Dave Ramsey, debt, credit cards, retirement, etc

32vickie

32vickie

X-
Location
Pipersville, PA
So how is everyone doing? Still working on reducing debt and trying to get wife on board. Brother in law now that is another story he will probably file for bankruptcy before the end of the year and is costing him his marriage.
Thinking about halting my contribution to my 401K ($420) and taking that extra money and paying off some small credit card stuff. What do you think. Working out the payments tonight and I will see how many months it will take.
Also rebuilding the emergency fund due to needing new tires on the car for inspection and new oxygen sensor on the truck.
Doug
 
SuperJETT

SuperJETT

So long and thanks for all the fish
Location
none
We're still plugging away, though it's slowed down due to some medical bills and car repairs.

BUT, and a big but, we haven't had to charge anything, and only one of those had to come out of the baby emergency fund, the rest was cash-flowed by reducing our debt payment so our total debt was still decreasing while paying for those things. That's a big deal to us.

Our Christmas shopping is almost done and we still have a little $$ in that account, so that's good too.
 
Snackem

Snackem

Danger Zone
Location
Colfax WA
32vickie said:
So how is everyone doing? Still working on reducing debt and trying to get wife on board. Brother in law now that is another story he will probably file for bankruptcy before the end of the year and is costing him his marriage.
Thinking about halting my contribution to my 401K ($420) and taking that extra money and paying off some small credit card stuff. What do you think. Working out the payments tonight and I will see how many months it will take.
Also rebuilding the emergency fund due to needing new tires on the car for inspection and new oxygen sensor on the truck.
Doug
Click to expand...


Since you asked what I think and I'm never shy to give my opinion. . . I'd stop the 401 K for a short time while you pay down the debts. Then I'd start with the 401K again only I'd put a lot more in there (like the $420 you're doing now along with whatever yoiu a paying towards your credit cards). I don't know your card balance but I'm guessing that with the extra $420 you'll pay them off pretty quick and then you can really sock some money away for retirement, or a 'new' ski. :firedevil:
 
32vickie

32vickie

X-
Location
Pipersville, PA
Just think if you used that extra money to reduce debt you could have purchased a 760 with cash later. :arms:
Maybe i should take my own advice. By By 401K for a couple of months.
Hello to paying off the CC faster and paying cash for a square or early round nose.:cheer:
 
SuperJETT

SuperJETT

So long and thanks for all the fish
Location
none
I dropped my 401k down to 1% (plus 1% match) temporarily to help pay debt. Ramsey recommends it, as long as it's not for more than 18-24 months I believe.
 
J

jetskiier

X
Location
...
I've been listening to the Dave Ramsey show online as often as I get the chance, but he gives some advice that I don't necessarily agree with;

One caller was in school and had around 15-20k in student debt at 0% for the next couple years (the interest didn't start until after graduation), he inherited enough to pay off the loans and was asking if he should pay them off now or wait until just before the interest starts on the student loans. Dave told him to take the money out of the money market and pay off the student loan. Why does this make more sense than collecting ~5% interest for 2 years? He asked would you take a student loan to invest in the money market, and the answer was no, but this was already done, I would personally collect the interest.

Another caller spent his 'emergency fund' on his sisters roof and the blew the motor in his car, and only had $800, and wondered if he should take out a 2-3k loan to buy a car, Dave told him to buy and $800 car, save up then buy a $1500 car, save some more until he can afford a $2500 car, but it and save until he can buy a $5000 car... I understand how this works on paper, but does he not understand the taxes, title, safety... fees everytime you buy a car. To me it makes more sense to borrow $2k and pay it back as fast as possible rather than flipping cars every month or two.

His answers are usually pretty predictible, and his theory is pretty simple but it seems to work for lots of people, these are just two cases I have heard in the 3-4 shows I have listened to that I don't agree with. I think he is trying to over simplify things, or do you guys agree with him?
 
32vickie

32vickie

X-
Location
Pipersville, PA
I agree with you and I would keep the money in the bank until the student loans kick in. He could be thinking that the debt would be paid off before you could find something to buy with the money. Me personally I would get a 12 month CD and when it matures get another and then pay off the loan. But most people are not like that. The money burns a hole in their pocket. As for the car he probably thinks a person will hold on to the car until the 800 dollar car dies and by then they will have plenty of money to buy a better car. We have three vehicles two are paid for and the third has 20 months left. I use the older car to go to work and keep my truck for the weekends and towing the toys. Could I sell one and get out of dept faster. Yes but we would then have to give up on doing things with the family that we call love.

Doug
 
Mile9c1

Mile9c1

X-H2O.com
Location
Grand Rapids, MI
Dave has strong principles. Debt is debt, no matter what the interest rate. Sure the student loans are free till graduation, but will the inheritance still be there?? Good chance something will come up and the money will be gone. Most people don't have good money discipline, which is why they have debt in the first place.

Dave didn't say that called NEEDED a nicer car every time he had the chance. You don't need to buy a nicer one if you don't want to, but if you have cash for one and it's something you want, then it's okay to buy the car. I've been driving a $600 car for the last 7 months, and I drive 100 miles every day. It's got 200,000 miles on it. I don't plan to upgrade till it dies.
 
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Mile9c1

Mile9c1

X-H2O.com
Location
Grand Rapids, MI
Hey that's not Dave :rippedhand:

I respect Dave and all, but does anyone have mutual funds that actually average 12% every year? I am invested in about 10 different funds and they are not even close.
 
michael950

michael950

for me to POOP on!
Location
Houston, TX
Then you need to dump those funds and invest in something else.

I did a project for finance to find 3 different MFs that returned no less than 15% over the last 10 years and 4 stocks with 5-yr projected growth of no less than 15%.

There is other information to watch for, but if you are not earinging more than 8%, they are not working for you.


[Investment in anything all depends on your objectives, the prof wanted 15% b/c we are young and can invest in the more aggressive stocks/MFs. But for someone who is about to retire, you want that money to be safe so you invest in less risky investments]
 
michael950

michael950

for me to POOP on!
Location
Houston, TX
http://www.morningstar.com > Funds Tab at the top > Morningstar Tools (left of ad on right) > Mutual Fund Screener

There are some predefined screens by pressing the light green "Moningstar Scrrens" button.

Watch those Returns, screen for more than 15% over 10 years (or exceed the S&P/market)
 
Mile9c1

Mile9c1

X-H2O.com
Location
Grand Rapids, MI
All my mutual funds are in retirement accounts, I can't change to whatever I want.

I don't have any mutual funds for my savings... in fact Dave Ramsey says never put money into mutual funds unless you're going to keep it there for more than 5 years. I knew it wasn't Dave in that presentation :Banane01:
 
michael950

michael950

for me to POOP on!
Location
Houston, TX
Some retirement accounts do allow you to choose into which MFs your money goes, some have a list of selected MFs and some give free rein on your selections.

Also, with IRAs you get to choose where your money goes.

The Auto segment recommended investing your car payment into a MF savings account for the long term.
 
Mile9c1

Mile9c1

X-H2O.com
Location
Grand Rapids, MI
michael950 said:
Some retirement accounts do allow you to choose into which MFs your money goes, some have a list of selected MFs and some give free rein on your selections.
Click to expand...

I have free rein, but only of a few selections. My last company was the same way, but I think those funds were even worse. Oh well.


Nice work SuperJETT! :arms:
 
Mile9c1

Mile9c1

X-H2O.com
Location
Grand Rapids, MI
Do jetskis count? I keep a 6 month cash emergency fund, and after I pay the bills I max out my 401K, and then pay off debt. I haven't started a Roth IRA yet, but I plan to. I don't want to end up 60 years old and broke.
 
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