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Dave Ramsey?


polksalet
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Any thoughts on this guy. I used to listen to him and he made a lot of sense. I wondered what others thought of his financial philosophies.

 

I just completed his FPU course about 3-4 weeks ago. I for one think it is very worthwhile info. and would be happy to share more if anyone has specific questions.

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Do a quick search in the Tailgate. There are a few threads about him.

 

 

I think's he's great for a ton of Americans who have trouble living within their means. If you are financially savvy like some on this board, you may not agree with all of his principles.

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Do a quick search in the Tailgate. There are a few threads about him.

I think's he's great for a ton of Americans who have trouble living within their means. If you are financially savvy like some on this board, you may not agree with all of his principles.

 

 

I am extremely savvy, my wife however is female.

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Do a quick search in the Tailgate. There are a few threads about him.

I think's he's great for a ton of Americans who have trouble living within their means. If you are financially savvy like some on this board, you may not agree with all of his principles.

 

 

search returns nothing

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dave provides a great deal of common sense and some solid thinking on how to get debt free and structure your finances. the main item of debate with his teachings i've seen is how to pay off multiple debts. dave would say start with the smallest debts, pay those off, and then move up the bigger ones. i would prefer to pay all i can on the debts that carry the highest interest rate to avoid as much interest as possible.

 

one other bone i have with him is that he is absolutely anti-credit cards. he would say just don't use 'em. i like the convenience and pay them off each month, and i get value out of that.

 

his approach overall is geared toward simple practices that help most folks deal with money, which can be very intimidating for some people. following his plan will definitely set you up right and give you a strong sense of accomplishment.

 

regardless of which approach you follow, the key to any is to get your spending under control so that you stop amassing the debt.

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dave provides a great deal of common sense and some solid thinking on how to get debt free and structure your finances. the main item of debate with his teachings i've seen is how to pay off multiple debts. dave would say start with the smallest debts, pay those off, and then move up the bigger ones. i would prefer to pay all i can on the debts that carry the highest interest rate to avoid as much interest as possible.

 

Actually, the "best" approach is really neither one.

 

Use this formula to determine which debt to pay first:

 

Minimum Payment

_______________

 

Total Debt Balance

 

 

 

 

So, if any debts have a substantially higher ratio than all the others, pay it off first...

 

Why? Because it will allow you to free up your cash flow to pay off all debts faster...

 

For example:

Debt A: $200 min pmt, $2000 balance; 10% interest

Debt B: $100 min pmt, $5000 balance, 5% interest

Debt C: $250 min pmt, $15000 balance, 15% interest

 

Q: You come into a $2500 windfall (say an unexpected commission from work). What debt do you pay on first? A, B or C?

 

Answer: You pay Debt A first because you're having to spend 10% of the total balance each month (vs. 2% for Debt B and 1.7% for Debt C), by getting rid of the abnormally high "minimum debt payment" debt first, you free up that $200 / month to retire the higher interest rate debt next.

 

So, in this hypothetical, you send $2k to pay off Debt A and the rest ot pay off Debt C. Then, you use the $200 / month you were paying on Debt A to pay down Debt C (the $250 you were paying, plus the $200 you've freed up from paying off Debt A).

 

Note that this means that, if you have multiple debts (including your mortgage, car and other assets), AND YOU'RE TRYING TO GET DEBT FREE, it may make more sense to pay off your house before you pay off a "low minimum payment credit card".

 

...everyone's situation is different...

Edited by muck
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