Dave Ramsey-Financial Peace University

[capitalcityguy]

I've never taken the class, but have heard him enough on the radio and read one of his books.

I think the biggest financial impact he has had on my family's finances was to get me to open my mind to paying off our mortgage early. Yes it was cheap money given our low interest rate, but at some level I'm not real comfortable with the long term financial health of our country so investing in something solid like not owing the bank any money if (when?) things go bad, is a vnice ongoing peace of mind.

As for worrying about living a hermit life as some always want to suggest -- take your mortgage payment and think about what that would be like to now keep in your checking account every month instead of paying it to X bank/mortgage company.

 

[acody]

My church has always offered this course, so I decided to sign up and see what I can learn, 1st class was last night. I'll give a brief background then ask a couple questions of folks who have taken the course or can share financial advice....

My wife and I are both 30. We have paid off all ISU student loans. We have both of our cars paid off. We have lived in our house for about 4.5yrs now. I realize that these are already good accomplishments according to his "Baby Steps." In addition, we have a savings account with $40k+. I guess that is our "emergency account," although we haven't really designated its use. Could be for future trips, house, etc. We don't have any kids yet, but that is a good possibility.

Both of us have a bank credit card. I keep mine with a low balance and pay it off monthly. She is a higher balance than me but still stays on top of it. She also has a couple retail cards which she pays off.

Lastly, both of us have been working corporate jobs for 7 years now and have been contributing to 401ks for company match. I actually put in 15% right now, with my company matching 50% of the first 7%. I also have a company-funded pension, and we have been maxing out Roth IRA's for about 5 years now.

So from what I learned thru Class 1, we are doing very well in terms of getting rid of all debt aside from our mortgage. We have a good amount of liquid cash saved up for emergencies. It seems we could do a better job of earmarking $ or creating sinking funds for specific future expenses.

I assume as we go through the class Dave will get into more detail on investing and preparing for retirement?
Should we split up some of that cash and put some into an account that at least gets some interest? I've never really thought out saving for my kid's college but I see that will be part of the plan. What is the best route to start a fund and let it grow?

Sorry this got long. Just looking for some advice on how to keep taking good financial steps. Thanks!

Wow! Congratulations. You and your wife are well ahead of most people in your age demographic. You have $40,000 in savings account which is amazing. I've listened to Dave Ramsey often but have not taken his classes. I agree with most of his financial fundamentals on debt, spending, etc. I think he gets way too carried away with eliminating all debt, especially mortgages. Our economy is very much centered around home ownership and with interest rates so low for so long, it's ok to have a low interest rate mortgage. I also believe everyone should own a reliable safe vehicle which may require an auto loan. Eating beans and rice every day just so you have zero debt is not living, in my opinion. I also agree with some of the posters on here that say a personal finance course should be required in high school.

 

[Gunnerclone]

Everyone needs to stop congratulating the OP for having 40k in a savings account.

 

[ClonesFTW]

I think the point missed by some here is that financial freedom does not directly correlate to improved quality of life for everyone. I can think of a couple people who are loaded with debt constantly taking vacations and traveling the world; they are pretty happy people. I'm very conservative so it's not a route I would take however I can understand both sides.

 

[AgronAlum]

I've never taken the class, but have heard him enough on the radio and read one of his books.

I think the biggest financial impact he has had on my family's finances was to get me to open my mind to paying off our mortgage early. Yes it was cheap money given our low interest rate, but at some level I'm not real comfortable with the long term financial health of our country so investing in something solid like not owing the bank any money if (when?) things go bad, is a vnice ongoing peace of mind.

As for worrying about living a hermit life as some always want to suggest -- take your mortgage payment and think about what that would be like to now keep in your checking account every month instead of paying it to X bank/mortgage company.

And live like a hermit for years to get there... No thanks. You can be financially set and still have a mortgage. It’s all about ones own finances and what they are comfortable with.

 

[Rabbuk]

Everyone needs to stop congratulating the OP for having 40k in a savings account.

Ya why isn't it in gold?

 

[BoxsterCy]

I never heard of this Ramsey dude until I came to CF. I am retired and in retrospect did some of his stuff getting here to 66. Grew up in a cash and carry loans bad kinda family to start with. Paid house off early, remodeled with ton-o-sweat equity, had few cars loans, didn't rack up credit card debt, save early and often for retirement etc. I was also lucky to go to college when it was relatively cheap so I didn't start off immediately with a load of debt. I also got a degree that had career possibilities even if they seemed dim in 1973 (as in you to can get a temporary job in an architecture office for less money than your dad would pay you to drive truck ). From what i read posted here the guy seems too extreme to me. Like with the credit card thing. If you use it like a check account it's fine. Credit cards are a tool like a check. Seems he goes off the rails some and it's all absolute and black and white.

I've know too many people in my lifetime that died right before or right after retirement for me to fully espouse taking on a monks vow of total thrift. I always waited a Porsche so I bought one 10 years ago. Low mileage used on but I didn't wait till I was retired. Got to enjoy driving that for the last ten years. don't think Ramsey boy would have approved.

 

[NorthCyd]

What is sad is that kids are not taught sound financial strategies in high school. Hell, even college. Mistakes are made early that take years to recover from.

***like getting married***

LOL... *sigh*. Yes. More specifically for me divorce. This will seriously **** up your plans. The best advice I can give is no matter how much you are convinced you will spend the rest of your life together plan like you might not.

 

[mywayorcyway]

I can't believe a thread like this is getting so many replies. You learn something new on CF every day.

 

[capitalcityguy]

And live like a hermit for years to get there... No thanks. You can be financially set and still have a mortgage. It’s all about ones own finances and what they are comfortable with.

We paid off our mortgage last fall and never lived like hermits. Some of it depends on where you start. We were never severely in debt...and we didn't stretch ourselves buying as much house as we could afford.

 

[capitalcityguy]

I think the point missed by some here is that financial freedom does not directly correlate to improved quality of life for everyone. I can think of a couple people who are loaded with debt constantly taking vacations and traveling the world; they are pretty happy people. I'm very conservative so it's not a route I would take however I can understand both sides.

It doesn't have to be one or the other.

 

[DurangoCy]

And live like a hermit for years to get there... No thanks. You can be financially set and still have a mortgage. It’s all about ones own finances and what they are comfortable with.

The only time Dave says to live like a hermit is when you're in Baby Step 1 or 2, which is not having $1000 in the bank and your consumer debt paid off (credit cards, student loans, car loans, etc.) Once your done there, you're saving a 3-6 month emergency fund and then starting to do cool things with your money (buying houses, saving for retirement, college funds, spending, giving, etc.)

He's never once said "live like a hermit" for the duration of your mortgage. He just challenges people to keep retirement savings to no more than 15%, live your life (whatever level you want) and then throw the rest at the house. His 15 year at 25% of take home pay is probably the hardest thing for a lot of new home buyers to hear, but I don't think he's wrong there either.

 

[DurangoCy]

This is an interesting flow chart that's made the rounds on readdit that's worth checking out. It's a little more involved and has a few differences, but has a lot of very good concepts.

https://i.imgur.com/CcEVQAV.jpg

 

[dualthreat]

To more clearly understand his advice, you need to listen to a few of his callers on his show.
"Yeah, hi Dave. We have $150k in student loan debt, $25k in credit card debt, both my S/O and I drive new sportscars... oh and we have a household income of $35k."

He speaks to thousands... millions of people. Of course you can modify his advice a bit, but everybody always thinks their the exception and nothing is wrong.

 

[DurangoCy]

To more clearly understand his advice, you need to listen to a few of his callers on his show.
"Yeah, hi Dave. We have $150k in student loan debt, $25k in credit card debt, both my S/O and I drive new sportscars... oh and we have a household income of $35k."

He speaks to thousands... millions of people. Of course you can modify his advice a bit, but everybody always thinks their the exception and nothing is wrong.

3 kids and they're either in private school or getting home schooled and I think you've got it.

 

[BCoffClone125]

I don't understand the not having credit cards theory. I have heard that from multiple people, but if you can pay off your credit cards in full every month, and don't spend like an idiot, why not reap the rewards that many credit cards offer (i.e. cash back, rewards points)? I used to put everything on my debit card, but once I realized my wife and I had our spending under control I started using the credit card for almost all transactions I could.

 

[dirtyninety]

3 kids and they're either in private school or getting home schooled and I think you've got it.

I don't think Vanilla Ice ever listened to Dave Ramsay. Unless Dave told him to burgle his neighbor.

 

[Shawker]

I was about to ask how the hell the OP has $40K in savings at age 30, and then I read that he doesn't have kids which explained everything.

 

[Cyched]

I was about to ask how the hell the OP has $40K in savings at age 30, and then I read that he doesn't have kids which explained everything.

We already had a thread about that

https://cyclonefanatic.com/forum/threads/smartest-dumbest-financial-decision-youve-made.212685/

 

[mywayorcyway]

I don't understand the not having credit cards theory. I have heard that from multiple people, but if you can pay off your credit cards in full every month, and don't spend like an idiot, why not reap the rewards that many credit cards offer (i.e. cash back, rewards points)? I used to put everything on my debit card, but once I realized my wife and I had our spending under control I started using the credit card for almost all transactions I could.

I guess the idea is you won't spend as freely with a credit card, even if you pay it off every month. I'm in the same boat as you - I put everything on my CC that I can, and haven't paid any interest on one in 15 years. I'm guessing I would spend less if I didn't have them, or didn't use them as often...but I can't overcome my laziness.