Author Topic: Dave Ramsey  (Read 1119 times)

Rasputin

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Dave Ramsey
« on: January 07, 2019, 12:29:16 PM »
Whatís everyoneís thoughts on this guy? He seems to make sense. Any other authors you guys and gals would recommend for overall budgeting and getting one's sh*t together?

Cromacster

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Re: Dave Ramsey
« Reply #1 on: January 07, 2019, 12:34:21 PM »
Listen to Dave Ramsey's debt payoff advice (more or less), but end here.  Don't listen to any of his investing advice.

Other good resources.

Good website about investing
https://jlcollinsnh.com/stock-series/

Good book about mindset
Your Money or Your Life
« Last Edit: January 08, 2019, 10:42:17 AM by Cromacster »

35andFI

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Re: Dave Ramsey
« Reply #2 on: January 07, 2019, 12:38:06 PM »
From my (limited) DR experience, he seems to have a target audience. In my opinion, that target audience is consumers who are in debt.

His content is a great starting place for people to get their Net Worth up to 0.

That being said, here are a few things that I (and others on here) disagree with:

1) Debt snowball vs debt avalanche
2) Paying off a house (debatable)
3) Investing

princeradar

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Re: Dave Ramsey
« Reply #3 on: January 07, 2019, 12:50:31 PM »
Dave Ramsey is a great place to start.  Following his plan will definitely help most people with their financial situation especially if you have debt.  Treat Dave Ramsey as the high school level.  You need to educate yourself to move to higher levels of financial lieteracy and the MMM forum is a great place to start. 

The thing I like about Dave, which some people here disagree with is that he doesn't always focus on the math, but on changing behaviour which is good for newbies.


Rasputin

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Re: Dave Ramsey
« Reply #4 on: January 07, 2019, 12:53:33 PM »
From my (limited) DR experience, he seems to have a target audience. In my opinion, that target audience is consumers who are in debt.

His content is a great starting place for people to get their Net Worth up to 0.

That being said, here are a few things that I (and others on here) disagree with:

1) Debt snowball vs debt avalanche
2) Paying off a house (debatable)
3) Investing

I am $80K in debt with student loans and another $20K in a car. I donít really have much more money each month to pay down my loans. I need to unf*ck myself and soon. Iím 42 and would like to impregnate my wife, but kids are expensive too.

brandon1827

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Re: Dave Ramsey
« Reply #5 on: January 07, 2019, 01:26:43 PM »
From my (limited) DR experience, he seems to have a target audience. In my opinion, that target audience is consumers who are in debt.

His content is a great starting place for people to get their Net Worth up to 0.

That being said, here are a few things that I (and others on here) disagree with:

1) Debt snowball vs debt avalanche
2) Paying off a house (debatable)
3) Investing

What would be the fundamental difference between the debt snowball method vs. debt avalanche? On the surface, they appear to be very similar methodologies

chaskavitch

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Re: Dave Ramsey
« Reply #6 on: January 07, 2019, 02:04:29 PM »
From my (limited) DR experience, he seems to have a target audience. In my opinion, that target audience is consumers who are in debt.

His content is a great starting place for people to get their Net Worth up to 0.

That being said, here are a few things that I (and others on here) disagree with:

1) Debt snowball vs debt avalanche
2) Paying off a house (debatable)
3) Investing

What would be the fundamental difference between the debt snowball method vs. debt avalanche? On the surface, they appear to be very similar methodologies

The debt snowball is applying all extra money toward paying off your debts from smallest balance to largest.  Once the smallest balance is paid, you then apply your initial extra money amount plus that (now free) smallest debt payment to the next largest balance, etc.  This is nice because you have a constant series of small accomplishments building into the bigger goal of paying off all debt.

The debt avalanche is applying all extra money toward paying off your debts from highest interest debt to lowest, in order to save the most money in interest along your path. 

Which one is best for you depends on your personality as well as how high interest your debts are.  With both plans the goal is to keep the dollar amount of money being put toward debt month to month the same, or to increase it, but either gives you more strategy and purpose than just throwing your extra money at whichever debt is worrying you the most any given month.

35andFI

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Re: Dave Ramsey
« Reply #7 on: January 07, 2019, 03:08:08 PM »
Just to be clear, putting emotion aside, the debt avalanche method comes out ahead (based on money in your pocket) reguardless of how high or low the interest rates are.

Itís simple, you put what you can into the debt with the highest interest rate until itís paid off. Then you move onto whatever has the next highest interest rate until thatís paid off. And on and on.

chaskavitch

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Re: Dave Ramsey
« Reply #8 on: January 07, 2019, 03:20:18 PM »
Just to be clear, putting emotion aside, the debt avalanche method comes out ahead (based on money in your pocket) reguardless of how high or low the interest rates are.

Itís simple, you put what you can into the debt with the highest interest rate until itís paid off. Then you move onto whatever has the next highest interest rate until thatís paid off. And on and on.

I knew I forgot something.  Dang.  Yes, debt avalanche always comes out ahead monetarily, sometimes by a tiny bit and sometimes by a lot, but always by something. 

Some people need the feeling of accomplishment from paying off the "easy" smaller loans first to keep them engaged and positive about the process, otherwise they might quit the whole process because they're discouraged about how long a larger debt takes to get rid of.  That's the only reason to choose a debt snowball rather than an avalanche - if you think you'll quit without the mileposts of getting rid of an entire category of debt relatively quickly.

SmileAllDay

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Re: Dave Ramsey
« Reply #9 on: January 07, 2019, 03:21:19 PM »
By all accounts, he's a good place to start (particularly if you're in debt). And, even if you don't agree with everything he says, doing something is better than doing nothing.

I've heard other people say he's very preachy but it's kind of his shtick. He ties parts of his methods back to Christianity. Not that that's necessarily a bad thing but it can turn some people off.

The JL Collins and YMOYL recommendations above are spot-on.

Rasputin

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Re: Dave Ramsey
« Reply #10 on: January 07, 2019, 03:59:18 PM »
By all accounts, he's a good place to start (particularly if you're in debt). And, even if you don't agree with everything he says, doing something is better than doing nothing.

I've heard other people say he's very preachy but it's kind of his shtick. He ties parts of his methods back to Christianity. Not that that's necessarily a bad thing but it can turn some people off.

The JL Collins and YMOYL recommendations above are spot-on.

His preaching is a bit annoying. I expect him to start dancing with snakes or speaking in tongues. I order the YMOYL book on amazon. I want to retire at a normal age with a bit of coin in my pocket.

alcon835

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Re: Dave Ramsey
« Reply #11 on: January 08, 2019, 05:52:26 AM »
Dave Ramsey is solid. There's no one better at getting folks out of a debt and on a budget. His advice falls off pretty hard once you get to the investing stage (especially for FIRE folks). Still, when I find someone interested in getting their finances together, I point them to Dave first. He just has a great way of getting through all the noise and convincing folks that financial fitness is a worthy, achievable cause.

brandon1827

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Re: Dave Ramsey
« Reply #12 on: January 08, 2019, 08:03:09 AM »
Thanks for the clarification everyone. I think what I'm doing currently falls into the snowball method...but my eventual goal will be to shift to the avalanche method. Coincidentally, my highest interest debts are also some of my smaller debts (credit cards)...so I'm knocking those out first before tackling my larger, lower interest debts (student loans).

reeshau

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Re: Dave Ramsey
« Reply #13 on: January 08, 2019, 08:31:05 AM »
Just to be clear, putting emotion aside, the debt avalanche method comes out ahead (based on money in your pocket) reguardless of how high or low the interest rates are.

Itís simple, you put what you can into the debt with the highest interest rate until itís paid off. Then you move onto whatever has the next highest interest rate until thatís paid off. And on and on.

I think Dave's retort to this is twofold:  the psychology of giving you some quick wins (with small debts being more achievable goals) and the fact that his method demands you will be done in about 2 years, which minimizes the compounding advantage of the debt avalanche.  As was said before, psychology over the raw, idealized numbers.

Rasputin

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Re: Dave Ramsey
« Reply #14 on: January 08, 2019, 09:38:26 AM »
Dave Ramsey is solid. There's no one better at getting folks out of a debt and on a budget. His advice falls off pretty hard once you get to the investing stage (especially for FIRE folks). Still, when I find someone interested in getting their finances together, I point them to Dave first. He just has a great way of getting through all the noise and convincing folks that financial fitness is a worthy, achievable cause.

Who do you recommend for investment information? I currently am only in a Vanguard target date fund but am always looking to improve, develop some passive income, etc.

Cromacster

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Re: Dave Ramsey
« Reply #15 on: January 08, 2019, 10:41:02 AM »
Listen to Dave Ramsey's debt payoff advice (more or less), but end here.  Don't listen to any of his investing advice.

Other good resources.

Good website about investing
https://jlcollinsnh.com/stock-series/


Good book about mindset
Your Money or Your Life

Rasputin

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Re: Dave Ramsey
« Reply #16 on: January 08, 2019, 11:54:28 AM »
Would anyone here move their money (IRA) out of the 2045 fund and into VTSAX for long term investing?

35andFI

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Re: Dave Ramsey
« Reply #17 on: January 08, 2019, 12:34:00 PM »
Would anyone here move their money (IRA) out of the 2045 fund and into VTSAX for long term investing?

I will not make any investment advice to you but I will say that I am 27 and happily invest in VTSAX in my IRA account (and my taxable account too).

It's important to look at your entire portfolio and make sure that what you put in your IRA fits in well.

alcon835

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Re: Dave Ramsey
« Reply #18 on: January 09, 2019, 06:47:21 AM »
Dave Ramsey is solid. There's no one better at getting folks out of a debt and on a budget. His advice falls off pretty hard once you get to the investing stage (especially for FIRE folks). Still, when I find someone interested in getting their finances together, I point them to Dave first. He just has a great way of getting through all the noise and convincing folks that financial fitness is a worthy, achievable cause.

Who do you recommend for investment information? I currently am only in a Vanguard target date fund but am always looking to improve, develop some passive income, etc.

I've been building out my investment portfolio for only the last year, so my advice is still growing. Honestly, though, Mr. Money Mustache seems solid if you're investing for FIRE reasons (and if you're not investing for those reasons...why not?)

What's that advice? In a nut shell, I've put all my 401Ks, IRAs, and individual investments going toward VTI and VXUS with an 80/20 split respectively. I plan to transition those to Mutual funds this year, since they'll all be over $10,000 and can transition into Admiral shares (also makes automating the whole thing easier).

If you're looking on advice for things like one-off stocks and timing the market and such, I'm not playing in that realm. I may at some point in the future, but for now I'd like to get my general investing solidly moving toward FIRE while getting a few personal items upgraded (I just bought a home and would like to furnish it!)

35andFI

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Re: Dave Ramsey
« Reply #19 on: January 09, 2019, 08:47:05 AM »
...

I plan to transition those to Mutual funds this year, since they'll all be over $10,000 and can transition into Admiral shares

...

FYI vanguard has recently reduced the minimum from 10k to 3k for many (all?) funds.
VTSAX can now be had for $3,000.

billy b

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Re: Dave Ramsey
« Reply #20 on: January 09, 2019, 01:01:44 PM »
Listen to Dave Ramsey's debt payoff advice (more or less), but end here.  Don't listen to any of his investing advice.

Other good resources.

Good website about investing
https://jlcollinsnh.com/stock-series/

Good book about mindset
Your Money or Your Life

YUP! Totally agree.

Rasputin

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Re: Dave Ramsey
« Reply #21 on: January 09, 2019, 02:00:17 PM »
...

I plan to transition those to Mutual funds this year, since they'll all be over $10,000 and can transition into Admiral shares

...

FYI vanguard has recently reduced the minimum from 10k to 3k for many (all?) funds.
VTSAX can now be had for $3,000.

Would I incur any fees if I took $3,000 of my 2045 fund and bought VTSAX?

35andFI

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Re: Dave Ramsey
« Reply #22 on: January 09, 2019, 03:11:22 PM »
Would I incur any fees if I took $3,000 of my 2045 fund and bought VTSAX?

No fees and as long as it is in your IRA, no taxes either.

alcon835

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Re: Dave Ramsey
« Reply #23 on: January 09, 2019, 07:16:49 PM »
...

I plan to transition those to Mutual funds this year, since they'll all be over $10,000 and can transition into Admiral shares

...

FYI vanguard has recently reduced the minimum from 10k to 3k for many (all?) funds.
VTSAX can now be had for $3,000.

Good to know, Thanks!!

35andFI

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Re: Dave Ramsey
« Reply #24 on: January 09, 2019, 07:20:49 PM »
Happy to help!

phildonnia

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Re: Dave Ramsey
« Reply #25 on: January 16, 2019, 05:56:48 PM »
I listen to DR in the car every day.  I generally like the show, and he seems like a swell guy. 

I know he takes a lot of criticism for focusing on psychology over accepted financial wisdom.  For example, he tells people to pay off debts smallest-to-largest, rather than highest-interest to lowest-interest. You can find plenty of hate for this particular approach, and others.  But he argues (and I think he may be right) that this approach is likely to be more successful when taking human nature into account.  After all, people in debt aren't there because they don't understand interest rates.

His rants against debt culture are spectacular.  I'm always hoping for a good rant. 

But I have a couple of problems with him. 

The main thing is that he always finds ways to work his sponsors into whatever he's taking about.  Like, if someone's asking about insurance, the answer will contain a recommendation for Zander Insurance.  I get it that they need to pay the bills, but other talk hosts manage to read their copy during the breaks.  It gives the whole thing the flavor of an infomercial.  Throw in the occasionaly religious angle, and it starts to sound a little cultish as well.

He also bugs me with his frequent misuse of statistics.  "Our studies show that most millionaires pay off their house in seven years ..." (ok, fine so far) "... therefore paying off your house in seven years is the best way to become a millionaire." (wait, what?  For a self-professed "math nerd", he needs to brush up on Bayesian inference.)

I am among those who doubt that his portfolio has reliably averaged 12% return as he claims.

One difference between DR's philosophy and MMM's, is that DR is actively opposed to early retirement.  That's a philosophical argument, I suppose.

phildonnia

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Re: Dave Ramsey
« Reply #26 on: January 16, 2019, 05:59:30 PM »
I am $80K in debt with student loans and another $20K in a car. I donít really have much more money each month to pay down my loans. I need to unf*ck myself and soon. Iím 42 and would like to impregnate my wife, but kids are expensive too.

DR's advice is not to delay marriage or children because of finances.  That opinion is, obviously, controversial. 

Rasputin

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Re: Dave Ramsey
« Reply #27 on: Today at 10:33:02 AM »
I am $80K in debt with student loans and another $20K in a car. I donít really have much more money each month to pay down my loans. I need to unf*ck myself and soon. Iím 42 and would like to impregnate my wife, but kids are expensive too.

DR's advice is not to delay marriage or children because of finances.  That opinion is, obviously, controversial.

Iím married, but Iíve been pulling out. Iíll probably put a kid in her stomach soon. I got ďTotal Money MakeoverĒ from the library. Iím making changes. Still plugging away. I guess it just takes time to become a rich baller like Dave is. I bet he drives a Benz with spinner and hydraulics.