Sugar Magnolia Posted March 30, 2007 Share Posted March 30, 2007 If you've ever read the book The Millionaire Next Door that is how my husband and I have lead our lives. > Never made a ton of money >Never inherited any money >never cashed in any IPO stock >lived way below our means >saved at least 25% of our income even when we bought our first house and our mortgage was 27% of our income >never had CC debt >never had a car loan >had a mortgage for only 17 years >retired at age 46 Yes I am a dog trainer for 15 hours a week as a semi-retirement job, but do it for fun, and I donate so much of my time my husband calls it community service, not a job. Our goal when we got married was to retire by the age of 50-we have no kids. We could have lived a more lavish lifestyle when working but then we'd still be working. We are much happier not working, or as Bob Brinker calls it-we reached the point of crtical mass. I'm not preaching this kind of lifestyle-it's all a matter of choices that people can make. Quote Link to comment Share on other sites More sharing options...
Chavez Posted March 30, 2007 Share Posted March 30, 2007 Don't be a wisenhiemer, Chavez. You admit (as we all must) that corporate America and its investors are driven by short-term profits. They shouldn't be, but they are. I agree shifting our collective view towards long-term fiscal health would be best, but that's not what's actually happening. As far as the my federal government comment, my point was this: if the Feds stopped debt-financed expenditures it would grind to a halt, at least in the short term. Am I wrong? I'm a big believer in the a balanced budget. But our government doesn't seem to agree with me. Sure, I can agree that those scenarios ARE the way things are run. We also seem to agree that both scenarios are needlessly short-sighted and stupid. Really, part of the problem is that if TRUE fiscal conservatives ran on a platform of "higher taxes, lower services/entitlements, and a country that is back on a solid foundation :flag: ", they would be the political equivalent of India's Untouchable caste. Personally, if I thought a party (because one candidate would simply be overwhelmed and marginalized in about 2 seconds) was going to live up to that billing, I'd vote for them - short-term pain is well worth long-term gain (as an aside, how long would possibly the strictest budget possible - NO discretionary spending, drastic cuts in the military, and an entitlement freeze, if not cuts - take to dig us out of the hole? Anyone know?) Quote Link to comment Share on other sites More sharing options...
The Irish Doggy Posted March 30, 2007 Share Posted March 30, 2007 Ok, Ok, but wait... What if Az's hypothetical $100 dollars was used to buy a really big frog? Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted March 31, 2007 Share Posted March 31, 2007 My wife and I walked in to a home furnishing store last week and bought a new living room set and new floors for the whole house - with cash. That was a very good feeling, particularly because we haven't always been that smart. We say it in business and it's true in personal finance - Cash is King. We won't be retiring at 46 like Shugga, but we're well on out way to early retirement and will have a nice pile when we do. If only we'd have gotten our act together 10 years ago. Quote Link to comment Share on other sites More sharing options...
JoJoTheWebToedBoy Posted March 31, 2007 Share Posted March 31, 2007 Ok, Ok, but wait... What if Az's hypothetical $100 dollars was used to buy a really big frog? I'd pay 200 for a REALLY BIG frog!!!! Quote Link to comment Share on other sites More sharing options...
proninja Posted March 31, 2007 Share Posted March 31, 2007 i have ZERO debt and will do all in my power to keep it that way... I have a ton of debt and am working hard to accumulate as much as I can as fast as I can. :thumbup: Quote Link to comment Share on other sites More sharing options...
proninja Posted March 31, 2007 Share Posted March 31, 2007 Dave Ramsey is sort of like the weight watchers of the financial world. What he says is conceptually very easy. Simple even. Sort of like eating correctly. What he says, however, is poor for folks who are farther along with their understanding, because it really limits what they do. I don't fault him for this at all - because the people that understand how Ramsey would hurt them are financially savvy enough to ignore him. Weight watchers is the same thing. Don't eat crap, try to move around a little bit, and get some accountability going on. Cool. Can do. You have to start there with fat people. You can't start with talking about the ratio of polyunsaturated fat to monounsaturated fat in their diet, you have to start with "Put down the ice cream and go for a walk." Ramsey tells financially fat people to put down the ice cream and go for a walk. I think it's great, but following his precepts would have cost me a good bit of change over the last few years. Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 31, 2007 Share Posted March 31, 2007 Dave Ramsey is sort of like the weight watchers of the financial world. What he says is conceptually very easy. Simple even. Sort of like eating correctly. What he says, however, is poor for folks who are farther along with their understanding, because it really limits what they do. I don't fault him for this at all - because the people that understand how Ramsey would hurt them are financially savvy enough to ignore him. Weight watchers is the same thing. Don't eat crap, try to move around a little bit, and get some accountability going on. Cool. Can do. You have to start there with fat people. You can't start with talking about the ratio of polyunsaturated fat to monounsaturated fat in their diet, you have to start with "Put down the ice cream and go for a walk." Ramsey tells financially fat people to put down the ice cream and go for a walk. I think it's great, but following his precepts would have cost me a good bit of change over the last few years. While I agree that some of Ramsey's stuff just doesn't make any sense (like his notion that you should pay off your smallest debts first regardless of the various interest rates on your debt), I think that overall his ideas are pretty good for lots of people. Especially his idea that people don't "need" nearly as much stuff as they think they need and I also like how he reinforces the idea that people are indeed responsible for the debts they have incurred (and that it's basically dishonest to not pay them back if it is at all possible). I also think that most people aren't really as smart as they think they are (and I put myself into this category too) and can end up making pretty bad decisions without some sort of guidelines that they can follow. As such, I sort of view Ramsey's program as a type of insurance that people can get--the cost of this "insurance" will be in the form of lower rates of return, but it will likely prevent people from completely ruining their financial situations. As proninja noted, some people would benefit from this type of insurance and others wouldn't. (As for the weight-watchers analogy--I think it he more fits the mold of an Evangelical Christian trying to save people while thinking that his brand of Christianity is the only one that could possibly be correct.) Quote Link to comment Share on other sites More sharing options...
Puddy Posted March 31, 2007 Share Posted March 31, 2007 (edited) I have a ton of debt and am working hard to accumulate as much as I can as fast as I can. :thumbup: Conflict of interest alert Proninja Edited March 31, 2007 by Puddy Quote Link to comment Share on other sites More sharing options...
I Like Soup Posted March 31, 2007 Share Posted March 31, 2007 While I agree that some of Ramsey's stuff just doesn't make any sense (like his notion that you should pay off your smallest debts first regardless of the various interest rates on your debt), I think that overall his ideas are pretty good for lots of people. I think the consideration here wiegie is that Ramsey is giving people a sense of accomplishment early in their attempt at reducing debt, regardless of the interest rates, etc. The psychology of people, so to speak. Quote Link to comment Share on other sites More sharing options...
muck Posted March 31, 2007 Share Posted March 31, 2007 I think the consideration here wiegie is that Ramsey is giving people a sense of accomplishment early in their attempt at reducing debt, regardless of the interest rates, etc. The psychology of people, so to speak. +1 Tell a 400 lb man to put down the ice cream and go for a walk ... lose two pounds ... "Wow!! That is AWESOME!" ... It ain't exactly seeing a personal trainer every other day for three months, but its a start. Quote Link to comment Share on other sites More sharing options...
proninja Posted April 1, 2007 Share Posted April 1, 2007 Conflict of interest alert Proninja I practice what I preach to my clients with the financial savvy to handle it. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted April 1, 2007 Share Posted April 1, 2007 I think the consideration here wiegie is that Ramsey is giving people a sense of accomplishment early in their attempt at reducing debt, regardless of the interest rates, etc. The psychology of people, so to speak. My take exactly. Not efficient monetarily but very efficient psychologically. Quote Link to comment Share on other sites More sharing options...
wiegie Posted April 1, 2007 Share Posted April 1, 2007 My take exactly. Not efficient monetarily but very efficient psychologically. I don't know--when I had debts to pay coming out of graduate school, I just put them all into a spreadsheet and then plotted the debt each month to see how it was decreasing. And watching that total debt number decrease was very rewarding. If you'll notice on his radio show, Ramsey's first question is not "How many different debts do you have?" it is "how much do you owe in total?" This indicates that he understands what is really the most important question even if he doesn't sell it that way. The "debt snowball" idea is a nice gimmick, but it just doesn't make sense financially--and I think he does his listeners a disservice by not explaining why it makes sense to pay off the highest interest rate debt first. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted April 1, 2007 Share Posted April 1, 2007 I don't know--when I had debts to pay coming out of graduate school, I just put them all into a spreadsheet and then plotted the debt each month to see how it was decreasing. And watching that total debt number decrease was very rewarding. If you'll notice on his radio show, Ramsey's first question is not "How many different debts do you have?" it is "how much do you owe in total?" This indicates that he understands what is really the most important question even if he doesn't sell it that way. The "debt snowball" idea is a nice gimmick, but it just doesn't make sense financially--and I think he does his listeners a disservice by not explaining why it makes sense to pay off the highest interest rate debt first. I think you're dead on - nevertheless, the type of people that Ramsey deals with are already the kind that are suckers for instant gratification. It therefore makes sense - psychologically, not economically - to give them that gratification quickly in their debt clearance efforts in order to persuade them to continue and not lose hope quickly. The local paper have been following three people trying to get out of debt over the last 6 months with varying success. One of them would definitely be well served by Ramsey's strategy, IMO, as she's got little or no willpower and therefore needs to see instant success, however chimeric it might be. Not all these folks would have a clue as to how to set their debts up on a spreadsheet, either. Quote Link to comment Share on other sites More sharing options...
wiegie Posted April 1, 2007 Share Posted April 1, 2007 I think you're dead on - nevertheless, the type of people that Ramsey deals with are already the kind that are suckers for instant gratification. I'll admit that that does make some sense. Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted April 1, 2007 Share Posted April 1, 2007 I think the consideration here wiegie is that Ramsey is giving people a sense of accomplishment early in their attempt at reducing debt, regardless of the interest rates, etc. The psychology of people, so to speak. i can maybe see there also being some benefit to eliminating payments one by one, to lower your monthly nut. could be a great first step if you're really in over your head with monthly payments. Quote Link to comment Share on other sites More sharing options...
muck Posted April 1, 2007 Share Posted April 1, 2007 (edited) i can maybe see there also being some benefit to eliminating payments one by one, to lower your monthly nut. could be a great first step if you're really in over your head with monthly payments. Right. Each debt is different as it regards the minimum payment. Depending on how each debt calculates the minimum payment due, you may be better off by determining the ratio of minimum pmt to total debt and knocking out any debt that has a much higher ratio than other debts, thereby freeing up your cash flow to whacking on the highest interest rate debt. Frankly, if you're buried in debt, cash flow is more important than interest rate. Also, and lastly, if you're putting a $0.39 stamp on your $39.00 minimum payment credit card with a 12% interest rate credit card ... and ... you're putting a second $0.39 stamp on your $78.00 minimum payment credit card with a 15% interest rate, you're effective interest rate is 15% higher on the first card than on the second card (because postage represents an additional 1% / month in interest and the second card represents an additional 0.5% / month in interest). Therefore, you're loads better to pay the first debt than the second, even though the second card has a higher stated interest rate (24% vs 21%, after the cost of postage). Edited April 1, 2007 by muck Quote Link to comment Share on other sites More sharing options...
proninja Posted April 1, 2007 Share Posted April 1, 2007 Depending on how each debt calculates the minimum payment due, you may be better off by determining the ratio of minimum pmt to total debt and knocking out any debt that has a much higher ratio than other debts, thereby freeing up your cash flow to whacking on the highest interest rate debt. Frankly, if you're buried in debt, cash flow is more important than interest rate. :applause: Cash Flow is king. Quote Link to comment Share on other sites More sharing options...
SayItAintSoJoe Posted April 2, 2007 Share Posted April 2, 2007 I guess the moral of the story here is "one-size does not fit all". Quote Link to comment Share on other sites More sharing options...
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