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While they might try to hit up friends and family, that is often hard to do. I have spent 20 years counseling people in debt. They will run up the credit all the way to the limit and won't change their ways until they experience pain. With a debit card, they will run out of cash and will learn their lesson the hard way.
I doubt that the types of people you are referring to are like ME, who has over $200,000 in credit lines. Most people who are financially irresponsible might have about $5,000 - $10,000 in credit lines. You guys make it seem as though they have the AMX Black Card with an unlimited credit line on it.
Like I said, we can argue for pages on in. I'm the type that believes the bullet wound should be sewn up, not with a band-aid slapped on it.
The type of person you are describing is financially irresponsible, they more than likely don't even have a huge credit line to begin with. Instead of these band-aid solutions (cut up the credit card), how about get some financial discipline and strong financial management implemented within the person.
Credit Cards are a much more quality and superior form of payment. As long as you get them without annual fees and you pay them off either before the grace period....or pay them off on a 0% interest for 12 - 24 month deal.
- You get free income with Credit Cards in the form of 1% - 20% cash back
- You get real-time protection using the chargeback system
- You get to build up your credit history which helps qualify you for major purchases like a mortgage
- Using the 0% interest for 12 - 24 month deals, you have a source for emergency or investment capital
I like to focus on the solution, not band-aids. A person that is financially irresponsible usually has some sort of psychological issue going on that needs to be resolved. Cutting up the credit card isn't going to solve that. You can talk about them feeling the "pain quicker" by using the other payment options, but the problem usually is deeper than that.
They are paid on Friday, they are at the mall on Saturday, they are broke by Sunday, and they are back at work on Monday blaming "the man". This is how they operate. Cutting up a credit card is a band-aid solution to this, this person needs reconstructive surgery on their level of patience, discipline and financial management.
If they can't even BUDGET properly, what else are they screwing up on? They aren't putting away anything for retirement most likely, probably don't even have the proper levels of insurance, probably don't file/pay their taxes on time.
Forget these band-aid solutions............solve the problem.
Avoid debt, save, and invest. A motto pretty almost everyone should follow.
The idea is generally applicable, I agree.
The details are driven by psychology, however, and not math. It's fine for the audience he's targeting, but the step-by-step plan comes up a bit short for someone with even an ounce of restraint. For example, he recommends giving up 401k matching dollars until all consumer debt is paid off. So a person could be throwing away thousands or even tens of thousands of dollars by following the plan as it's articulated.
I doubt that the types of people you are referring to are like ME, who has over $200,000 in credit lines. Most people who are financially irresponsible might have about $5,000 - $10,000 in credit lines. You guys make it seem as though they have the AMX Black Card with an unlimited credit line on it.
Like I said, we can argue for pages on in. I'm the type that believes the bullet wound should be sewn up, not with a band-aid slapped on it.
The type of person you are describing is financially irresponsible, they more than likely don't even have a huge credit line to begin with. Instead of these band-aid solutions (cut up the credit card), how about get some financial discipline and strong financial management implemented within the person.
Credit Cards are a much more quality and superior form of payment. As long as you get them without annual fees and you pay them off either before the grace period....or pay them off on a 0% interest for 12 - 24 month deal.
- You get free income with Credit Cards in the form of 1% - 20% cash back
- You get real-time protection using the chargeback system
- You get to build up your credit history which helps qualify you for major purchases like a mortgage
- Using the 0% interest for 12 - 24 month deals, you have a source for emergency or investment capital
I like to focus on the solution, not band-aids. A person that is financially irresponsible usually has some sort of psychological issue going on that needs to be resolved. Cutting up the credit card isn't going to solve that. You can talk about them feeling the "pain quicker" by using the other payment options, but the problem usually is deeper than that.
They are paid on Friday, they are at the mall on Saturday, they are broke by Sunday, and they are back at work on Monday blaming "the man". This is how they operate. Cutting up a credit card is a band-aid solution to this, this person needs reconstructive surgery on their level of patience, discipline and financial management.
If they can't even BUDGET properly, what else are they screwing up on? They aren't putting away anything for retirement most likely, probably don't even have the proper levels of insurance, probably don't file/pay their taxes on time.
Forget these band-aid solutions............solve the problem.
Why is it always up to everyone else to solve the problem. Are they incapable of being adults? And you can't force someone to stop sabotaging themselves.
The details are driven by psychology, however, and not math. It's fine for the audience he's targeting, but the step-by-step plan comes up a bit short for someone with even an ounce of restraint.
Yep, he's targeting the people who find it hard to walk and chew gum at the same time. Try to get too financially sophisticated with the audience Ramsey's aiming at, and you'll lose them. They NEED simple, clear, and easy, even if it's not financially optimal advice. Hence stuff like the Debt Snowball. Sure, it makes the most financial sense to pay off the highest interest rate loan first, but if someone tries that and eventually quits in frustration because they don't see themselves making any significant progress, they're worse off than if they'd tried the Debt Snowball and paid off the smallest debt first and then stuck with the program because of the psychological boost paying off that small loan provides. The Debt Snowball approach has them paying more interest, but it achieves the ultimate goal: it gets the person out of debt, because they can stick with it.
A hell of a lot of financial success boils down to applied psychology.
Agreed.....but if a few of your friends bring drinks over then what? At some point you have to come to the term of being personally responsible and personally discipline.
Don't agree. You can bring a lunch to work, eat it, and still be hungry and decide to run down to McDonalds to fill up your stomach some more. It comes down to being personally discipline.
The examples you bring up are meaningless because there's a Liquor store everywhere, there's Fast Food restaurants everywhere, there are shopping malls everywhere. People have to develop budgets and discipline such as to CONTROL the consumption of said items and said spending.
Eliminating them in total isn't the answer because they can't be eliminated. That's what you don't want to seem to admit. I can bring a lunch from home every day of the week, I still have to pass McDonalds on the way to work and I still have to eat with people at work who will bring that stuff into the breakroom with them. If I have a discipline problem in relation to eating the stuff, I will fall off.
No....I disagree. But we can just agree to disagree man because we will go on for another 17 pages.
Your theory is that if a person is overweight, then let's try to keep them away from McDonalds. It would mean that McDonalds is causing the person to be overweight, rather than the person's habit of overeating. You can keep them out of McDonalds all day long, all they will end up doing is overeating on the stuff bought from the grocery store because they have a EATING PROBLEM.
Just like a person with a financial irresponsibility problem, taking the credit card away does nothing. They will run through all of their Cash/Checking/Debit Card Balance....then they will hit up their friends and family to borrow money to run through their money next.
Right, so...if someone is trying to quit smoking, they might as well just have cartons of cigarettes sitting around their house rather than get rid of them, because HEY, they could always just run out to somewhere and pick up some smokes, right?
If you truly believe that, then there's no sense arguing with you.
Yes it does work for the average person if you can discipline yourself. And it also helps you learn how to manage your money after you are debt free, it's habit forming. Once you've paid off debt you can progress to the next step. You even learn how to use good debt to make money, example in real estate investing.
Key, you have to be determined, you have to control yourself, you have to want it bad enough.
I can tell myself Im going to put $100 in emergency fund but if i dont have $100 extra dollars and cant cut back anywhere, his plan is null.
I can tell myself Im going to put $100 in emergency fund but if i dont have $100 extra dollars and cant cut back anywhere, his plan is null.
(example, not my exact situation)
They can choose to be a naysayer if want instead of finding a way. if they refuse to and choose a looser mentality they are screwed and will always struggle. It's up to them.
Its not a naysayer or choosing not to find a way. If you live bare bones and have a smaller income, you cant always save up like he claims you should.
Not everyone has a giant income or $500 iphone.
I've seen people in this situation wasting money on cigs and booze, spending money on ridiculous things. Then go crying to mom and dad that they don't have money expecting the 70+ year old parents to pull out their wallet on their fixed income to give money to them.
I've seen where someone daughter couldn't afford a car so fixed income mom co-signed the loan, bad decision. Then when the daughter didn't pay the car loan the bank came after 75 year old fixed income mom. Nice huh?
I thought to myself, BIG DEAL! They made $600k in 4 years. How hard is it to pay off a $120k mortgage if you make $150k a year???
My wife and I make a bit more than the $175k in you post, however, $55k of it goes to taxes. Now add our mortgage, living expenses, insurance, retirement, etc. and there isn't as much left over as you think.
Someone with a higher salary will have living expenses proportionate to their salary so it isn't as cut and dry as you're making it sound. Of course, I would have more left each month if I lived like we only made $50k per year but what is the point of working so hard for our higher income if we're going to live like we did when we only made $50k?
I'm not advocating living beyond your means but I do believe in enjoying what you've worked for.
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