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Dave's advice isn't perfect. You'll save more money paying off your lowest-interest-rate debt first instead of the debt with the smallest amount owed.
I think you mean the highest interest rate debt first...
I'm a long-time Dave Ramsey fan but haven't listened to his show in years. I used to download his podcast to my actual ipod (yes, that long ago!) to listen to at the gym. The stories were inspiring and helped me with being motivated to pay off some foolish cc debt and get on the savings right track. (no credit card debt for around 13 years) There is something psychologically motivating about paying off smallest to largest that overcomes any "savings" for paying off the high interest rate ones first. It is motivating to send in that final payment and then apply that extra amount to the next one and then the next one etc. That motivating keeps you doing it vs keeping around a bunch of piddly payments at low interest and attacking the high interest high balance card first.
I don't do the "envelopes" and I am not on board with used cars for the same reliability reasons mentioned above. I can still hear my parents and grandparents saying "You are just buying someone else's trouble" haha I know CPO is a good thing but a new car (that I drive for YEARS) is just one of those things I am willing to "sacrifice" for. (But I'll still pay cash for it! ;-)
Finally to the OP -- look for sponsorship to attend his series. My husband and I have a standing offer at our church to pay for 1 couple (or single) to attend the series since we feel so blessed by what we got out of just following him via podcast/radio.
Hello, Just a quick question. I was referred to the Dave Ramsey program in order to get my debts paid off, etc. I was fine doing that and do not have an issue attending the classes but the materials are rather expensive. Over $100. I realize it is probably worth it but I am already in debt and it doesn't make sense to get in further debt to do this program.
So my question is....does this program work and is it worth the money? I also noticed that some of the topics within the course do not apply to me. So I kind of am wondering if this is for me. I need to pay down my credit cards, clean up my credit score and save money for dental repairs, etc.
Please be honest with me with your answer. I am single...I don't have a home and live very humbly. My income level is not that great but not bad either.
Thanks so much for your help and suggestions.
You're right here. If you're at the point you need to go in debt to do this then you're already not listening to Dave's teachings. He would never advocate for that. Instead he would say you should save for it and pay cash. Just like anything else you want.
Started it 14 years ago. Nothing in the bank, plenty of debt, and a new house. I retired 2 years ago with a paid-for house and a net worth that ensures we live comfortably. I still work part-time with my own business, but that's more for extra "mad money" than anything else, and to give our oldest son time to get ready to take it over.
Worth it? EVERY cent. One suggestion - watch his website, because they go on sale pretty often. There's nothing "magic" about his method - but it forces you to think things out and plan - and THAT is where the key is. Start with this bundle he's offering right now - it'll get you well underway!
Wow...thank you so much for that advise and the link. Now I think I can do that. Should I participate in the class that meets every week or can I do this alone? I am not good in classroom situations. Too much wasted time in driving there...wasted talk, etc. but I will do it if it will help me out of this mess I am in.
I've learned great tips from his book and his radio show. I wouldn't buy the program, just buy the book and listen to his show and archived programs. Basic message is to increase your income, decrease non essential expenses, pay off smallest debt first then attack them one by one. There is no magic, just strong will to make whatever sacrifices needed and to say NO to debt.
Agreed... What he preaches is financial discipline, no more, no less.
He's made a career out of giving common sense advice to people who didn't have any common sense when it came to their finances.
That being said... there are some people who can reap a huge benefit from attending his classes. Not because of what the program involves, but I think it's more of a psychological benefit... You are attending class with others who are also in debt and want to get on better financial footing. There's no judgment, and for some people, seeing that they are not alone in their financial struggles does them a world of good, especially when they see others making progress towards their goals and encourages them to also stick with their plan and be disciplined.
I was an investment advisor years ago, and every now and then I'd get the person who just couldn't commit to a plan, sitting down one on one with me. But stick them in a room with other individuals with similar financial troubles and it would finally sink in for them. It was kind of fascinating to me, they weren't able to tackle their finances by themselves, but by being part of a group, a "team" they had much more discipline.
Wow..good point. I am not sure what would work for me..classroom or alone. I haven't been very disciplined because I was never taught this and my ex did all the finances. I also don't like numbers or paperwork, etc. I just don't like finances or doing it...not that I have no common sense but I like to spend and also I had to use credit cards to survive a very rough time after a horrible divorce where I got stuck with half of the bills that I never racked up. Long story that I want to make better. Thank you.
I'm not a fan of his advice to "drive a car you can buy with cash." For most people, reliable transportation is essential to having a good job. If you buy a cheap, old car, the likelihood of it breaking down and leaving you stranded are much higher than if you bought a newer car with a warranty. Also, the unexpected expense of mechanic bills is tough on even the best budget, and fixing your own car is beyond most people's skills.
Overall, his advice is very good, and I know he helps a lot of people get and stay out of debt.
We paid cash for all of our vehicles while following the advice from Dave Ramsey and none of them are
old or cheap and do not break down or strand us. They also did not have a warranty so your generalization is not true for all vehicles paid for with cash.
OP: If you get The Total Money Makeover book by Dave Ramsey it gives you what you need in my opinion. We followed it for 8 years and still use many of the things we learned to this day and will continue to follow those things.
We have no debt, no credit cards, have paid cash for everything including our vehicles *all 9 of them* and our home.
Edited to add: We actualy have bought 12 vehicles and paid cash not 9.
Dave Ramsey's methods can certainly work for many people, and as such he's worth trying if you struggle with financial discipline, but some of his advice I find non-optimal.
For example, I love credit cards. They are more secure than cash or debit, and because I always pay them off in full every month, I have never in my entire live paid any interest on a credit card. I do most of my purchasing online. I get several hundred dollars of free stuff every year just for using a credit card. But I do realize that for many people, there's a psychological effect where they don't realize the value of money unless they're using hard cash.
It's also a hell of a lot easier to get a home loan through most home lenders if you have good credit instead of "no" credit like Dave advocates. "no" credit is certainly better than bad credit, however. I recently bought a new construction home, and I wouldn't have been able to use the builder's preferred lender to save thousands on my closing costs (and yes, they matched the best interest rate I was quoted from other lenders - I did my shopping around) if I had no credit. Having no credit really limits your options when buying a home.
Some of his advice also seems to advocate sacrificing your own health just to save a little cash. For example, one time on his radio program he praised a young woman who had been sleeping on a broken down mattress for years to save a little money. I'm sorry, but that's insane - the back problems that that's going to cause down the road are going to be far more expensive to deal with than if the woman had just bought a decent $300 mattress. Eating nothing but beans and rice, while it may save money, can also lead to nutritional deficits and sub-optimal functioning of physiological and mental processes. Life's too short not to take care of your health.
So Dave Ramsey's methods do work for many people, but they are certainly not the only path to proper financial discipline. I'm naturally conservative with my spending habits, well on my way to retiring early, so I guess I don't really require Dave's extreme methods to keep my finances in order. But I certainly know people who are the opposite and live paycheck to paycheck despite even making more money than I do, and they could probably benefit from Dave's methods.
I do agree with you. I have in fact been afraid to look at his program for fear he is going to tell me to do this or that or say something that I don't feel is right like starving or sleeping on the floor, etc. I don't agree with any of that either as we only get one body and if we don't take care of it then that is it...But unlike you...I lack the knowledge or whatever it takes to better myself financially. I envy you...wish you could help me but I realize this isn't your job or calling in life. I just need a little direction. Scary for me. I never did the finances when married and I admittedly feel lost and like a child trying to navigate through life alone in this...
I think you mean the highest interest rate debt first...
I'm a long-time Dave Ramsey fan but haven't listened to his show in years. I used to download his podcast to my actual ipod (yes, that long ago!) to listen to at the gym. The stories were inspiring and helped me with being motivated to pay off some foolish cc debt and get on the savings right track. (no credit card debt for around 13 years) There is something psychologically motivating about paying off smallest to largest that overcomes any "savings" for paying off the high interest rate ones first. It is motivating to send in that final payment and then apply that extra amount to the next one and then the next one etc. That motivating keeps you doing it vs keeping around a bunch of piddly payments at low interest and attacking the high interest high balance card first.
I don't do the "envelopes" and I am not on board with used cars for the same reliability reasons mentioned above. I can still hear my parents and grandparents saying "You are just buying someone else's trouble" haha I know CPO is a good thing but a new car (that I drive for YEARS) is just one of those things I am willing to "sacrifice" for. (But I'll still pay cash for it! ;-)
Finally to the OP -- look for sponsorship to attend his series. My husband and I have a standing offer at our church to pay for 1 couple (or single) to attend the series since we feel so blessed by what we got out of just following him via podcast/radio.
Thank you. I looked into sponsored programs here at churches and can't find any. Thanks for your help...I am so encouraged and yet overwhelmed by all this info. Seems like a lot of work and years to get this mess fixed. I work a hard job already full time in a hospital and looking for a second job at a not so young age...Its exhausting to say the least. I feel alone and scared. Looking at retirement age in the next decade and have nothing as a single woman. I never thought I would be in this situation at my age. Its a bummer to say the least.
I try to do the opposite of my neighbors and it works great.
Don't get obsessed with your vehicles (buy used, CPO).
Don't overshoot on your mortgage, max 3X income, preferably 2.5X (plenty of folks easily going 4X to 5X, you know who you are)
Don't try to make yourself "look" like you are at an income level. No one cares besides yourself, chances are you are just faking it anyways.
For example, one of my neighbors is in his mid 40's with a wife and one young kid has 3 2017 cars (two mid-luxury, one economy). Makes no sense to me, but might make sense to him.
I see all kinds of goofy stuff in DFW all the time. Oh and neighbors buying a fancy golf cart to drive around the neighborhood...
Lol, I live in the Northern Dallas area too and I know what you mean. I don't have a mortgage. I rent. My credit is bad from a recent divorce where I was screwed from not having a good attorney. I inherited half of the debt while those credit cards were not in my possession. It didn't matter though...Texas law. I have a used car with high mileage and I cannot seem to get ahead. My full-time job is brutally exhausting as I work in a hospital. Cant go to school cause of the cost, hard to get a second job with my work hours and the fact that I am dead after my shifts. This is the hardest thing I have ever done but I am committed to staying single and doing things right, not violating my own moral values to be with someone to make things easier. But when you do things right it is sometimes harder in another way. Thanks for your help.
Lol, I live in the Northern Dallas area too and I know what you mean. I don't have a mortgage. I rent. My credit is bad from a recent divorce where I was screwed from not having a good attorney. I inherited half of the debt while those credit cards were not in my possession. It didn't matter though...Texas law. I have a used car with high mileage and I cannot seem to get ahead. My full-time job is brutally exhausting as I work in a hospital. Cant go to school cause of the cost, hard to get a second job with my work hours and the fact that I am dead after my shifts. This is the hardest thing I have ever done but I am committed to staying single and doing things right, not violating my own moral values to be with someone to make things easier. But when you do things right it is sometimes harder in another way. Thanks for your help.
I'm going to throw a wrench in here then run really far away.
Depending on how bad your finances are and with retirement looming ( meaning you REALLY need to start saving) Have you looked into/considered bankruptcy?
It gets a bad rap, but depending on just how much debt we are talking about, it may be a viable option. You can still learn to better handle your finances but if the plan is to live without credit anyway, i don't see how a Chapter 13 (or 7 if applicable) would do anything other than help.
Disclaimer: I am not at all familiar with Dave Ramsey or his plan.
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