Dave ramsey

[Anonymous]

Anonymous wrote:

Anonymous wrote:
That's a myth. If you left your accounts alone and kept investing right on through the recession, you did just fine.

Sure. but you'd have done even better to have spent the time leading up to the recession paying off your debts instead of investing that money. Then, when you paid your debt off a couple of years later, you could have bought in while the market was low and been further ahead.

That sounds like market timing because it is. That's the whole point. We don't know the future, and you can't time the market. The fact that someone missed out on the last year of growth because he or she was instead paying down debt seems like a really good point right now, but it was over a small window and things could just as easily gone the other direction.

^^Applause for someone who actually GETS IT.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
That's a myth. If you left your accounts alone and kept investing right on through the recession, you did just fine.

Sure. but you'd have done even better to have spent the time leading up to the recession paying off your debts instead of investing that money. Then, when you paid your debt off a couple of years later, you could have bought in while the market was low and been further ahead.

That sounds like market timing because it is. That's the whole point. We don't know the future, and you can't time the market. The fact that someone missed out on the last year of growth because he or she was instead paying down debt seems like a really good point right now, but it was over a small window and things could just as easily gone the other direction.

^^Applause for someone who actually GETS IT.

The above scenario is false. Money invested in a total market index fund immediately before the crash would have returned an average of 8% annually. That's 10 years out from the worst market hit in a century and unless you have an insane interest rate you would still have been better off putting that money in the market. Things could not have "just as easily gone the other direction" - it's not inconceivable but past performance has shown it incredibly unlikely.

[Anonymous]

Anonymous wrote:
The above scenario is false. Money invested in a total market index fund immediately before the crash would have returned an average of 8% annually. That's 10 years out from the worst market hit in a century and unless you have an insane interest rate you would still have been better off putting that money in the market. Things could not have "just as easily gone the other direction" - it's not inconceivable but past performance has shown it incredibly unlikely.

You're looking at a ten year window (though you should be looking at 12), in hindsight.

If you'd taken two years off to pay down your debt prior to the crash, you'd be in an even better position right now. You'd have avoided the investment hit, been out of debt, AND been able to enjoy the recovery. Your investment portfolio would not be quite as large, but that would be more than offset by the debt payoff.

For what it's worth, I would not count on ~8% annually. "Historical Returns" seem to mostly be based on the last 100-120 years or so, which have honestly done the U.S. a lot of favors. We've had a couple of industrial revolutions, economic growth from coal, oil, and other non-renewable resources, the rest of the world blown each other up TWICE in two world wars while leaving us relatively unscathed, we've been the leaders in the tech sector for the last few decades, and we enjoyed high population growth for most of that time.

That is not the normal course for human history.

Think about it this way: If your great-great-great-great grandfather had invested $1 in 1776, at 8% annual returns that would be about 125 million dollars today. Does that seem reasonable to you? By inflation, that should be around $30.

[Anonymous]

The more debt you're carrying around, the more likely it is that you won't be able to get the very best loans for buying a house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My physical and mental health improved when my debt was eliminated. Some people--like me--are physically and emotionally burdened by debt and the worry that comes along with in ways you cannot imagine. Paying off my debt as a top priority was the right path for me.

These are emotional decisions, not financial decisions. If it makes you feel better, go for it, but don't pretend that you are following an effective strategy for maximizing wealth.

Credit card interest can run as high as 20% or more it is wise to always pay off the credit card debt first and don’t forget we haven’t had a serious market downturn in almost a decade the markets do not always go up and you could lose a lot of money that could’ve gone toward that

[Anonymous]

Anonymous wrote:

Anonymous wrote:
The above scenario is false. Money invested in a total market index fund immediately before the crash would have returned an average of 8% annually. That's 10 years out from the worst market hit in a century and unless you have an insane interest rate you would still have been better off putting that money in the market. Things could not have "just as easily gone the other direction" - it's not inconceivable but past performance has shown it incredibly unlikely.

You're looking at a ten year window (though you should be looking at 12), in hindsight.

If you'd taken two years off to pay down your debt prior to the crash, you'd be in an even better position right now. You'd have avoided the investment hit, been out of debt, AND been able to enjoy the recovery. Your investment portfolio would not be quite as large, but that would be more than offset by the debt payoff.

For what it's worth, I would not count on ~8% annually. "Historical Returns" seem to mostly be based on the last 100-120 years or so, which have honestly done the U.S. a lot of favors. We've had a couple of industrial revolutions, economic growth from coal, oil, and other non-renewable resources, the rest of the world blown each other up TWICE in two world wars while leaving us relatively unscathed, we've been the leaders in the tech sector for the last few decades, and we enjoyed high population growth for most of that time.

That is not the normal course for human history.

Think about it this way: If your great-great-great-great grandfather had invested $1 in 1776, at 8% annual returns that would be about 125 million dollars today. Does that seem reasonable to you? By inflation, that should be around $30.

I don't understand your point. Money invested in the market 12 years ago would have yielded a 9% annual return. So you do not want it going to your debt. You want it in the market. Studies going back to the 1600s show 5% real returns as the norm. I certainly conceded that it's not guaranteed, but all of history is on your side.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My physical and mental health improved when my debt was eliminated. Some people--like me--are physically and emotionally burdened by debt and the worry that comes along with in ways you cannot imagine. Paying off my debt as a top priority was the right path for me.

These are emotional decisions, not financial decisions. If it makes you feel better, go for it, but don't pretend that you are following an effective strategy for maximizing wealth.

Credit card interest can run as high as 20% or more it is wise to always pay off the credit card debt first and don’t forget we haven’t had a serious market downturn in almost a decade the markets do not always go up and you could lose a lot of money that could’ve gone toward that

No one is arguing against paying off a 20% loan.

[Anonymous]

Lawyer with law student loans.

I have a much higher net worth than I would with DR despite my loans because I:

1) ignored DR and took out $$$$ loans for a T10 law school which landed me biglaw despite median grades

2) ignored DR and bought a house despite still having tons of student debt

3) ignored DR and maxed out retirement saving $$$$$ on taxes given my double biglaw marriage

Honestly the market would have to get destroyed for me to not be better off having taken advantage of the tax savings given my tax rate.

[Anonymous]

Anonymous wrote:Lawyer with law student loans.

I have a much higher net worth than I would with DR despite my loans because I:

1) ignored DR and took out $$$$ loans for a T10 law school which landed me biglaw despite median grades

2) ignored DR and bought a house despite still having tons of student debt

3) ignored DR and maxed out retirement saving $$$$$ on taxes given my double biglaw marriage

Honestly the market would have to get destroyed for me to not be better off having taken advantage of the tax savings given my tax rate.

Just curious, but how much do you have in loans still?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My physical and mental health improved when my debt was eliminated. Some people--like me--are physically and emotionally burdened by debt and the worry that comes along with in ways you cannot imagine. Paying off my debt as a top priority was the right path for me.

These are emotional decisions, not financial decisions. If it makes you feel better, go for it, but don't pretend that you are following an effective strategy for maximizing wealth.

Credit card interest can run as high as 20% or more it is wise to always pay off the credit card debt first and don’t forget we haven’t had a serious market downturn in almost a decade the markets do not always go up and you could lose a lot of money that could’ve gone toward that

No one should owe money on a credit card - period (exception if you are using 0% advances wisely). This sidebar started with a mention of mortgages and low interest car loans.


If it makes you feel good to pay off your 3% mortgage, go for it, but there's not a competent financial advisor in the world that will tell you that it's a good idea.

[Anonymous]

Anonymous wrote:Lawyer with law student loans.

I have a much higher net worth than I would with DR despite my loans because I:

1) ignored DR and took out $$$$ loans for a T10 law school which landed me biglaw despite median grades

2) ignored DR and bought a house despite still having tons of student debt

3) ignored DR and maxed out retirement saving $$$$$ on taxes given my double biglaw marriage

Honestly the market would have to get destroyed for me to not be better off having taken advantage of the tax savings given my tax rate.

Just curious. What would happen to you now if you lost your job and didn't get one for 6 months? Do you have the savings to pay for your mortgage and student loans during that time? How about your childcare?

[Anonymous]

Anonymous wrote:Lawyer with law student loans.

I have a much higher net worth than I would with DR despite my loans because I:

1) ignored DR and took out $$$$ loans for a T10 law school which landed me biglaw despite median grades

2) ignored DR and bought a house despite still having tons of student debt

3) ignored DR and maxed out retirement saving $$$$$ on taxes given my double biglaw marriage

Honestly the market would have to get destroyed for me to not be better off having taken advantage of the tax savings given my tax rate.

Except for incurring all that debt in the first place, I’m not sure this doesn’t make sense depending on (presumably high) income and total debt

[Anonymous]

Anonymous wrote:

Anonymous wrote:My physical and mental health improved when my debt was eliminated. Some people--like me--are physically and emotionally burdened by debt and the worry that comes along with in ways you cannot imagine. Paying off my debt as a top priority was the right path for me.

These are emotional decisions, not financial decisions. If it makes you feel better, go for it, but don't pretend that you are following an effective strategy for maximizing wealth.

As an economist myself, behavioral economis is a real thing and drives a lot of financial decisions within the economy and world of business and finance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My physical and mental health improved when my debt was eliminated. Some people--like me--are physically and emotionally burdened by debt and the worry that comes along with in ways you cannot imagine. Paying off my debt as a top priority was the right path for me.

These are emotional decisions, not financial decisions. If it makes you feel better, go for it, but don't pretend that you are following an effective strategy for maximizing wealth.

You may view "wealth" as solely numbers in accounts. I view it wholistically, as both financial security and being physically, mentally and emotionally healthy. If I were a multi-millionaire who had suicidal thoughts and couldn't get out of bed, I wouldn't consider myself to be wealthy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
That's a myth. If you left your accounts alone and kept investing right on through the recession, you did just fine.

Sure. but you'd have done even better to have spent the time leading up to the recession paying off your debts instead of investing that money. Then, when you paid your debt off a couple of years later, you could have bought in while the market was low and been further ahead.

That sounds like market timing because it is. That's the whole point. We don't know the future, and you can't time the market. The fact that someone missed out on the last year of growth because he or she was instead paying down debt seems like a really good point right now, but it was over a small window and things could just as easily gone the other direction.

That's why you keep buying all along, instead of waiting until you pay off your mortgage ridiculously early. So you're buying over that 30 year period of your mortgage.