Has anybody had success paying of debt with Dave Ramsey's theory?

[PaulGH]

Has anybody had success paying of debt with Dave Ramsey’s theory? My wife and I finally open and honestly discussed out financial and debt situation. I started listening to the Dave Ramsey podcast, and he seems to have a common sense approach. I was looking to see if people have used his theory with success.

People call his radio show every Friday who have had success on his plan.

My wife and I have implemented a great deal of Dave Ramsey’s financial advice in our own lives, and it has been a big help to us, including getting out of debt. (However, at the time we started using his plan, our only debt was our mortgage.)

By far the most helpful part of his plan for us was doing a budget at the beginning of each month, and then doing our best to stick to it. This helped us to see some areas where we were spending way too much money and could cut back. And it helped us to look at how all of our expenses relate to each other as a set of trade-offs, rather than examining each expense completely on its own (which had been causing us to spend more than we make each month, before we started budgeting).

 

[Xantippe]

By 1990, we realized that it was impossible to try to be debt-free and pursue figure skating. So we deliberately climbed off the debt-free bandwagon and have never looked back. We are in debt today and it doesn’t really worry us.

**And yet your kids are out of the house and you have a pretty good job…

Now would be a really good time to pay off your debts in preparation for retirement. It’s coming fast, and you’ll have more fun if your entire income is available to you to spend today’s stuff rather than being committed to pay for yesterday’s stuff.

You’ll be in a much better position if you could pay off your debts (perhaps selling a few larger items with payments on them) and aim to pay off your house before retirement. Social Security with a mortgage and payments is TERRIBLE–Social Security with no mortgage and no payments might be almost OK. **

If families followed any of the above gurus, no one except wealthy people would get involved with figure skating. For years, the sport was at least 25% or more of our income, and even today, it’s around 15% of my husband’s income.

So, why can’t you get out of debt now?

And I would say that the sport paid off for the girls. Both of them coached through college and made much more money (around $35/hour) than they ever would have made working at the dorm cafeterias. And they had friends and a social network at the rinks that made the transition to college and new living locations easier.

**So, why can’t you get out of debt now? Do you really want to be the broke grandma who can’t ever visit, can’t ever afford to do anything fun for the grandkids, and has to rely on financial help from her kids just to keep the lights on?
**

So we don’t listen to Ramsey or follow his teachings. I would challenge him to work with families involved with figure skating–I think he would probably throw up his hands in despair and give up. In his world, ordinary families with ordinary incomes would never get involved with figure skating or any of the activities that cost money (e.g., organ lessons and competitions). But that’s not an option. So I challenge him to come up with an option for regular-income figure skating families and other families who decide that they want to pursue an activity with passion. I don’t think it’s possible

Yep, you’re right, he’d tell them to do stuff that they can afford without debt.

 

[Xantippe]

As others have said, it is ultimately a life-style change. As to the technical details of Ramsey’s system, in particular the debt-snowball: you will find people who are critical of it because it does not guaranteed the least expensive way of paying off debt. Technically they are correct, and I have read Dave Ramsey admit to this. However, the system makes a lot of sense from an practical standpoint. It is easy to manage, it builds momentum.
But most importantly, it gives you quick success at the beginning. When one is still struggling with the change in lifestyle, one needs to feel it is working.

It is an excellent approach!!! If you focus on minimizing interest costs, you will end up failing.

Yes.

In my experience, the nice thing about the snowball is that your life rapidly becomes less complicated. I had had a couple of small department store cards, and eliminating those really streamlined our financial existence. We still do credit cards (which is not Dave Ramsey), paying off at the end of every month, but it’s just the two cards: one for monthly expenses, one for business and reimbursable work expenses. It keeps things clean and simple.

 

[PaulGH]

Throughout those years, financial freedom gurus have come and gone in the Christian world. When we were first married, everyone was jumping on the Larry Burkett bandwagon. Then it was the Ron Blue bandwagon. And now it’s the Dave Ramsey bandwagon.

I don’t know anything about those other guys or what kind of advice they gave. But while Dave Ramsey himself is probably a fad, I don’t think that his advice is. I say that because most of his plan is based on common-sense advice that has been around a long time, such as:

• Plan how much money to spend before you spend it.
• Don’t spend more than your income.
• Avoid debt as much as possible, and pay off debts if you have them.
• Set aside a certain percent of your income for savings and a certain percent for charitable giving.

He has a certain way that he packages his advice which is gimmicky, but most of his advice boils down to basic principles like these, that people have been following since long before Dave Ramsey came on the financial advice scene.

 

[Xantippe]

I followed all of DR’s baby steps and paid off the mortgage on my home much faster than I ever thought possible. I don’t have children, but I have one modest income, and I saved for my niece and nephews’ college. Thanks to DR, when I became too ill to work for about 6 months followed by another couple years where I was too ill to work full-time, I had plenty of money set aside and frugal habits which allowed me to weather that time with no financial worries. I even finished paying off my mortgage during those 6 months I was bedridden.

I don’t say DR’s plan is the only one to teach you to live within your means, but it is one that worked for me. And I like Dave’s style - he’s blunt and outspoken which appeals to me, but many may find off-putting. Financial stress seems to be a leading cause of stress in marriage and of divorce, so getting your financial life in order seems a wise idea. The Bible also mentions many times that debt is a bad thing, so I think taking the Lord’s financial advice is beneficial.

Wow! Great story!

 

[Musician]

We have followed Dave Ramsey’s general advice. We have The Millionaire Next Door, also, which has some amazing ideas.
We were $40,000 in debt from a failed business and were just in despair. Then we negotiated with our creditors and managed to pay it off in just 18 months. It was a God thing but also the willingness to live very frugally and face our debts head-on.
At this point several years later, we are fortunate enough to retire early with SS, a military retirement, and another pension. We have always lived simply so that is nothing new. We seldom buy new things unless it is absolutely necessary. We spend about $75/week in groceries and that is buying for five people right now. Seldom eat out, so it is a big treat when we do. We live in a small, affordable house in the country where it is cheap to live (Oklahoma). Our cars are both paid off. When we buy another one, it will be only on a cash-basis.
I guess above all, it is the choices you make. If you think you don’t have time to do things on your own to save money, you won’t save money. It’s that simple. Can you live in a smaller home? Raise a garden? Shop sales? Make your own bread? Drive an older car? These are all choices that we live with.
The key is living with simplicity and contentment.

 

[EasterJoy]

My husband and I have been married for 35 years.

Throughout those years, financial freedom gurus have come and gone in the Christian world. When we were first married, everyone was jumping on the Larry Burkett bandwagon. Then it was the Ron Blue bandwagon. And now it’s the Dave Ramsey bandwagon.

In 1988, my husband and I had been married for 8 years, and we got the family involved in the sport of figure skating.

By 1990, we realized that it was impossible to try to be debt-free and pursue figure skating. So we deliberately climbed off the debt-free bandwagon and have never looked back. We are in debt today and it doesn’t really worry us.

If families followed any of the above gurus, no one except wealthy people would get involved with figure skating. For years, the sport was at least 25% or more of our income, and even today, it’s around 15% of my husband’s income.

This is so out-of-line with any of the “debt free gospel” guidelines. I can just hear Dave Ramsey condemning this. We’re not listening to him.

We simply believe that there are some things in life that are more important than being debt free. Figure skating is one of those things. We will get to the end of our life and probably be poor, but we will have decades of fantastic experiences to remember.

We are frugal with our figure skating budget. When the girls were growing up, they often shared competition dresses. We never bought the videos or photos, and we never bought the skating stuffed animals and jewelry and other doo-dads for sale at competitions. We drove almost everywhere instead of flying (except when the girls travelled overseas as part of Team U.S.A.).

And I would say that the sport paid off for the girls. Both of them coached through college and made much more money (around $35/hour) than they ever would have made working at the dorm cafeterias. And they had friends and a social network at the rinks that made the transition to college and new living locations easier.

My younger daughter has coached since she was 16, and is now 28. She is currently coaching one of the top synchronized skating teams in the United States. It took her and the other coaches 10 years to get the team to this point. What a great journey it’s been! Her goal is to be part of the coaching team that coaches Olympic synchronized skating teams someday. #whynotsynchro

My older daughter is still working on passing all her Ice Dance tests (she has three dances to go), and she earns her ice time (ice costs around $10/hour at most rinks) by coaching. She chooses to get ice, not money, for coaching. She’s a stage manager, and it’s nice for her to have coaching as an additional income, and if the theater world dried up, she could probably get more coaching work for money instead of ice.

Other than the figure skating, we live a pretty simple life. Figure skating families often say, “My new kitchen is down at the skating rink,” and that’s exactly how we have lived over the years–poor at home, moderate at the rink.

We personally do not think that “living debt free” is consistent with pursuing the sport of figure skating (unless you have a very high income, e.g., Gracie Gold’s father is a heart surgeon).

So we don’t listen to Ramsey or follow his teachings. I would challenge him to work with families involved with figure skating–I think he would probably throw up his hands in despair and give up. In his world, ordinary families with ordinary incomes would never get involved with figure skating or any of the activities that cost money (e.g., organ lessons and competitions). But that’s not an option. So I challenge him to come up with an option for regular-income figure skating families and other families who decide that they want to pursue an activity with passion. I don’t think it’s possible

You are making an important distinction: that is, it is not bad to get into any kind of debt whatsoever. It is bad to get into debt that will end up owning you or that leaves you with far too little to show for your investment. That is as true of spending your own money as it is of borrowing the money of others.

What you describe sounds more like taking out student loans than like having a standard of living above your means, as evidenced by your conscientious use of the money you put into the sport. It is a little bit of a chancy call, but it appears you correctly predicted that your children were dedicated enough that they would stick with their sport for a lifetime. By making this a family dedication, you also found a way to make them much less vulnerable to some of the spirit-killing things that kids go through in adolescence when they don’t spend much time with their families and don’t develop self-discipline or have the can-do attitude that comes from mastering something difficult.

It is not a sin to accrue debt. I would argue it is a sin to accrue debt thoughtlessly by indulging yourself with things that you could do without, robbing yourself of the capacity to be generous with others. Generosity, however, is about more than money, investments are about more than real estate and stocks and bonds, and education is about more than what you learn at a conventional school.

 

[mkipp]

How do you get over the anger and anxiety/depression of the debt?

 

[Cat]

Yep, you’re right, he’d tell them to do stuff that they can afford without debt.

We’re working on getting out of debt, Xantippe. We’re just not doing it the Dave Ramsey way, by living like paupers. We doing it the slow but steady way (tortoise), and we’re having a good time.

Life is uncertain, and I don’t want to be lying on my deathbed thinking, “Wow, I’m debt-free. This is great.” I want to be thinking, “Ouch, this hurts, but boy, I had a lot of fun in my life, and I did a lot of good in this world with the “talents” that the Lord gave me.”

My husband is still figure skating, and doesn’t plan to quit until he has milked every bit of joy possible out of the sport.

We get out and travel. Most of our travelling is to see our daughters, or to attend figure skating competitions. No cruises or beach trips for us–I sunburn anyway, and certainly don’t need the constant eating that goes on at a cruise. Believe it or not, I lose a pound or two every time I go to a figure skating competition–something about sitting in a freezing rink for 12 straight hours!

 

[Xantippe]

How do you get over the anger and anxiety/depression of the debt?

By having a plan and making progress.

 

[Xantippe]

We’re working on getting out of debt, Xantippe. We’re just not doing it the Dave Ramsey way, by living like paupers. We doing it the slow but steady way (tortoise), and we’re having a good time.

That’s great that you’re making progress.

I think you may be misunderstanding the Dave Ramsey plan, though.

The idea is to sacrifice deeply and have “gazelle intensity” while paying off non-mortgage debt (which generally takes about two years) and then move on to the other Baby Steps, which is more relaxed. The most sacrificial phase of the plan is intense but relatively short.

Here’s DR explaining “gazelle intensity” (first five minutes):

youtube.com/watch?v=imBjHvIlou4

That clip has an exciting scene with a gazelle clip attempting to evade the cheetah and lots of excited DR yelling (so adjust volume accordingly).

 

[PaulinVA]

I find it ironic that people make money off of other people wanting to get out of debt or achieve financial freedom. Well, I guess you’re providing a pretty good debt-free life for them.

I have read the Millionaire Next Door, and thought it had many insights. I haven’t bought a new car since I read the book. Living below one’s means is the key to financial success.

 

[WingsOfEagles]

Yes, my parents have been using his program successfully for a good 10 years now. It absolutely works.

 

[Cat]

That’s great that you’re making progress.

I think you may be misunderstanding the Dave Ramsey plan, though.

The idea is to sacrifice deeply and have “gazelle intensity” while paying off non-mortgage debt (which generally takes about two years) and then move on to the other Baby Steps, which is more relaxed. The most sacrificial phase of the plan is intense but relatively short.

Here’s DR explaining “gazelle intensity” (first five minutes):

youtube.com/watch?v=imBjHvIlou4

That clip has an exciting scene with a gazelle clip attempting to evade the cheetah and lots of excited DR yelling (so adjust volume accordingly).

Here’s the problem, Xantippe, and I’m not ranting at you, I’m just explaining our choice.

My husband is 56. He has been working on his figure skating for about ten years to get where he is today.

He can’t take a year or two off for “gazelle intensity.” He’ll lose everything he worked for, and he gets older and less agile/strong every year. We all do. Even though Madison Ave. wants us all to believe that we’re not getting older, we’re getting better, that’s doo doo. Every morning we’re a little stiffer, a little slower, a little more afraid of falling down and not being able to get up.

So THIS is the time for my husband to skate.

When he accomplishes all he wants to accomplish and gets to a place where he feels that he can no longer make progress, he will slow down or quit, and THEN we will probably put as much passion into our debts and retirement prep as we do the figure skating.

Does that make sense?

We felt the same way when our children were young. It’s easy for Dave Ramsey to talk–he’s rich enough that he never has to tell his children or grandchildren, “Honey, I know you love figure skating and you have a little bit of talent, but we are committed to being debt free, and even though you’re too young to understand that, it’s very very important, and so you can’t skate anymore. You can go to public skates and have fun, but no more lessons, no more competitions.”

That’s just nonsense. I can’t imagine telling my children that. Children deserve a chance at doing what they love to do (within reason), and if that means going into debt, so what? We economized as much as we could, but we said, “Yes, you can try out for the elite synchronized skating team,” and when they made it through tryouts and were invited to join the team, we said, “Yes, we will pay the tuition which is more than two car payments,” and when their team earned Gold medals and qualifed to skate as Team U.S.A, we said, “Yes, we will pay for the plane trips overseas so that you can win Gold and see the Stars and Stripes raised and sing your National Anthem.”

We didn’t go overseas to see them. That was part of our economizing. But we gave them the chance, and they still thank us for letting them do it.

We never put any skating expenses on a charge card. We never put any of our private schooling on a charge card either. But both of those choices made it impossible for us to stay out of debt when it came to car repairs, house repairs, etc.

Debt, schmedt. We have 70 years plus a few more. I want memories to fill those years, not a pile of shredded credit cards and a bulging bank account.

 

[bitznbitez]

…while Dave Ramsey himself is probably a fad, I don’t think that his advice is. I say that because most of his plan is based on common-sense advice that has been around a long time, such as:

• Plan how much money to spend before you spend it.
• Don’t spend more than your income.
• Avoid debt as much as possible, and pay off debts if you have them.
• Set aside a certain percent of your income for savings and a certain percent for charitable giving.

Exactly.

 

[Xantippe]

Here’s the problem, Xantippe, and I’m not ranting at you, I’m just explaining our choice.

My husband is 56. He has been working on his figure skating for about ten years to get where he is today.

He can’t take a year or two off for “gazelle intensity.” He’ll lose everything he worked for, and he gets older and less agile/strong every year. We all do. Even though Madison Ave. wants us all to believe that we’re not getting older, we’re getting better, that’s doo doo. Every morning we’re a little stiffer, a little slower, a little more afraid of falling down and not being able to get up.

So THIS is the time for my husband to skate.

When he accomplishes all he wants to accomplish and gets to a place where he feels that he can no longer make progress, he will slow down or quit, and THEN we will probably put as much passion into our debts and retirement prep as we do the figure skating.

Does that make sense?

**If either of you were laid off or had some sort of serious health issue and/or disability, you’d be in a heck of a fix.

From looking at my parents and my in-laws and their contemporaries, I know that one kind of has to expect serious health issues to emerge in the 50s and 60s.

I’ve seen couples your age adopt the “I’m going to be able to work as long as I want to” approach, and I’ve seen a number of them go splat. A lot of people lose their jobs or their health or their zip in their 50s and 60s.

My parents started Dave Ramsey when they were just about your age, and I’m so glad. It’s so nice to know that they’re financially solid and that their basic needs will be covered. It’s one of the best things they’ve ever done for me and my siblings.
**

We felt the same way when our children were young. It’s easy for Dave Ramsey to talk–he’s rich enough that he never has to tell his children or grandchildren, “Honey, I know you love figure skating and you have a little bit of talent, but we are committed to being debt free, and even though you’re too young to understand that, it’s very very important, and so you can’t skate anymore. You can go to public skates and have fun, but no more lessons, no more competitions.”

The Ramseys took their kids out of private school and earlier, when the Ramsey kids were little, things were pretty bad–they were just coming out of bankruptcy. I think they were probably pretty well off by the time the kids were in high school, though. The new “Smart Money, Smart Kids” book has a lot of cute stories about the family and the way they handled money with the kids.

That’s just nonsense. I can’t imagine telling my children that. Children deserve a chance at doing what they love to do (within reason), and if that means going into debt, so what?

**In our family, if we don’t have the money, we don’t have the money. Our kids have a lot of nice things and have done amazing activities, but if they ever get into Amazing U without enough merit aid to go to Amazing U, our contribution will be limited to whatever the cost at our big state flagship would be and we will discourage attendance at Amazing U. Either Texas A & M or UT Austin is a really good school and gives a lot of bang for the buck.

There are lots of nice things. We can’t afford all of them, so we have to draw a line somewhere. **

Debt, schmedt. We have 70 years plus a few more. I want memories to fill those years, not a pile of shredded credit cards and a bulging bank account.

In my family, people tend to live to 90. I guess we have to be a little bit more careful…

 

[whatsmyname]

I always felt like DR’s budget guidelines were pretty lenient. I’m a member of a couple of message boards full of DR followers and we are way, way more gazelle than Dave ever thought of being. And I think part of Dave’s goal in being debt free and saving up an emergency fund is so he can afford to buy toys like boats and not have to have collection agencies calling his house at all hours of the day and night threatening his wife.

Also, it is just responsible to pay for your own food, housing, hobbies and clothing if you can afford it and not assume society is going to take care of you when you are perfectly well able to care for yourself. Now, if you aren’t perfectly well able to care for yourself, that is another story. But if you want me to pay for your basic food and housing costs because you spent all your money on a lavish lifestyle you couldn’t afford, that’s a problem for me.

I find it ironic that people make money off of other people wanting to get out of debt or achieve financial freedom. Well, I guess you’re providing a pretty good debt-free life for them.

You can just go get Dave Ramsey’s (or anybody else’s) books at the library for free if you don’t want to pay him for his advice. His radio show is also free to listen to.

 

[Xantippe]

You can just go get Dave Ramsey’s (or anybody else’s) books at the library for free if you don’t want to pay him for his advice. His radio show is also free to listen to.

Yep. Plus there’s free stuff on the website.

And if you pay for the TMMO book it’s about $10 used with shipping.

 

[Cat]

I always felt like DR’s budget guidelines were pretty lenient. I’m a member of a couple of message boards full of DR followers and we are way, way more gazelle than Dave ever thought of being. And I think part of Dave’s goal in being debt free and saving up an emergency fund is so he can afford to buy toys like boats and not have to have collection agencies calling his house at all hours of the day and night threatening his wife.

Also, it is just responsible to pay for your own food, housing, hobbies and clothing if you can afford it and not assume society is going to take care of you when you are perfectly well able to care for yourself. Now, if you aren’t perfectly well able to care for yourself, that is another story. But if you want me to pay for your basic food and housing costs because you spent all your money on a lavish lifestyle you couldn’t afford, that’s a problem for me.

You can just go get Dave Ramsey’s (or anybody else’s) books at the library for free if you don’t want to pay him for his advice. His radio show is also free to listen to.

I think a lot of people who are on public aid would be very hurt by your accusation that they got that way because of living a “lavish lifestyle.”

In this day and age in the United States, most people on public aid got that way because they were born into families that were already on public aid (often to single mothers with no male relative living in the house). These children of poverty grow up not learning the skills needed to be able to live on their own with no government help. They do not learn the simple skills like getting up on time, going to school everyday, keeping regular sleeping hours, doing the assignments that the teacher gives each day, staying chaste, avoiding alcohol and drugs (as teenagers), etc.

And in many of the urban areas (like Chicago, which is near where I live), many of these poor children are forced into gangs whether they want to be in them or not, and this contributes to their downfall by getting them involved with immoral and dangerous activities that generally kill them early in life.

The only way out of gang life, other than death, is to escape from the City and move somewhere rural, but again, these families do not possess the skills to live on their own.

Of course, people can be taught how to live on their own, but the teachers, materials, and facilities for the teaching cost money and guess who pays for it? (Taxpayers.) So even when they are trying to help themselves, these poor families end up accepting government aid.

It’s a horrific cycle of misery, and it’s very difficult for us taxpayers to keep paying and paying for this kind stuff, but what choice do we have?! These people aren’t living on government aid because they chose a lavish lifestyle. They’re there because they were born into it and can’t escape.

Does Dave Ramsey teach that we should despise those people who receive government aid?

I don’t know ANYONE in my circle of acquaintances who “lived a lavish lifestyle” and ended up broke. Anyone. Also, of course, there is the question of “what is a lavish lifestyle?” For some people, making macaroni and cheese from scratch is “living a lavish lifestyle,” because you can buy cheap mac and cheese in a box.

Another reason why people end up on government aid is due to addictions, mainly drugs, alcohol, and gambling. These three vices destroy lives and families, and put the victims–yes, victims! onto the streets and at the mercy of the government. I say victims because most people would say that there is nothing wrong with alcohol, certain drugs used for medical purposes, and gambling. Lots of people are able to use these without becoming addicted–but some people DO become addicted, and end up losing everything.

Often, their rehab is paid for by the government (taxpayers), and it still doesn’t work, and these people end up addicted and dependent for the rest of their lives. It’s an awful disease.

Does Dave Ramsey teach that we should despise the addicted people?

 

[1ke]

My husband is 56. He has been working on his figure skating for about ten years to get where he is today.

When he accomplishes all he wants to accomplish and gets to a place where he feels that he can no longer make progress, he will slow down or quit, and THEN we will probably put as much passion into our debts and retirement prep as we do the figure skating.

Does that make sense?

No, frankly, it doesn’t. A couple in their mid 50s with a lot of debt, with no accumulated assets, and little or no retirement savings who say they will ‘probably’ get passionate about paying off debt and saving for retirement in a few years are unrealistic and developing a recipe for disaster.

You can go to public skates and have fun, but no more lessons, no more competitions."

well, that is just how it is. skating, golf, tennis indeed perhaps ARE sports for the wealthy. That’s life.

Your husband took up skating later in life when he could pay for it, your children could have done the same.