Author Topic: Has anyone followed Dave Ramsey's Money Makeover?  (Read 34689 times)

nawhite

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Has anyone followed Dave Ramsey's Money Makeover?
« on: January 23, 2014, 02:47:10 PM »
I just finished reading Dave Ramsey's Total Money Makeover mostly out of an academic interest. He gets recommended as a starting point for lots of people so I wanted to find out what his advice was. He lists some "baby steps" to take to get your shit together.

1. Save $1000 for Ultra Emergencies
2. Start a Debt Snowball (pay down smallest debts first)
3. Save the rest of an Emergency Fund (3-6 months expenses)
4. Save 15% of expenses for Retirement
5. Save for Children's College
6. Pay off Mortgage
7. Build more wealth and give.

These are based off of removing psychological barriers to getting your shit together. I.e. if you kill a tiny loan (regardless of interest rate) you'll feel good and keep going with the steps.

I personally wouldn't follow the steps exactly how he recommends (debt should be paid off highest interest first!!!) but I'm curious if anyone on here has followed his advice or has a friend or family member actually working through these steps? How has it worked for you/them?

Does this plan really help keep people on the straight and narrow?
« Last Edit: January 23, 2014, 02:52:47 PM by nawhite »

brandino29

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #1 on: January 23, 2014, 02:51:35 PM »

5. Save for Children's retirement


Damn...now I'll really never retire!

nawhite

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #2 on: January 23, 2014, 02:53:16 PM »

5. Save for Children's retirement


Damn...now I'll really never retire!

Whoops, I edited the original to fix it.

kevinb421

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #3 on: January 23, 2014, 02:59:58 PM »
The power of Dave Ramsey is in following his program EXACTLY. It is for people who are in a serious downward spiral. I have recommended TMMO to people that have major spending problems, credit card debt, etc. To someone with a bit of mustache DR is not optimal. This is because he suggests having no CC's, paying debt based on balance size and not interest rate, buying loaded mutual funds (what!?!?).

It is also worth noting that Dave still promotes the consumer culture. His sales pitch is "live like no one else so later you can live like no one else". I listen to the show all the time and with that statement he made it clear that if you sacrifice now then you will get to drive 100k cars, have vacation homes and other crazy consumption ideals.

If you have no understanding of your finances and spend out of control then DR plan works, but if you are trying to grow your mustache and are willing to have some self control there are ways to tweak his program to have greater effect.

Disclaimer: I have taught his Financial peace class and really like the core message, but I feel the people on this forum are the 1% of the population that don't need his principles because they are willing to go farther than DR suggests for the general public.

FIreDrill

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #4 on: January 23, 2014, 03:11:42 PM »
Dave Ramsey was my intro into Finances but I was never completely sold.  For example, I really didn't want to pay off my car that was on a 0.9% apr.  I eventually did drop 7k on it to pay it off and I also paid off a second car.  I think the most important thing I learned from that experience was how clear it was to me that I never wanted to have another car loan.  So I guess you could say doing his program has kept me from possibly getting into more debt in the future.  Also, my wife and I took his class before we got married and that was a huge help, it allowed us to dig into finances and get on the same page about avoiding debt.  She is now slowly turning Mustachian :)

Mickijune

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #5 on: January 23, 2014, 03:29:02 PM »
We got TMMO from the library when my husband and I first got married. We both had tons of credit card debt plus student debt and were blowing money like nobody's business.

1. Save $1000 for Ultra Emergencies
We started with this principle and cleared out all the saving except $1000. Since paying off the credit cards though, we only keep a few hundred in savings because we have so much available credit. Not the best solution but it's working for us since we have so much debt still (student loans!).
2. Start a Debt Snowball (pay down smallest debts first)
We did this totally and completely, probably the best selling point of the whole program. It was amazing to find out how much extra money we could put to debt each month just by setting up a budget and sticking to it. We have something like 10+ credit cards. We paid the last one off in December 2013!
We are trying to transition to a more advanced version of the envelope system.  My husband doesn't want to pay for YNAB, so I'm trying to build a spreadsheet that isn't overly complicated, but let's us figure out the information we need to know and still use our debit and credit cards to pay for normal expenses (We love getting rewards points!) It's basically the same format as the spreadsheet in TMMO, but with a lot more functions and auto adding stuff like a spreadsheet I found online a while back.

Not even close to the rest of the steps yet....with $100k+ in student loan debt between the two of us....yikes. It's never gonna end!!!!!!!!

lcg377

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #6 on: January 23, 2014, 05:13:24 PM »
I started looking up financial info in the fall.  We've always been "responsible" with credit, but it never really occurred to me how badly it was holding us back to have student loans and our car loan.  So I started reading David Bach, DR, Mr MM, and Suze Orman all at the same time.  I think Dave Ramsey is really accessible for people new to this idea, but I found his writing sort of boring and simplistic.  But if I was more of a "story-based" thinker, they provide all these examples and success stories that probably really help some people jump on the bandwagon.  Also, I'm not religious, so had to gloss over the parables and stories to get to the nuggets of info that are useful to me.  I would definitely recommend it to certain people, but clearly I like more face-punches and swearing with my financial advice!

I run a small retail store, and I have seen a handful of people using the envelope system when they pay me.  Like, the EXACT one he sells on his website.  There must be good follow-through with the program!

livetogive

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #7 on: January 23, 2014, 05:40:52 PM »
A few Army buddies swear by him, but he's a little too evangelical for my tastes.  I also think he's super unsophisticated -  he reminds me of <<insert politically extreme radio pundit here>>.  At the same he's more financially successful than I am so I guess I can't really talk...

It does makes me want to scream when I hear about people paying down nominal sized debts vs. improving cash flow based on interest expense, but I suppose momentum is worth something.

pipercat

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #8 on: January 23, 2014, 05:59:32 PM »
I do like the basic tenets, and I am probably more suited for his message than MMM (because of our high debt) but I like it better over here! I probably read TMMO about 10 years ago, and I'm still working on step number 2 (with some obvious detours along the way).

I tend to like the Debt Snowball for the satisfaction of paying off a debt.  The debt repayment calculator that I use (http://www.vertex42.com/Calculators/debt-reduction-calculator.html) tells me that I will repay 4 debts in 2014 using the Snowball method.  If I were to use what they call the "Avalanche" method (highest interest first), I would only pay off one debt in 2014, one in 2015, and I think two in 2016.  I really need the motivation to keep working at it, so I'm going with the Snowball for now- we have a lot of debt.  Later this year, after those 2014 debts are paid, I can switch to the Avalanche if it looks more favorable.

I also don't really feel the need for 3-6 months emergency fund simply sitting in a bank.  Also, saving 15% for retirement after we pay off all our debts would leave us with a ton of money each month.  I think the 15% is pretty conservative.

Basically though, it's a little like choosing which diet guru you are going to follow.  There is valuable information from almost all of them, and you will likely be better off than if you had chosen to only use your own instincts.  Just keep in mind that YMMV.

b4u2

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #9 on: January 23, 2014, 06:07:33 PM »
We got TMMO from the library when my husband and I first got married. We both had tons of credit card debt plus student debt and were blowing money like nobody's business.

1. Save $1000 for Ultra Emergencies
We started with this principle and cleared out all the saving except $1000. Since paying off the credit cards though, we only keep a few hundred in savings because we have so much available credit. Not the best solution but it's working for us since we have so much debt still (student loans!).
2. Start a Debt Snowball (pay down smallest debts first)
We did this totally and completely, probably the best selling point of the whole program. It was amazing to find out how much extra money we could put to debt each month just by setting up a budget and sticking to it. We have something like 10+ credit cards. We paid the last one off in December 2013!
We are trying to transition to a more advanced version of the envelope system.  My husband doesn't want to pay for YNAB, so I'm trying to build a spreadsheet that isn't overly complicated, but let's us figure out the information we need to know and still use our debit and credit cards to pay for normal expenses (We love getting rewards points!) It's basically the same format as the spreadsheet in TMMO, but with a lot more functions and auto adding stuff like a spreadsheet I found online a while back.

Not even close to the rest of the steps yet....with $100k+ in student loan debt between the two of us....yikes. It's never gonna end!!!!!!!!

Take the YNAB free live classes and try to win a free copy. Also if your debt is really bad they will work with you on extending the free trial. I am still trying to win the free copy but the classes are very helpful.

Mr.Fixit

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #10 on: January 23, 2014, 09:28:54 PM »
I agree with a lot of the comments here. Good if the problem is a spending habit of psychological issue. His program is not made for those who simply have a math problem.

He does support big house debt and then killing yourself to pay it off.

No need for envelopes if you and your spouse know how to not make un planned spending, however I either one doesn't know what their spending than both need to be on the system..

The main goal for him seems to be "get rich" while most of us are seeking to deny consumerism to live a simple and free life, not drive 100k cars.

mpbaker22

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #11 on: January 23, 2014, 09:31:55 PM »
I guess I'm on step 8?  Seriously, I think his program is good, but not for most people on this board.  I wouldn't recommend a 6 month emergency fund to someone with multiple years of savings invested, but we're already having that debate on a thread I literally just posted in.  Paying off the house probably is a good idea for most people.  Most of it is good, but I have a hard time understanding the psychology from the point of view of someone in debt.

nottoolatetostart

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #12 on: January 24, 2014, 04:18:21 AM »
We followed it loosely when we first got married about 4 years ago since I didn't know anything else. Never took the class or anything, but certainly went to one of his live events and read the book. DH was never into it. We paid off higher interest debt first and never stopped our credit card usage (always paid it off in full, followed a budget) and most importantly, never quit the retirement plan. It took us 1 year to pay off my SL's and if we would have followed his advice to quit retirement contributions, we would have left more to $9K on the table from our employers contribution to our retirement, let alone paying extra in taxes. It would have saved us like $400 in interest by paying off the debt 2 months earlier. Penny wise, dollar foolish much?

I did like his focus on life insurance and getting a will in place. That was very helpful.

Nowadays, I don't get the mortgage payoff that he preaches. Yeah, I want our mortgage gone, but I don't understand the math. Our mortgage is at 2.625%. We do have a savings account that earns 3.05% on the first $20K, let alone the fact that our investments do very well for themselves. We only keep $13K or so on hand for emergencies and since we plan very well, knock on wood, we have never had to tap into it.

I have been on the Dave Ramsey forums and some people are very, very lost. They need a simple system. To Dave's credit, he needs to keep his plan simple for folks to follow.

To others, they simply evolve and evolve. Now, I find myself thinking about tax strategies, investments, tax loss harvesting, so when I listen to the DR radio sometimes, I want to scream at the callers and even worry that these same people are on the road driving next to me.


i_am_the_slime

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #13 on: January 24, 2014, 05:03:58 AM »

It is also worth noting that Dave still promotes the consumer culture. His sales pitch is "live like no one else so later you can live like no one else". I listen to the show all the time and with that statement he made it clear that if you sacrifice now then you will get to drive 100k cars, have vacation homes and other crazy consumption ideals.


Maybe - but I actually like that phrase because my "living like no one else" later on can just be early retirement.  That's the beauty of financial independence, right?  Whatever YOU want to do.

I agree with everyone else - his plan is good for those who need a simple plan.  For others who already have a clue, none of it is actually good advice.

davisgang90

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #14 on: January 24, 2014, 05:44:54 AM »
I find myself more closely aligned with DR's line of thinking than MMM.  I've learned a lot from both, but I have no intention of living on $25K a year.  I also have no intention of working till I'm 65.  I will ER with a more generous budget than MMM and without the load mutual funds DR recommends.

Saverocity

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #15 on: January 24, 2014, 06:02:57 AM »
I used to get frustrated by the imperfection of Dave, but in reality when considering the target audience (those in debt, that are getting further in debt) the advice is good enough to help.  My current view is that it is better to make small victories with people and their financial habits, even if not truly mathematically perfect and as they make progress the sophistication can increase.

Cincy Stache

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #16 on: January 24, 2014, 06:40:09 AM »
I definitely listen to DR's show.  I'm only familiar with his program to the extent that he refers to it on the show.  I've always had pretty good financial sense with regards to saving, so never got into the kind of debt you hear so often on his show.  I understand the Debt Snowball concept, and believe that it helps many people get over the hump of paying off a debt; however, to me it only makes sense to pay debts first that are costing the most.

It turned out that I've been a Mustachian all my life, and finding this community gave me even more focus on the kinds of things that are important!

My name is Cincy Stache and I've got an addiction: MMM.

ace1224

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #17 on: January 24, 2014, 06:45:33 AM »
when i was first getting out of consumer debt years ago TMMO saved my life.  i'm one of the people it targeted.  i needed emotional stuff to keep going.  the debt snowball was AMAZING.  as a science major that had to take 12 hours of advanced calculus you'd think that i would understand paying off the higher interest first, but there is something about seeing the number of accounts you owe go down, and by the time you get to the biggest one the payment you're making is so much bigger than the minimum payment that you're finally making progress.

it was like a game and by the time i was 3 months in i was hustling to save money, make more money, whatever just so i could throw more and more at the balances.  and the whole tagline of "live like no one else so you can live like no one else" finally started making sense.  he was jumping off point, and then seeing how easy it was to live on less and less and still be happy led me to this, which has saved me even more money. 

Theadyn

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #18 on: January 24, 2014, 07:26:02 AM »
My late hubby and I did DR starting in '05, and it worked for us.  We weren't ultra-consumerists, but we did lack direction.  I was all for getting out of debt but didn't really have a plan.  So Dave's plan worked for us.  I went all out nutso, lol, paying off 56k in a year and half, a year of that on one income of less than 60k.  The snowball worked for us because we could see it was working.  I do think the quick wins he talks about help keep the motivation going, at least it did for us.  We used visuals (like graphs and thermometer type drawings) to visually mark the progress and keep us motivated, and it worked.  I loved coloring in the blocks of progress we made.  Most of it was just money moving around, so the visuals helped.  To this day I have some goals taped on my closet door to track progress.

However, at the same time I could see the DR plan working, I still read everything I could get my hands on about money.   The DR plan, for us, was how to get out of debt, a plan that worked.  Other authors were more geared with the 'what do I do now' aspect.  Seems to me like there was something to learn from them all.

Shor

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #19 on: January 24, 2014, 08:06:26 AM »
when i was first getting out of consumer debt years ago TMMO saved my life.  i'm one of the people it targeted.  i needed emotional stuff to keep going.  the debt snowball was AMAZING.  as a science major that had to take 12 hours of advanced calculus you'd think that i would understand paying off the higher interest first, but there is something about seeing the number of accounts you owe go down, and by the time you get to the biggest one the payment you're making is so much bigger than the minimum payment that you're finally making progress.

If you consider it, people who subscribe to DR probably got themselves in to their financial debts from emotional purchases to begin with. Best way to reverse that flow is to appeal to their emotional side and reducing the number of debts and expanding the cash flow in via Snowball method.
While Avalanche might be mathematically optimal, the only other situation I can think of is one where job stability might be a little uncertain. For a specific case where the income level drops at some point during the recovery process, reducing the monthly minimum payments actually makes sense and increases your stability; at the cost of extending your final payout.

I am considering pointing DR to certain future-family-members who might better be able to relate and heed the advice. It's definitely more appealing to the average debt-laden household than the self-sustaining minimalism which comes off as 'simply just crazy!'

adam

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #20 on: January 24, 2014, 09:41:55 AM »
I think it was TMMO that got me started on my whole journey.  It seems that DR is a good starting point for a lot of people because he makes it very simple and very loud?

Yeah his math doesn't make sense (both the snowball and what he thinks mutual funds return you), but if people wanted to do the math they wouldn't be in debt.  Shit I know a lot of math and I'm still digging my way out.

I will admit, I don't do a straight %apr ranking when I pay things off. It does feel good to knock off that one small bill and be able to tell people about it.  I mean, I had a 0% CC with 4k on it and then a $40k student loan at like 6%.  I paid off the CC first.  I also make my own rules sometimes like; credit cards are first in line regardless of APR because they aren't attached to anything I can sell.  After that something like a vehicle, since if things got really bad you could get rid of that debt by selling the vehicle.  After that, student loans because the only way you're getting out of one of those is to pay it off or die.  Now that I type that out maybe I should switch the last two.

Anyways, I eventually got turned off by Dave because of all the money you needed to spend to keep going with his program.  Pay for forums, pay for podcasts (if you didn't want all kinds of ads), pay for envelopes, etc...

stealmystapler

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #21 on: January 24, 2014, 10:47:41 AM »
I sat through the DR Financial Peace University class with my parents while in high school. They were always pretty frugal, but never taught any real specifics about money, so it ended up being a nice grounding that I could jump off from. I certainly disagreed with his point about credit cards (nothing wrong with responsible use) and got one even though my parents tut-tutted me.

The year after I got married, my parents gave us a DR FPU kit for Christmas. My husband never had a good financial grounding from this parents, and certainly didn't feel comfortable with the churchiness of the program. We read through the book on our own time, discussing each chapter, and worked on using some of his budget forms. It certainly helped us learn how to discuss money with each other and come up with plans. We finally just started taking an actual class this January, and it feels more remedial than anything - a reminder of stuff we already know.

The DR plan certainly is simple, and we've certainly combined it with other philosophies. For now it's a good way to remind us to stay on track while we pay off our "hair-on-fire" $60,000 in student loans!

oldtoyota

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #22 on: January 24, 2014, 10:51:30 AM »
I just finished reading Dave Ramsey's Total Money Makeover mostly out of an academic interest.

??

I never thought of "Dave Ramsey" and "academic" in the same thought before!

I never heard of him until I came here. I have a feeling he would annoy me, but I can see why people find him useful.


RS

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #23 on: January 24, 2014, 11:51:08 AM »
I read the TMMO from the library. Thought the book as a whole was dumb (too many anecdotes for my liking), but all his principals can be learned just by listening to his daily podcast and/or looking at his website. I understand enough to not need to pay for the class, and wouldn't be able to stand using the physical envelope system (YNAB works great in it's place).

His plan may be simple, but 1,000 times better than no plan at all.


4. Save 15% of expenses for Retirement


Step 4 is actually save 15% of Gross Income for Retirement.

...without the load mutual funds DR recommends.

I understand the DR investing principals, but what do you all mean by "loaded mutual funds"?

snuggler

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #24 on: January 24, 2014, 12:07:22 PM »
I first heard about DR from a professor, who warned that he is a bit evangelical and religious.

DR definitely has his faults, one in particular being the political segments that crept into his shows a few years ago.

But, I'm grateful for him because I found Bogleheads through the DR forum, and I found MMM through Bogleheads. I think most people that are interested/sophisticated enough to care about more advanced personal finance strategies will eventually find Bogleheads and MMM and move on from DR.

nawhite

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #25 on: January 24, 2014, 12:34:00 PM »
...without the load mutual funds DR recommends.

I understand the DR investing principals, but what do you all mean by "loaded mutual funds"?

DR recommends mutual funds which have a "load fee." (He likely recommends them b/c of kickbacks with the fund managers but he's obviously hush hush about that). Load Fees are fees that you pay to invest with them. So if there is a 1% load fee and you have $100 you want to invest in that fund, you will end up with a balance of $99 in the fund and $1 in the pockets of the fund manager.

Funds with load fees are generally a stupid idea for the average investor because there are tons of funds without load fees that perform just as well as those that do have load fees. Vanguard is partially popular around here because they have no load fees (or any withdrawl fees, or any other stupid fees that fund managers have invented).

MayDay

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #26 on: January 24, 2014, 12:46:01 PM »
My parents have always been a bit of a financial mess- moderate salaries but very high SL debt and my mom always carried small balances on multiple store credit cards, never getting them paid off.  I cannot even imagine the thousands she wasted over the years carrying stupid 200$ balances! 

Anyway, she took the class at her church and it really helped her.  She stopped carrying CC debt by completely, and upped her retirement contributions.  She is far from optimized, but a million miles ahead of where she is.  I actually have hope at this point that they will be able to retire someday, lol.  She "isn't a math person" and wasn't raised to have financial sense whatsoever, so DR was a good fit for her.  My dad has no excuse for not being on top of things financially.  In his case I imagine it stems from his childhood.

nvmama

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #27 on: January 24, 2014, 12:58:23 PM »
As stated many times already.  Dave Ramsey is a great starting place for those who just need to get started and work their way out of debt.

My brother in law and sister in law have recently went through his FPU classes.  They are now huge fans of DR.  They have been working the steps and are still in the paying debt down part.  I see it as having a positive impact on them and now their daughters are getting a better financial understanding than they probably would have gotten if their parents hadn't gone through the FPU.

The only down side I see is that now my Brother in law feels he needs to convert everyone to the DR way, so family functions are getting rowdy.  My DH and I use our credit cards very responsibly and pay off in full each month so you can probably figure out what many of the very loud discussion are about. 

Carrie

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #28 on: January 24, 2014, 01:07:32 PM »
We started with Dave Ramsey's TMMO.

Here's what I like: clear step by step directions to financial well-being.

Here's where he's lacking -- investing advice.  I think it's great that he encourages people to invest, but recommending they go through ELPs (there are his kickbacks) who sell nothing but loaded funds is obviously poor advice.  His never ending claim that good growth stock mutual funds return 12% and that you can withdraw at a high rate (I think he uses 8% withdrawal), probably not good.

I think he is misleading about getting wealthy.  He recommends 15% to retirement, but that sounds way too low to achieve wealth unless your spending is low (which he doesn't necessarily endorse in the later steps) or you have 40-50 years of growth.  A lot of his callers/followers are getting much too late a start to put that little into retirement when they get to that step.

We never had a problem with CC debt (didn't have any), so I ignore his rants against credit cards.  We have one, don't use it much, but I'm not planning to close it either.  I don't want to end up with zero credit (which he touts).  I'd like to have the ability to get another mortgage, and to qualify for lower insurance rates, and to be able to get security clearance if needed.

I do agree with him on not carrying debt, car loans are dumb, an emergency fund is good, and investing is good.  I was gung-ho about paying off the mortgage until I stumbled across MMM, now I'm aiming to max retirement savings first, but we still want our mortgage gone so that our yearly expenses are even more MMM-like. 
« Last Edit: January 24, 2014, 01:09:28 PM by Carrie »

rubybeth

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #29 on: January 24, 2014, 01:17:49 PM »
...but I'm curious if anyone on here has followed his advice or has a friend or family member actually working through these steps? How has it worked for you/them?

Does this plan really help keep people on the straight and narrow?

DH's aunt recommended him to us about four years ago. Less than four years later, all our (student loan) debt was paid off. Reading his book also kind of kicked us into high gear in terms of Legacy planning (we got life insurance, got our wills done, etc.). But we never had credit card debt, bought cars with what was in savings, don't have kids, and aren't buying a house anytime soon, so it kind of lost relevance after we paid off the debt, which is when I started looking at investing and found MMM. I know DH's aunt and uncle used the program, but they are in their 50s so I think they are more the target market for the program.

I agree that a lot of handling money is psychological, which is one of the main components of the baby steps. If you can feel like you are progressing in the steps, that's a good "win" for the average earner.

Also, for us, our highest interest debt (one of our student loans) was also our smallest, so the debt snowball thing worked well.

hybrid

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #30 on: January 24, 2014, 01:24:09 PM »
I was already doing most of the DR thing not knowing there was some guy named Dave Ramsey.  Thing is, I also planned on working until 70.  The reason I like this site so much is that now I don't spend so much on luxury and am buying time instead, and I would much rather buy time than luxury.

So while I have nothing against his approach, it sure seems more like it is geared toward people who need a much more dramatic change than I did.  So for those folks I am sure he is very inspirational.

I suppose I am in the middle.  I cannot see getting down to a 25K budget either (nor wanting to frankly, the wife would throw me out), but we are spending a whole lot less than we did before.  As long as folks have found both financial responsibility and are happy, I don't think there are right ways or wrong ways of doing it, just different ways to the same endpoint.

TheRealMFC

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #31 on: January 24, 2014, 01:29:26 PM »
I was in the habit of listening to his show for a while about 7 or 8 years ago. I didn't follow his program exactly, but he definitely influenced the way I approached my finances. We paid off all of our debt, except the mortgage, and then we started to aggressively pay that down as well. We also started to save more, and put a lot more into retirement funds. That, and we cut up all but one credit card. So he helped to nudge us in the right direction for sure.

MMM is helping us take it to another level.

MooseOutFront

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #32 on: January 24, 2014, 02:48:36 PM »
But, I'm grateful for him because I found Bogleheads through the DR forum, and I found MMM through Bogleheads. I think most people that are interested/sophisticated enough to care about more advanced personal finance strategies will eventually find Bogleheads and MMM and move on from DR.
We are same.

My wife and I enacted the TMMO in 2009 after I had read the book.  The "let's have a baby" conversation morphed into a new commitment to get our act together and a hand-written big chief tablet budget.  It was a great tool for a couple of young people making good salaries with $27k in credit card debt and $(10k) net worth.  The main benefits were that it focused me upon my new interest in personal finance and it put my wife and me on the same page regarding money from that point on. 

I still listen to his show occasionally because it's easy listening financial porn, but it's not that often I run into people that I would recommend him to.  Mainly because there are too many little and big things I don't agree with him on and I don't want lead someone astray or make them think I agree with some of that stuff.

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #33 on: January 24, 2014, 08:38:17 PM »
I definitely listen to DR's show.  I'm only familiar with his program to the extent that he refers to it on the show.  I've always had pretty good financial sense with regards to saving, so never got into the kind of debt you hear so often on his show.  I understand the Debt Snowball concept, and believe that it helps many people get over the hump of paying off a debt; however, to me it only makes sense to pay debts first that are costing the most.

In some circumstances, there is another, much more valid reason to pay off the smallest debts first.  A goodly percentage of Dave Ramsey's clientele are in exactly those circumstances.

If you owe so very much that just making ends meet when paying the minimums, it really makes sense to pay off some smaller debts first.  It gives your budget some breathing room once you do.  It makes it much easier to recover from the inevitable dammits that will crop up.   That can be a major stress reliever.  Since one of the main reason people get divorced is money problems and getting divorced is one of the best ways to sabotage financial fitness, it may more than pay for itself.

Bbqmustache

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #34 on: January 25, 2014, 06:43:09 AM »
I teach a modified Baby Steps approach for our clients.  I fully believe also in the Dave Ramsey principle of avoiding debt because of the risk it creates.   I would much rather pay the opportunity cost of keeping a large amount of cash in the bank as an  Emergency Fund, than go into debt during a financial emergency.

Going into debt when you have an unexpected emergency is the worst time to go into debt, in my humble opinion.

http://www.financialliteracyconversations.wordpress.com

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #35 on: January 25, 2014, 07:16:19 AM »
I don't understand why saving for children's college would be listed as a big money priority. That seems a lot more like an extreme luxury rather than an obligation. I would say it makes sense after literally everything else is taken care of and only if you want to give that (huge) gift to them. There are so many other ways for a person to pay for their college.

CU Tiger

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #36 on: January 25, 2014, 07:36:36 AM »
My husband and I took the Dave Ramsey Financial Peace class about four years ago. We'd already been married 10+ years at the time, and taking that class was the best thing we ever did together to get us on the same page financially.

We didn't have money troubles...no CC debt...no debt other than our mortgage/2nd mortgage. What we learned in the class was how to talk to each other about money, to make decisions together.  We used to really argue about money...I wanted to save for short term goals, as well as retirement, and he wanted to put every single dollar into retirement. We couldn't talk about financial goals without arguing. The class really helped us find a way to plan and talk about money as if we were on the same team. We even led a small FPU class at our church.

The FPU classes are really super-helpful for people who are in deep trouble and just can't figure out how to start working themselves out. Considering all the people he's helped dig themselves out of debt, his program works for people who will actually work the steps.
He calls them Baby Steps for a reason...people in crisis need very simple, concrete things to do.

We have sort of moved on to MMM now, because thinking about FIRE is now our goal. Next month we will make the last payment on our mortgage, and that will increase our investing by $1500 per month. I don't know if we'd be where we are if we hadn't started with Dave Ramsey.

We are Christians, so the religious aspect was fine, but if you aren't, you can just ignore it.

JanMN

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #37 on: January 25, 2014, 07:39:32 AM »
My brother in law and sister in law have recently went through his FPU classes.  They are now huge fans of DR.  They have been working the steps and are still in the paying debt down part.  I see it as having a positive impact on them and now their daughters are getting a better financial understanding than they probably would have gotten if their parents hadn't gone through the FPU.

The only down side I see is that now my Brother in law feels he needs to convert everyone to the DR way, so family functions are getting rowdy. 

"rowdy" haha...well at least someone is bringing up the topic of saving money :-)

OSUBearCub

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #38 on: February 07, 2015, 09:38:51 AM »
I'm looking into the Financial Peace University classes for a couple reasons:

1. The fee seems reasonable considering I was planning on buying his book/workbook anyway
- Yes I know I could get the raw materials for 30% of the $94 class fee but additional benefits will be listed below

2. I'm really good at cutting back in category A but then I'll let category X slip without knowing it
- I need a "big picture" look at the goal

3. I suck at budgets
- His budgeting seems pretty simple and a good starter exercise to build the skill

4. Being single, I answer to no one else.  My self-control tends to be wibbly-wobbly at best.
- I'm hoping the group scenario can help build a little accountability until I get the ball rolling on the master plan

5. Student loan pay-off calculators are showing that I won't be out from under my loans for a LOT longer than I was estimating

Question - I'm not terribly religious and fundamentalist/evangelical Christian environments make my skin crawl.  I'm willing to make this work even if I have to go to a church rectory to take the classes.  However, how much religious doctrine will I need to sit through?

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #39 on: February 07, 2015, 09:59:10 AM »
I'm looking into the Financial Peace University classes for a couple reasons:

1. The fee seems reasonable considering I was planning on buying his book/workbook anyway
- Yes I know I could get the raw materials for 30% of the $94 class fee but additional benefits will be listed below

2. I'm really good at cutting back in category A but then I'll let category X slip without knowing it
- I need a "big picture" look at the goal

3. I suck at budgets
- His budgeting seems pretty simple and a good starter exercise to build the skill

4. Being single, I answer to no one else.  My self-control tends to be wibbly-wobbly at best.
- I'm hoping the group scenario can help build a little accountability until I get the ball rolling on the master plan

5. Student loan pay-off calculators are showing that I won't be out from under my loans for a LOT longer than I was estimating

Question - I'm not terribly religious and fundamentalist/evangelical Christian environments make my skin crawl.  I'm willing to make this work even if I have to go to a church rectory to take the classes.  However, how much religious doctrine will I need to sit through?

1) I can give you the raw materials for free if you want to PM me your address. I have at least 2 of his books from many years ago.

2) Do you use Mint or YNAB? They are pretty good at this as well.

3) Same as #2

4) Start a journal here and post your expenses. There is a strange sense of accountability when you expose yourself there.

5) Debt payoff is only 1 part of independence.

I don't know about the classes, but he's an uber religious guy. Like non-stop references on his show. I would think the religious message is every bit as strong as the financial one. And from reading other posts of yours on the forum, I understand why you'd want to avoid that. I don't think putting yourself in that environment would be a good thing, but what the hell do I know, you know what you can handle.

Seriously, if you want a couple of books let me know. They're just collecting dust in my basement.

surfhb

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #40 on: February 07, 2015, 10:40:54 AM »
Many bag on DR but he is directly responsible for steering millions of people towards smart money management.   He definitely needs credit for that.   

That said, his investment advice borders on the immoral.    He's basically a liar and pushes his "endorsed local providers" to line his wallet.   

OSUBearCub

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #41 on: February 07, 2015, 10:53:28 AM »
Many bag on DR but he is directly responsible for steering millions of people towards smart money management.   He definitely needs credit for that.   

That said, his investment advice borders on the immoral.    He's basically a liar and pushes his "endorsed local providers" to line his wallet.

Yeah, I've seen that criticism frequently in my research.  I really need to get more "hair on fire" about my student loan debt as most of it is with a private bank and the interest is pretty high.  I've been paying it off for five years now and the emotional toll of being in debt is grinding on me.  I want that money to put toward real estate and ultimately FIRE.  I just need a little old-time discipline to get out from under the debt.

EllieStan

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #42 on: February 07, 2015, 10:59:38 AM »
I just finished reading Dave Ramsey's Total Money Makeover mostly out of an academic interest. He gets recommended as a starting point for lots of people so I wanted to find out what his advice was. He lists some "baby steps" to take to get your shit together.

1. Save $1000 for Ultra Emergencies
2. Start a Debt Snowball (pay down smallest debts first)
3. Save the rest of an Emergency Fund (3-6 months expenses)
4. Save 15% of expenses for Retirement
5. Save for Children's College
6. Pay off Mortgage
7. Build more wealth and give.

These are based off of removing psychological barriers to getting your shit together. I.e. if you kill a tiny loan (regardless of interest rate) you'll feel good and keep going with the steps.

I personally wouldn't follow the steps exactly how he recommends (debt should be paid off highest interest first!!!) but I'm curious if anyone on here has followed his advice or has a friend or family member actually working through these steps? How has it worked for you/them?

Does this plan really help keep people on the straight and narrow?

I think it's a good starting point when you don't know what to do and where to start. When I first started reading financial blogs, I felt I didn't control my debts and budget as I should and I really needed simple advices to get me started. ''Baby steps'' were inspiring to get my finances in order, but I read many blogs and followed a bit of his advice and Gail Vaz-Oxlade's (ex.: paying off the highest interest first, calculating my budget according to her simple Budget Pie). The problem I see is unless people keep on educating themselves AFTER, steps like these will never help them incoporate good financial habits. They still won't master the art of budgeting and still won't get a good understanding of personal finances. There needs to be a bigger step B after the guru's ''baby steps''.

« Last Edit: February 07, 2015, 11:05:16 AM by EllieStan »

Riff

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #43 on: February 07, 2015, 11:08:31 AM »
It is also worth noting that Dave still promotes the consumer culture. His sales pitch is "live like no one else so later you can live like no one else". I listen to the show all the time and with that statement he made it clear that if you sacrifice now then you will get to drive 100k cars, have vacation homes and other crazy consumption ideals.
When he says this, I interpret is as don't buy a bunch of dumb stuff and waste your money now, so later you won't have to work until you're 75 barely scraping by on Social Security.  Don't be like normal people; be weird.

Zikoris

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #44 on: February 07, 2015, 11:20:24 AM »
It seemed kind of pointless because by the time I found it I already:

Had no debt
Had emergency money
Had no kids and my tubes tied
Decided on renting permanently rather than buying

So the only advice that would have applied to me was... save 15% for retirement. Not exactly groundbreaking advice.

brandino29

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #45 on: February 07, 2015, 11:29:23 AM »
I'm looking into the Financial Peace University classes for a couple reasons:

1. The fee seems reasonable considering I was planning on buying his book/workbook anyway
- Yes I know I could get the raw materials for 30% of the $94 class fee but additional benefits will be listed below

2. I'm really good at cutting back in category A but then I'll let category X slip without knowing it
- I need a "big picture" look at the goal

3. I suck at budgets
- His budgeting seems pretty simple and a good starter exercise to build the skill

4. Being single, I answer to no one else.  My self-control tends to be wibbly-wobbly at best.
- I'm hoping the group scenario can help build a little accountability until I get the ball rolling on the master plan

5. Student loan pay-off calculators are showing that I won't be out from under my loans for a LOT longer than I was estimating

Question - I'm not terribly religious and fundamentalist/evangelical Christian environments make my skin crawl.  I'm willing to make this work even if I have to go to a church rectory to take the classes.  However, how much religious doctrine will I need to sit through?

1) I can give you the raw materials for free if you want to PM me your address. I have at least 2 of his books from many years ago.

2) Do you use Mint or YNAB? They are pretty good at this as well.

3) Same as #2

4) Start a journal here and post your expenses. There is a strange sense of accountability when you expose yourself there.

5) Debt payoff is only 1 part of independence.

I don't know about the classes, but he's an uber religious guy. Like non-stop references on his show. I would think the religious message is every bit as strong as the financial one. And from reading other posts of yours on the forum, I understand why you'd want to avoid that. I don't think putting yourself in that environment would be a good thing, but what the hell do I know, you know what you can handle.

Seriously, if you want a couple of books let me know. They're just collecting dust in my basement.

I'm with Cheddar. Start a journal here. You won't learn anything new at the class and from my experience, the collective (free) wisdom of the MMM forum community is much more valuable. Plus, we'll help you hold yourself accountable!

I'm a red panda

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #46 on: February 07, 2015, 12:41:46 PM »
I've never been interested in Dave Ramsey because his advice is of very little use for me. Except for a mortgage, I've never had debt.

Additionally- I LOVE my credit cards; so anyone anti-credit card is off my radar.

From a financial perspective, it makes no sense to me to encourage people to pay off debts in an order that doesn't take into account interest earned (though from a motivational perspective, I understand it- but since I'm good with money, it makes zero sense.)

I also refuse to write a budget, so the vast majority of internet finance advise doesn't do much for me.

Zikoris

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #47 on: February 07, 2015, 01:00:20 PM »
I also don't see much point in detailed budgeting. I track with Mint, and use that and the "just don't buy things" system to keep everything in check. That keeps my spending lower and savings higher than any budget-following person I've ever met.

darkadams00

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #48 on: February 07, 2015, 08:04:46 PM »
I have read TMMO and listen to Dave Ramsey's free podcasts/radio archives sometimes when I'm working in the garage. Mainly I'm just trying to listen to someone with a bit of conservative financial advice to balance the marketing/consumer frenzy that peeks into every corner of society. Dave's message is straightforward and somewhat simplistic to MMM folks, but the readers on this board do not come close to representing a random selection of US society. Very few of my family, friends, and coworkers are true savers. Some do save a little, but most save hardly a dime beyond a pittance into their 401k. Many spent as much money on discretionary items/events/activities last year as my family spent on our entire budget outside of savings. Most of these folks would think Ramsey is a bit preachy, and that would be sufficient excuse to change absolutely nothing in their finances. Some people just don't want to hear.

All told, I think the American masses could benefit from almost any financial advisor who told them to make better choices, quit wasting money, and take control of their finances. Ramsey is such a person. The autodidactic spreadsheet ninjas just get to graduate out of Personal Finance 101 a little earlier.

SwordGuy

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Re: Has anyone followed Dave Ramsey's Money Makeover?
« Reply #49 on: February 07, 2015, 08:41:58 PM »
I also don't see much point in detailed budgeting. I track with Mint, and use that and the "just don't buy things" system to keep everything in check. That keeps my spending lower and savings higher than any budget-following person I've ever met.

I like a much simpler method of budgeting.

You should pretty much know what your regular bills (monthly, quarterly, and annual) will be.   Pay it or set aside 1/12th of the annual amount each month.

Decide how much you want to save or invest each month and put that on auto-pilot so it just happens automatically.

Don't go into unplanned debt if/when you spend what's left over.

The rest pretty much takes care of itself.