because the self-responsibility gene was breeded out by all the ****ing leftists and neo-rights (which quite frankly is just like the left with the addition of wanting to take away personal liberties in they name of some fairy-tale that helps them sleep better at night) in this country.


EDIT: in bold

so you think the US has (had?) a free-market economy? please explain the bailout and other BS legislation that CLEARLY interferes with the market hence it not being free.

This thread is not about capitalism or the bailout or free markets. It was simply started to communicate to individuals how to take financial control of their own little world. Frankly, if your financial house is in order, alot of these other problems either don't impact you or the impact is greatly minimized.

Noone is to blame for my "mess" except me. The same can be said for everyone reading this. It's called personal responsibility and you have to be man (or woman) enough to admit that and own up to it.

I love the straw-man or non-sequiturs that fly on here. Where did I say anything about corporations? It's just the system itself and I specifically seem to recall that post WW2 there was a government proclaimation at the highest level that the only way to deal with the huge surplus of goods they had was to encourage a consumerist society. People are ultimately to blame, and I NEVER suggested otherwise. But, when you set up the system to so efficiently encourage it, they're not entirely to blame.

No offense, but wtf were you guys thinking? Didn't it seem a bit excessive to be living such a hand to mouth lifestyle? Don't get me wrong, I think this "Ramsey" way is a big improvement over the way you were living before, but in reality, the optimal way of life has to be something in between. Debt can and should be a healthy way to live a comfortable lifestyle, you just have to be responsible about it.

Quick question -- did people's parents not teach them this stuff? Maybe it's because I grew up in the midwest in an everyday lower-upper middle class family, but every freaking day my parents harped on my brother and i how important it was to be responsible with your money. When we did something nice, they explained how it was a special occasion and if you save money you can treat yourself to nice things sometimes. When we couldn't afford something, they'd explain why (need new car, dog is sick, dad lost job, etc.), and we'd live a more modest lifestyle until we could comfortably afford whatever that is.

Do parents really not teach their kids this stuff? I guess it shouldn't be surprising to me, because I sure as hell never learned that attitude in school. Speaking of that, public schools should have a mandatory "don't be a dumbass with your money" classes, and I don't mean the consumer ed classes that were like: "this is a credit card, this is a mortgage: use them."

No offense taken. It's not like we were bankrupt. Far from it. We have over $150K in 401(k)s, we have a $280K home with a $214K balance, we have one car we own outright and another lease (fleece as Ramsey would call it) with 3 payments left, take a couple nice vacations every year (Jazzfest, Vegas, etc.), have about $10K in my daughter's college fund, and so on. We were already saving about 15% - I include that as "spending" which is somewhat deceiving I guess. But we do have $7500 (of $10,000) in credit card debt remaining and about 1 month's worth of expenses in an emergency fund.

Sounds like you had parents that taught you good money management skills. Not that mine didn't, but over time I guess those teachings fade. You get caught up in the lifestyle when you make well over $100k/year like my wife and I did prior to me getting laid off. I will say my parents never preached the evils of credit cards and so on. They certainly lived it though. I have only myself to blame like I said before.

I agree this stuff should be taught in schools.

No, because most people are greedy and dont plan for the future and are seriously ****ing stupid.

I can't believe you think you need a guru to figure stuff out like this.

That's a pretty narrow view of things otis, but you're entitled to your opinion.

It's not that I couldn't figure it out. These simple concepts presented in this format just helped me personally bring perspective into my financial life. If you're above it or not in need of it, great for you man. That's awesome. I appreciate Ramsey for helping me recognize I needed to tweak a couple things.

I also obvioulsy don't work for his site in anyway...and would like to say you can go to www.daveramsey.com and then click on "listen now" and then click on listen now again then click on archives and listen to previous episodes of his radio cast for free. I open it with windows media player and fast forward through all the commercials so you can watch like a 3 hour show in a little over 2 hours.

Also he's on the radio every weekday from 6 pm to 9 pm (pacific time) on AM 590 over here in northern idaho eastern washington...no idea about other areas.

IF you listen to dave he gets this phone call everyday. But it's basically like this, "don't play with snakes" and I can't remember the exact figure but if you spend cash when you go shopping you spend 16-18% less then if you use a credit card because it's harder to part with cash.

Is that 1% "cash back" really worth over spending by 16%?

That's the just.

He also recommends other things like stopping you matched 401K contrinutions when starting your snowball...but that's to help you get traction...basically he coined it "gazalle like intensity" and if you focus and see those results you're more likely to continue.

I HIGHLY recommend buying his book and reading it...it's BALLER AWESOME LIFE CHANGING!

why is paying off your mortgage bad?

I understand the math behind keeping a mortgage on your home, and I understand it's +EV money wise to keep the mortage (yes I understand OPM and other factors)

But a paid for house feels better...if you lose your job you're not stressed about making that payment. A paid for home also deleverages you and there is an opposite thing to inflation (yes I know super rare and tbh I'd bet a lot of money that inflation is going rampant now/in the future)

But I'm just trying to show you, life it's always baout +EV money decisions...a +EV life decision might be having no stress from a mortgage payment (I'm currently aggressively paying my house off and my wife would rather have a paid for house then a big diamond ring...by paying it off and giving her that security it's like the best present I could give her)

Not saying you're wrong, just saying you're not right for everyone imo.

In regards to the "hand to mouth" lifestyle....yes you're right taylor. He shouldn't do that as a long term plan, but it's all about "gazalle like instensity." (dave explains it well in his book) And after 2 years the person shouldn't be still in debt 9 times out of 10 so they're no longer hand to mouth u know (hope that makes sense)

I work with lower income people everyday (aka my renters) and I have 55 year old single man renting from me that has worked his whole life and has $0 in the bank, lives paycheck to paycheck and uses paycheck/payday loans to pay his rent. So while many parents teach responsible "money habits" to their kids...how were the 6 kids of this gentle supposed to learn it? from a super bad school system that doesn't teach it? (which I agree with you it should be required ciriculum) or from a parent that doesn't do it himself? They really had no shot imo.

I also agree that "ideal" lifestyle should be inbetween. Maybe having a paid for house, but having 3 mortgages on rentals and 1 rental paid for. With no credit card debt but maybe a busines (like wendy's franchise) that is debt free. (or maybe a SBA on the franchise) Basicaly I agree that the ideal is inbetween, but imo it's better to be too much like dave, then too little

I saw the name on this thread and realized I have read this guy's book. I remember as distinct chapter about praying to "God" for help with finances. I think I threw up in my mouth.

His advice is suitable (just like virtually anyone's) for most people in financial trouble, though he misses the mark on many issues.

That's a good point. Luckily I ended up paying only 1% over the dealer's invoice cost, so I was happy with the price.

Yeah, I know. I know I should have just bought a three-to-five year old Camry or the equivalent. That's what I did with my previous vehicle purchases. My truck was a treat to myself. I live frugally and (hope to) make wise financial decisions, but I allowed myself the luxury of a new vehicle.

------------------------

What does Ramsey say about online purchases? They may be too easy to make, in his view, so maybe he advises against them, but in many cases one can get a much better price for the same or an equivalent product.

D.

What Taylor said. I mean, if you needed a "financial guru" to tell you this, it was obviously worth it, but not putting money in a 401k when you're effectively paying 20% a year for the privilege should be really basic, common sense stuff.

This kind of statement is very misleading. You didn't spend 13K on nothing, you spent 13K to drive a car for three (I assume) years. If that car was worth 30K when you drove it off the lot and is worth 15K today, your lease made money. If the beater you buy costs you 5K, needs 2K in repairs during the year you drive it, and you wind up selling it for 2K because it's such a piece of junk, you would have been better off leasing a new car like you were doing. This kind of thinking is just a crutch, and while it's better than not walking at all, you're best off just making the best financial decisions in the first place...such as, for example, buying a good used car off lease, financing it with some 0% APR intro credit card that you can make big payments on/balance transfer a few times before just paying it off.

I'm not trying to be obnoxious and I apologize if this comes off that way, but there are some serious logical fallacies here.

I think it's important to note that there's a movement in decision theory (psychology/economics/philosophy) that the definition of "EV" should include these extra factors that you're referring to. That's all part of 'value' in expected value. It's one of the reasons traditional economic theories are just so woefully incomplete, you have to take stuff like emotion into account.

lol

That is not "value", it is utility. Panhandling is +EV, its +EV even if you are making $300/hr as an escort/banker/whatever.

http://en.wikipedia.org/wiki/Expected_utility

Maximizing your median happiness should be your goal. Though most people go about this in really suboptimal ways.

adanthar,

I really like your post.

People often aren't good at it, but it is also just a hard problem.

I agree 100%. Most people make suboptimal decisions without realizing they are doing it. I didn't want to suggest that this is a "lol ur all dum, I m god" type comment. Just that optimal decision making is a really interesting study in that many times people graphically overweight "soft issues". "Well I feel better with my house paid off" or "I couldn't sleep at night with that risk" are examples of this. If you would light thousands of dollars on fire to feel better, then great since that is essentially what is happening with many of these things.

Actually, maximizing is the wrong goal. Satisficing is so much better. Maximizing is really on its way out in the literature...there's growing psychological evidence that we're not really 'built' to maximize anyway...but we're pretty good satisficers if that's what we choose to do.

You missed my point...and bringing up wiki isn't a good way to argue yours. My point is that the definition of "utility" is deficient because it doesn't take into account the non-rational side of economics (but, like I said, there is a movement to reconcile this).

rika you seem way too smart to be paying so much just to 'feel good'*. especially when you yourself seem pretty sure there will be large inflation in the future. why pay with today's dollars when you can pay with tomorrows that are worth less?

*i am not denying that it would feel good to own your own home 100%....however there are tons of things in life that feel good that i avoid just because the cost is too high.

This isn't true.

I don't know anything about this. But I'm not sure it makes any sense. I assume you mean "satisfy", how do you satisfy happiness/utility? The min to avoid suicide? Seems bogus.

Actually its a great way to show that expected utility/expected value aren't the same idea. People try to use value when they mean utility. Lets take Rika's example of the mortgage. The move is decidedly -EV. There is really no debate on this point. He will lose money compared to his alternative state of not paying it off. He believes that paying it off will reduce the stress of his life ergo resulting in greater utility/happiness making it a +EU decision. The idea of utility has been around for a long time. So has expected value. Trying to make one word mean the other isn't what this "movement" you're describing is.

This is false. Utility/Happiness are interchangeable and do take into account how a person feels.

ETA: How the **** can this be your point? You were just talking about EV.

Nice argument "this isn't true." A good book on the subject is Berns, G.S. 2005. Satisfaction. NY:Holt. Also, Herbert Simon was the father of satisficing. It's funny that you think it isn't true, I don't know why you think that because you haven't given any reason. You clearly have no idea what "satisficing" even means. It's a decision theory. And, no, utility and happiness are most decidedly NOT interchangeable. That's a very archaic understanding of Bentham/Mills-style utilitarianism.

I didn't know what that meant, but wikipedia has rectified that problem. But could explain the "criteria for adequacy" for happiness?

Also, could you expand on the difference between utility/happiness?

This whole satisficing system is to accomplish what? Consumer purchasing is more based on psychological constraints rather than economical modeling. The cheapest product is not always the desirable one. Even when they both satisfy the same specs.