Well here's the thread. We had a nice thread going in the classifieds for my truck sale. What is your opinion of debt? I subscribe to Dave Ramsey's plan-no debt except the house. I didn't always think that way, and my net worth shows it. How does everyone else feel? More details can be found in my 2006 Suburban for sale classified.
Debt-Dave Ramsey
- Thread starter mxz_chris
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Yooper_Bob
New member
I wish that I had learned the lessons he teaches when I was in my twenties rather than in my forties.
I have never carried any credit card debt, and never bought any "toys" (boats/sleds/motorcycles) on credit, but certainly financed my share of new cars and trucks.
When I look back at all of the brand new cars and trucks I bought which I could "afford" the payment on.....if I had skipped buying those, my net worth would be several hundred thousand dollars higher.
What he teaches is really just "common sense", but in a very structured manner (which most people need).
FYI....I have been 100% debt free now for 6 months!
I have never carried any credit card debt, and never bought any "toys" (boats/sleds/motorcycles) on credit, but certainly financed my share of new cars and trucks.
When I look back at all of the brand new cars and trucks I bought which I could "afford" the payment on.....if I had skipped buying those, my net worth would be several hundred thousand dollars higher.
What he teaches is really just "common sense", but in a very structured manner (which most people need).
FYI....I have been 100% debt free now for 6 months!
I posted on the other thread, which dealt with car debt. I like listening to Ramsey, but I'm not sure I always agree with everything. I think his strategy with buying a car is:
1. Keep driving what you have while making payments to yourself.
2. Gradually trade up after time (after 1 year, you can buy a $4000 car, after 2, trade it up for an $8000 car, for example).
3. Never buy new cars, thereby avoiding the initial depreciation hit.
Well, I think a decent alternative is to buy new or almost new (ensuring that your vehicle was never abused), and keep it for the long haul (8-10 years). If you take care of a solid new car these days, it should last you that long, probably longer. And a $20k car over 10 years is only $2000/year, which doesn't seem too bad. Yes, you'll likely have some interest, but rates are so low right now it's not all that significant. I think the biggest risk to this strategy is that the type of car that meets your needs will likely change in 10 years, which means you may have to sell, realize the hit from depreciation, and start over again. If you decide to sell or HAVE to sell, you could end up losing.
I always bought used in the past, but this year I talked myself into taking advantage of the cash for clunkers program and bought a new altima. It's about 10 months old now, and while I like the car, I don't making payments. I just looked up the value, and the trade-in value is slightly greater than what I owe on it (as Uncle Sam essentially paid for the initial depreciation hit via the Cash for Clunkers program). And, I looked up the value for the same vehicle but one year older, and it's a difference of only about $1500. So it seems the real cost for me to drive this vehicle for the next year will be about $1500 (depreciation) + the interest cost. Hard to argue with that.
On the other hand, if I would have saved the payments I made this year, I'd have about $3000 set aside for a new, used vehicle, plus the $1500 or so my cash for clunkers trade in was worth.
1. Keep driving what you have while making payments to yourself.
2. Gradually trade up after time (after 1 year, you can buy a $4000 car, after 2, trade it up for an $8000 car, for example).
3. Never buy new cars, thereby avoiding the initial depreciation hit.
Well, I think a decent alternative is to buy new or almost new (ensuring that your vehicle was never abused), and keep it for the long haul (8-10 years). If you take care of a solid new car these days, it should last you that long, probably longer. And a $20k car over 10 years is only $2000/year, which doesn't seem too bad. Yes, you'll likely have some interest, but rates are so low right now it's not all that significant. I think the biggest risk to this strategy is that the type of car that meets your needs will likely change in 10 years, which means you may have to sell, realize the hit from depreciation, and start over again. If you decide to sell or HAVE to sell, you could end up losing.
I always bought used in the past, but this year I talked myself into taking advantage of the cash for clunkers program and bought a new altima. It's about 10 months old now, and while I like the car, I don't making payments. I just looked up the value, and the trade-in value is slightly greater than what I owe on it (as Uncle Sam essentially paid for the initial depreciation hit via the Cash for Clunkers program). And, I looked up the value for the same vehicle but one year older, and it's a difference of only about $1500. So it seems the real cost for me to drive this vehicle for the next year will be about $1500 (depreciation) + the interest cost. Hard to argue with that.
On the other hand, if I would have saved the payments I made this year, I'd have about $3000 set aside for a new, used vehicle, plus the $1500 or so my cash for clunkers trade in was worth.
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I recently read one of his books, upon my wifes request. He makes a lot of good points that I believe some people need. Alot of it is common sense though. There was not much that I could use from his book, because we are in a good place financially already. We have a mortgage, but not one that has use in a bind at all. I would recommend him to anyone with any debt more that a home mortgage. Considering all of the foreclosure these days, many people need his advice.
polarisman_98
Member
I also posted in the other thread. I discovered Dave Ramsey on the radio about 8 years ago and thought his show was interesting. I did not initially subscribe to the idea but decided I'd try it several years ago. I continued listening to the radio show and read his books. My wife and I then went through his program "Financial Peace University" in a group setting at our church. It was a great program and taught some really good no-nonsense, common sense things. We have been debt free (except the mortgage, which is on a 15 year fixed and is set to be paid off early) for about three years now and it’s a great feeling.
Dave Ramsey always says, "Live like no one else so that later, you can live like no one else". I'm in the LATER portion and it’s great. Just paid cash last month for a "new" (2008) car and will be paying cash for a new (2010) sled this fall.
It's easy to save lots of cash when your income isn’t sucked up by monthly payments.
Dave Ramsey always says, "Live like no one else so that later, you can live like no one else". I'm in the LATER portion and it’s great. Just paid cash last month for a "new" (2008) car and will be paying cash for a new (2010) sled this fall.
It's easy to save lots of cash when your income isn’t sucked up by monthly payments.
polarisman_98
Member
Jr37, the program that we went through was a video series - we didn't actually see him in person. He does travel around the country quite often doing seminars and presentations though.
On the radio, I listened to AM 790 out of Eau Claire when I was in college. I see you're in Marathon, I don't know if one if the Wausau stations carries his program or not. I think he has a list of syndications on his website daveramsey.com. I don't get the Eau Claire station here in Tomah but I listen on XM Radio channel 165. He's on daily 11am-2pm central.
He's also on Fox Business Channel every evening.
On the radio, I listened to AM 790 out of Eau Claire when I was in college. I see you're in Marathon, I don't know if one if the Wausau stations carries his program or not. I think he has a list of syndications on his website daveramsey.com. I don't get the Eau Claire station here in Tomah but I listen on XM Radio channel 165. He's on daily 11am-2pm central.
He's also on Fox Business Channel every evening.
I am allergic to debt, been there done that. We live frugaly, but can afford more. But Do we need those things? We pay cash for every thing, and do ok. At 52 I own my home, fridge, boats, cars, ect. When your young you need those things, so you borrow. Have to start out. Its not easy when you are young and need to provide for your family. If you take care of your cars they take care of you, preventive mant. is cheaper than a new car. I spend my days snorkeling, diving, and fishing, when we can fill the boat[60 gallon tank] caught a red snapper 26lbs, sold it at the landing, covered 2 days of boating, wish every trip was like that. Life is good, debt is not. Work smarter, not harder. Wish I could teach my kids that. They will learn, same way we did.
mxz, sorry if I started the twist on your Suburban thread. I am interested in this. I find it scary when you hear on his tv show that someone makes 30K a year and owes $75K on Credit cards, has a $1000/mo mortgage and a $500 per month car pmt. I personally don't care if I have a car pmt and mortgage, as long as we can do the things we like to do. I hate the cc debt and other debt like sleds, toys, etc.
Learnin as I go.
m8man
Learnin as I go.
m8man
I've never even heard of Dave Ramsey but we've tried to live by the debt free motto. We do owe on our house but have no other debt. It was easy when my wife worked. we'd buy new vehicles, sleds, etc and always pay cash. Now we have older 6-7 yr old vehicles and just don't have the cash to replace them. But, we own our cabin outright, our vehicles, just bought a new sled this spring, a new to us camper last fall, so we do OK. I would reallly like a new truck though!
eagle1
Well-known member
People need to remember the "other" payments not just car,mortgage,toys. Look at what people are paying a month for cell phones, cable tv,restaurants, ect....
Figure out what you pay in a year and multiply by 10. That's a lot of coin for that cell phone or cable in 10 years and what do you have to show for it? That's why I have "rabbit ears" and a very cheap cell plan ($29).
I don't think making payments is necessarily bad thing if it's within reason and your budget especially now day with low interest. I'm with you elf, I want a new truck
Figure out what you pay in a year and multiply by 10. That's a lot of coin for that cell phone or cable in 10 years and what do you have to show for it? That's why I have "rabbit ears" and a very cheap cell plan ($29).
I don't think making payments is necessarily bad thing if it's within reason and your budget especially now day with low interest. I'm with you elf, I want a new truck
Professor PC
Banned
there is a slightly better way if you interested....i only know ARCTIC CAT and FORD but you can look up what kind you like...all are the same....so when left over sleds 2 to 3 years old dont get sold and the dealer nolonger wants them they all go to a place called RVSPORTS.com...you can buy a BRAND NEW, STILL IN THE CRATE 2007 or 2006 for 4000 dollars depending on engine and whatnot with a WARRANTY STILL...go look
then all FORDS unsold go to a dealer in ST.JOSEPH MICHIGAN and i forget the name and do not know if they got hit in the dealer melt down....but i went there and was able to buy 2....not 1....BRAND NEW FORD RANGERS with ZERO miles and WARRANTY for 10,000 each....each had the original sticker from the dealer that sent it back to them stating 21,000 each....which saved me 22,000 dollars plus shipping and all that other stuff to the tune of 23,500 dollra savings and drove of the lot with 2 BRANDY NEW TRUCKS for a fraction of the real price
FYI....ramsey makes his money off of YOU....listening to his crap and buying and going to his shows......not the stuff he tells you....he dont even do that crud....but it is COMMON SENSE ADVICE so i'll give em that
THINK OUTSIDE THE BOX
then all FORDS unsold go to a dealer in ST.JOSEPH MICHIGAN and i forget the name and do not know if they got hit in the dealer melt down....but i went there and was able to buy 2....not 1....BRAND NEW FORD RANGERS with ZERO miles and WARRANTY for 10,000 each....each had the original sticker from the dealer that sent it back to them stating 21,000 each....which saved me 22,000 dollars plus shipping and all that other stuff to the tune of 23,500 dollra savings and drove of the lot with 2 BRANDY NEW TRUCKS for a fraction of the real price
FYI....ramsey makes his money off of YOU....listening to his crap and buying and going to his shows......not the stuff he tells you....he dont even do that crud....but it is COMMON SENSE ADVICE so i'll give em that
THINK OUTSIDE THE BOX
Dave Ramsey's deal is great. I took the Financial Peace University course last fall partially as a barter with my sister. (Her husbands been laid off for quite a while, things were pretty tight for them and her van blew head gaskets after a long list of other repairs) I did the repairs for her for cost of parts to help them out, and at that time They were going through the FPU course--she said she'd pay my way to the course to at least give me something. Took the course and learned a whole lot. Also found that theres lots of people out there who are pretty much clueless on personal finances stuff.
Somehow I managed to get through the early-mid twenties without buying the new truck, sleds, big screen tv and all the other stuff you'd like to have, that can be tough when your buddys have nice new everything. I lived with my parents for a while, paid off college loans, tool loans, car, etc.... Currently have only a mortgage payment (80/20) and am working on paying off the 20% loan. I bought with no down payment-dumb! From the time I bought the house I knew that eventually I'd add on to the garage, saved some money and was planning to finance part or most of it. Talking to the bankers I realized that by not having much (any) equity in the house I wouldn't be able to borrow under favorable terms, esp after the housing crash. Ran some #s and realized that If I worked hard and saved hard, I could do it with cash. Now garage is up, heated, insualted, all the bells, and zero payment. It's an awesome feeling! I've kept up the saving plan and have also been able to upgrade lawnmower, snowblower, and 2 sleds within the last year, not a dime owed on any of them! (None of them are brand new but very slightly used good craigslist deals)
FYI my saving plan is simple. If you have direct deposit at work, simply have part of each paycheck deposit right to your savings account. At my work, it can be either a $$ amount or a %. I do % because my checks can vary a lot. It took some adjusting to get used to, but once your used to it, its completely painless and very rewarding. Hopefully nobody takes my post as bragging, certainly not meant that way, just trying to help inject some optimism!
Somehow I managed to get through the early-mid twenties without buying the new truck, sleds, big screen tv and all the other stuff you'd like to have, that can be tough when your buddys have nice new everything. I lived with my parents for a while, paid off college loans, tool loans, car, etc.... Currently have only a mortgage payment (80/20) and am working on paying off the 20% loan. I bought with no down payment-dumb! From the time I bought the house I knew that eventually I'd add on to the garage, saved some money and was planning to finance part or most of it. Talking to the bankers I realized that by not having much (any) equity in the house I wouldn't be able to borrow under favorable terms, esp after the housing crash. Ran some #s and realized that If I worked hard and saved hard, I could do it with cash. Now garage is up, heated, insualted, all the bells, and zero payment. It's an awesome feeling! I've kept up the saving plan and have also been able to upgrade lawnmower, snowblower, and 2 sleds within the last year, not a dime owed on any of them! (None of them are brand new but very slightly used good craigslist deals)
FYI my saving plan is simple. If you have direct deposit at work, simply have part of each paycheck deposit right to your savings account. At my work, it can be either a $$ amount or a %. I do % because my checks can vary a lot. It took some adjusting to get used to, but once your used to it, its completely painless and very rewarding. Hopefully nobody takes my post as bragging, certainly not meant that way, just trying to help inject some optimism!
Professor PC
Banned
i just checked RV and everything sold cept 1 2009....you gotta check ever year
polarisman_98
Member
PC - I don't think anyone is going to disagree that there are good ways to find good deals out there; that's not even what this thread is about.
And of course the guy makes money from his radio and tv shows, books, and live events. It's his job and I know he's not doing it all for nothing. If you listen to him for five minutes you know the guy is full of integrity and he truly wants to help people. Also, in reference to your statement that "he dont even do that crud", I know for a fact that he does. He always talks from his own life experiences when he teaches. Check out 'My Total Money Makeover' from your local library and read it. You'll see what I mean. Good stuff...
FYI....ramsey makes his money off of YOU....listening to his crap and buying and going to his shows......not the stuff he tells you....he dont even do that crud....but it is COMMON SENSE ADVICE so i'll give em that
THINK OUTSIDE THE BOX[/QUOTE]
Of course he makes money. He is not shy about telling us that he is doing great. The point is that he is trying to help us do the same. If you actually do some research, you'll see he is debt free, did declare BK after making a lot of mistakes, learned from them, and is now devoted to helping others recover from their mistakes. He is a free market conservative businessman, and makes no bones about it. But he is not a fake.
THINK OUTSIDE THE BOX[/QUOTE]
Of course he makes money. He is not shy about telling us that he is doing great. The point is that he is trying to help us do the same. If you actually do some research, you'll see he is debt free, did declare BK after making a lot of mistakes, learned from them, and is now devoted to helping others recover from their mistakes. He is a free market conservative businessman, and makes no bones about it. But he is not a fake.
Life too short not to have nice things to make payments on. I like new stuff and not old junk.
As long as I can afford the monthly payment I will buy it.
You will never know when your time is up.
FYI:for all you tight wads out there you cant take all your hourded cash with you when you die!
As long as I can afford the monthly payment I will buy it.
You will never know when your time is up.
FYI:for all you tight wads out there you cant take all your hourded cash with you when you die!
No but I can leave a family well off, and children who live their lives responsibly. And not lose everything if times get tough for a little while. My paid for stuff can be sold to help out with bills (if my emergency fund is gone), the bank just takes your stuff if they own it. And you're still broke..02.
cuzzinolaf
Well-known member
I agree if it is within reason. You only live once and I'd rather have a nice sled, boat, etc., while I can enjoy it. I think that credit card debt is OK if you pay it off in a certain amount of time and don't go crazy.
That is what life insurance is for. I don't think debt means that people lose everything if times get tough. I think if you have a security fund and have a majority of stuff paid for that you'll be fine.
I like to take a "middle of the road" approach. I do have life insurance for my family in case I die. In fact, I am worth more dead than alive. I do have some debt but it is under control. I always pay cash for toys and vacations. I have a mortgage and student loan. I take out small loans for cars but usually pay them off early. I do put money away every month for 401k and IRA's. I like to be able to enjoy today but put money away so I can also enjoy tomorrow. Someone once told me, it does not matter what you make, if you spend less than you make you should be finacially ok.