Ramsey has a good system for getting out of debt; though people differ on whether to start with the smallest debt (quick triumph) or the highest interest rate (often boring, but sucking the life out of you). I think it depends upon your personality and what motivates you.
Yes, I know: it should be clear on a spreadsheet. But that simply isn't human nature. So figure out what motivates you: wiping out one debt completely (smallest first) or knowing you're saving the most because you're tackling your priciest debt (highest interest). (Ramsey isn't so big on choices.)
We got out of debt twice before we saved enough to buy a house with nearly 30% down. After a few years of that triumph, we borrowed against equity to ensure our home's stability through our 70's when we wouldn't want to be bothered with repairs. And for a business--usually considered a good kind of debt because it's an income-producing asset (if you do it right).
I don't see that Ramsey has different sizes for different folks, but then, I haven't been through ALL of his materials.
What do you think?
Oh, if you want to pay off your mortgage without going broke, check out Amazon's "Let Your Mortgage Make You Rich!
I highly recommend The Total Money Makeover. In our house we refer to Dave as Uncle Dave. Dave's principles are mostly common sense but yet implementing those principles has greatly improved our lives.
Lin: 'Oh, if you want to pay off your mortgage without going broke, check out Amazon's "Let Your Mortgage Make You Rich!"'
Correction: 'Oh, if you want to pay off your mortgage without going broke, check out MY BOOK "Let Your Mortgage Make You Rich!'
Come on... full disclosure... to suggest your comment is on-topic for this thread is disingenuous. Honestly, you're hoping to sell more of your own book. That's a fair thing to do, but I think people would appreciate some sincerity. Attaching yourself to the best-seller isn't necessarily a leech tactic, but it seems you worry about that perception, otherwise you might have been forthcoming.
Ramsey doesn't attempt to provide different sizes for different folks. He's giving people (common people, 99% of the people) a simple 1-2-3 plan to follow, which will work, and which will not require that they devote their life energy to becoming financial gurus themselves. You make a few changes, follow steps 1, 2, and 3, and you're basically free to go on auto-pilot after that. No worries, no huge effort, but you'll come out better than you would have otherwise. Not the highest reward in the shortest time, but absolutely no risk.
Now, if you want to learn how to implement clever strategies and are inclined to craft a unique system that requires more education about specific things, and a bit more effort overall... if you want to accelerate things, are OK with risks, enjoy manipulating variables and taking advantage what's out there... then you really should consider Lin's book. The way I see it, these approaches target different people with different goals.
When I was in college I figured out how easy it was to "work" the club membership CD programs. I developed spreadsheets to help track my average cost. If I remember right I was getting music CDs for something under $1.90 each without breaking any rules; only by timing things carefully and remaining stubbornly immune to marketing offers that didn't fit the primary goal of maintaining a low average cost. Some of the same thinking goes into debt leveraging strategies. It can work... it's not that hard... but in the end I have a family and dozens of other priorities for my time.
Recently I heard a Key Bank radio commercial where they explain their free GPS device promotion. Open an account, make a couple of automatic deposits, and get a free GPS device worth probably a couple hundred bucks. This is easy! They hope you'll switch over to Key entirely, but you don't have to. You just tell your work to change your automatic paycheck deposit to $100/mo going to your new Key account, and the rest as normal. Two months later you undo this change to your paycheck deposits. In the meantime you don't use the Key account for anything (except I think you have to make one automatic bill payment). You simply have to be disciplined about that. Then, you close that account after the specified minimum number of days and keep your free GPS device. I'm tempted... because a part of me is like the Lins of the world and enjoys "working the system" in these various ways. But... I just spent all of my free time for the week by writing this post :) Now it's time to go have popcorn and a movie with the kids while my financial life is on easy auto-pilot doing well enough for me on a Ramsey-like plan.
Lin, I do hope your book sells well for the appropriate audience.
I am very financially stable. I have paid for EVERY purchase in my life with cash, however, it would be nice to have some "good" credit so that my auto insurance falls. Does ramsey have any advice about how to create good credit without buying anything?
A business mentor of mine took out a bank loan when he turned 18 for the express purpose of building his credit so he could go into business. Of course, making payments on time for a year cost Mitch something in interest. You could do a cost/benefit analysis to see whether your insurance would fall enough to be worth it.
Another option would be to get a gasoline credit card. You're unlikely to use it to buy anything foolish or unnecessary and paying it in full every month would contribute to your credit rating. I doubt Dave Ramsey would recommend that or even agree with it. You need to decide if you want to be fanatical about never using a credit card for any purpose whatsoever, or be fanatical about making the wisest financial choices you can make. It sounds like, in this case, a wiser choice would be to meet the requirements of lower-priced insurance.
Dave Ramsey offers nothing new. He just presents the material in a way that's easy to listen to. So does it work if you follow it? Of course! You're not paying for financial wizardry, you're just paying for someone to get you to follow what you already know is sound advice.
Is it worth it? All I can say is, if it helps you, then it's worth paying for, since you're not paying for information, but motivation to use that information.
It seems to me that Dave Ramsey is only good for clueless, completely undisciplined people. Cut up credit cards? Then I'd be without the $600+ I make annually from cash rebates, without ever having paid a cent in interest or penalties. Although I've never been in debt aside from a 15 year mortgage that I paid off in 7, it makes no sense to me that people with debt should pay off the smallest debt first rather than the debt with the highest interest rate. Ramsey also says unless you're a multimillionaire, you don't need a revocable living trust. Maybe if he added estate lawyers to his "ELPs" he'd change his mind. (No, I'm not a lawyer.) He has said revocable living trusts are a hassle to live with, which is incorrect. Anyone who has ever had to wait around for a will to go through the probate process and pay the associated fees knows that revocable living trusts are the way to go. However, one good thing about Ramsey's T.V. show is that many of the calls are highly entertaining!
Having listened to Dave Ramsey's show for a couple of years, and having read the Total Money Makeover, I think that many people who don't like Dave's plan are ignoring RISK in their financial lives.
Sure, if you can pay off credit cards and get bonus points, and that makes you happy, then that's great. But do you really think you are taking money away from a multi-million dollar corporation? Might you sometimes buy something you don't really need on impulse, since using a credit card is so easy?
Or, to take a more extreme possibility: what if you get sick, lose your job, and have a credit card balance? Will you still be able to make the payment?
Borrowing money involves risk. If you borrow against your house to start a business, you might lose your house. And you probably will spend too much on the business, getting it started with new equipment when slightly-used would have been fine.
Dave re-packages common sense advice, and puts it into steps, so you know what to do, in what order.
Before I listened to Dave, I had money in stocks, but no emergency fund. I listened to Dave and created a pile of cash that represents about 4 months of my household spending (Dave recommends 3-6 months), and so when I had a hospitalization in the family, I could just write a check, and focus on getting family healthy, rather than stressing about money.
Janice, I think you don't need to buy the workbook unless you are a visual learner that needs to write in order to learn. The Audiobook in our car was of great use to us, partly because Dave is the orator for his book. We looked forward to long car rides because we would get uninterrupted Dave Ramsey time to keep us motivated.
On topic: Dave's book works, we are on BS3 right now thanks to his tips. My husband and I only had $12K to pay off in BS2, but we also did it in about 10 months, and we were pregnant for the last 8 of those months, and I stopped working to stay-at-home, too. We have been debt-free for about 6 months now, and we are 50% to finishing our Fully-Funded Emergency Fund (BS3).
The folks that are complaining about the loss of $600 of "free money" they receive each month from keeping their credit cards are not thinking long-term at all. I would remind them that if you are a millionaire several times over by the time you retire because you follow Dave's Baby Steps all the way until you retire, is $600/mo ($7200/year) really all that great if you never achieve your millionaire goal? Imagine the impact you will have by having more than enough money to have fun, leave an inheritance for your progeny (who are also college-educated and debt-free), and STILL have enough money left over to donate to your chosen charity in your Final Will.
The critics are the folks that want to "Keep up with the Joneses" and keep their fancy smartphone, iPad2, and their flashy car because society says you have to. Read the book to find out why the Joneses are BROKE. Why would you want to stay broke?
TMMO is a lifestyle change. It's not easy, but it is worth it after you get debt-free and see the light of BS7 at the end of the tunnel--very far away, but so much clearer than it was before once the debt is GONE.
Janice, the information in the Workbook is similar to what is in the book. It just has a lot more little exercises to focus your attention on the information. They are a lot like the worksheets that we used to have in my school that went with the textbooks.
My best advise is to go with the book and skip the workbook unless you want to do the exercises.