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09-09-2019, 11:06 PM #1
If I followed Dave's advice I would be broke now
I noticed that over the years Dave Ramsey has changed some of his positions. Before if someone had two debts, one for $6000 at 30% interest and another debt of $3000 at 4%, he would tell them to pay off the $3000 smallest to largest while the higher interest loan grows. I understand that point but lately he has changed his position for the better on that. I even hear him sometimes tell people to take out a lower interest loan to pay off a higher interest which is good. Before he would say that you cannot borrow your way out of debt.
The two craziest thing he has ever said in the past but no longer does unless someone is totally out of options, is when someone could make $100k but have a $20k car loan and he would tell them no debt of any kind, sell the car, buy a piece of crap, then get a loan for the difference. Now he tells them to pay the car off quicker.
The main reason for my topic is that I worked in a very tough industry for eight years as an employee and followed the Dave plan to a point as far as lowering your personal expenses which I totally agree with. With sacrifice and working seven days a week I paid off my house and I never had any credit card debt so I was totally debt free for years. Though I realized its not a big deal since I am not a big spender so I didn't even notice a change in having an extra $900 a month in savings from a mortgage.
While I was being totally beat down by my job I spent years trying to find another company to work for but they all follow the same script where if one company offers something they do the same. If one company lowers their pay then they do so the same. I loved my job but wanted to do things more efficiently and without the drama. I did something that Dave would have never approved of, I took the plunge and got a $200,000 business loan, put $50k down to start my own company.
I can hear Dave now saying how its just a huge risk and once I borrow money my life will be ruined and have problems every day. Here is the thing, I grew up poor and lived lower middle class my entire life. I made $80k as an employee, and I expected to make around the same after business expenses except I would have more freedom. To my SHOCK I was bringing in $35,000 per month I had no idea there was so much money to be made. I already paid off the $200k business loan and living like a king. I can fly first class to anywhere I want around the world no problem.
This is not the end of the story, the odd thing is without warning the company I worked for eight years shut down the department I was in and everyone I used to work with got laid off. So right now I would have been looking for a new job making the same pay while saving up $200k for years instead of making $400k. Dave is keeping everyone middle class until they retire 50 years later with a million dollars in a retirement account. This is what the government and corporations want they do not want you to be rich they want you to rely on them. I have people contacting me all the time asking for a job making 70% less than I make as an employee for the same amount of work it is amazing.
Last edited by Nashville NoDebt; 09-09-2019 at 11:20 PM.
09-10-2019, 12:02 AM #2
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Dave is is the business of selling books and advice. It's up to you to make the best decision for your personal situation. In your case, you did good following your gut instincts and taking a risk. A lot of people would have failed at it in different situations, different locations, with different backgrounds and different personal goals.Stop trying to organize all of your family’s crap. If organization worked for you, you’d have rocked it by now. It’s time to ditch stuff and de-crapify your world.
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09-10-2019, 04:18 AM #3
I'm glad your path was a prosperous one. Sometimes taking a risk can pay off.
When we were thinking about getting a rental property, I asked my sister what she thought. My BIL is a real estate appraiser and has owned rental properties in the past. How does he determine the price that should be paid for a property? He had a formula and after doing the calculation, the answer was to NOT buy the property. DH and I felt that the property was in a desirable area, near a college, had a tenant and so we bought it. The value has gone up 50% in 2 years and we were able to rent it out within 3 weeks after the last tenant left.
I know Dave loves rental properties. I don't know how he calculates the reasons to buy and at what cost. Had we followed my BIL formula, we wouldn't have been in a financially dire situation, but we certainly wouldn't be allowing a renter to pay our home mortgage either. The rental was paid in cash, so we're not losing anything. And the kids can have it if they need a place to live or want to sell it.
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09-12-2019, 04:14 PM #4
Yup and the cool thing is that I am helping out friends and other people who may need some financial help now. I used to be kinda greedy since I worked so hard for the money to just give it away and be broke but now I have so much leftover I do not mind helping others.
09-12-2019, 07:06 PM #5
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Let's face it, Dave is not poor....everytime he sells a book, it's money in his pocket and out of yours......maybe what works for him won't work for you.....he has some good advice but some I don't agree with. You kinda have to do what's best for you and your family.
12-17-2019, 12:37 PM #6
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I agree that Dave has some good advice and his plan can work for a lot of people. It doesn't work for us.
Here's my current story. We just refinanced our home for 30 years and took out the equity too. We paid off our 401k loans and will be taking out a new loan. We will then pay off almost $40,000 in credit card debt. Some with interest rates as high as 27%. Our 401k loan is 5.75% and will be paid in 5 years. We will still have 3 cc to pay off as well as a car loan. We currently have an 8 year plan. That plan will pay off every debt we have AND our house. For us, going Dave's route, we'd be in debt for another 15-20 years. We are getting close to retirement age and we don't want any kind of debt if we can avoid it. Our emergency fund will be much higher. We know of things that will possibly need to be replaced or fixed over the next few years and we don't ever want to be in a position to have to use credit. There may be a month here or there that we aren't "gazelle intense", and that's okay. That's part of our plan.
The best thing to do is what is best for you. We tried Dave's plan and it's just not working. We weren't seeing any progress. With our new plan, there won't be a ton of bills to pay each payday. A good portion will be a payroll deduction and we won't even realize it. It will feel like we did something.
But like I said, Dave can work for a lot of people You just need to figure out what works for you.
12-22-2019, 07:25 PM #7
My church wanted me to teach the Dave Ramsey Course because I was the only CPA in the congregation. I thought about it but just couldn't do it because Dave and I disagreed on too many points. I subscribed to his Podcast for about three years just to see if he would change. I also subscribed to Suzy Orman and her advice was more inline with my thinking.
Dave's plan is for people who are deep in debt with low income. His plan appeals to those who don't understand financial concepts or who don't have discipline. I agree with much of what he says for his targeted audience.
But as everyone else has said, do what works best for you.
I took a huge cut in pay to leave my private practice and teach at a college. I don't regret it for one minute.Kim
The Lord will provide