dave ramsey

[WakeSlayer]

Dean, I completely agree on both points. I like the idea of the same as cash purchases, but never do it because of the possibility of a major event. The mortgage interest tax credit is barely there also. I know several people who got ARM's a few short years ago and are struggling with the rising rates. THe 2nd mortgage approvals were a joke for years. Basically you could tell an appraiser what you wanted him to say, and the bank would write you a check. now the same people are finding out from the bank that they currently owe far more than the house is worth, but they already pre-spent the money they are trying unsuccessfully to borrow, again. My brothers home was devaluated by $60k recently when he went for another 2nd mortgage increase. He cannot figure out why. I also carry a second mortgage which is not at an attractive rate, but I am still far below the value of my farm/lake property. That one is next on my list of payoffs.
Just play in a field you can manage is all I am saying.

[882001]

wow more posts than i thought. i dont believe dave is all knowing, but he is smart. alot of what he says is just common sense.will i still use 18 month same as cash? sure i will. i do believe its a great tool. i was more talking about the 20 year boat notes that people are carring now, thats insane! i do believe that he has alot of good pointers for people. and its more of a guide line than gospel.

[WakeSlayer]

I was going to bring up boat loans. That one amazes me. I financed my first for 3 years, and have bought my other two with the proceeds of my previous craft, and some saved cash. 15-20 years for a toy is nuts. But, it enables people to do it, I guess. A good example of the earlier comment about how many people would not have jobs were it not for the credit industry.

[bkhallpass]

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".

Your argument makes no sense mathematically or economically. You can earn just as much on your money while saving before purchase as you can after purchase, while incurring a debt. If it were a one time occurrence, then yes, you could make some very minute return. However, with the dollar value of an 18 month same as cash deal, the return you'll make is not even worth talking about. If you do the these deals consistently, which it sounds like you do, then over the long haul you do not, and cannot make any more money than if you'd just purchased the items in the first place.
BKH

[bchesley]

Wow, I was at the Dave Ramsey total money make over in houston last thursday. My wife and I are on his plan. We will be totally debt free in 12 months. Then the real fun begins. For those of you who do not know about him I highly recommend you buy his book. It will totally change your thougths of managing money.

[882001]

Wow, I was at the Dave Ramsey total money make over in houston last thursday. My wife and I are on his plan. We will be totally debt free in 12 months. Then the real fun begins. For those of you who do not know about him I highly recommend you buy his book. It will totally change your thougths of managing money.

i was there.

[Red57Bird]

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".

Your argument makes no sense mathematically or economically. You can earn just as much on your money while saving before purchase as you can after purchase, while incurring a debt. If it were a one time occurrence, then yes, you could make some very minute return. However, with the dollar value of an 18 month same as cash deal, the return you'll make is not even worth talking about. If you do the these deals consistently, which it sounds like you do, then over the long haul you do not, and cannot make any more money than if you'd just purchased the items in the first place.
BKH

BKH - my point is fairly simple, and it makes sense if you think of it in these terms. I have two ways to pay for my new washer and dryer. One, I can write a check for $1,000 and I own them debt free. Or I can take advantage of the same as cash offer, keep my $1,000 in my pocket, using it to earn interest and a return. Then when the 18-month term is up, then write the check for $1,000 and own them debt free. A lot of people don't take into account the opportunity cost of money (i.e. what can I do with my money to generate interest and income).

I'm obviously comfortable with my financial strategies, just like you are comfortable with yours. Let's just agree that we have taken two different paths to get to the same destination. Sound like a plan :?:

[mdsankey]

Dave is going to get a good chuckle when he finds out a bunch of Nautique guys are discussing him on this forum. Dave is an avid skier and talks about his MC all the time. We started on Dave's plan about 4 years ago and we only half heartedly did it to start with. We soon realized we were not getting anywhere by doing it half a**ed. We finally commited to doing all of it and things took off. We were out of debt in about 8 Months when we finally went at it. We haven't looked back. our neighbors and friends thought we were crazy because we wouldn't go out to eat with them and we didn't take vacations together anymore. We haven't had a credit card for over three years now and i don't care what my credit score is because we pay cash, if we don't have cash we wait. our next purchase is a summer lake cabin, that will be next spring. It is hard work and you will doubt what you are doing but when you learn to delay your pleasure and think of your future I believe there is no greater reward than knowing that you are teaching and giving your children the tools to be finacially independant thier whole lives.

[WakeSlayer]

I am curious about you guys that are debt free in 8 months, and 12 months, etc. Literally ? How do you pay off a mortgage in that short period of time. Assuming a mortgage at something like 150-200k, You have to be in the $1m annual income range to clear enough to pay that down to zero, eat, pay insurance, heat/cool your home, boat gas, etc. Just curious about that statement that i have read a couple times.

[bkhallpass]

Red57Bird,

I am well aware of the time value of money. The point reamins that the exact same return may be earned on
your cash during that 18 month period whether you choose to take delivery of the goods at the beginning, or at the end of the 18 month period. In my opinion, the value being placed here is the time value of owning stuff now. It has nothing to do with investment return.

What's more, you've categorized same as cash finaning as smart debt. I do not beleive it is . That is to say same as cash financing is not offered so the vendor can lose money. In most cases the consumer can get a better deal if paying cash rather than using zero percent financing. Most times, this will more than make up for any returns to be earned on the cash during the grace period. Further, in most cases, there are substantial penalties and interest if the consumer is unable to pay the balance at the end of the grace period. In fact, the vendors are counting on the fact that many consumers won't be able to make the payments and will be subject to the penalties.

At best, zero percent financing might be "smart debt" for folks who could afford to pay cash anyway - maybe.
In most cases, zero percent is only better debt for someone who would finance anyway. For anyone zero
percent, or same as cash financing is dumb debt if you can't pay the balance in full at the prescribed time period.

BKH

[mdsankey]

ok, fair enough. On Dave's plan the mortgage is the last to be paid off (usually your biggest debt amount) and it is the only debt that Dave won't yell at you for having. When I said we were debt free in 8 months, that was everything but our motgage. but we kept using the debt snowball and paid off our mortgage in about 9 more months. but we were lucky enough to have purchased our house($200k) with a large down payment and we had a 15yr. fixed mortgage. boy did we save alot of money on interest. i guess the big thing is paying things off and just keep rolling the amount you were paying into the next debt and paying that off quick and keep going.

[WakeSlayer]

17 months is pretty impressive. Nice going !!
I have a 15 year fixed, and pay bi-weekly, which allegedly knocks it down to a 9-10 year mortgage.

The real problem that we are all trying to get past is the incredible amount of people whom are trying to seperate you from your money and make it their own. How you get there, is your business, but get there, and do it as fast as you can.

[mdsankey]

Well said Wakeslayer "get there and get there fast" Dave's saying is "live like no one else so later you can live like no one else"

[Red57Bird]

Red57Bird,

I am well aware of the time value of money. The point reamins that the exact same return may be earned on
your cash during that 18 month period whether you choose to take delivery of the goods at the beginning, or at the end of the 18 month period. In my opinion, the value being placed here is the time value of owning stuff now. It has nothing to do with investment return.

What's more, you've categorized same as cash finaning as smart debt. I do not beleive it is . That is to say same as cash financing is not offered so the vendor can lose money. In most cases the consumer can get a better deal if paying cash rather than using zero percent financing. Most times, this will more than make up for any returns to be earned on the cash during the grace period. Further, in most cases, there are substantial penalties and interest if the consumer is unable to pay the balance at the end of the grace period. In fact, the vendors are counting on the fact that many consumers won't be able to make the payments and will be subject to the penalties.

At best, zero percent financing might be "smart debt" for folks who could afford to pay cash anyway - maybe.
In most cases, zero percent is only better debt for someone who would finance anyway. For anyone zero
percent, or same as cash financing is dumb debt if you can't pay the balance in full at the prescribed time period.

BKH

BKH - like I said previously, there's multiple paths to the same destination. Sounds like you are as comfortable with your plan as I am with mine.

[bchesley]

Read his book. It explains it all. He has baby steps to take to get started. The debt snow ball effect is where you start to gain ground. I cant explain it as well as he does. If you dont like to read books and are interested in financial freedom he has a radio program that comes on in the afternoon in most major metro areas. Tune in and listen. It will change your whole perspective.