Dumping Debt and building wealth with Dave Ramsey JANUARY - Page 11 - Mothering Forums

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Old 01-11-2008, 02:36 AM
 
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We have a new car we bought in July (yes, new; oops) that we owe about $10,000 on, at $216/month, and no other debt. If we pare down to zero budget fat and DH does not get a job (he’s SAHD), I think we could pay off the car in just over a year.
I'm reading TTMM right now and JUST read through the part that is relevant to your question. We, too, bought a new car this past June but it will be paid off in 12 more months with our current Money Plan. Dave says that if you have a car loan that will be paid off in 18 - 20 months then don't sell it, just pay it off as fast as you can. So that answers your question (and mine) which is don't sell your car, just pay it off fast.

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But then BS 4 is 15% to retirement. That amount happens to be equal to the sum we would be paying toward the car, then the big EF. So we’d be living at BS4 for the rest of our lives!
No you won't (though I know how it feels to feel that way). First of all, if you work hard at your budget you can always find ways to trim off excess and allow you to move on to the next step. And if you are already a guru of simple living and frugality, then consider that in a few short years your children will be older and your DH will have more freedom to work part-time.

I will say this though, if my budget were that tight that I was seriously stuck at step 4, I would not be saving for a college fund for my kids. If they even go to college they could pay for it themselves (hopefully by being smart with money). Paying for your kid's college is a great thing to do (my parents paid for most of mine, and Dad set up RESP's for each kid when they were born) but if it meant the difference between being stuck at step 4 for the rest of my life or paying down my mortgage faster I would probably go for the latter.

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Old 01-11-2008, 03:27 AM - Thread Starter
 
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Why should I wait to start investing?
We have to remember that we are emotional beings. If we don’t see quick results in any particular process, we are likely to quit and move on to something else. That’s why Dave has the Baby Steps (http://www.daveramsey.com/etc/cms/in...ContentID=2867) and the Debt Snowball.(http://www.daveramsey.com/etc/cms/in...ContentID=4055)

These processes play off our human emotions. By taking small steps, we see quicker results, thus we stay focused and motivated to stay on track. By paying off the smaller debts first, we see quick results and more income available to fight our debts and stay enthusiastic about our progress.

Another reason that investing is further down the line is because until you free your income from being spent on payments, you cannot fully utilize its power. So there again lies the importance to be debt-free before worrying about investing. Your income is the most powerful wealth-building tool you will ever have, and you have to free it from payments so that you can take full advantage of this tool!

It is still important to start investing as soon as possible. The average time it takes people to get through Baby Step 2 is 18 months to two years. But that is only done when you get "gazelle intense" (http://www.daveramsey.com/etc/cms/ga...ing_6736.htmlc) and truly focus your efforts on getting debt free. Use your desire to start investing for your future as motivation to get debt free!

Don't get caught up in the numbers games. Focus on tasks one at a time. This process yields the quickest and best results, and Dave has used these principles for over 15 years.

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-11-2008, 01:20 PM
 
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Today was a good financial day!!! My DH's bonus came in for staying at his job thru the end of the year (company was in some transitioning and need to try to keep people). Thankyou Dewberry!

So all of our bills are PAID!!! Including our oil bill, which was over $800 this fill-up!!! YIKES! :

Step 1: $771.25/1000. WOOOHOOOOO. Plus for the first time, I was able to put the full monthly amounts into our sinking funds account. There is about $500 in there to cover various occasional expenses, nearly not enough, but good none-the-less. Unfortunately we had nothing extra for debt, but that is ok. Our tax returns will go to that. I will be posting some stuff to sell this weekend.

Step 2: is going to take a long time!!! We have about $51K and we are already short on our budget every month, so not too much extra to speak of.

To the OP that stated her husband hung up on her! It was tough getting my DH on board. Show him your budget and tell him your ideas. Hear him out and let him know why that won't work. My DH loves to transfer money from one account to another using the checks they send. So sometimes he will write out a check for a certain amount, pay off the higher rate card, then he will end up spending the remainder on renovations that need to be done to the house.

As a compromise, maybe you could agree to surf the higher rate cards to the lower rate, but DON'T charge living expenses. That way you both get what you want and you don't have to pay interest in the mean-time. Just make sure the 0% doesn't expire after so many months, and that you don't charge on that card b/c usually the rate is higher for purchases, and there is usually a balance transfer fee of 3-5%. Make sure to read all the terms and conditions. Keep showing him the numbers and he will eventually get on board!
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Old 01-11-2008, 02:48 PM
 
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I am with the few of you that are debt free except for the mortgage, but not able to really move beyond that into serious retirement and college savings.

And my conclusion is that I need to look for a better paying job. I think that will happen in another year or so. But I think this turnip has been squeezed, KWIM? I finish my master's degree in August, hopefully. And maybe that will be the resume boost I need. Plus, I'll have a little more energy for job searching.

Dave was talking to a woman on this week's radio show about her family's situation. Her husband was working hard, but not at jobs that were earning a lot. The caller and I are in really different situations, but Dave's point that 5 years from now he needs to be at a better-paying regular job (as opposed to a two jobs) hit home with me.

In my situation, it's also hard to say what DH will be doing in 2, 3 or 5 years. He is currently a stay-at-home dad with a little bit of freelance work.

Bridget. Momma to DD (4), expecting DS - 9/09, wife to SAHD. Gardener, coffee addict, urban dweller.
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Old 01-11-2008, 03:17 PM
 
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$40.76/$1000

Woohoo!!! We had a few bills that were less than budgeted!

Dawn, mama to D (3.06) & N (9.07) C (11.09) & Still-in-shock surprise due in Aug!
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Old 01-11-2008, 03:35 PM
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Originally Posted by Heather423 View Post
Today was a good financial day!!! My DH's bonus came in for staying at his job thru the end of the year (company was in some transitioning and need to try to keep people). Thankyou Dewberry!

So all of our bills are PAID!!! Including our oil bill, which was over $800 this fill-up!!! YIKES! :

Step 1: $771.25/1000. WOOOHOOOOO. Plus for the first time, I was able to put the full monthly amounts into our sinking funds account. There is about $500 in there to cover various occasional expenses, nearly not enough, but good none-the-less. Unfortunately we had nothing extra for debt, but that is ok. Our tax returns will go to that. I will be posting some stuff to sell this weekend.

Step 2: is going to take a long time!!! We have about $51K and we are already short on our budget every month, so not too much extra to speak of.

To the OP that stated her husband hung up on her! It was tough getting my DH on board. Show him your budget and tell him your ideas. Hear him out and let him know why that won't work. My DH loves to transfer money from one account to another using the checks they send. So sometimes he will write out a check for a certain amount, pay off the higher rate card, then he will end up spending the remainder on renovations that need to be done to the house.

As a compromise, maybe you could agree to surf the higher rate cards to the lower rate, but DON'T charge living expenses. That way you both get what you want and you don't have to pay interest in the mean-time. Just make sure the 0% doesn't expire after so many months, and that you don't charge on that card b/c usually the rate is higher for purchases, and there is usually a balance transfer fee of 3-5%. Make sure to read all the terms and conditions. Keep showing him the numbers and he will eventually get on board!
You're doing great! Just keep plugging along for a while, it'll start to come together.

You say you're spending more than you make each month? (Or is that not what you meant?) If so, I'd think that would be the first issue to address. You either need to make more money, or spend less, immediately! Easier said than done.


Daisie125 Good job!



I thought we owed more on the electric bill than we do, and had schedulded two payments this month. THat means I'll have that money to coast us through the week we aren't going to have a paycheck.








Random and off-topic....does anyone here have ATAT for their cell phones? AAre they always crazed about getting their money? I owe them the bill that's dated 12/31, which I got after the first and they want it NOW. I mean jeez! (Luckily they were in teh budget for NOW anyway, but still....)
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Old 01-11-2008, 04:03 PM
 
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Random and off-topic....does anyone here have ATAT for their cell phones? AAre they always crazed about getting their money? I owe them the bill that's dated 12/31, which I got after the first and they want it NOW. I mean jeez! (Luckily they were in teh budget for NOW anyway, but still....)
I work for AT&T and yes, they can sometimes be a bit pushy with calling for a late bill. its proable because your next bill cycle date came up, so it shows you are 2 months behind, even though you havent gotten the 2nd bill yet.

Now that i'm on the DR plan, i'm so much more aware of how much i was living above my budget. I'm so glad that i found this thread, its just the kick in the behind i needed!
On a happy note i just found out yesterday that i got full finacial aid for school so that means i can take the little bit of $ budgeted for school stuff and put it towards debt
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Old 01-11-2008, 04:19 PM
 
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Our EF is empty. The plumber had to come yesterday, and out went the entire EF when he left, including $20 in toonies (Canadian $2 coin) from the extra secret stash. I know that's what the EF is for, but it sure sucks when it's drained. I put $5 in there this morning just so it wouldn't be empty.

Meh.

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Old 01-11-2008, 04:23 PM
 
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Hi everyone Sorry I haven't been around much, this ear infection is wiping me out. I am spending most of my non work hours in bed asleep

I get paid today so I am excited to add money to the EF. I am hoping to have it fully funded by the end of this month.

I hope everyone is doing well

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Old 01-11-2008, 04:24 PM
 
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AND ... my partner bought a bunch of essentials at Walmart yesterday on the way home from the city in a blizzard after a stupidly long meeting and left half of them at the self-checkout because she was so exhausted and they're saying they can't do anything about it. The darn store is an hour and a half away, otherwise I'd be down there in person doing this:

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Old 01-11-2008, 04:58 PM
 
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I recently left a couple of bags behind at Walmart and they couldn't find that they had been turned in, so most likely the person behind me took them by accident. Anyway, they told me to bring in the receipt and they gave me the items anyway. Can you call and talk to the manager? I don't see why they wouldn't do something in the name of customer service. At least check their book to see if anything had been turned in.

ribbonpurple.gif  "And the day came when the risk to remain tight in a bud was more than the risk it took to blossom." Anais Nin
   
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Old 01-11-2008, 06:10 PM - Thread Starter
 
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I am the one that stated this originally. It is not ment as an insult. Dave Ramsey says this and this is what I take it to mean:

Man: Takes care of his family beyond his wants. Maturity.

Boy: Puts his wants in front of taking care of the family. Inmaturity.

I now thank my dh each day for taking care of us. Since finding Dave we are now able to have so many more of our wants because we do not have debt.

Love each other.

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-11-2008, 06:49 PM
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I understand that DR might say things about boy vs man in his book, but saying things like:

Quote:
Originally Posted by shanetedissac View Post
I'm sorry that your dh is so willing to destroy your financial future.
Hope he grows up soon for your family.
and

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Originally Posted by shanetedissac View Post
OK, you dh is acting like a boy and not the man you need in your house. The 'I want' syndrome is not mature and is not a man supporting his wife and child!
is more like a direct attack, since we're not talking about some random man, but those particular womens dps. I think it sounds mean and disrespectful and doesn't probably make you feel good about your situation. I just think it would be kinder and more productive to say something else.

Your advice here is so respected and sought after, that it's better given kindly. IMHO.
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Old 01-11-2008, 07:15 PM
 
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Hi. New here. I read TMM about six months ago and was gazelle for about a month (on my own). Didn't last long.

I am a WOHM of an 18mo dd. My dh is a full-time grad student and part time SAHD.

I am subbing hoping that you all can help me stay motivated. I make a salary that should be plenty but live in the expensive east coast, have huge SLs, a mortgage (that really isn't unreasonable) and a newer car with a loan (it's a inexpensive new car, but still...). I'm on debt snowball, but I feel like with my amount of debt it'll be a while until I see the "snowball"- thus the difficulty in staying motivated.

I really would like to cut working down to 4 days a week and consider ttc again in the next year- but, well, I don't see it being too feasible.

I have a hard time giving up the "matching" funds from my retirement, but I'm getting close to giving in to Dave on this one...
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Old 01-11-2008, 07:47 PM - Thread Starter
 
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Hi. New here. I read TMM about six months ago and was gazelle for about a month (on my own). Didn't last long.

...
WELCOME!

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-11-2008, 09:13 PM - Thread Starter
 
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I was looking around the Dave Ramsey site and clicked on future cities that his live show would be coming to. Along with the planned cities it also had a list of prospective cities. I am so EXCITED because NYC was listed. I live about an hour from the city but would so drive and get a play sitter for the children to go!!! I'm going to have to put some money aside for this

Anyone been to a show?

Be well,

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-11-2008, 10:24 PM
 
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I'm just posting to stay connected. We are still on BS#2 and will be for years I think (looks like 2 years). Progress is so, BUT we haven't had any real set backs (knock on wood). Just pluggin' away. . .
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Old 01-11-2008, 11:17 PM
 
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I'm wondering if anybody from high real estate areas of the country (Canada, US) could comment on the real estate part of Dave's plan.

We'll be debt free with a small downpayment by the end of this year. Even if we stick it out another six months after that (and put all snowball stuff into savings) we still won't have much money relative to the real estate market here. We're even leaving the city we were both born and raised in to go to a more rural area 5 hours drive away. While prices there are almost half of what they are in the city, we're still looking at about $450,000 to $550,000 for what we want. With Dave's suggestion to get a 15 year mortgage and not pay more than 25% of your monthly income, it would take us another several years to get to that point...and it depresses me. I want to go *now*, kwim?

Part of me knows that Dave is right and that taking on too much mortgage is a dumb idea. But when he writes stories in his book about couples buying houses for $150,000 (and I've lived in Cleveland so I know that's true there) I think he must have no idea what it's like in more urban areas. You couldn't get a box for $150k here...

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Old 01-11-2008, 11:27 PM
 
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We are still plugging along at BS #2 right now. We had our first Christmas where we didn't charge anything! Yeah! We also had to cash flow new tires for the van-$700! Yikes! Proud of ourselves but I can't wait to get this step done. I am still doing a newspaper route to get our debt down and it has really saved our butt at times! Good luck to everyone! In this economy I just want to be debt free!

Homeschooling Momma to DD 8 years old, DS 7 years old, DS born 03/11 by adoptionheart-1.gif , waiting for DD born 07/10 and two furry labs. Wife to my wonderful husband of 12 years.
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Old 01-11-2008, 11:55 PM
 
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I'm wondering if anybody from high real estate areas of the country (Canada, US) could comment on the real estate part of Dave's plan.

...
I believe a mortgage is worth carrying a debt for. We're in BC, and live rurally (about three hours away from Vancouver), but the cheapest house for sale here is ( OH GOOD HEAVENS, I just checked the mls!!!) $519K.
There is no way on this green earth that a 15 year mortgage will ever be realistic here. When I read Dave, I went "la-la-la-la I don't hear you" for that section. Just not possible. Nu-uh.

We're in a condo now, and hope to build in the next five years, and we'll be lucky we can make a 25 year ammortization work. If we can't, I think we'll head to Quebec and get a nice waterfront acreage in Gatineau for about $300k. Seriously.

Sigh. I :my town. Love, love, love it. We don't want to leave, and so we make the financial sacrifices to stay.

I used to live on the Sunshine Coast and did the same thing there.

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Old 01-11-2008, 11:57 PM
 
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I You couldn't get a box for $150k here...
Honey, you couldn't get a snot rag for $150k in Vancouver! :

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Old 01-12-2008, 12:33 AM - Thread Starter
 
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duplicate post.

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-12-2008, 12:38 AM - Thread Starter
 
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I'm wondering if anybody from high real estate areas of the country (Canada, US) could comment on the real estate part of Dave's plan.
In upper Fairfield County in CT to get a starter home: 2/3 bedroom 1/1.5 bath about 1000/1500 sqf you are looking at around $350,000. Our house is a 4bed 2.5 bath with about 2100 sqf and is worth about $450,000. That is the same price we purchased it for 4 years ago.

I would wait it out and get the home with the security and without the murphy.

Be well,

Shane - Homeschooling mom to three boys (12, 1-, 8) and living the open life with my husband.

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Old 01-12-2008, 12:53 AM
 
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I have been wondering about dropping AAA. For me it is $48/year. I like the peace of mind, but would also like the $48!

How much does a tow truck cost if you don't have AAA? Does anyone know?
Nothing for me. I don't have AAA and my car insurance pays for towing when I need it.

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Old 01-12-2008, 01:35 AM
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Watch teh foreclosure section of your newspaper. Sadly, you will find loads of good deals there.


You can still get a 2 - 3 bedroom fixer-upper in western ma for $75,000. Come on over! (Nicer homes start at $150,000)
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Old 01-12-2008, 02:00 AM
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Piglet, I'm in Toronto so not quite as bad as Vancouver but no houses under $500,000 in my area. I'd worry about in high demand markets about prices continuing to go up and try to get into the market. Condos here have doubled in the past 5 years, no way could we have bought where we are now with current prices. I think Dave's way is ideal but I don't see it as the be all/end all, I'd be interested to hear what he says to callers who ask this question from more expensive US cities. anyone know?
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Old 01-12-2008, 02:10 AM - Thread Starter
 
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While paying off debt, should I stop investing?Dave recommends that you should stop your contribution to retirement plans and investments in general for as long as it takes to get rid of your debt (excluding mortgage payment). Do not withdraw from your retirement plans; just let it sit while you conquer your debt. Then, after everything is paid off, start contributing toward your retirement plans again

Live like no one else, so you can live like no one else!

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Old 01-12-2008, 02:17 AM
 
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I recall reading something in the book about "get a 30 year mortgage and pay it like it's a 15". I suppose in my part of the world that's what it's going to have to be. My concern is that DH's job is not lifetime guaranteed (well, whose is?) and his salary can jump around a bit. If we got into a 30 year mortgage and paid extra each month it would provide a buffer should he end up in a job that pays a bit less. If we were in a 15 year mortgage we could lose the house if DH got "downsized". Is that right? Or would it be easy to renegotiate a 15 year mortgage to a 30 year one? I don't know much about this homeowning stuff.

I'm so torn - I'm turning 40 this month and desperately want a place of our own. We made a plan to move in a year (or so) and the idea of doing what we're doing now for another 5 years just so we can do it "Dave's Way" is really just too depressing for words. I'm sick of paying rent. I'm feeling like even on a 30 year mortgage at least *some* of what you're paying each month is going to us, compared with 0 right now. Sorry to sound like such a whiner!

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Old 01-12-2008, 02:24 AM
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A bit of melodrama there. But my point is that we don’t have 3 cc’s, a student loan & 2 car loans. The book's premise is that once you pay off non-mortgage debt, you then have enough to put 15% to retirement, AND save money for college AND save for a house or pay off your mortgage & have lots of mad money to boo. W'd be no where near that. So what’s the point?! I HATE having debt, so for me that’s a big motivation, but do you see what I’m trying to say? If we were pouring $1000/mo at debt, we’d have bigger motivation.
You could always run out and buy a bunch of crap on credit cards so that you can start from a harder place. :

So...really think about what you are saying, though.... You think that once you are on BS4 (saving 15% to retirement) that you will never have a pay increase (either from your job or you DH getting a job), or a decrease in expenses (such as paying off the mortgage)?

I can't tell if you are in a house (of your own) right now, but it sounds like you aren't. You have the steps a little wonky - but that's easy to do, because he doesn't list them ALL on one page. If you want to buy your first home, after you complete Baby Step 3 but before you begin BS4 is when you save up for your home. Dave calls it BS3(b) (on pg 148 of TMMO)
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Old 01-12-2008, 02:29 AM
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I recall reading something in the book about "get a 30 year mortgage and pay it like it's a 15".
He actually says don't do that. He says to get a 15 and pay it like it's a 15 UNLESS you have a great interest rate on your existing 30 year that you couldn't get on a 15. (pg 191, TMMO)

However, I think that his stuff is better suited to people in smaller markets, and not those hot ones like NYC or L.A. where a refrigerator box rents for $2K/month.
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