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 48302 times)

homehandymum

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Re: Bullied out of Dave Ramsey Forum
« Reply #50 on: March 11, 2014, 02:14:12 AM »
For those who asked about the calculators for rental investments, the MMM article that sprang to mind was this one, where he gets schooled on the 50% and 2% rules (which I'd never heard of).

http://www.mrmoneymustache.com/2011/10/10/lets-buy-a-foreclosure-episode-2-what-is-the-50-2-rule/

The Rental Properties threads probably has a whole lot more information, but I haven't spent any time there as that is not my thing at present.

http://www.mrmoneymustache.com/forum/real-estate-and-landlording/

KBecks

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Re: Bullied out of Dave Ramsey Forum
« Reply #51 on: March 11, 2014, 06:49:37 AM »
I listen to the Dave Ramsey podcast of the show but didn't even know they had forums.   But, forums are not always great places to hang out.  You need to sift through things and really decide for yourself what works for you.  It's your life!  :)   

Do the numbers work on your current home to make it a rental?   Make sure it will be profitable and not a drag on you.  Best of luck!   

arebelspy

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Re: Bullied out of Dave Ramsey Forum
« Reply #52 on: March 11, 2014, 07:23:33 AM »
http://www.mrmoneymustache.com/2011/10/10/lets-buy-a-foreclosure-episode-2-what-is-the-50-2-rule/

Hah, I forgot about that article.  Apparently he calls me "Joe" there, rather than ARebelSpy, as in subsequent articles.

This recent discussion, especially if it gains more traction, might help illuminate more on rental properties and the various strategies:
http://www.mrmoneymustache.com/forum/real-estate-and-landlording/if-there-was-an-mmm-real-estate-strategy-what-would-it-look-like/
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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rsofiantexas

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Re: Bullied out of Dave Ramsey Forum
« Reply #53 on: March 11, 2014, 08:57:57 AM »
FancyPants - Yes, we make a nice income but before that I was a stay at home mom and graduate student - so to answer your question about where all the money has been going... grade school.  But done now and it's all paid off.

Mister Fancypants

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Re: Bullied out of Dave Ramsey Forum
« Reply #54 on: March 11, 2014, 10:10:21 AM »
FancyPants - Yes, we make a nice income but before that I was a stay at home mom and graduate student - so to answer your question about where all the money has been going... grade school.  But done now and it's all paid off.

I just would be cautious of owning 2 homes with little equity and no savings.

It's a scary place to be, I always like to have a cushion or access to liquidity.

Have you considered a HELOC against the original home to use a as down payment on the new property? Might eat up your cash flow but might also provide you with options....

Just a thought...

Good luck,
-Mister FancyPants

GuitarStv

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Re: Bullied out of Dave Ramsey Forum
« Reply #55 on: March 11, 2014, 11:47:22 AM »
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.

Do I have to pay all at once, or can I pay in installments?

FIreDrill

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Re: Bullied out of Dave Ramsey Forum
« Reply #56 on: March 11, 2014, 12:09:47 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.

Do I have to pay all at once, or can I pay in installments?

Aren't you lucky! They have an installment plan! For a small upcharge, of course.

https://www.mytotalmoneymakeover.com/join


But if you pay for a year up front they will give you FREE STUFF!!!!! :P

homehandymum

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Re: Bullied out of Dave Ramsey Forum
« Reply #57 on: March 11, 2014, 02:17:11 PM »
http://www.mrmoneymustache.com/2011/10/10/lets-buy-a-foreclosure-episode-2-what-is-the-50-2-rule/

Hah, I forgot about that article.  Apparently he calls me "Joe" there, rather than ARebelSpy, as in subsequent articles.

Is that you?  Well, you learn something new every day.  I remembered the article because I only discovered MMM a couple of months ago and spent weeks blasting through all the articles from start to present.  :)

Mama Mia

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Re: Bullied out of Dave Ramsey Forum
« Reply #58 on: March 11, 2014, 04:44:20 PM »
I have to give DR some credit for starting me down the path to paying off our debts.  After reading about him online I borrowed his book from the library.  I've never herd him speak, nor have I watched any of his videos or taken any of his courses.   I needed the baby steps as a simple, easy to follow, free plan to get me out of debt however I was smart enough to know to tackle the highest interest rates first.  So instead of ordering my debt from smallest to largest I did so from highest to lowest percentage rate.  I took a break from using the credit cards while paying them off.  I'm back to using the card that earns me points and it gets paid off every month.  We have started contributing more to DH's 401k, opened Roth IRA, started stashing money into categories for future purchases.  I wish that there was a system similar to DR for beginning investing.  I've read all of MMM articles and I'm hooked to the forums but I'm not nearly as schooled on the topic as I wish I was.  I'm appalled to hear that he charges to use his forum!!!  That is insanity! 
« Last Edit: March 12, 2014, 06:38:48 AM by Mama Mia »

Nords

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Re: Bullied out of Dave Ramsey Forum
« Reply #59 on: March 11, 2014, 07:40:44 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.

Do I have to pay all at once, or can I pay in installments?
If you have to ask the question then nobody will admire your chutzpah...

ender

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Re: Bullied out of Dave Ramsey Forum
« Reply #60 on: March 11, 2014, 08:27:14 PM »
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.

Keep in mind most people don't get into loads of consumer debt by following fiscal sense, either.

GuitarStv

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Re: Bullied out of Dave Ramsey Forum
« Reply #61 on: March 12, 2014, 06:28:57 AM »
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.

Do I have to pay all at once, or can I pay in installments?

Aren't you lucky! They have an installment plan! For a small upcharge, of course.

https://www.mytotalmoneymakeover.com/join


But if you pay for a year up front they will give you FREE STUFF!!!!! :P

Holy crap.  I thought I was making a funny, but the website to get people out of debt actually has a plan to put people who sign up into more debt.  What is this queasy feeling?

golfer44

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Re: Bullied out of Dave Ramsey Forum
« Reply #62 on: March 12, 2014, 10:22:10 AM »
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.

Do I have to pay all at once, or can I pay in installments?

Aren't you lucky! They have an installment plan! For a small upcharge, of course.

https://www.mytotalmoneymakeover.com/join


But if you pay for a year up front they will give you FREE STUFF!!!!! :P

Holy crap.  I thought I was making a funny, but the website to get people out of debt actually has a plan to put people who sign up into more debt.  What is this queasy feeling?

Capitalism.

Simple Abundant Living

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Re: Bullied out of Dave Ramsey Forum
« Reply #63 on: March 12, 2014, 11:18:05 AM »
I'm still in the information-gathering stage of potential real estate investment. But in this case, I would listen to the seasoned investors on this forum. I don't see how the OP's home makes the cut for a good income property. I would evaluate it as if you didn't already own it and decide if you would purchase it for a rental. I personally wouldn't. Too much risk for too little profit.

As a side note, I find it interesting that all the people I've noticed writing to ask if their existing home would make a good rental, are answered with a resounding "no". Maybe the reasons we chose a house to live in are not the same reasons an investor chooses a house to rent.

arebelspy

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Re: Bullied out of Dave Ramsey Forum
« Reply #64 on: March 12, 2014, 11:36:21 AM »
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

soccerluvof4

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Re: Bullied out of Dave Ramsey Forum
« Reply #65 on: March 12, 2014, 11:48:07 AM »
I think he does good for some but to many other/better resources if you look around.

Storypage

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Re: Bullied out of Dave Ramsey Forum
« Reply #66 on: March 12, 2014, 12:45:37 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?

I think it will work out fine. Keep in mind, it will only keep getting better as rental prices in your area go up, which they almost always do. When we started renting ours out (we did something similar to what you are), we were breaking even with payments, utilities, taxes, etc. Now, rent has doubled and we pocket a nice profit every month.

Add to that our house has gone up considerably in value, we are very happy with the decision to keep it.

Storypage

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Re: Bullied out of Dave Ramsey Forum
« Reply #67 on: March 12, 2014, 12:48:07 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.

And Ramsey is a huge fan of Bill Cosby, so that is likely where he got it from. I can assure you he isn't serious, and his kids don't take it seriously.


Cassie

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Re: Bullied out of Dave Ramsey Forum
« Reply #68 on: March 12, 2014, 10:31:43 PM »
Unless house prices with rents take a big downsize!  Been there & done that. YOu really have to think about what might happen and how much $ you have to weather the storm.

MrCash

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Re: Bullied out of Dave Ramsey Forum
« Reply #69 on: March 12, 2014, 10:45:45 PM »
I'm a big fan of Dave Ramsey, but there are a few issues in which I disagree.  Mainly his investment advice and his reluctance to talk about expense ratios, index funds and other investment principles that I believe are essential.

Immerito

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Re: Bullied out of Dave Ramsey Forum
« Reply #70 on: March 17, 2014, 09:05:56 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).

I'm not sure which of these remarks you consider to be bullying in response to your post:

"We want to move closer to hubby's work but I refuse to sell our house because of many reasons (great house, will be worth a lot more in the future, always wanted an investment property, etc.). So, I just put in my application for another mortgage - with no money down - and without selling this one. We will see what happens! I'll know something by tomorrow afternoon. "

Was it this one?

"IMO, you are on a slippery slope to being over your head. You aren't out of BS2, you aren't willing to sell your cars for less expensive ones, and you want to take on another mortgage with no down payment? Can you save up a sinking fund for your current home in case anything breaks down or gets damaged by the renters? Will you have a sinking fund in case your renters don't pay 1 month? 3 months? Or if you can't get a renter? Why not rent for 1 year to make sure this is an area you want to be in? What is the rush to buy right now? I understand WHY you want to move and agree with it for your child's sake. But to buy a home with no down payment, given the baby step you are in, and given your unhappiness with your job, it seems very dangerous.

I really really hope everything works out for you. Because you are taking a big gamble."

Or this one?

"Before DR my hubby and I also bought a house without having sold our previous one. We had a buyer, but their credit wasn't quite good enough for the bank to give them the loan. The bank made them do six months of "credit repair." They rented our house in the meantime, so we thought we were ok to go ahead and buy. Well, the closing kept getting pushed further and further out, and we were losing money every month. Finally the house was sold...a full year after it was supposed to.

Looking back, I hate thinking about what we could've done with the money we lost every month. Your plan may seem foolproof to you, but what if something happens and you go through unemployment? Have an accident? Then you're on hook for two mortgages. It's just such a big risk. We were lucky that our situation didn't turn out worse than it did."

Or this one?

"Uh, you're going to rent out a house with no emergency fund. I don't understand what needs explaining. If you have to move for whatever reason what will you do then? Get a third no money down mortgage? What happens when your renters stiff you on rent or the hot water heater needs to be replaced and it'll cost 4k? You have no savings. Also, remember you probably have to pay taxes on the rent you receive and that mortgage is no longer deductible. "

And those are just from the first page.

It seems you have decided what you desire from strangers on the Internet is validation, not constructive criticism, and that is fine.

But playing the victim card because you didn't like the replies of people who can see the iceberg ahead and are warning you lest you sink your luxury liner? A bit much.

I encourage you to rethink your plan. There are some fine people here on both forums who are concerned for you because they can see the risks inherent in this plan. You may think you can steer in time to avoid the iceberg---but plenty of other folks have thought the same thing, and their families have suffered financially for it.

I hope you will not be one of them.

Take care,





Source:

https://www.mytotalmoneymakeover.com/modules/fusetalk3/forum/messageview.cfm?catid=9&threadid=483734&STARTPAGE=1&FTVAR_FORUMVIEWTMP=Linear

T-Rex

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Re: Bullied out of Dave Ramsey Forum
« Reply #71 on: March 17, 2014, 10:08:16 PM »
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!!

That is a pretty common quote for frustrated parents to say to / about their kids in the United States. It is meant to be a joke.

stash4cash

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Re: Bullied out of Dave Ramsey Forum
« Reply #72 on: March 18, 2014, 09:47:20 AM »
Unless house prices with rents take a big downsize!  Been there & done that. YOu really have to think about what might happen and how much $ you have to weather the storm.

Curious to hear more details about your story Cassie if you are willing to share.

Cassie

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Re: Bullied out of Dave Ramsey Forum
« Reply #73 on: March 18, 2014, 10:15:14 AM »
Sure back in 2006 we bought a 2 bedroom condo for a rental and then a year later a studio one. We put 20% down on each and had a lot of savings. My hubby had a really good job & I had a decent one. The rents were good also.  We also had a home that we lived in & bought at the height of the bubble. Prices started to drop & also so did rents. Pretty soon we are losing $ every month. We move out of our house for a year & into the condo trying to save $ but still losing $. A year later prices had dropped more as well as rents so moved back into our house. Long story short we used all our savings-charged up our empty credit cards trying to keep the properties.  Eventually we are in a big financial hole so have to short sale the condos. Then we have to make a deal with all the CC companies for a lower payoff. We were able to do this because we still had good jobs.  However, we knew my hubby was going to get laid-off about a year before he did so we had to get this settled within that time.  So we went from having lots of $ and no debt to just the opposite. Needless to say "our hair was on fire" so we counted every penny until the mess was resolved. We thought we were going to hold the real estate and make lots of $ selling it down the road.  I think that is one thing that people do not think about is that rents can & do go down.  Anyways we lost so much $ that it makes me sick to think about it and I would hate to see others have that happen to them.
 

HairyUpperLip

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Re: Bullied out of Dave Ramsey Forum
« Reply #74 on: March 18, 2014, 10:47:04 AM »
It's $85/Year for the DR website.

lol - wow, and his goal is to help people get out of debt...

stash4cash

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Re: Bullied out of Dave Ramsey Forum
« Reply #75 on: March 18, 2014, 11:30:00 AM »
Sure back in 2006 we bought a 2 bedroom condo for a rental and then a year later a studio one. We put 20% down on each and had a lot of savings. My hubby had a really good job & I had a decent one. The rents were good also.  We also had a home that we lived in & bought at the height of the bubble. Prices started to drop & also so did rents. Pretty soon we are losing $ every month. We move out of our house for a year & into the condo trying to save $ but still losing $. A year later prices had dropped more as well as rents so moved back into our house. Long story short we used all our savings-charged up our empty credit cards trying to keep the properties.  Eventually we are in a big financial hole so have to short sale the condos. Then we have to make a deal with all the CC companies for a lower payoff. We were able to do this because we still had good jobs.  However, we knew my hubby was going to get laid-off about a year before he did so we had to get this settled within that time.  So we went from having lots of $ and no debt to just the opposite. Needless to say "our hair was on fire" so we counted every penny until the mess was resolved. We thought we were going to hold the real estate and make lots of $ selling it down the road.  I think that is one thing that people do not think about is that rents can & do go down.  Anyways we lost so much $ that it makes me sick to think about it and I would hate to see others have that happen to them.

Sorry to hear it but thanks for sharing!

GertieMcFuzz

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Re: Bullied out of Dave Ramsey Forum
« Reply #76 on: March 18, 2014, 12:57:35 PM »
It's $85/Year for the DR website.

lol - wow, and his goal is to help people get out of debt...

For what it is worth there are many, myself included, who don't pay to use the Ramsey forums. Some have paid for a legacy membership, some teach Financial Peace University, some are on trial memberships for being in an FPU class, some have been in the forums since it started (and it was free) and are grandfathered in, others have taken the Financial Counselor training course and are members for life...

I believe that, similar to this forum, the accountability and motivation of being able to converse with like minded individuals is very powerful and has a lot of value. There are certainly a lot less valuable things to spend $7.50 on per month than accountability, awesome ideas on how to save money, and nudges/pushes/shoves/kicks to improve your financial life.

Just this lurkers two cents

hybrid

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Re: Bullied out of Dave Ramsey Forum
« Reply #77 on: March 18, 2014, 01:05:31 PM »
What sticks out to me in regards to renting is that while you are clearing 600 a month, you also have to provide the maintenance for a 3500 SF home.

Not a 1600 SF home, 3500 SF. That's a lot of paint, roof, plumbing, carpet or floor sanding, asphalt(?), decking(?), and general repairs that could eat up those gross profits pretty quick, not to mention if it goes unrented for any amount of time.

Also, if you are both 70% disabled I'm guessing a lot of opportunities to create sweat equity goes out the window as well?

I can definitely see moving, but I'd sell your McMansion first rather than rent it. Just too many ways this can go south and there are stresses to consider as well, which frankly might not be the best thing in the world in a PTSD situation. There are plenty of other ways to invest that might suit your family better.

Storypage

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Re: Bullied out of Dave Ramsey Forum
« Reply #78 on: March 19, 2014, 09:49:51 AM »

I have fewer problems with Ramsey than with some of his followers, actually. Sometimes they take what he says as absolute gospel. As if there is no way to get out of debt unless you do exactly what he says, and follow his steps exactly. Particularly where it comes to BS 2.

I used it as a benchmark, but departed as needed. I bought a house while still in debt, for instance. And I never stopped investing while getting out of debt. Worked fine for me. And there are very valid arguments for paying highest interest first, rather than smallest debt. And having a credit card is fine if you use it right and pay it off every month (I know the argument is you pay more with plastic, which is trye, but debit cards are plastic too and Ramsey is fine with debit cards). But a true Ramseyite would go nuts over that.

Silly, really.

FIPurpose

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Re: Bullied out of Dave Ramsey Forum
« Reply #79 on: March 19, 2014, 10:10:08 AM »

I have fewer problems with Ramsey than with some of his followers, actually. Sometimes they take what he says as absolute gospel. As if there is no way to get out of debt unless you do exactly what he says, and follow his steps exactly. Particularly where it comes to BS 2.

I used it as a benchmark, but departed as needed. I bought a house while still in debt, for instance. And I never stopped investing while getting out of debt. Worked fine for me. And there are very valid arguments for paying highest interest first, rather than smallest debt. And having a credit card is fine if you use it right and pay it off every month (I know the argument is you pay more with plastic, which is trye, but debit cards are plastic too and Ramsey is fine with debit cards). But a true Ramseyite would go nuts over that.

Silly, really.

I believe that I've heard DR say that paying highest interest first is just as valid, but it's just not the methodology he teaches. Just because he teaches one way doesn't mean that he's against other methods. It works well for most.

soccerluvof4

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Re: Bullied out of Dave Ramsey Forum
« Reply #80 on: March 19, 2014, 10:19:02 AM »
Yesterday after visiting this site, since trading was blah! I went to youtube and watched hours of his shows for free. Alot of it was redundant but alot of it was some good face punching for some people. So instead of paying 85$ or whatever it is watch it for free and there are a few things of interest. Most of it MMM's know but never-the-less I can see it being another forum to help some people. So i will hold my position that its good for newer/beginners!

Simple Abundant Living

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Re: Bullied out of Dave Ramsey Forum
« Reply #81 on: March 19, 2014, 10:20:36 AM »
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).

I'm not sure which of these remarks you consider to be bullying in response to your post:

"We want to move closer to hubby's work but I refuse to sell our house because of many reasons (great house, will be worth a lot more in the future, always wanted an investment property, etc.). So, I just put in my application for another mortgage - with no money down - and without selling this one. We will see what happens! I'll know something by tomorrow afternoon. "

Was it this one?

"IMO, you are on a slippery slope to being over your head. You aren't out of BS2, you aren't willing to sell your cars for less expensive ones, and you want to take on another mortgage with no down payment? Can you save up a sinking fund for your current home in case anything breaks down or gets damaged by the renters? Will you have a sinking fund in case your renters don't pay 1 month? 3 months? Or if you can't get a renter? Why not rent for 1 year to make sure this is an area you want to be in? What is the rush to buy right now? I understand WHY you want to move and agree with it for your child's sake. But to buy a home with no down payment, given the baby step you are in, and given your unhappiness with your job, it seems very dangerous.

I really really hope everything works out for you. Because you are taking a big gamble."

Or this one?

"Before DR my hubby and I also bought a house without having sold our previous one. We had a buyer, but their credit wasn't quite good enough for the bank to give them the loan. The bank made them do six months of "credit repair." They rented our house in the meantime, so we thought we were ok to go ahead and buy. Well, the closing kept getting pushed further and further out, and we were losing money every month. Finally the house was sold...a full year after it was supposed to.

Looking back, I hate thinking about what we could've done with the money we lost every month. Your plan may seem foolproof to you, but what if something happens and you go through unemployment? Have an accident? Then you're on hook for two mortgages. It's just such a big risk. We were lucky that our situation didn't turn out worse than it did."

Or this one?

"Uh, you're going to rent out a house with no emergency fund. I don't understand what needs explaining. If you have to move for whatever reason what will you do then? Get a third no money down mortgage? What happens when your renters stiff you on rent or the hot water heater needs to be replaced and it'll cost 4k? You have no savings. Also, remember you probably have to pay taxes on the rent you receive and that mortgage is no longer deductible. "

And those are just from the first page.

It seems you have decided what you desire from strangers on the Internet is validation, not constructive criticism, and that is fine.

But playing the victim card because you didn't like the replies of people who can see the iceberg ahead and are warning you lest you sink your luxury liner? A bit much.

I encourage you to rethink your plan. There are some fine people here on both forums who are concerned for you because they can see the risks inherent in this plan. You may think you can steer in time to avoid the iceberg---but plenty of other folks have thought the same thing, and their families have suffered financially for it.

I hope you will not be one of them.

Take care,





Source:

https://www.mytotalmoneymakeover.com/modules/fusetalk3/forum/messageview.cfm?catid=9&threadid=483734&STARTPAGE=1&FTVAR_FORUMVIEWTMP=Linear

Wow, I think if people in two financial forums are telling you this is a bad idea- It's probably a bad idea.  Sell your current home and when you have accumulated a 20% down payment for an investment, look for one that fits the 1-2% criteria.  It doesn't look like your family needs the stress of two homes right now.

Storypage

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Re: Bullied out of Dave Ramsey Forum
« Reply #82 on: March 19, 2014, 01:55:00 PM »
Wow, I think if people in two financial forums are telling you this is a bad idea- It's probably a bad idea. 

I didn't. I think it's fine. The Ramseyites are just objecting because it doesn't follow The Plan, so they don't count. I doubt most of those who are chiming in (there or here) even own rentals. I do. I own 3 rental properties and manage a 4th. The first one was done exactly the way the OP is doing it.

Of course, just because it worked for me doesn't mean it will work for her. And vice versa, just because it didn't work out for some doesn't mean it won't work out for her. If it turns out it isn't working out for her, she can always sell later.  Not everyone is cut out for landlording.

There is no such thing as a risk free investment.

Storypage

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Re: Bullied out of Dave Ramsey Forum
« Reply #83 on: March 19, 2014, 01:58:26 PM »

I have fewer problems with Ramsey than with some of his followers, actually. Sometimes they take what he says as absolute gospel. As if there is no way to get out of debt unless you do exactly what he says, and follow his steps exactly. Particularly where it comes to BS 2.

I used it as a benchmark, but departed as needed. I bought a house while still in debt, for instance. And I never stopped investing while getting out of debt. Worked fine for me. And there are very valid arguments for paying highest interest first, rather than smallest debt. And having a credit card is fine if you use it right and pay it off every month (I know the argument is you pay more with plastic, which is trye, but debit cards are plastic too and Ramsey is fine with debit cards). But a true Ramseyite would go nuts over that.

Silly, really.

I believe that I've heard DR say that paying highest interest first is just as valid, but it's just not the methodology he teaches. Just because he teaches one way doesn't mean that he's against other methods.

Yeah, will, that isn't how is minions take it.


NeverWasACornflakeGirl

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Re: Bullied out of Dave Ramsey Forum
« Reply #84 on: March 20, 2014, 12:48:26 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).

I'm not sure which of these remarks you consider to be bullying in response to your post:

"We want to move closer to hubby's work but I refuse to sell our house because of many reasons (great house, will be worth a lot more in the future, always wanted an investment property, etc.). So, I just put in my application for another mortgage - with no money down - and without selling this one. We will see what happens! I'll know something by tomorrow afternoon. "

Was it this one?

"IMO, you are on a slippery slope to being over your head. You aren't out of BS2, you aren't willing to sell your cars for less expensive ones, and you want to take on another mortgage with no down payment? Can you save up a sinking fund for your current home in case anything breaks down or gets damaged by the renters? Will you have a sinking fund in case your renters don't pay 1 month? 3 months? Or if you can't get a renter? Why not rent for 1 year to make sure this is an area you want to be in? What is the rush to buy right now? I understand WHY you want to move and agree with it for your child's sake. But to buy a home with no down payment, given the baby step you are in, and given your unhappiness with your job, it seems very dangerous.

I really really hope everything works out for you. Because you are taking a big gamble."

Or this one?

"Before DR my hubby and I also bought a house without having sold our previous one. We had a buyer, but their credit wasn't quite good enough for the bank to give them the loan. The bank made them do six months of "credit repair." They rented our house in the meantime, so we thought we were ok to go ahead and buy. Well, the closing kept getting pushed further and further out, and we were losing money every month. Finally the house was sold...a full year after it was supposed to.

Looking back, I hate thinking about what we could've done with the money we lost every month. Your plan may seem foolproof to you, but what if something happens and you go through unemployment? Have an accident? Then you're on hook for two mortgages. It's just such a big risk. We were lucky that our situation didn't turn out worse than it did."

Or this one?

"Uh, you're going to rent out a house with no emergency fund. I don't understand what needs explaining. If you have to move for whatever reason what will you do then? Get a third no money down mortgage? What happens when your renters stiff you on rent or the hot water heater needs to be replaced and it'll cost 4k? You have no savings. Also, remember you probably have to pay taxes on the rent you receive and that mortgage is no longer deductible. "

And those are just from the first page.

It seems you have decided what you desire from strangers on the Internet is validation, not constructive criticism, and that is fine.

But playing the victim card because you didn't like the replies of people who can see the iceberg ahead and are warning you lest you sink your luxury liner? A bit much.

I encourage you to rethink your plan. There are some fine people here on both forums who are concerned for you because they can see the risks inherent in this plan. You may think you can steer in time to avoid the iceberg---but plenty of other folks have thought the same thing, and their families have suffered financially for it.

I hope you will not be one of them.

Take care,





Source:

https://www.mytotalmoneymakeover.com/modules/fusetalk3/forum/messageview.cfm?catid=9&threadid=483734&STARTPAGE=1&FTVAR_FORUMVIEWTMP=Linear

Did you follow this poor woman over here to bully her here, too?  Please, leave her alone.  Let's just say she felt unwelcome on that forum and leave it at that.  I don't think we need to debate the specifics.

gobius

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Re: Bullied out of Dave Ramsey Forum
« Reply #85 on: March 20, 2014, 01:36:16 PM »
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 read one of DR's books and it wasn't bad; I mostly found myself agreeing with a lot of what he said but saw that I was actually saving more than he was recommending, although not as much as I do now that I am reading MMM posts/forums.  My boss is a big DR fan and knows I'm frugal, so he says I'm on the "Dave Ramsey plan".  I don't have the heart to tell him that I don't need a DR plan.

I will say that, if your high-interest debts aren't outrageous and you make an aggressive payment plan, the difference in interest doesn't account for that much.  My sister had a CC with a 24% rate ($5,500 balance) and one with a 15% rate ($2,500 balance or so), along with $55K of student loans and a $10K car loan (all ranging 3-7% I believe).  I told her that, mathematically, she should pay off the 24% one first.  However, I made her a big spreadsheet with an aggressive payoff plan and told her to pay the 15% one first, showing her that the difference was $200.  Nothing to sneeze at, but my plan had her saving $30K in interest and being debt-free in 6 years or so, so the $200 was less than 1% of the savings.  I wanted to get her a quick "win" and knew that the logic of paying the 24% first probably wouldn't be as effective as "you could pay off this first one in 2-3 months".  For someone like her (no financial knowledge/desire, purchases driven by emotions), Dave Ramsey's plan works.

She has since paid off the 15% one and is down to about $2,000 on the 24% one (partially due to a small windfall from her job).  Not as fast as I wanted, so the difference may now be $300, but she's getting there.  I doubt she will be debt-free in 6 years, but hopefully within 10 years (she's 28).

Your example is a bit different; I suppose it depends on the balances.  $500 at 2% that can be paid in a month may be a good quick win before hitting the $8,000 20% loan for someone who struggles.  Having $2,500 at 2% and $3,500 at 20%, on the other hand, would be a different story.

gobius

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Re: Bullied out of Dave Ramsey Forum
« Reply #86 on: March 20, 2014, 01:48:58 PM »
One thing I'll mention about Dave Ramsey's book is that the stories seem almost impossible to believe.  Not to say they are made up, but I suppose some just blow my mind.  I suppose he picks the most extreme examples.  I'll see one where a married couple had $100K in credit card debt and $100K in student loan debt, then pay it all of in 3 years or something.  Most of these people aren't straight out of college so it's not like they suddenly went from college to $100K/year.  These people are obviously making serious bank but were pissing it all away.  Some were even more extreme than that.

FIPurpose

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Re: Bullied out of Dave Ramsey Forum
« Reply #87 on: March 20, 2014, 10:23:37 PM »
Yeah I feel like a lot of the debt is exaggerated because most of those extreme cases involve them having 2 truck's that they borrowed 50,000 each for, and look all their troubles went away when they sold their trucks. In fact, that's what most financial books are:


Cpa Cat

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Re: Bullied out of Dave Ramsey Forum
« Reply #88 on: March 21, 2014, 07:52:52 AM »
Well, I will second everyone who says this all sounds risky. And I question whether your home is a good rental property - like someone else said, the house we choose to live in isn't necessarily the best one to rent.

But here's my take on rental properties:

If you just sold your house and put that money into the market instead, are you sure that your overall gain wouldn't be better than the gain on the house?

Have you factored in the fact that you will be paying taxes on the sale of your rental?

You don't have a lot of savings. How long can you float the second mortgage if you have no tenant? What if something bad happens to the home that makes it unliveable for a couple of months? What if it sits empty while you look for a tenant? This is where no emergency fund gets you into trouble. It's totally normal for a rental home to run into temporary trouble - and it should be planned for. But you haven't planned for it, which means it will put you in immediate financial distress.

What kind of mortgage are you covering with this rent? Is it a 15 year or a 30 year? If it's a 15 year, then you at least have the advantage of building equity. But the numbers look a lot less impressive on a 30 year.

So I guess I'll just echo everyone else here: sell the house. Save up money. Put it into a smaller rental home with less of a mortgage load. When you start to feel that you're seeing success there and you find you enjoy this rental experiment, then buy the next one.

William

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Re: Bullied out of Dave Ramsey Forum
« Reply #89 on: March 21, 2014, 09:29:20 AM »
It's so strange DR charges for forum access.  Such an odd thing to charge for.  He does seem to enjoy selling stuff to people in debt though...

Overall he is great.  I listen to his podcast quite often.  Just don't buy all the products he wants to sell you and don't take his investing advice.  He loves American Funds...

TomTX

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Re: Bullied out of Dave Ramsey Forum
« Reply #90 on: March 21, 2014, 03:34:19 PM »


So I guess I'll just echo everyone else here: sell the house. Save up money. Put it into a smaller rental home with less of a mortgage load. When you start to feel that you're seeing success there and you find you enjoy this rental experiment, then buy the next one.

The benefit of a large mortgage is that you are more effectively able to leverage your money on asset appreciation.

The benefit of using a house you already have is that you have already paid all the closing costs, rather than paying for closing costs selling the old house and more closing costs buying a new rental house. Transaction costs will eat you alive in the residential real estate market.

Mazzinator

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Re: Bullied out of Dave Ramsey Forum
« Reply #91 on: March 21, 2014, 06:53:28 PM »
Here's my two cents ;-)

Please, please please tell me the new house you're going to buy is SMALLER!!!??? These comps are outta control big. 3500 sq ft..holy shit... I know everything's bigger in TX, but i vote next house should be downsized.

Also, due to this move, i would put paying off the car until later. I would save every extra penny from now until you're all moved in AND tenants are in and have paid rent a few months. At this point, who the fuck cares if your cars are paid off by summer or winter...cash is most important during this time. I'd also probably keep that cash as an emergency fund for repairs, life etc. There are a few posts here regarding commingling funds and how much to keep.

http://www.mrmoneymustache.com/forum/real-estate-and-landlording/how-much-do-you-keep-in-cash-reserves-per-property/msg78948/#msg78948

I read some of your other posts on TMMO, i think you'll enjoy yourself here more. I started on a DR inspired forum (not tmmo), um yea not paying a fee for that shit, and i also got tired of being yelled at and being "angry" at my debt (aka my husband for going to law school) Debt is not the end of the world. I'd rather be Financially free, not just debt free!!!

Good luck!! And please keep us updated!!!!

Comparables:
http://www.realtor.com/realestateandhomes-detail/2405-Playa-Del-Mar-Dr_Little-Elm_TX_75068_M87631-75525?row=3
http://www.realtor.com/realestateandhomes-detail/2592-Rain-Dance-Dr_Little-Elm_TX_75068_M70372-85023?row=4

The apartments are 1300 sq ft... my house is 3500 sq ft.