Quote:
Originally Posted by cwilli26
This is a decent argument under normal circumstances which includes the overwhelming majority of America.
The difference is that you likely overbought in Ramsey's conservative world. Under his guidelines, you would buy this way:
* 15-year fixed rate mortgage
* 10% minimum down (20% highly recommended)
* PITI (& HOA) no more than 25% of net income
* Total loan amount no more than 2-2.5x annual income
Under these ultra-convservative guidelines, if you couldn't weather the financial storm then it probably didn't matter what the payment was (15 v 30).
And lets not forget, the undisciplined masses are rarely going to pay a 15 like a 30 despite their best intentions.
The last 2 points are overly conservative, but not by a huge amount. With those guidelines, you are correct, you should be able to afford a 15 year mortgage. However, it doesn't seem like it's the automatic right choice to go 15 vs. 30. Things change in life and locking that much money into a single asset takes away a lot of flexibility (which might be a good thing for people who are prone to blow the money).
Whether they rarely pay the 30 like a 15 is not really important, it's just you can't ever decide to go the other way (pay a 15 like a 30). That's pretty significant. If the difference between the two is only a minor error, it seems like you want to lean toward flexibility. If the difference is a major error (which I can't understand how it is unless as I mentioned earlier, any extra cash in your pocket will basically be wasted), then you have to make the right choice.
I think it comes down to an extreme opposite view of money from what it gets people on. The target Ramsey audience is going to be someone who basically spent as much money as they got (plus whatever credit they could get) without regard for the future and living in the present. The Ramsey philosophy seems to take that extreme to the opposite end of the spectrum, rather than sacrificing the future for the present, his philosophy will sacrifice the present for the future. However, such a lifestyle tends to lead to extreme frugality and dying with a pile of money you never spend. Both ends of the spectrum can be mistakes. I don't consider someone who basically never is able to enjoy themselves during their life to be doing that much better than the guy who runs up debt having a good time, then files for bankruptcy. In some sense, that guy is the winner, in that he got to live the life without paying for it.
I grew up in an environment of frugality and savings even when my parents had the income to live otherwise. We wouldn't ever buy things that were "overpriced". When we went to the movies, we didn't get food. When we went to the amusement park, we didn't play the carnival games. When we went out to eat, we didn't get appetizers and my parents didn't drink.
It's still stuck into my head to always try to save money and not spend it, but I finally had to realize that was also an error in living, that I must balance enjoying the present and planning for the future. I think most people will tend to overvalue the present, so learning to live counter that is not a huge problem unless taken to extreme ends. I don't think my upbringing is terribly common and it's definitely far more common that people go the opposite way and try to spend too much. But that doesn't mean going to the other extreme isn't also a mistake.
It seems that Ramsey basically moves your addiction from credit to an addiction to frugality.
Quote:
Originally Posted by eX3cution
I don't understand why there is a 6 pages thread for a system made for the undisciplined masses on a business, finance and investing sub-forum of a poker forum.
Kind of my main point.