Dumping Debt and building wealth with Dave Ramsey JANUARY - Page 8

[shanetedissac]

Originally Posted by littleaugustbaby

I guess I have to wonder why someone who does not want to get rid of FICO or credit card debt would participate in a thread for people trying to follow DR's plan and sing the praises of using credit, when the whole cornerstone of the program is to eliminate all debt, stop using credit, and stop worrying about a FICO score.

I second this. There is appropriate support for any need. This support is to be debt free!

Be well,

[annethcz]

Originally Posted by littleaugustbaby

I guess I have to wonder why someone who does not want to get rid of FICO or credit card debt would participate in a thread for people trying to follow DR's plan and sing the praises of using credit, when the whole cornerstone of the program is to eliminate all debt, stop using credit, and stop worrying about a FICO score.

I'm assuming this comment is directed at me. I don't want to get rid of FICO, I'm realistic and know that my FICO score affects non-debt related financial matters, such as insurance rates. I differ with Dave Ramsey on that point.

As for singing the praises of using credit, I do believe there are a few legitimate uses for credit, including a home mortgage. Please correct me if I'm wrong and DR doesn't believe in home mortgages, it's been a couple of years since I've read any of DR's books.

That said, I'm not advocating the regular use of credit cards and don't believe in carrying a balance on a credit card. I'm not encouraging ANYONE to incure credit card debt they are unable to pay. Yes, I do believe it's safer to use a credit card for online transactions, and pay it off before any interest accrues. I'm not arguing in favor of going into consumer debt as a financial plan, I'm talking about using a credit card as an occasional tool.

I will gladly bow out of this thread if I am not welcome. I was piggy-backing on this thread because I think DR does have some good ideas, but I am not an adherent to everything he says. I prefer to take financial advice from a number of different sources, rather than from just one source.

The reason I was asking about how others on this thread felt about FICO scores and the protections offered by credit cards vs. debit cards is because I was honestly interested. These are issues that I don't agree with DR about, and I wanted to know how it played out in other's everyday lives. I wanted to know if other people really were okay with the tradeoff of less credit use = lower FICO score = higher insurance rates.

I've seen a number of people say they don't agree with everything DR has to say- perhaps we need a new generic 'snowballing your debt' tribe.... hhhmmm...

[HydeParkB]

I too use my credit card, and I'm not going to stop in order to be a 100% Dave Ramsey follower. I'm also not gazelle intense. I'm not stopping night school in order to work a part-time job.

We did however pay off our car last year, and our only debt is our mortgage. Credit cards are paid off every month. Honestly, I love looking at my cc statement to see how much money went where.

I think DR has some great guidelines, and I hope to get increase our retirement investing to the levels Dave recommends. I'd like to move to more of a cash/envelope system for some items. But if this topic is only for the hardcore, I'll step out too.

[Jadzia]

Dave Ramsey seems to think that anyone who has a credit card is in debt. I am sure this is the case for some people, but he seems to ignore the fact that there are many people like myself who use credit cards for their own convenience, paying off the balance in full and not carrying any balance on the cards. I put all of my purchases on credit cards, getting cash back or other points, and at the end of the month I pay the bill. I have never paid a dime to a credit card company, in fees, interest, or otherwise.

I also disagree with his contention that FICO is a "debt score" because I carry no debt except my mortgage but still have excellent credit. It is how you *manage* credit, not by how much debt you carry. Most of your FICO score is based on on-time payments.

I like to keep up on this thread because I have many savings goals and am interested in building wealth. I would be on DR's later baby steps: saving for retirement and my son's college (which we are working on simultaneously). I think Dave Ramsey has a lot of good things to say about spending your money wisely, avoiding debt, and building wealth, but I certainly do not agree with everything he says. (His investing advice is atrocious.) I do watch his show on Fox Business news and I like to take the good along with the bad. Personal finance is one of my hobbies and I like to read and watch as much as I can from a multitude of sources. The more I learn, the more I can separate the good advice from the bad.

Are we not allowed on this thread if we don't agree with everything DR says?

[shanetedissac]

Originally Posted by Jadzia

Are we not allowed on this thread if we don't agree with everything DR says?

This thread is not to debate DR theory. I have chosen to follow his plan how he has laid it out and am looking for support on this path.

We used to have everything on cc and then after 15 years they started to get balances that we were not paying off each month. We were then dipping in to our investments to pay them. We were more inclined to purchase something (sale, great deat, we NEEDED it) because it was so easy to put on the card and then pay off. Well one month we did not have the money to pay off. I have heard many times that you spend more when you use plastic (even debit card's can do this). When you use cash there is more connection to the money for me.

So, yes I am hardcord Dave Ramsey. I would like support in this and not a debate about it.

Be well,

[littleaugustbaby]

Originally Posted by annethcz

I'm assuming this comment is directed at me. I don't want to get rid of FICO, I'm realistic and know that my FICO score affects non-debt related financial matters, such as insurance rates. I differ with Dave Ramsey on that point.

As for singing the praises of using credit, I do believe there are a few legitimate uses for credit, including a home mortgage. Please correct me if I'm wrong and DR doesn't believe in home mortgages, it's been a couple of years since I've read any of DR's books.

You don't have to agree with everything DR says, or even follow his plan to a T to participate here, IMO. But the thread is a support thread for people who are following DR's plan, so when a bunch of people start coming in and talking about how they are "realistic" because they use FICO, then it doesn't really gel with the whole support thread thing. It would be similar going to the circ forum and saying that you can see how circ is bad, but you do support it sometimes. It wouldn't fly there.

Asking questions is good. But like the PP said, we're really not here to debate DR's theory. We're here to support each other because we've found something that works for us, and it's kind of hard, especially when someone comes in and says "What does Dave say about XYZ?" Only to have people jump in and say, "Well, this is what DR says, but I think he is wrong and I do it my own way..."

So by all means, join in and ask questions, or even share your successes and downfalls, but if there's stuff that you disagree with, maybe start a debate thread?

Edited to answer the mortgage question - DR advocates using mortgage companies who do underwriting, not companies who base mortgages off of FICO scores. He also pushes for 15 year mortgages (and aggressively paying them off). He advocates for "100% down" whenever possible, but obviously that would take years for some people.

[MommyErin]

Originally Posted by phathui5

My experience has been that the hold is a night's hotel cost. The last time we did it it was a $89 hold.

That isn't always the case, though. According to the US Bank Website:

Q: How do hotels determine how much to authorize?A: Hotels are allowed to request an authorization for an amount based on your length of stay, all applicable taxes, plus any additional expected dollar amount(s). Cruise lines and car rental agencies also follow this practice. Upon making your reservation, we suggest you ask for the total amount of the authorization.

So I would think, if you live check to check, an authorization could be big enough to cause real issues.

[MommyErin]

Originally Posted by littleaugustbaby

I guess I have to wonder why someone who does not want to get rid of FICO or credit card debt would participate in a thread for people trying to follow DR's plan and sing the praises of using credit, when the whole cornerstone of the program is to eliminate all debt, stop using credit, and stop worrying about a FICO score.

Well, I'm here to learn about what people do with Dave Ramsey's program and how it works in real life. I don't necessarily buy it (or not buy it) but I was hoping to glean some helpful information. Is this not an appropriate thread for that? Is it only for people who are hard-core DR followers? And, honestly, while DR is successful, is he truly the arbitor and end-all-be-all of all things financial? Maybe he is, I don't know but that's why I'm here. You know, to learn and question. Debate is part of that, IMHO.

Okay, I'm stepping out of the closet now ... "Hi, I'm Erin and I'm Jesuit Educated. Pay no attention to me as I question EVERYTHING!"

[Jadzia]

Originally Posted by shanetedissac

This thread is not to debate DR theory. I have chosen to follow his plan how he has laid it out and am looking for support on this path.

Well as I was read it, no one had come on here to debate anything. Another poster mentioned using a credit card and she was forced to explain herself for having one and then it was questioned why she was even posting on the thread.

Doesn't seem very "supportive" to me.

Be well,

[littleaugustbaby]

Originally Posted by MommyErin

Well, I'm here to learn about what people do with Dave Ramsey's program and how it works in real life. I don't necessarily buy it (or not buy it) but I was hoping to glean some helpful information. Is this not an appropriate thread for that? Is it only for people who are hard-core DR followers? And, honestly, while DR is successful, is he truly the arbitor and end-all-be-all of all things financial? Maybe he is, I don't know but that's why I'm here. You know, to learn and question. Debate is part of that, IMHO.

I think that this should be a great place to learn - but again, it is a place for people following the program to support each other and help each other along. It's hard to do that when there are people debating it, yk? I agree that debate is a great tool for learning, but it is really hard for people to support each other on following a plan when you have people jumping in and saying that it is not realistic, or that they don't agree with it. That's not really healthy debate that helps further anyone's journey.

[PancakeGoddess]

Originally Posted by Jadzia

Dave Ramsey seems to think that anyone who has a credit card is in debt. I am sure this is the case for some people, but he seems to ignore the fact that there are many people like myself who use credit cards for their own convenience, paying off the balance in full and not carrying any balance on the cards. I put all of my purchases on credit cards, getting cash back or other points, and at the end of the month I pay the bill. I have never paid a dime to a credit card company, in fees, interest, or otherwise.

I also disagree with his contention that FICO is a "debt score" because I carry no debt except my mortgage but still have excellent credit. It is how you *manage* credit, not by how much debt you carry. Most of your FICO score is based on on-time payments.

ITA with all of this. You absolutely don't have to ever have debt to have a good FICO score. You have to use credit, and pay it off. The more promptly you pay it, the better your score. I don't play around to manipulate the score, but I'm glad to know what makes it go up and down. I am very anti-debt and so I decided to read this thread, but I really don't know DR's ideas.

So, has anyone read Dave and Suze who could compare their ideas? I'm very familiar with her.

[littleaugustbaby]

Originally Posted by PancakeGoddess

So, has anyone read Dave and Suze who could compare their ideas? I'm very familiar with her.

There was talk (I think on last month's DR thread) about starting a Dave vs. Suze discussion. I am not all that familiar with her, but I guess someone mentioned that she is all about FICO? If anyone wants to start a thread, I would be interested!

[PancakeGoddess]

Yea, she is all about it. She is certainly not about ever carrying credit card debt. I'd love to hear legitimate critiques of her ideas, though, because I am really just a personal finance newbie and she's the one who taught me what I know so far.

[shanetedissac]

Originally Posted by MommyErin

So I would think, if you live check to check, an authorization could be big enough to cause real issues.

Dude, if this person is living check to check there will be no hotel or car rentals in their near future.

Be well,

[shanetedissac]

Definition of an Emergency Fund

Some of you are new to Dave Ramsey. I thought I would post some of his articles from his web site: www.daveramsey.com

Be well,

What is an emergency fund?It is a rainy-day fund, an umbrella. An emergency fund is for those unexpected events that are not regularly planned for happening in life - you lose your job, there's an unexpected pregnancy, the car's transmission goes out, or, or, or. This is NOT an investment or Bahamas fund! Before attacking Baby Step 2 (the Debt Snowball), save $1,000 as a baby emergency fund. A fully funded emergency fund is 3-6 months of your personal expenses set aside in a savings or money market account; build this up in Baby Step 3.

[dachshund mom]

Originally Posted by shanetedissac

Dude, if this person is living check to check there will be no hotel or car rentals in their near future.

Be well,

This made me laugh. DH and I went on a vacation after the CCs were paid off, but we still had the cars and student loans to go. We saved the money ahead of time, but still shouldn't have gone. Very soon after we got back, our A/C went out and had to be replaced. I swore Dave Ramsey had bugged our house and broke our A/C to teach us a lesson. No vacations while doing the debt snowball!

For the record, we haven't followed all of his rules. After the CCs were paid, we started putting 6% into DHs 401k to get the match since the rest of the debt was very low interest. We also kept a bigger emergency fund due to DHs job and because we have high deductible insurances. I'd say make changes if it keeps you on the plan, kwim? I'm much more straight DR and DH is more mainstream, so we make compromises, but overall are going in the right direction. 48 more days and we'll be debt free!!!

[Maggi315]

I think it's a bit harsh to be critical of those who have different views about credit cards and such. Sure, Dave Ramsey can be 100% credit card free, because he has gone through all seven steps, has tons ofmoney in the bank, no debt and no real need to worry about having to buy a house, car, college, etc. But back down here in the real world, those of us still at the beginning need to be realistic.

I wonder how many have actually taken his course? In it, you will find he calls those that take everything he says "geeks" and tells the "geeks" to lighten up a little. He pokes fun that those that want to sell their house because its 2 points higher in percentages than those he recommends. He tells people that by being so caught up on some of the numbers or the rules, that they are missing his point! \

Yes, taking his course costs money, but the it's a small amount in the long run, we saved the cost of the course in one month by following just a small fraction of the plan.

He also warns people that years of doing the wrong thing isn't going to be corrected in one month, attitudes don't change in one month.

And he talks about when he was in debt, he would list the most important (4 walls he calls them) to the least important. Then he would look at how much money he had, and go down the list until he was out of money and draw a line (a true line on a piece of paper). anything below that list didn't getpaid, period. He says he even told people that on the phone, sorry you are below the line!

I don't think anyone is debating his theories or principles by suggesting that not everyone can run out and forget about their fico scores right off the back. Now, ask me about my fico score when I'm finishing step 7 and I might have a different opinion, but the truth is, like it or not, we have to be realistic while doing the problem or we will further screw ourselves down the road and quit.

[tannersmommy]

Originally Posted by dachshund mom

48 more days and we'll be debt free!!!

Wow!!! That must feel so good. Congratulations.

[ReikiMommy07]

Originally Posted by shanetedissac

I have heard many times that you spend more when you use plastic (even debit card's can do this). When you use cash there is more connection to the money for me.

I agree with having more "connection to the money" with cash. But I'm curious how/why you believe debit cards can put you in a position where you can't pay them off. DH and I each have a debit card, as we have separate checking accounts that link to each card. And we can only spend what we have. If the money isn't there, we don't spend/overdraw, b/c it's impossible to do so with our cards. Isn't that why it's called a debit card? Just wondering, b/c maybe there are debit cards that work differently than ours.

And I haven't gotten far in TTMMO, so also, is Dave against debit cards, and if so, why?

Thanks y'all!

[phathui5]

Originally Posted by shanetedissac

Dude, if this person is living check to check there will be no hotel or car rentals in their near future.

Be well,

Not for entertainment purposes maybe, but I can think of plenty of reasons that someone would need to rent a car or hotel room even without lots of money in the bank.

And I haven't gotten far in TTMMO, so also, is Dave against debit cards, and if so, why?

Dave is not against debit cards. The reason that he recommends paying cash for things is that you're more likely to spend less money when you have to part with cash for it (which for many people is probably true).