Dave Ramsey worth it?

[Anonymous]

Anonymous wrote:His book "The Total Money Makeover" is all you need to start and it's not expensive, around $25, I think. Give it a shot.

Better yet, if you're in over your head in debt, get the book out of the library!

[Anonymous]

I agree with previous posts about it being too conservative. He markets to the middle class people. I understand that he doesn't want us to be in debt but it is too extreme. He doesn't recommend any credit cards at all. We use credit card but always pay it off each month. So we don't have a balance. He recommends paying off mortgages even when the mortgage is so low in interest. It isn't helping people build their money. I mean with low mortgage interest and having interest being deductible, it almost makes no sense for you to pay off your mortgage when you can use that money to invest in diversify portfolio.

[Anonymous]

Anonymous wrote:PPs what do you mean by conservative?

I have clue how to begin tackling our debt so Ramsey is better than nothing I guess! Student loans will be last as they're mostly in deferment. I'm thinking of using the amount I was paying on them as extra in the snowball. I've been paying the interest while deferred.

We mean that some people, either in an attempt to make finance as simple as possible for novices, or because they don't understand economics or opportunity cost (http://en.wikipedia.org/wiki/Opportunity_cost), will advise you to do things like pay down debt, spend less money, or invest in less risky assets even in circumstances where doing these things is actually counter-productive and will make you less well off in the long run.

Ramsey, in my opinion, is one of those people. For example, he pushes you hard to pay off your home mortgage, even when that is often the wrong financial choice. (For one discussion of why a mortgage can be good, see http://www.ricedelman.com/cs/education/article?articleId=232&titleParam=11%20Great%20Reasons%20to%20Carry%20a%20Big,%20Long%20Mortgage#.UtS3kvRDtEI).

You are correct that Ramsey might be better than nothing in your case, both because it sounds like you're not very educated on the subject yet and because it sounds like your financial situation is very simple and Ramsey will probably have the correct advise for you right now.

Basically, what you need to be doing is spending as little money on discretionary things as possible and using that money to pay down your debt. In most situations, you want to pay down your debt starting with the loan with the highest interest rate, then moving on to the loan with the second highest. You didn't tell us the interest rate on your loans, but credit card rates are almost always awful, so you probably want to start with those. I would try to get rid of all of your credit card debt before you start to accumulate after tax savings.

Whether you want to start paying down your auto loan or your student loan immediately after you finish with your credit card debt is a bit more complicated. You might not want to pay either of them down if you have an excellent interest rate, for example. I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market. You might also not want to pay down these loans if you don't have any emergency savings and it would take you a very long time to get rid of the debt. That's because if you have a sudden expenditure, you might have to go back into credit card debt, and again end up with a much worse rate then if you had delayed paying down the less scary student loans in order to accumulate some savings.

For basic guidance like this, Ramsey is a decent place to start, and will give you some time to learn more about finances. I would just encourage you, as your debt load starts to shrink, to look to some other sources as well before investing your newfound income.

[Anonymous]

What are the interest rates on your various obligations?

[Anonymous]

Makes total sense now! We arent considering our mortgage as part of the issue as we have a great VA loan rate and may sell in the next few years.
Cc's range from 15-22% mostly on the higher end, car is 6.6% and 75% of the student loans are 2.3 or 6.8% with a couple private ones at 9%.
We dont have an emergency fund at all or any college savings for 2 DC (not in K yet)

[Anonymous]

Anonymous wrote: I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market.

This is short sighted. What is extraordinarily low? My student loans are at 5.12% and if I just pay the minimum payment I will pay more than $40,000 in interest payments over the next 20 years. My plan is to pay them off aggressively and will end up paying less than $3,000 more in interest over the next two years. I will have saved myself $37,000 and then can start saving and investing more heavily. I would much prefer that scenario than to have that loan hanging around my neck for the next 20 years.

Also, student loans can never be discharged in a bankruptcy. They will follow you until you die. If you ever get laid off or injured or have some other family hardship, you would be in a much stronger position financially to have paid off your student loans.

It's more than just math. DR hates debt because it creates risk. He values the peace of mind and security of being debt free more than a few percent or even 10% in the stock market.

[Anonymous]

Anonymous wrote:

Anonymous wrote: I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market.

This is short sighted. What is extraordinarily low? My student loans are at 5.12% and if I just pay the minimum payment I will pay more than $40,000 in interest payments over the next 20 years. My plan is to pay them off aggressively and will end up paying less than $3,000 more in interest over the next two years. I will have saved myself $37,000 and then can start saving and investing more heavily. I would much prefer that scenario than to have that loan hanging around my neck for the next 20 years.

Also, student loans can never be discharged in a bankruptcy. They will follow you until you die. If you ever get laid off or injured or have some other family hardship, you would be in a much stronger position financially to have paid off your student loans.

It's more than just math. DR hates debt because it creates risk. He values the peace of mind and security of being debt free more than a few percent or even 10% in the stock market.

Not PP, but my student loans are at 1.625 percent. That is pretty damn low.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market.

This is short sighted. What is extraordinarily low? My student loans are at 5.12% and if I just pay the minimum payment I will pay more than $40,000 in interest payments over the next 20 years. My plan is to pay them off aggressively and will end up paying less than $3,000 more in interest over the next two years. I will have saved myself $37,000 and then can start saving and investing more heavily. I would much prefer that scenario than to have that loan hanging around my neck for the next 20 years.

Also, student loans can never be discharged in a bankruptcy. They will follow you until you die. If you ever get laid off or injured or have some other family hardship, you would be in a much stronger position financially to have paid off your student loans.

It's more than just math. DR hates debt because it creates risk. He values the peace of mind and security of being debt free more than a few percent or even 10% in the stock market.

Damn. I'd borrow as much as I could at those rates. That's less than inflation.

Not PP, but my student loans are at 1.625 percent. That is pretty damn low.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Too conservative for my taste.

me too. he never teaches people how to make their money work for them. i feel like he markets to middle americans who are generally uneducated in money matters. he just rubs me the wrong way. i know the same can be said for suze orman but for some reason she doesn't annoy me as much.

Although I like him, and some of his advice is good - I pretty much agree with PP here. HIs show is geared more toward unsophisticated investors who don't understand that there is opportunity cost with paying off certain kinds of debt. that said, if you have debt that is bothering you then go for it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market.

This is short sighted. What is extraordinarily low? My student loans are at 5.12% and if I just pay the minimum payment I will pay more than $40,000 in interest payments over the next 20 years. My plan is to pay them off aggressively and will end up paying less than $3,000 more in interest over the next two years. I will have saved myself $37,000 and then can start saving and investing more heavily. I would much prefer that scenario than to have that loan hanging around my neck for the next 20 years.

Also, student loans can never be discharged in a bankruptcy. They will follow you until you die. If you ever get laid off or injured or have some other family hardship, you would be in a much stronger position financially to have paid off your student loans.

It's more than just math. DR hates debt because it creates risk. He values the peace of mind and security of being debt free more than a few percent or even 10% in the stock market.

Damn. I'd borrow as much as I could at those rates. That's less than inflation.

Not PP, but my student loans are at 1.625 percent. That is pretty damn low.

I am PP. Same. (Well, it's more like 1.7 because I consolidated a small loan with a higher rate into it).

[Anonymous]

No. He is patronizing and not very smart. He is out to make money and doesn't tailor his advice to particular situations. He also gives really bad advice if you want to build real wealth.

[Anonymous]

DR haters- if you don't suggest his advice... Could you tell me who you do recommend? Any good finance blogs to follow?
Definitely willing to explore different options.

[Anonymous]

I like DR's principles and think his books/forums are a good place to start if you are in debt. I modified his program a little. I still use credit cards, but pay it off at the end of the month. I payed high interest student loans first instead of the smallest balances. I contribute to my retirement plan as it helps me with taxes and I get a match. I keep a high EF as $1k won't even cover my rent.

I also follow mister money mustache's blog about early retirement/simple living, although it's a little more difficult in such a high cost area.

[Anonymous]

Anonymous wrote:I think Dave Ramsey is fantastic. His book "The Total Money Makeover" is all you need to start and it's not expensive, around $25, I think. Give it a shot. Also, definitely listen to his radio show or his podcasts. There's no substitute for hearing his advice/encouragement and hearing from others who have gotten out of debt to keep you motivated.

Get it from your local library instead of buying it. Or buy it on ebay.

[Anonymous]

Anonymous wrote:

Anonymous wrote: I don't intend to ever make extra payments on my student loans, because my interest rate is extraordinarily low and I would be better off just putting that money in the market.

This is short sighted. What is extraordinarily low? My student loans are at 5.12% and if I just pay the minimum payment I will pay more than $40,000 in interest payments over the next 20 years. My plan is to pay them off aggressively and will end up paying less than $3,000 more in interest over the next two years. I will have saved myself $37,000 and then can start saving and investing more heavily. I would much prefer that scenario than to have that loan hanging around my neck for the next 20 years.

Also, student loans can never be discharged in a bankruptcy. They will follow you until you die. If you ever get laid off or injured or have some other family hardship, you would be in a much stronger position financially to have paid off your student loans.

It's more than just math. DR hates debt because it creates risk. He values the peace of mind and security of being debt free more than a few percent or even 10% in the stock market.

'

And after you die if you have a co-signer or anyone else on the loan.