Yeah, his Jesus stuff makes me barf.

Didn't read through all 32 pages... but CANCEL credit cards?

Give me a break. There are only two times I can ever think to cancel a credit card:

1. Annual fee cards suck when there are plenty of no-fee cards. I wouldnt cancel a annual fee card unless I had a no-fee card to replace it with though.

2. You can't trust yourself not to run a balance.

Well I guess you can cancel a card you never use if you have like a gazillion other ones.

I mean really, a good chunk of your emergency money should be invested in real conservative stuff, and CC's used if the bottom falls out of your life, and paid off as soon as you can access cash from your investments, without depleting your cash on hand.

What happens if you cancel all your credit, go on a cash basis, the bottom falls out, and you run out of cash? I'd rather run out of credit first, then run out of cash.

The church is just another one of his marketing partners.

Just like whenever anyone mentions the word "mortgage" he will tell them to go to Churchill Mortgage and whenever an insurance question comes up, he will tell the person to go to Zander Insurance. Hell, he even has a deal with some web-filtering software and audible.com and plugs them every time it's vaguely relevant.

The church gives him free distribution of his products (and, indeed, even helps him collect fees for the advice). So, yes, he'll keep telling people to go and give 10%.

If you need to be on a special plan to help you manage CC debt (like the Dave Ramsey plan) then yes, you probably can't trust yourself not to run a balance.

Ramsey treats debt in the same way that AA treats beer, and for the same reasons.

First off...FAIL.

Second...uhh, get some credit?! Not like it's hard to come by.

This is the danger of playing with fire (CCs) that DR warns about. I do believe there is legislation going into place at years end to eliminate the CC companies from making these type of changes on existing balances which means they will probably make more changes like this sooner rather than later.

In your case, you would be well-served to get very crazy and get at least one of these paid off asap. Implementing the zero-based budget and living on less than you make (allowing the extra $$ to be snowballed towards the debt) will help you accomplish just that.

Regarding tithing, I heard DR also state that "one must take care of his/her own house first" and that "tithing is a personal decision." Yes, he will congratulate you for continuuing tithing but he comes short of recommending/suggesting/requiring it while working the program.

FYI, DRs advice when there are "storm clouds on the horizon" is to pile up cash and stop the debt snowball. Storm clouds are things like a pregnancy, job instability/loss, medical issues, etc. If your income is about to drop, he would definitely say pile up cash.

Thought I'd perform some thread necromancy on this one by providing a quick update.

Over three years since I started this thread and the wife and I are still going strong. A couple of the highlights since I've last posted:

* Consistently completed the zero-based budget every month since December 2008 resulting in some of the successes below.

* Refinanced into a 15-year fixed rate mortgage in January 2009. On pace for a August 2014 payoff which is right at the time my kid heads off to college.

* Have approximately 12 months of cash on hand in the event of a complete disaster.

* Actually went out and got a credit card in September 2011 after not having one since January of 2009 (started a business and didn't want to hassle with a business checking/debit account -- also, ran into a car rental issue with the debit card so I backed off on this Ramesy-ism a bit).

* Despite having only two active tradelines (mortgage and one credit card), I still have a FICO of 800+.

* Net worth has more than doubled despite losing $50k in real estate equity.

* We do all this while living a very satisfying lifestyle. We don't try expensive cars or eat at expensive restaurants (very often anyways), but we do enjoy a couple of nice vacations every year and are socking away tons of cash for an early retirement.

Ok naysayers. Let's hear it. I know Ramsey may not be optimal, but it is proven.

grunching

I don't dislike Ramsey but I think that a lot of the stuff he says is a "no-****" type of statement. Yea, debt is bad. Yea, emergency funds are good. If people need someone like him to change their lives then they probably have a lot of other issues going on than debt imo.

That said, he has suggested a pretty ridiculous strategy - the idea of paying the smallest debt off first regardless of interest rate. IDK how anyone can justify that as legit unless the person in debt is a complete mongoloid.

Cwilla, your situation seems great though. Good job and good luck.

From a pure math standpoint, the smallest to largest strategy regardless of interest rate is pure idiocy --- agreed --- and Ramsey will agree as well. The problem is that most people get to the point of swimming in debt because they don't do the math.

If one of those types highest interest rate debt is $20k, it is unlikely the debtor will gain much traction and then fall off the plan. On the other hand, if they knock out a few $xx medical debts or a couple of $xxx credit cards or etc., then those small, quick wins turn into motivation that can get them indoctrinated into the plan. At that point, he is fine with modifying the order.

In fact, there are debts he advocates paying first no matter what: IRS, 401k, friends/family for other reasons.

Too many people (not you I'm talking about PLAYOFFS) have posted half-truths or sound bites taken out of context in this thread. That is another reason I brought this thread back. I'm over 3 years in and know the deal and can better refute the misinformation in this thread.

I've got

6k in cc debt
15k in auto debt
50k in student loan debt

I make

40k per year

Where the hell am I even supposed to start?


This just an example of today's recent college grad, but in this instance, where would you even begin to start pounding down debt?

First question: Are you an idiot with no understanding of math and are extremely weakminded?

If answer is yes, start with 6k CC debt and enroll in Ramsey class. Become religious zealot and realize debt is an instrument of the devil.

If answer is no, cut expenses as much as possible, pay off highest interest rate first after maxing out any matching 401Ks with as much as you can reasonably throw at it.

Consider selling car and paying off that debt and buying a more practical car you can afford.

Thanks for the update

This was just an example. A lot of people are stuck with a **** load of CC debt from college and a whole pile of student loan debt. The majority of them don't get jobs right out of college making 100k/yr so how are they supposed to reasonably exist and pay down their debt?

First define reasonably exist.

Create a new definition of "reasonably exist" and find a second job.

Have enough money left For necessities; groceries, electricity, heat

And obv 15k in auto debt is completely necessary.

A lot of people aren't "stuck with" that debt, they get themselves into that much debt. Getting in debt 40K in school loans for a 40K job or 15K for a car when you make 50K or racking up 8K in credit card debt is the problem. But it's not "stuck with". But it's certainly a sunk cost.

But noting those things without even mentioning interest rates is LOL bad. It's like saying "I am playing Texas Hold'em and have AK on the flop. My opponent bets $500. What do I do?" There are so many pieces of crucial information missing that it's not even worth discussing until that comes up. Monthly payments are needed, interest rates are needed. Cost of essential expenses are needed.

The simple answer is, you live more frugally, cut out expenses that are unnecessary, and pay down the worst debt.

most adults dont know **** about managing their money and that includes pretty much any college kid.i can understand spending a **** load of money going to harvard, yale etc(where the school you go to actually might make a difference) but most students dont go to schools like these. they go to schools most people never heard of for 20-30 k a year instead of cheaper state schools for a third of the price (talking about undergrad.) Then instead of paying for school (or most of it) while they are actually in school by working they decide **** it ill worry about it later, take out loans for way more than they should, get credit cards to buy **** they dont need paying the minimum every month because math is so boring and the concept of compound interest is so hard to understand and take out car loans for a third of their pre tax salary-which itself pales in comparison to the rest of unnecessary debt they're carrying.

im really not sure how the hell people are supposed to pay off 100k in debt with no job- the better question is why the **** do these people have 100k in debt to begin with?buy **** you can afford and you dont have these problems.
i mean it would probably help if high schools and colleges actually taught personal finance classes instead of wasting time with **** like art history and pushing people into getting worthless liberal arts degrees that arent worth the paper theyre printed on but wtf do i know.

i agree DR is very very basic and for the life of me can not fathom things like paying over the debt with the lowest balance first instead of the lowest interest rate first- but for the average person out there (the geniuses with huge cc debts,car notes, student loans,who buy **** from blue hippo and rent a center) they would be better off not even trying to think and just doing whatever he says.


i mean there are always exceptions
just like with fat people- most people who are fat are fat because they eat **** all day and dont excersise, a very small % have serious medical conditions and i feel bad for them.
some people with lots of debt had total **** luck-i mean if you have a couple of kids, your wife dies, you get laid off and have unexpected medical condition i feel bad for you. but those people are few and far between and large out of control debt is usually self inflicted and avoidable.

and work ot and or get a second job

can i as an american go to canada and scam them for 50k?

Obviously it's going to take more than one year. Pay the minimums, live frugally, anything you have left after that, pay extra towards the highest interest thing (I assume the CC).

fwiw, the student loan could go on a 25-year extended repayment plan and get the monthly payment down to about $225. You'll have payments for 25 years, but it would be managable enough.

Its a little rough, I'm figuring $200 for the CC, $400 for the car loan, and you say he can get the student loan down to $225, that's $825 a month. He's probably taking home about $2500 per month, so that leaves $1625 for everything else, which is not much. Probably will have to find a way to make extra money on nights or weekends.