dave ramsey

[882001]

hey i was asked to go to a seminar the other day by a friend. and at first i thought, oh no a pyramid scheme. or a get rich scheme. but was kind of blown away by the whole thing. got home and got rid of all my{mine and wifey} credit cards. look forward to trying this out. have any of you guys heard of this dude?

[mdsankey]

Dave is awesome. He knows what he is talking about there are no gimmicks with him. wife and I have been listening to him for years. We are debt free and living the dream. it is hard work to stay focused but the pay off is great. We just got our first Nautigue this year. Dave's only problem is that he is a Mastercraft guy. good luck and live like no one else!!

[DanielC]

This is just an opinion, I have not heard of this person.
Although I am not there, I am trying to not use credit to buy anything, why spend 10% to 25% more for stuff you probably do not need, you just want.
My understanding, and it might be wrong, that is if you close credit card accounts, it reduces your total credit limit, and makes your credit score get worse. In my state, people with a bad credit score have to pay more for insurance.

[Red57Bird]

Credit cards are not the problem, it is how people use them. I pay for everything I can on credit card, then pay off the balance at the end of the month. I get to use OPM (other people's money) for free for 30 days, never pay interest, and get rebates in the form of cash back from the card company. In fact I used my credit card to pay for a lot of the construction materials when building our lake house and I ended up with about $900 in debit gas cards. I used the construction loan to pay the credit card off each month. Using a credit cards as a substitute for a loan (i.e. carry a balance and pay the minimum each month) is what gets a lot of people into trouble.

[WakeSlayer]

Agree with Red57. I pay nearly everything with my CC. Then make one payment at the end of the month. I accrue air miles like mad, and can fly my wife and I to our cabin a 2-3 times a year for nothing. The key is pay it off EVERY month. There is no magic trick here, just do not spend money you don't have.
The trick would be to get people to pay me to tell them that. Then I would be living like no one else, for sure.

[Red57Bird]

Wakeslayer - do you mind if I show your post to my wife? Just need a little proof to show her that at least I'm right about one thing :twisted:

I haven't been right since my wedding day.

[deanofindy]

It's not just about not using credit cards. You have valid points about the rewards of using them. But Dave Ramsey's point is to not be in debt to anyone. Ultimately you should not even have mortgage debt. Man, if I didn't have that payment every month! Putting that money in my pocket would be great! And in a year I could pay CASH for an upgraded boat with the money I saved! Wakeslayer, it's awesome that you have the ability to stay within your limits and pay off your cards monthly, but unfortunately many people don't have the discipline. What a sad day if the Nautique got repoed. Makes me sick just thinking about it.

[Red57Bird]

Having a mortgage payment is not necessarily a bad thing. It's the last great tax deduction for the middle class. Once my house is paid off, first thing I'll do is refinance and take the cash and invest it. I'm borrowing money in which part of the cost is subsidized by the government, and using the proceeds to generate income and/or capital gains.

Again, it's all about being responsible and controlling the amount of debt you carry.

[mdsankey]

deanofindy, you got it right! the one thing these guys are not taking into account is that everything they are doing has RISK. i've followed Daves plan for years now and you will definately be called wierd by your friends, but i owe no one anything and i'm able to build wealth every pay check i get. i just paid cash for my 07 206 and i will enjoy every moment on the lake knowing that if i lose my job or get hurt that no one can come and take my boat my house my anything, and if you don't get excited by that then go ahead and play with snakes(credit card companies). i know this isn't the American way of life but go and ask any millionare out there how much they care about there frequent flyer milage. by the way the wife and i only make median wage salaries so any one can do it. Be strong Deanofindy!

[WakeSlayer]

My point is more broad, though I got specific with the CC and air miles. I am paying cash, if you think about it. I just do it 29 days later, and get something for it. I am not debt free, however. I have a mortgage on my farm, however, it is about 30% of the value of the place, and still is a deduction at tax time, albeit not much of one. When I do need funds for something that I do not have, I still leverage it against my home as my debt to value ratio is very low. I have my retirement land bought and paid for in the mountains, and a modest cabin on it. I have a very solid plan, reasonably good discipline, and a retirement clock to remind me of my goals. I have a wonderful wife who likes to travel and keep a nice home. (read expensive) I also have a couple teenagers who live in a different world than when most of us grew up. So I have my work cut out for me.

My whole point is live within your means. That is a different thing for everyone. A mortgage is fine, but get one you can afford. Buy used cars. Only spend on cards what you can pay off in 30 days.
Indeed a very simple formula.

[Red57Bird]

mdsankey - if you are comfortable with your financial plan, then that is the most important thing. I guess what Wakeslayer and I are trying to say is that eliminating debt is not the "Holy Grail" of financial planning. Responsible spending and borrowing is the key. As far as risk goes, getting up out of bed in the morning has risk.

My wife and I are fortunate in that we have good jobs, make good money, and have been saving and investing for some time. We have a seven figure net worth that we accumulated through smart investments, discipline, only buying what we can afford, and using smart debt. We take advantage of every single money saving opportunity. One great example of smart debt is buying goods using a "x-month same as cash" financing. Given the choice of paying for a $1,000 for a washer and dryer up front, or being able to "finance" using 18-month same as cash, with no payments, I'll pick the "debt". If you choose to pay for it up front, you are losing money by missing the opportunity costs and time value of money. Anytime I can use other people's money for free, I take advantage of it.

[G-man]

I use to work for a guy that loved it when his employees bought new cars, houses or had babies. He felt they would be more inclined to be debt motivated to work hard and not change jobs. I had been self employed for a long time before working for him. During that time my wife and I did not abuse the credit cards and would have 1 car financed at a time. He motivated me to leave the company when I saw he liked having the "Golden Handcuffs" on employees.

[Red57Bird]

G-man - you and I must have worked for the same guy. :shock:

He absolutely loved having his employees in debt up to their eyeballs. It was a bonus if you had any kids, or a pregnant wife.

[mdsankey]

Red57, you are correct when you say having a good plan and living within your means is most important. we will have to agree to disagree on the debt issue. if everyone did things without debt there would be alot of people without jobs and living this way wouldn't be as much fun as it is. I never thought that a Nautique forum is where i would be singing the praises of Dave Ramsey, I thought I would be spouting off on how great these boats are. oh well at least i've noticed there is a pretty educated crowd in here.

[deanofindy]

I appreciate all of your points of view. Everything that Dave Ramsey says is certainly not taken by me as Gospel. But he does have a valid point about being different with borrowing money. I'm a firm believer in using other ppl's money when it comes to investments - within reason. You're right Wakeslayer - it has to be done within your means. I know way too many ppl right now that have over leveraged themselves on the value of their home. The "same as cash" borrowing is very inticing. But what happens if an unfortunate major event happens and your moneystream is no longer there. Instead of waiting a couple of months and paying cash that you saved, you might now be indebted to a credit agency. (I'm not saying "you" personally but a general "you"). And the great myth of the mortgage tax credit: the actual tax credit is nothing compared to the amount that the mortgage actually costs annually. Let's say the payment is $1200/month. $14000 /year is what you pay out for something like a $2500 credit. I'd rather just pay the $2500 once a year.
Anyway, be careful out there folks. Nautiques make me happy and the ppl who own them feel like family. I wish everyone well.