Poll

Dave Ramsey

Who?
30 (10.9%)
Yeah, he's great - I listen to him all the time!
22 (8%)
Good for beginners
196 (71%)
Total Blow Hard
28 (10.1%)

Total Members Voted: 254

Author Topic: Bullied out of Dave Ramsey Forum  (Read 48248 times)

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Bullied out of Dave Ramsey Forum
« on: March 09, 2014, 03:58:33 PM »
Ah, where to begin... well - DR isn't for everyone, and although I love him and his advice, I feel like they are not necessarily laws that I HAVE to live by.  Try explaining this on their forum (no really, don't). 
So - I was just expressing my personal goals and was hoping for someone to listen and maybe send a kind "good luck" my way.  NO.
So I'm here now. 

Here is my situation:
My husband and I bring in $160K gross and pay mortgage/tax/insurance of $1600 - about the same as a 3 bedroom apartment in this area.
We don't have any debt except for one last car - which will be paid off by this summer.  We have about $4500 leftover a month.
We need to move closer to my husbands work/kids school (right after we bought our house, he got his dream job about 40 minutes away and the kids go to school over there now).  The rentals are about the same as our mortgage over there - so would like to buy a house out that way.  I do NOT WANT TO SELL my current home for many reasons (ex: it's a great home, good energy efficiency, great interest rate 2.54%, great area -will appreciate in value), and I've just always wanted an investment property.  I've read a few books so I'm not going into this blind.  So - like I said - the current house costs me $1600 a month, while other houses in the area like mine (actually not as nice) are renting for $2200 - that's a $600 profit I can put towards repairs, etc.
Problem - I don't have money saved because I've been paying off the cars, but I'm applying for another mortgage anyway.  I didn't think it would be possible, but a couple of people told me I should at least try - and so try I did.  I should know whether or not I am pre-approved by tomorrow afternoon. Yes, it is very important that we relocate for many reasons (my son is having issues in school and my husband cannot take the drive with two little boys in the car and his PTSD).
« Last Edit: March 09, 2014, 06:01:08 PM by rsofiantexas »

spoonman

  • Handlebar Stache
  • *****
  • Posts: 2312
  • Location: PNW
Re: Bullied out of Dave Ramsey Forum
« Reply #1 on: March 09, 2014, 04:16:19 PM »
I think you have valid reasons for pursuing a new place, and it sounds like you can pull it off.  Moving closer to work is a good idea that few people in this boards would deny.  And, well, sometimes you gotta do what you gotta do, which some people may not fully understand (for instance, your husbands long drive and PTSD not mixing well).

Best of luck with the new loan!

Babymoustache

  • 5 O'Clock Shadow
  • *
  • Posts: 90
  • Age: 45
  • Location: New Zealand
Re: Bullied out of Dave Ramsey Forum
« Reply #2 on: March 09, 2014, 05:10:22 PM »
I used to be a fan of Dave Ramsey... For about a month!

Last week after his show where he said "my kids knew that I bought them into this world and I could take them out just as easily. We told them we can make another one just like them..." When he was talking about his kids being afraid to rebel against him. I was shocked and absolutely appalled that he felt justified about threatening his kids lives in this way... Justified enough to even say it on national radio!!

Really, there is absolutely no excuse for behaviour like that in my book and it doesn't surprise me that his forums aren't the greatest either (especially with a leader that thinks like that!). So welcome to mr money mustache where I hope you will find support, advice and friendship. Cheers :)

tariskat

  • Bristles
  • ***
  • Posts: 307
Re: Bullied out of Dave Ramsey Forum
« Reply #3 on: March 09, 2014, 05:21:13 PM »
My mom used to say that too, actually, and I wouldn't call her abusive or particularly wrong. Sometimes kids are little shits. Perhaps you were a perfect child ;-). I listen to DR but sometimes I have to skip half or all of his show when he starts ranting. I think it is a valuable way to start thinking about your finances, though, if you're new to being financially smart. Pay off debts, save some, invest more.

Here we go for a lot more badass actions, like renting houses and moving closer to work and biking.

Anyway, with yearly 160k$ pay, it doesn't seem outrageous to think about renting your current place and getting one close to work, which should also save expenses. You need to look after your family's health, of course- PTSD can't be easy for either of you. Good luck!

Cassie

  • Walrus Stache
  • *******
  • Posts: 5739
Re: Bullied out of Dave Ramsey Forum
« Reply #4 on: March 09, 2014, 05:24:41 PM »
With that level of income I think you will get the mortgage. However, you don't have $ saved up for a down payment so you will end up with PMI. My hubby & I did something similar about 9 years back.  However, a series of circumstances (job layoff, plummeting house prices/rents, etc) caused us to use all of our savings trying to keep afloat and then we had to short sell anyways. So to sum it up it all went bad even though at the time we could afford it. That is my cautionary tale.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #5 on: March 09, 2014, 05:29:36 PM »
I am so grateful for the warm welcome.  Thank you. 
And thank you Cassie for sharing your experience - I'm sorry it worked out the way it did for you :( 
I do realize there is risk involved, but have wanted a rental property for YEARS and need to move now.  I'm not exactly stoked about the PMI, but plan to purchase a less expensive house to live in and have it paid off in a few years.

FIreDrill

  • Handlebar Stache
  • *****
  • Posts: 1044
Re: Bullied out of Dave Ramsey Forum
« Reply #6 on: March 09, 2014, 05:43:21 PM »
I was on the Dave Ramsey forums for a little bit and while it was alright they were way to strict for my taste.... I asked once if I should even bother paying off my 0% car loan cause I would much rather invest and the basic response I got was... "OMG Debt is the Devil!  Pay it off now or we will tell you over and over again how wrong your are!!!!"  It wasn't the best forum but it got me started and out of debt.  I'm so glad I found the MMM forum though, it's much more to my liking.  Welcome to the Dark side, ;).

SS

Norrie

  • Bristles
  • ***
  • Posts: 348
  • Location: The Bible belt
Re: Bullied out of Dave Ramsey Forum
« Reply #7 on: March 09, 2014, 05:54:49 PM »
I think that the Dave Ramsey plan/forums work best for people like me. I was absolutely broke, in over $65,000 in debt, had zero financial literacy, and needed a very clear step by step set of instructions for dealing with it.

Once I cleared away the debt and wanted to learn more about where to go from there, investing, etc., his program fits my needs less and less. I'll never totally hate on DR, because following his advice saved our asses a million times over, but I can't imagine that he'd be a good fit for anyone not wallowing in the bowels of debt. You sound like you have it too far together for him to be helpful.

I've never listened to his radio show, because I find him to be a pompous blow hard, and while I am a member of his forum, I have to tread lightly because I like to swear a lot and take the Lord's name in vain, and that is not the culture that they're striving for.

Cassie

  • Walrus Stache
  • *******
  • Posts: 5739
Re: Bullied out of Dave Ramsey Forum
« Reply #8 on: March 09, 2014, 05:58:12 PM »
I looked at the site but you had to pay to join so I never did. After hearing these stories I am glad that I didn't. With a zero percent car loan I definitely would keep it and save the $.  Sounds like their was no room for independent thought.  YOu will get alot of varying advice depending on who is posting.  Alot of it is helpful and some pretty funny. The one criticism I have of here is that drop cable, sell a car, be a one car family gets repeated alot.  I do get tired of that because different people value different things.  Besides that I really value this site.

SwordGuy

  • Walrus Stache
  • *******
  • Posts: 5777
  • Location: Fayetteville, NC
Re: Bullied out of Dave Ramsey Forum
« Reply #9 on: March 09, 2014, 06:01:39 PM »
$1600 monthly payment for the new "rental" property with rent of $2200?

There are some really good threads on this site that cover the economics of  a good rental property.   Some very good books on it are also recommended in those threads.

I don't think those kind of numbers are likely to work out in your favor, but you should read up and do the math.  Really do the math per the instructions.


rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #10 on: March 09, 2014, 06:05:16 PM »
$1600 is for the property I own now (includes taxes & insurance) which I can rent out for $2200... I plan to purchase something with only a $1300/$1400mortgage for myself. 
How is $600 profit on the rental not going to work out in my favor?  Can you direct me to this "calculator" please?
« Last Edit: March 09, 2014, 06:12:43 PM by rsofiantexas »

iamlindoro

  • Handlebar Stache
  • *****
  • Posts: 1520
    • The Earth Awaits
Re: Bullied out of Dave Ramsey Forum
« Reply #11 on: March 09, 2014, 06:13:15 PM »
$1600 is for the property I own now which I can rent out for $2200... I plan to purchase something with only a $1300/$1400mortgage for myself. 
How is $600 profit on the rental not going to work out in my favor?  Can you direct me to this "calculator" please?

The common reason is because you aren't budgeting for emergencies and other maintenance that can and will come up over the course of any given year in a rental.  You might get extremely lucky and go some time without an emergency, but given enough time, one *will* eventually occur.  If you have a toilet overflow causing damage, pest infestation, you could easily be out your entire profit for one or more years in a single incident.  You might have a long period of vacancy and be out thousands in a couple of months.

One of the "golden" rules of investment properties is that operating expenses + vacancy are 50% of the rent.  The other is that rent should be 2% of the property's price per month (some people are okay with less).  Minimally, your 2200 on a 1600 mortgage fails the 50% rule.

FIreDrill

  • Handlebar Stache
  • *****
  • Posts: 1044
Re: Bullied out of Dave Ramsey Forum
« Reply #12 on: March 09, 2014, 06:16:54 PM »
$1600 is for the property I own now which I can rent out for $2200... I plan to purchase something with only a $1300/$1400mortgage for myself. 
How is $600 profit on the rental not going to work out in my favor?  Can you direct me to this "calculator" please?

The common reason is because you aren't budgeting for emergencies and other maintenance that can and will come up over the course of any given year in a rental.  You might get extremely lucky and go some time without an emergency, but given enough time, one *will* eventually occur.  If you have a toilet overflow causing damage, pest infestation, you could easily be out your entire profit for one or more years in a single incident.  You might have a long period of vacancy and be out thousands in a couple of months.

One of the "golden" rules of investment properties is that operating expenses + vacancy are 50% of the rent.  The other is that rent should be 2% of the property's price per month (some people are okay with less).  Minimally, your 2200 on a 1600 mortgage fails the 50% rule.

I believe the 50% rule is just the mortgage payment and does not include taxes/insurance so it may still be within the limits of the rule if the 1600 is including taxes/insurance.

Check out http://www.biggerpockets.com/renewsblog/2013/06/14/50-percent-rule/ for details on this 50% rule and bigger pockets in general is a great resource for real estate investing.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #13 on: March 09, 2014, 06:20:21 PM »
He says that's for a multifamily investment property - mine is a single family house... should the same rule apply?
Regardless - my mortgage is $1073 so I'm good with the 50% rule.
Yes, Texas has some high property taxes!  I like that website ;)  Thanks for the link!
« Last Edit: March 09, 2014, 06:26:54 PM by rsofiantexas »

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5078
Re: Bullied out of Dave Ramsey Forum
« Reply #14 on: March 09, 2014, 06:43:42 PM »
You might break even over time with this scenario, maybe a little better.  You need to add up all the anticipated operating expenses of the property.  Those include the taxes, insurance, repairs and maintenance, and reserves for replacement of capital items.  Budget new carpet and a full interior paint every 5 to 7 years.  A/C and hot water every 8 to 10 years.  You also need to make an allowance for vacancy between tenants and collection loss for tenants that don't pay.  You may also incur eviction expenses.  From the $2,200, subtract a reasonable vacancy and collection loss (typically 8 to 10 percent for a house in a good area, depending on rental demand).  Then subtract the anticipated operating expenses.  If the house is newer, the near term repairs and maintenance will be low, but will grow over time.  Your property taxes are likely quite high, as you are in Texas.  The net amount is what's left to pay the mortgage P&I and then you.  I would be surprised if you anticipate a net income more than $150 to $200 a month, and an A/C unit or a roof that has not been properly accounted for could wipe that out.

Two percent is typical for multiple units.  I would not accept less than 1.3 to 1.5 percent on a newer home in an area with high taxes unless I saw a rapid appreciation rate.  Minimum guideline on a SFR is typically 1 percent, but that implies low property taxes.  In your case, the leverage at 2.54 percent may be to your benefit, although if the loan is short term, it may kill your cash flow.

Start by reading some of the investing books in the thread here and check out Bigger Pockets as another commenter suggested.  If there is a decent real estate investors' association in your area, attend a few meetings and talk to other investors.

lexie2000

  • Stubble
  • **
  • Posts: 222
Re: Bullied out of Dave Ramsey Forum
« Reply #15 on: March 09, 2014, 06:58:09 PM »
I looked at the site but you had to pay to join so I never did. After hearing these stories I am glad that I didn't. With a zero percent car loan I definitely would keep it and save the $.  Sounds like their was no room for independent thought.  YOu will get alot of varying advice depending on who is posting.  Alot of it is helpful and some pretty funny. The one criticism I have of here is that drop cable, sell a car, be a one car family gets repeated alot.  I do get tired of that because different people value different things.  Besides that I really value this site.

I know that some of the DR strategies do help people (snowballing debt, etc.), but I always got the impression that DR was more about marketing DR stuff than anything else.    Does he really charge money to join a DR forum?   That would be a clear indication to me of who he's interested in helping.

Cassie

  • Walrus Stache
  • *******
  • Posts: 5739
Re: Bullied out of Dave Ramsey Forum
« Reply #16 on: March 09, 2014, 07:06:05 PM »
I looked about a month ago and I can't remember exact details but you had to pay. You could not join the forum without paying.

G-dog

  • Senior Mustachian
  • ********
  • Posts: 14099
Re: Bullied out of Dave Ramsey Forum
« Reply #17 on: March 09, 2014, 07:21:37 PM »
I used to be a fan of Dave Ramsey... For about a month!

Last week after his show where he said "my kids knew that I bought them into this world and I could take them out just as easily. We told them we can make another one just like them..."

That is part of one of Bill Cosby's routines - so some of us would remember a funny tongue-in-cheek comedy routine, but out of context it could sound heartless and abusive.

I hadn't heard of DR before finding MMM recently.  And I've never heard his show or read his books - so for those who have, does this sound like the kind of joke he would make?

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #18 on: March 09, 2014, 07:38:49 PM »
It's $85/Year for the DR website.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #19 on: March 09, 2014, 07:42:42 PM »
You might break even over time with this scenario, maybe a little better.  You need to add up all the anticipated operating expenses of the property.  Those include the taxes, insurance, repairs and maintenance, and reserves for replacement of capital items.  Budget new carpet and a full interior paint every 5 to 7 years.  A/C and hot water every 8 to 10 years.  You also need to make an allowance for vacancy between tenants and collection loss for tenants that don't pay.  You may also incur eviction expenses.  From the $2,200, subtract a reasonable vacancy and collection loss (typically 8 to 10 percent for a house in a good area, depending on rental demand).  Then subtract the anticipated operating expenses.  If the house is newer, the near term repairs and maintenance will be low, but will grow over time.  Your property taxes are likely quite high, as you are in Texas.  The net amount is what's left to pay the mortgage P&I and then you.  I would be surprised if you anticipate a net income more than $150 to $200 a month, and an A/C unit or a roof that has not been properly accounted for could wipe that out.

Two percent is typical for multiple units.  I would not accept less than 1.3 to 1.5 percent on a newer home in an area with high taxes unless I saw a rapid appreciation rate.  Minimum guideline on a SFR is typically 1 percent, but that implies low property taxes.  In your case, the leverage at 2.54 percent may be to your benefit, although if the loan is short term, it may kill your cash flow.

Start by reading some of the investing books in the thread here and check out Bigger Pockets as another commenter suggested.  If there is a decent real estate investors' association in your area, attend a few meetings and talk to other investors.

I'm great with breaking even - I'm not trying to pull in income from this property - only to own it long enough for the renters to pay down the mortgage for me so I can sell it and make a bigger profit.

G-dog

  • Senior Mustachian
  • ********
  • Posts: 14099
Re: Bullied out of Dave Ramsey Forum
« Reply #20 on: March 09, 2014, 07:47:16 PM »
Re:renting out your house
We spent a lot of years renting while in school and getting established, and now live in an area with lots of rental units (duplexes).
My advice, for what it is worth:
1) choose your tenants carefully - do credit checks, background checks, criminal checks, get references, etc.
2) study all the laws around rentals - your rights and obligations  and the renters rights and obligations EXAMPLE: in our area the landlord is required to assess damage and notify you if they are holding part/all your dd within 30 days after you move out. Pour last landlord was a lazy dumbass that never fixed things when notified, I didn't contact him re:returning our dd until AFTER 30 days post- moving out.  He tried to bamboozle us and when we didn't acquiesce, he took us to small claims court (saving me the cost of filing! See, dumbass comment above).  I knew the law, I won.
3) when we were renting, 1 month's rent was usually needed as the damage deposit - how much damage can you fix with that money (this may vary in your area)
4) we had a pet (dog), it can be hard for folks with pets to find rental properties - this may let you charge more if most properties in your area do not allow pets.  If so, you will also get more applicants to pick from.
5) figure out what you include with rent ( gas, electric, w/d, water, sewer, garbage) and what you will require from tenants ( lawn mowing, snow removal, etc.)
6) will you let the tenants paint rooms to fit their tastes?
7) small claims court may be you only recourse with some tenants if you have a problem - but guess what?  Even if you win, the court doesn't actually make them pay, you may just end up with them having a lien against them and never really being able to collect!
8) check up on your property regularly
9) how will you handle leases (monthly, 6 month, year long)?

Good luck, I am sure you can make this work for you.

G-dog

  • Senior Mustachian
  • ********
  • Posts: 14099
Re: Bullied out of Dave Ramsey Forum
« Reply #21 on: March 09, 2014, 07:49:06 PM »
It's $85/Year for the DR website.

Outrageous! IMHCAO. (In my humble cheap ass opinion)

golfer44

  • Stubble
  • **
  • Posts: 195
Re: Bullied out of Dave Ramsey Forum
« Reply #22 on: March 09, 2014, 07:50:37 PM »
Are you sure your house will rent for $2200? What are your sources for this?

I obviously don't know your market, but if 3 bedroom apartments are going for $1600, most people won't pay almost a 40% premium for a house. In my area it's $100-200 higher, usually.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas

Ambergris

  • Stubble
  • **
  • Posts: 184
  • Age: 43
Re: Bullied out of Dave Ramsey Forum
« Reply #24 on: March 09, 2014, 08:30:47 PM »
I think that the Dave Ramsey plan/forums work best for people like me. I was absolutely broke, in over $65,000 in debt, had zero financial literacy, and needed a very clear step by step set of instructions for dealing with it.

Once I cleared away the debt and wanted to learn more about where to go from there, investing, etc., his program fits my needs less and less. I'll never totally hate on DR, because following his advice saved our asses a million times over, but I can't imagine that he'd be a good fit for anyone not wallowing in the bowels of debt. You sound like you have it too far together for him to be helpful.

I've never listened to his radio show, because I find him to be a pompous blow hard, and while I am a member of his forum, I have to tread lightly because I like to swear a lot and take the Lord's name in vain, and that is not the culture that they're striving for.

I sort of think of Dave Ramsey as being for people who are "Debt-oholics" - who can't handle debt responsibly and hence are better off staying away from it altogether.  But like some alcoholics with alcohol, Dave seems to think that because he and his audience are bad with debt no-one could possibly be using it responsibly.

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 1888
  • Age: 40
  • Location: South East Virginia
Re: Bullied out of Dave Ramsey Forum
« Reply #25 on: March 09, 2014, 08:50:06 PM »
Sounds like moving is the right call for you all.  Just make sure the math works for renting vs selling then paying off the car now, getting rid of PMI and putting something into an emergency fund/investments.

Really I would say the rental has to also cover PMI.  Look at the family bottom line, not the rentals bottom line.  Getting a mess of rental houses is a great goal just make sure this is the right time.  Maybe this is the right time-I dont know-do the math.

we on the mmm forums have our own oddities and orthodoxy :-p  welcome

curler

  • Stubble
  • **
  • Posts: 111
Re: Bullied out of Dave Ramsey Forum
« Reply #26 on: March 09, 2014, 08:53:17 PM »
I'm great with breaking even - I'm not trying to pull in income from this property - only to own it long enough for the renters to pay down the mortgage for me so I can sell it and make a bigger profit.

You also should factor in whatever the PMI on the new place would be (because if you sell, then you won't have to be paying PMI).  So break-even on the current house could mean a net loss.

lexie2000

  • Stubble
  • **
  • Posts: 222
Re: Bullied out of Dave Ramsey Forum
« Reply #27 on: March 09, 2014, 09:06:23 PM »
It's $85/Year for the DR website.

That's ridiculous!!

tariskat

  • Bristles
  • ***
  • Posts: 307
Re: Bullied out of Dave Ramsey Forum
« Reply #28 on: March 09, 2014, 09:20:15 PM »
I used to be a fan of Dave Ramsey... For about a month!

Last week after his show where he said "my kids knew that I bought them into this world and I could take them out just as easily. We told them we can make another one just like them..."

That is part of one of Bill Cosby's routines - so some of us would remember a funny tongue-in-cheek comedy routine, but out of context it could sound heartless and abusive.

I hadn't heard of DR before finding MMM recently.  And I've never heard his show or read his books - so for those who have, does this sound like the kind of joke he would make?

Yes, I listened to that episode. He made the joke. It sounds like him.  I didn't find it all that outrageous, more amusing.

Nords

  • Magnum Stache
  • ******
  • Posts: 3198
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Bullied out of Dave Ramsey Forum
« Reply #29 on: March 09, 2014, 11:07:36 PM »
It's $85/Year for the DR website.
Hunh.  That doesn't seem to move people out of debt-- quite the opposite.

I have to admire the man's chutzpah.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3304
Re: Bullied out of Dave Ramsey Forum
« Reply #30 on: March 09, 2014, 11:13:10 PM »
Keep in mind that the various rental rules can be bent a bit if:
-You are willing to gamble on appreciation.
-You are hands-on and live close enough that you can manage the property yourself without wasting a ton of your time.
-You are capable of fixing minor problems yourself.

Also remember that selling the house down the road might not net you as much as you think - realtor commissions, closing costs of various kinds, staging and touchup, vacancy while the house is on the market, plus taxes (if you wait more than a few years to sell - you've got to use it as your primary residence for 2 out of the last 5 years to avoid capital gains) will take a big bite. So even if your market is appreciating at a pretty great rate, you might not make a profit selling in a year or two, especially if you're paying PMI the whole time on the new house.

With all that said, it sounds like the move makes sense for you either way so you can treat this as an experiment to some extent. We managed to end up with 2 rental properties (one because I was being an idiot and didn't do my homework, and one because we needed to move and didn't want to try to deal with the stress of selling while expecting a new baby imminently) which basically do no better than break even, so I know firsthand how expenses can add up for a rental. If the market is decent to sell and you're sure you want to move, I would probably sell if I were you.

-W

lackofstache

  • Bristles
  • ***
  • Posts: 313
Re: Bullied out of Dave Ramsey Forum
« Reply #31 on: March 10, 2014, 07:00:33 AM »
We're in a similar situation in regards to moving, but I'm going to sell our current house as I'm not comfortable with too much equity and no capital. In your situation, I'd sell the current house now, use the proceeds for a down payment and getting out of debt and then focus on getting a rental down the road. Paying PMI so you can "make more money later" on your current house doesn't seem like a risk I'd take.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #32 on: March 10, 2014, 07:38:04 AM »
I really appreciate all of the great feedback.  You've given me a lot to think about!

LalsConstant

  • Bristles
  • ***
  • Posts: 439
Re: Bullied out of Dave Ramsey Forum
« Reply #33 on: March 10, 2014, 08:24:32 AM »
I've said this before and will say it again probably.  Dave Ramsey is an individual who markets a very particular, very niche skill: he is really good at getting massive numbers of people motivated to get out of debt.  Beyond that, he's not really good at anything else.  His investment advice is terrible, etc.

In a better world where people (like me) behaved more rationally, he wouldn't be famous or wealthy because no one would need his service.

Regarding the "I brought you into this world I can take you out" line, some of you people are way too sensitive.  My parents told me that multiple times!  Children have absolutely no perspective on the world or what their parents do for them.  If my parents hadn't laid down the law with me when I was knee high to a grasshopper I'd be absolutely worthless now.

I read "The Total Money Makeover" back when I was drowning in debt myself.  I spent $30 on the book.  Even now that I've got my act together (modern me wouldn't spend $30 on something that's free), I don't regret spending that money at all because the benefits of doing so are much more than the thirty bucks I am out.

For getting out of debt, he is the king.  Dave Ramsey has a way of making people get excited about debt reduction.  Turning learned helplessness into enthusiasm is incredibly valuable and I'll defend his ability and practice of doing this for people all day long.

And while I agree with others that $85 for a year membership isn't trivial, but think about this.  If you're such a mess you need someone to be a cheerleader for you (and I was such a mess at one time), having a support community going through the same thing you are could be incredibly valuable.

I think no less of someone paying $85 for help with their personal finances than I do of someone paying $85 for an eye exam.  Sometimes you just need a particular service other people don't for personal wellness and there's no shame in it.

Now I found that community for free in the personal finance sphere, but I understand the desire for convenience and not interacting with the general population of internet users.

You also have to consider Ramsey's site is going to be full of recovering debtors.  A more general site may not have that kind of focus.  I'm a recovered debtor trying to become a saver, so this site is more appropriate to me now, but there was a time MMM would have gone completely over my head.

What I don't like about Dave Ramsey is he tries to be this comprehensive guru, and that's where I feel he needs to step off.  Getting people out of debt, motivating them to get out of debt, etc. is great and I have no problems with him monetizing his products and services because they are a net gain to individuals who use them properly.

It's his nonsense about "invest in good growth funds" that irks me.

As far as this situation, personally I would not get the mortgage, but I am highly debt adverse and since your mind is made up, I have no useful advice on the actual problem because I wouldn't do that myself. 

I will say this doesn't sound like a half baked idea and you're definitely going to have to do something based on the circumstances.  I don't think it's a completely awful option even if I wouldn't do it myself.

That's pretty much the problem with and a feature of Dave Ramsey, he can't step outside his own frame of reference and acknowledge sometimes life doesn't align to ideology. 

I don't think that's necessarily all bad, there are for example alcoholics for whom the best course of action is to never, ever drink any alcohol ever again.  Similarly there are people who, without Dave Ramsey, would probably regress to being debtors.

But there's definitely a place for a more balanced perspective too.  I feel like I've "outgrown" Dave Ramsey but his core concepts are still things I keep doing.

mh1361

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Bullied out of Dave Ramsey Forum
« Reply #34 on: March 10, 2014, 08:27:26 AM »
My friend is going through the DR Financial Peace curriculum or whatever it's called right now, and I just can't get over the debt snowball approach. Personally, I think it undermines fundamental financial knowledge. He's helping people get out of holes, sure, but they aren't learning the ins and outs. More just following blindly it seems. Telling someone to pay off a 2% loan instead of a 20% loan because the balance is smaller? I can't really get behind that. Plus, I've heard he recommends some poor portfolio choices as far as expense ratios go.

zachd

  • Stubble
  • **
  • Posts: 102
Re: Bullied out of Dave Ramsey Forum
« Reply #35 on: March 10, 2014, 09:08:58 AM »
$1600 monthly payment for the new "rental" property with rent of $2200?

There are some really good threads on this site that cover the economics of  a good rental property.   Some very good books on it are also recommended in those threads.

I don't think those kind of numbers are likely to work out in your favor, but you should read up and do the math.  Really do the math per the instructions.

I'm interested in this also if you could share some links!
Thanks

lexie2000

  • Stubble
  • **
  • Posts: 222
Re: Bullied out of Dave Ramsey Forum
« Reply #36 on: March 10, 2014, 09:24:42 AM »
My friend is going through the DR Financial Peace curriculum or whatever it's called right now, and I just can't get over the debt snowball approach. Personally, I think it undermines fundamental financial knowledge. He's helping people get out of holes, sure, but they aren't learning the ins and outs. More just following blindly it seems. Telling someone to pay off a 2% loan instead of a 20% loan because the balance is smaller? I can't really get behind that. Plus, I've heard he recommends some poor portfolio choices as far as expense ratios go.

I like the snowballing debt principle, but I agree that paying the debt with the lowest balance first rather than the debt with the highest interest rate is financially inefficient.  Obviously, it's a psychological ploy to provide encouragement, but makes no fiscal sense whatsoever.

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 1888
  • Age: 40
  • Location: South East Virginia
Re: Bullied out of Dave Ramsey Forum
« Reply #37 on: March 10, 2014, 09:44:22 AM »
Quote
It doesn't really seem outrageous when you consider that MMM is offering a conference that would be far more expensive for most of us to attend.

But if you had any real debt and paid to go to Argentina you would get no end of shit from mmm.

zachd

  • Stubble
  • **
  • Posts: 102
Re: Bullied out of Dave Ramsey Forum
« Reply #38 on: March 10, 2014, 09:48:45 AM »
I started out with DR peace whatever at the end of last year.  Another plus is that he has the videos and you can watch them with your S.O. and be on the same page about what he is saying and advising you to do.  I can definiately say had we not listened to his advice and made a budget like he said we would have continued to be in bad shape financially.  We have really turned things around now. 

I did know in the back of my mind that probably I was not going to pay off my smallest balances first because I don't need the motivation or moral victory or whatever that comes with paying off the smaller ones first.

In all fairness, people on this forum might not be mean, but certainly seem to pile on sometimes like "OMG you pay $500 for groceries for two people, we have 3 kids and only pay $225!"
Most people here seem very single minded about following a very specific path laid down by MMM as if that path was the "one best way" to get from point A to point B.

I do enjoy the forums please don't bully me out though.

MooseOutFront

  • Pencil Stache
  • ****
  • Posts: 510
  • Age: 39
  • Location: Texas
Re: Bullied out of Dave Ramsey Forum
« Reply #39 on: March 10, 2014, 10:22:38 AM »
How stable is that big $160k income?  This is the most important question to me.  So long as you're making that kind of coin then this can't really go too wrong, but if that's variable then the rental could be an issue.

How much equity do you have in your current home, and how long do you have that 2.54% interest rate locked in for?

I know the DFW market here is currently strong so I would be inclined to sell and avoid PMI. Though I certainly understand the desire not to get rid of a house that you have financed so cheaply.  I'll be having a similar discussion when and if we move.

rsofiantexas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: North Dallas
Re: Bullied out of Dave Ramsey Forum
« Reply #40 on: March 10, 2014, 10:42:00 AM »
UPDATE:  Very exciting news!  NO PMI, because we are both disabled veterans and can get separate VA loans and they just confirmed we can use both at the same time!  No processing fee because we are 70% disabled.  They are pulling credit now - which is always high 700's. 

So - to answer MooseOutFront, the 160k is pretty stable.  $3200/mo. is guaranteed (retired army).  My husband's job is amazing and they love him and there is only ONE of him.  He can transfer anywhere if needed and make about the same.  He's charismatic and everyone wants him. 
Me on the other hand, I'm horrible at job interviews and work further away than I would like, but I make less than him and I'm a teacher with a Master's degree so I can find SOMETHING - even if it's just substitute jobs while looking.

mh1361

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Bullied out of Dave Ramsey Forum
« Reply #41 on: March 10, 2014, 10:55:53 AM »
My friend is going through the DR Financial Peace curriculum or whatever it's called right now, and I just can't get over the debt snowball approach. Personally, I think it undermines fundamental financial knowledge. He's helping people get out of holes, sure, but they aren't learning the ins and outs. More just following blindly it seems. Telling someone to pay off a 2% loan instead of a 20% loan because the balance is smaller? I can't really get behind that. Plus, I've heard he recommends some poor portfolio choices as far as expense ratios go.

But not everyone has the ability for the inclination to go deep into PF material. I don't use DR myself, and I didn't follow his philosophy, but I've recommended it to people who have used it to some success. There's a place for an idiot-proof philosophy people can follow blindly. In my experience it's best for people who are bad at lifestyle change. Some people can sustain motivation. Others can't. Some people can delay gratification easily, others can't. If you can't stay motivated and can't delay gratification, paying off small debts at low interest is going to be a lot more psychologically powerful that steadily chipping away at the larger, higher interest one. On the other hand, if you're the kind of person who can follow a diet, you don't need the debt snowball. DR's advice works really reall for people whose financial state is full of self-inflicted gunshot wounds. As a group, those folks are less capable of delayed gratification, which is part of what got them into this mess in the first place.

Totally agree.

mh1361

  • 5 O'Clock Shadow
  • *
  • Posts: 67
Re: Bullied out of Dave Ramsey Forum
« Reply #42 on: March 10, 2014, 10:57:54 AM »
Quote
It doesn't really seem outrageous when you consider that MMM is offering a conference that would be far more expensive for most of us to attend.

But if you had any real debt and paid to go to Argentina you would get no end of shit from mmm.

+1

Not to mention when MMM says, "A trip like this is obviously suitable for only a small minority of readers of this blog about living an efficient life. While the retreat is not designed to sell anything and Iím accepting no pay myself*, the price of $1900 is still a non-trivial amount of money to spend for a vacation. If youíre in debt or otherwise struggling, a trip like this will not solve your problems, and I donít want anyone to ever feel they have to pay to meet me or ask for advice. I hope to continue to host less formal gatherings in various places that are more affordable and convenient to reach than Ecuador, plus you could always just stop by Longmont, Colorado to say ďHiĒ on your next trip through here."

nottoolatetostart

  • Bristles
  • ***
  • Posts: 426
Re: Bullied out of Dave Ramsey Forum
« Reply #43 on: March 10, 2014, 11:11:50 AM »
Just wanted to post something pro-Dave Ramsey.

I found him in 2010 after we bought our house and newly married. With the SL's, mortgage, and a small car loan, it totaled out a little more than $200K. I signed up for the forum (worked out to $5-$6/month with a special offer I received). Found a lot of gaps in spending, learned about YNAB, and got our married financial house in order. While we didn't follow all the advice (continued to contribute to 401k, still used credit cards, didn't always snowball our debts), it still got us on the right track. That's where we were at that time in our life. The forum membership paid for itself and then some many times over.....didn't renew though when my membership renewal date came up. I will always credit DR to the initial progress we made.

Now, 3.5 years later from discovering DR, we now have 25x our basic expenses and only owe $40K on our mortgage. We are 33 and 34 years of age. We've plugged even more holes in our budget with MMM.

DR's message is great for those that need something simple....if I discovered MMM first, I would have been like WTF and never followed along. DR's baby steps is a great marketing message, no matter how you slice it. I have tried to get my Mom turned on to DR and honestly, would be thrilled if she was there. 

DR is like the first step of junior varsity and MMM is varsity. They are apples and oranges.

Minor edit on the year we found DR

Mister Fancypants

  • Bristles
  • ***
  • Posts: 296
  • Age: 42
  • Location: New York
Re: Bullied out of Dave Ramsey Forum
« Reply #44 on: March 10, 2014, 11:28:06 AM »
Here is my situation:
My husband and I bring in $160K gross and pay mortgage/tax/insurance of $1600 - about the same as a 3 bedroom apartment in this area.
We don't have any debt except for one last car - which will be paid off by this summer.  We have about $4500 leftover a month.
We need to move closer to my husbands work/kids school (right after we bought our house, he got his dream job about 40 minutes away and the kids go to school over there now).  The rentals are about the same as our mortgage over there - so would like to buy a house out that way.  I do NOT WANT TO SELL my current home for many reasons (ex: it's a great home, good energy efficiency, great interest rate 2.54%, great area -will appreciate in value), and I've just always wanted an investment property.  I've read a few books so I'm not going into this blind.  So - like I said - the current house costs me $1600 a month, while other houses in the area like mine (actually not as nice) are renting for $2200 - that's a $600 profit I can put towards repairs, etc.
Problem - I don't have money saved because I've been paying off the cars...

@rsofiantexas - Just to be the devilís advocate for a moment, you clearly make a nice income and have very little debt at the moment. You did say your husband got the dream job right after you bought your current house but haven't said how long ago you bought the house, so we have no idea how much equity you have in it. You also haven't said what type of mortgage you have just the rate, is it an ARM or FRM is it 15 or 30 years if itís an FRM?

Anyway the reason I bring up these points, is you seem very eager to take on a 2nd mortgage on a second house in the anticipation of renting out your current home which may or may not meet the 2% or 50% rule. You don't have any actual real estate investing experience so you are doing back of the napkin calculations and trusting the people on the forum here are saying it works out.

I think you need to step back for minute and think about it, how much equity do you have in your current home is it less than 20%? You are looking to buy a new home with no down payment and rent out the existing home, you clearly were a Dave Ramsey follower so even though you have no debt now only the last car loan, you have implied you previously did and were snowballing it away.

Why so eager to get back into debt? You have no savings to use for a down payment, so you have no savings in general. You are both VA disabled so you probably have some type of government pension, do you have retirement savings? You have an excess of $4500 a month and no savingsÖ Where has it gone?

Personally I think even though you have said you do "NOT WANT TO SELL" you should seriously consider it... Invest in real estate later when you have investment capital.

Once again just trying to be the devilís advocate...

Best of luck,
-Mister FancyPants

MooseOutFront

  • Pencil Stache
  • ****
  • Posts: 510
  • Age: 39
  • Location: Texas
Re: Bullied out of Dave Ramsey Forum
« Reply #45 on: March 10, 2014, 11:31:39 AM »
Yeah we started with reading and implementing the TMMO in June of 2009 and I still listen to the radio show on iheartradio with some regularity.  Dave certainly did us a lot of good.

But my opinion of him continues to erode, and I don't recommend him to anyone anymore.  His investment advice is bad.  His advice to only save 15% is bad, particularly in light of him justifying it by planning on 12% returns.  And his personal greed just rubs me wrong.  He has a hugely successful show and business, more money than his kids can spend, and yet he self promotes and cross-sells products and seminars more now than ever.  It's obnoxious to listen to.  His "Ramsey Personalities" are a joke, as if he thinks he'll be able to just hand this thing off to his kids some day.  He's so focused on leaving a legacy that he's in denial that this business dies with him.  That plus his twitter rants where he kids himself into believing that the comments don't bother him while spending a whole segment ranting and calling the people that razz him on twitter names.  it makes him look like an out-of-touch old man and somebody on his staff needs to tell him to get off social media because he can't handle it.

Sorry.  Looks like I'm ranting now.

MayDay

  • Magnum Stache
  • ******
  • Posts: 4017
Re: Bullied out of Dave Ramsey Forum
« Reply #46 on: March 10, 2014, 11:35:29 AM »
I will chime in that DR, although I personally am not a huge fan for myself and due to the god motivation, was a huge help for my mother.  She and my dad always struggled a bit, initially due to very very high student loans, and later (I think) due to the bad habits they picked up along the way.  For example my mother always had multiple store credit cards with small balances.  But they totaled a thousand or so, and she carried them for at least ten years- can you imagine the interest rates she was paying?  DR got her to pay off all her stupid little CC balances, and even if the class (she took a class at her church) did nothing else, it was worth it for that reasons. 

My parents have a decent amount saved, enough to have a not-eating-cat-food retirement, but they need more.  They are resistant to talking about it or doing anything about it, but at least they have the CC's paid off, and maybe that is the best they will ever do.

daymare

  • Bristles
  • ***
  • Posts: 463
  • Age: 30
Re: Bullied out of Dave Ramsey Forum
« Reply #47 on: March 10, 2014, 02:04:39 PM »
So I have a love/hate thing going with Dave Ramsey.  I am a huge reader, I'll read anything and probably find lots that is useful or interesting, and I read and enjoyed his books.  He's terrific at no-nonsense motivation for those heavily in debt, especially on incomes that are quite low.  His persona/personality and history (bankruptcy) make him likeable and approachable to many.  His FPU classes have undoubtedly helped a lot of people -- it would be hard to argue, I think, that he hasn't done lots of net good in the world.

That said, I don't respect his intelligence and find a lot of his advice to be factually wrong or illogical.  His religious/misogynistic crap really gets to me too -- most recently, when talking about the NJ teen who sued her parents, he starts ranting about people not accepting personal responsibility, being wusses towards their kids (so far so good ... I too dislike entitlement and most certainly don't find it to be a useful attitude in life).  Then his rant continues into how he made sure his daughters weren't out dressed as streetwalkers when teens, that he made sure they were dressed in a way that men looked at their eyes.  Makes my blood boil!  Boys will be boys, their poor behavior is the problem of women, clearly. 

One time a man called about student loans, and mentioned living with his fiance at her parents' place for awhile to save more money.  Dave goes on a rant about how that's so wrong, why wouldn't you just get married right away?  His interest in other people's sex lives is unreal.  His interest in his kids' sex lives (aka his daughters' purity before marriage) also bothers me!  Also, quit saying 'kick the old woman (Sallie Mae) out of the house!  They're all idiots!' to the idiots who took out huge loans for bullshit degrees, while making them feel smart and good.  Also, congress doesn't just 'not know how to balance a budget', how does anyone win when you dumb down a complicated situation into something incorrect and simplistic?

That said, I do listen to his show's podcast daily, and find myself agreeing with some of what he says sometimes ...

Cheddar Stacker

  • Magnum Stache
  • ******
  • Posts: 3714
  • Age: 41
  • Location: USA
Re: Bullied out of Dave Ramsey Forum
« Reply #48 on: March 10, 2014, 02:53:12 PM »
Yeah we started with reading and implementing the TMMO in June of 2009 and I still listen to the radio show on iheartradio with some regularity.  Dave certainly did us a lot of good.

But my opinion of him continues to erode, and I don't recommend him to anyone anymore.  His investment advice is bad.  His advice to only save 15% is bad, particularly in light of him justifying it by planning on 12% returns.  And his personal greed just rubs me wrong.  He has a hugely successful show and business, more money than his kids can spend, and yet he self promotes and cross-sells products and seminars more now than ever.  It's obnoxious to listen to.  His "Ramsey Personalities" are a joke, as if he thinks he'll be able to just hand this thing off to his kids some day.  He's so focused on leaving a legacy that he's in denial that this business dies with him.  That plus his twitter rants where he kids himself into believing that the comments don't bother him while spending a whole segment ranting and calling the people that razz him on twitter names.  it makes him look like an out-of-touch old man and somebody on his staff needs to tell him to get off social media because he can't handle it.

Sorry.  Looks like I'm ranting now.

+1. The only thing good I'll say about DR's ways, are that it got him onto Oprah which got my wife interested in finance for the first time ever. This helped a bit for a year or so with our spending, but it didn't last too long. While we were doing the DR stuff I saw through all the flaws in his logic and just did my own thing - paid the highest interest rate first, kept using credit, etc.

I'm glad we stumbled across it when we did, but I'm very glad we've moved on to bigger/better things.

Good luck with the 2 houses OP.

Nords

  • Magnum Stache
  • ******
  • Posts: 3198
  • Age: 59
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Bullied out of Dave Ramsey Forum
« Reply #49 on: March 10, 2014, 11:30:48 PM »
UPDATE:  Very exciting news!  NO PMI, because we are both disabled veterans and can get separate VA loans and they just confirmed we can use both at the same time!  No processing fee because we are 70% disabled.
That's incredible-- I didn't know the program allowed you to do that.  I'm sorry you guys are 70%, but I hope the VA loan helps make life better.

And his personal greed just rubs me wrong.  He has a hugely successful show and business, more money than his kids can spend, and yet he self promotes and cross-sells products and seminars more now than ever.  It's obnoxious to listen to.
To put it mildly:
http://retireearlyhomepage.com/daveramsey.html