DansDeals.com Forums

DansDeals Forum => General Discussion => Topic started by: Kobe bryent on June 08, 2020, 02:18:07 PM

Title: Dave Ramsey Plan
Post by: Kobe bryent on June 08, 2020, 02:18:07 PM
"American household debt hit a record $13.21 trillion in 2018. If you had to write that check it would read $13,210,000,000,000." Debt.org

Personal finances is something that unfortunately isn't taught as part of the basic curriculum in schools, and as such many are financially illiterate.
Whether or not one agrees with the entire Dave Ramsey Plan (DRP), we should all be able to agree on the simple principle of "living within oneís means." Comments like  "I know many people that spend within their means no matter what. To each their own."  (https://mishpacha.com/at-all-costs-the-conversation-continues-2/)remind me how it isn't just common sense but rather financial education that will change the way we look at personal finances.
Title: Re: Dave Ramsey Plan
Post by: moko on June 08, 2020, 02:35:01 PM
"American household debt hit a record $13.21 trillion in 2018. If you had to write that check it would read $13,210,000,000,000." Debt.org

Personal finances is something that unfortunately isn't taught as part of the basic curriculum in schools, and as such many are financially illiterate.
Whether or not one agrees with the entire Dave Ramsey Plan (DRP), we should all be able to agree on the simple principle of "living within oneís means." Comments like  "I know many people that spend within their means no matter what. To each their own."  (https://mishpacha.com/at-all-costs-the-conversation-continues-2/)remind me how it isn't just common sense but rather financial education that will change the way we look at personal finances.
I don't think you want to be bantering about DR around these forums.
Also, in our circles you need an education fund way before college.

Title: Re: Dave Ramsey Plan
Post by: Euclid on June 08, 2020, 02:35:32 PM
Why is prepaying a mortgage a good thing with today's mortgage rates? Seems like a dumb thing to do, just take the excess money and invest it - all you need to make is more than ~4% (if not less).
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on June 08, 2020, 02:57:28 PM
Why is prepaying a mortgage a good thing with today's mortgage rates? Seems like a dumb thing to do, just take the excess money and invest it - all you need to make is more than ~4% (if not less).
That isn't the point. I would love to know how many people in our community are even in the position to prepay their mortgage or invest that extra money.
Title: Re: Dave Ramsey Plan
Post by: Euclid on June 08, 2020, 03:16:48 PM
That isn't the point. I would love to know how many people in our community are even in the position to prepay their mortgage or invest that extra money.
Oops sorry for taking it off topic. The choices are a little confusing for me because I don't necessarily agree with the ordering.
Title: Re: Dave Ramsey Plan
Post by: gozalim on June 08, 2020, 03:58:55 PM
Why is prepaying a mortgage a good thing with today's mortgage rates? Seems like a dumb thing to do, just take the excess money and invest it - all you need to make is more than ~4% (if not less).
and where are you earning a safe %4 ?
Title: Re: Dave Ramsey Plan
Post by: aygart on June 08, 2020, 04:50:34 PM
and where are you earning a safe %4 ?
my whole life policy

@ExGingi
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 08, 2020, 05:36:52 PM
my whole life policy

@ExGingi

Indeed. My Whole Life policies give me anywhere between a 3% to 5% safe rate of return (besides for providing a death benefit and not generating a 1099).
Title: Re: Dave Ramsey Plan
Post by: gozalim on June 08, 2020, 05:39:37 PM
and -in context of this discussion- you can 'prepay' it?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 08, 2020, 05:45:35 PM
Why is prepaying a mortgage a good thing with today's mortgage rates? Seems like a dumb thing to do, just take the excess money and invest it - all you need to make is more than ~4% (if not less).

Here is another way to look at this:

Prepaying a (presumably fixed rate) mortgage converts a guaranteed CASH LIQUID asset into non-guaranteed, illiquid HOME EQUITY.

Now I know that when home prices are rising and banks are easily giving HELOCs, many people might not realize the risks involved. But remember that HELOCs can be frozen, shut down, or simply not offerred at any time the banks don't want to lend. Also, while we've seen an outstanding increase in home values (especially in BKLN and LKWD), prices don't always go up (they are possibly a little down from their peak). And here's something many people miss - prepaying a mortgage is irrelevant to your net worth, I actually know people that were kicking themselves for not having larger mortgage balances during the Making Home Affordable loan modification days.

Also, don't forget tax ramifications.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 08, 2020, 05:46:17 PM
and -in context of this discussion- you can 'prepay' it?
The Whole Life? Yes! If set up correctly and with the right companies.
Title: Re: Dave Ramsey Plan
Post by: gozalim on June 08, 2020, 06:00:55 PM
Here is another way to look at this:

Prepaying a (presumably fixed rate) mortgage converts a guaranteed CASH LIQUID asset into non-guaranteed, illiquid HOME EQUITY.

Now I know that when home prices are rising and banks are easily giving HELOCs, many people might not realize the risks involved. But remember that HELOCs can be frozen, shut down, or simply not offerred at any time the banks don't want to lend. Also, while we've seen an outstanding increase in home values (especially in BKLN and LKWD), prices don't always go up (they are possibly a little down from their peak). And here's something many people miss - prepaying a mortgage is irrelevant to your net worth, I actually know people that were kicking themselves for not having larger mortgage balances during the Making Home Affordable loan modification days.

Also, don't forget tax ramifications.
speaking of liquid, how liquid is the cash in a whole life policy?
Easier /more reliably available to access than a HELOC?
Title: Re: Dave Ramsey Plan
Post by: aygart on June 08, 2020, 08:26:20 PM
Indeed. My Whole Life policies give me anywhere between a 3% to 5% safe rate of return (besides for providing a death benefit and not generating a 1099).

Before or after leveraging?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on June 08, 2020, 09:22:20 PM
and where are you earning a safe %4 ?
US Saving Bonds
Title: Re: Dave Ramsey Plan
Post by: CountValentine on June 08, 2020, 09:22:49 PM
my whole life policy

@ExGingi
More than 4%.  :)
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 08, 2020, 09:36:22 PM
speaking of liquid, how liquid is the cash in a whole life policy?
Easier /more reliably available to access than a HELOC?

There's a reason banks will give 95% LTV against the Cash Value of a Whole Life policy (I know of one bank that will actually go to 100% LTV with credit scores of 750+.

I've seen HELOCs being shut down for people with perfect credit. The cannot happen with the Cash Value of Whole Life. If banks won't lend, the insurance company gladly will.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on June 08, 2020, 09:41:06 PM
I've seen HELOCs being shut down for people with perfect credit.
Home value falls?
Title: Re: Dave Ramsey Plan
Post by: 12HRS on June 08, 2020, 10:19:06 PM
What happens when you lose your job and cant make payments towards your WL policy?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 09, 2020, 01:59:24 PM
What happens when you lose your job and cant make payments towards your WL policy?

What happens to all other payments when you lose your job? Housing? Medical insurance? Utility Bills, etc.?

If the policy was properly overfunded, and especially if the policy is (even partially) seasoned, the policy will have enough to self support itself through the hard time. Also, if policy was set up with regular overfunding, it's easier to dial down the premium amount while keeping the coverage unaffected.
Title: Re: Dave Ramsey Plan
Post by: 12HRS on June 09, 2020, 02:12:58 PM
What happens to all other payments when you lose your job? Housing? Medical insurance? Utility Bills, etc.?

If the policy was properly overfunded, and especially if the policy is (even partially) seasoned, the policy will have enough to self support itself through the hard time. Also, if policy was set up with regular overfunding, it's easier to dial down the premium amount while keeping the coverage unaffected.

whole point of paying off house was to not have the risk..So now this WL policy is the emergency fund? One can also borrow from their retirement accounts but its not generally smart to do that.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 09, 2020, 03:45:22 PM
whole point of paying off house was to not have the risk..So now this WL policy is the emergency fund? One can also borrow from their retirement accounts but its not generally smart to do that.
So at what point would one pay off a house and not have "the risk"?

So now you are talking about 3 asset types: A Whole Life insurance policy, A house (presumably you're referring to primary residence), and An employer sponsored retirement account (IRAs don't generally allow for loans, CARES act being the exception allowing for a withdrawal that can be redeposited).

The WL should not be an emergency fund, but it could be used as a backup to such. Unlike the other two assets, which would be leveraged to secure a loan, that could decline in value while a loan is outstanding, a Whole Life policy, by design and definition, cannot decline in value (with the exception of the cost of some riders that could eat into the policy's value, none of this should be an issue if working with a competent agent).
Title: Re: Dave Ramsey Plan
Post by: 12HRS on June 09, 2020, 10:56:47 PM
So at what point would one pay off a house and not have "the risk"?

Most people on his plan pay off their house within 7-10 years.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 09, 2020, 11:08:16 PM
Most people on his plan pay off their house within 7-10 years.
So they converted cash into equity in their home at an accelerated pace. Saving (tax deductible) mortgage interest. If "the risk" is not being able to make housing payments, they will still have property taxes and homeowners insurance (as well as other utilities).

The only logical argument I can hear about prepaying the mortgage is saving the mortgage interest. With mortgage rates at the low 3s (and potentially tax deductible, making the interest bite even lower) one needs to consider the alternatives to see how much sense it makes. Obviously every person's situation and personality is different.
Title: Re: Dave Ramsey Plan
Post by: moko on June 09, 2020, 11:11:44 PM
So they converted cash into equity in their home at an accelerated pace. Saving (tax deductible) mortgage interest. If "the risk" is not being able to make housing payments, they will still have property taxes and homeowners insurance (as well as other utilities).

The only logical argument I can hear about prepaying the mortgage is saving the mortgage interest. With mortgage rates at the low 3s (and potentially tax deductible, making the interest bite even lower) one needs to consider the alternatives to see how much sense it makes. Obviously every person's situation and personality is different.
He's very clear that paying off one's mortgage is a behavioral decision and not a logical decision. The question he asks to anyone asking why not rather invest the money is " Would borrow money on your home to invest? If the answer is no, then this is the same thing"
Some might borrow money on their home to invest
Title: Re: Dave Ramsey Plan
Post by: 12HRS on June 09, 2020, 11:18:46 PM
He's very clear that paying off one's mortgage is a behavioral decision and not a logical decision. The question he asks to anyone asking why not rather invest the money is " Would borrow money on your home to invest? If the answer is no, then this is the same thing"
Some might borrow money on their home to invest

This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

they will still have property taxes and homeowners insurance (as well as other utilities).

obviously there are some expenses that will never disappear.
Title: Re: Dave Ramsey Plan
Post by: David61 on June 09, 2020, 11:21:07 PM
So they converted cash into equity in their home at an accelerated pace. Saving (tax deductible) mortgage interest. If "the risk" is not being able to make housing payments, they will still have property taxes and homeowners insurance (as well as other utilities).

The only logical argument I can hear about prepaying the mortgage is saving the mortgage interest. With mortgage rates at the low 3s (and potentially tax deductible, making the interest bite even lower) one needs to consider the alternatives to see how much sense it makes. Obviously every person's situation and personality is different.

Much harder to get tax benefit for mortgage payments (e.g. in NJ), especially with average size frum family, given recent (2018) changes to IRS standard deductions.
Most are likely not getting much if any tax benefit relating to their mortgage anymore. Few probably realize that.
Title: Re: Dave Ramsey Plan
Post by: moko on June 09, 2020, 11:42:43 PM
obviously there are some expenses that will never disappear.
Time to conquer an island!  :) off the grid! all solar.
off topic... I just stayed at a gorgeous cottage in VT (https://www.homeaway.com/vacation-rental/p9258434?adultsCount=1&haExternalSourceId=e6e31be0-9d41-11ea-b839-cc8bab4de691%20c5e33484-a1ac-4290-8101-8700a57cde42%20hasc%20email&utm_campaign=HAUS_TRV_OLB_HASC_bookingRequest_PPB&utm_content=listing-id-121.9258434.8278493&utm_medium=email&utm_source=SYS&utm_term=20200523) (work related) totally on solar. even the well pump. They don't have a gas hookup. Induction cooktop, electric oven. Supposedly a net positive carbon footprint.
Quote from: SunCottage Welcome Packet
Cannabis & Hemp
 It is now legal in Vermont for citizens to grow marijuana for personal use. It canít
 be sold, but it can be shared, if you would like to sample some of our home-grown
 let us know. While we donít partake ourselves, we love growing things! In 2019
 we received our hemp license to grow for the CBD market. You may see them
 growing in the garden
:D
Title: Re: Dave Ramsey Plan
Post by: ExGingi on June 10, 2020, 07:58:12 AM
He's very clear that paying off one's mortgage is a behavioral decision and not a logical decision. The question he asks to anyone asking why not rather invest the money is " Would borrow money on your home to invest? If the answer is no, then this is the same thing"
Some might borrow money on their home to invest
This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

obviously there are some expenses that will never disappear.
So now that we agree on that. What's there to argue about? Based on that argument, the Dave Ramsey Plan should be instructing people to purchase heavily overfunded Whole Life insurance in a way that it's either fully paid off or self sustaining in 10 years or less. No more life insurance bills to worry about. And peace of mind of having coverage that will never expire.
Title: Re: Dave Ramsey Plan
Post by: moko on June 10, 2020, 08:15:57 AM
This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

obviously there are some expenses that will never disappear.

So now that we agree on that. What's there to argue about? Based on that argument, the Dave Ramsey Plan should be instructing people to purchase heavily overfunded Whole Life insurance in a way that it's either fully paid off or self sustaining in 10 years or less. No more life insurance bills to worry about. And peace of mind of having coverage that will never expire.
ah, his argument to that is to keep investments and insurance separate.
He views WL as a long term investment but you can do much better with other, relatively safe investment tools.
In regards to strict insurance, term is way cheaper dollar for dollar than WL.
I'm in my mid 30s and obese. I pay $1400 annually for 1mil,  30 yr term.
What would I have to pay in whole life to receive a 1mil pay out?
Title: Re: Dave Ramsey Plan
Post by: Mordyk on June 10, 2020, 08:16:20 AM
This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

obviously there are some expenses that will never disappear.

So now that we agree on that. What's there to argue about? Based on that argument, the Dave Ramsey Plan should be instructing people to purchase heavily overfunded Whole Life insurance in a way that it's either fully paid off or self sustaining in 10 years or less. No more life insurance bills to worry about. And peace of mind of having coverage that will never expire.
He says not to buy whole life.  He says the only reason to have life insurance is so your family can continue living.  Thats why you only need term until you built wealth.  Go on youtube and find out what he thinks of whole llife.  Its the devil ;D
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 01:48:00 PM
(https://i.postimg.cc/rwS23C0q/20200809144357-IMG-1930.jpg) (https://postimg.cc/yDYGSRyG)

(https://i.postimg.cc/VsMgj73s/20200809144458-IMG-1942.jpg) (https://postimg.cc/kDJWCyJL)

(https://i.postimg.cc/BZM6wsWm/20200809144337-IMG-1927.jpg) (https://postimg.cc/RqJ4NkZt)

(https://i.postimg.cc/Z50yLnCP/20200809141719-IMG-1872.jpg) (https://postimg.cc/ZWtRbTP0)
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 23, 2020, 02:08:06 PM
This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

obviously there are some expenses that will never disappear.

So now that we agree on that. What's there to argue about? Based on that argument, the Dave Ramsey Plan should be instructing people to purchase heavily overfunded Whole Life insurance in a way that it's either fully paid off or self sustaining in 10 years or less. No more life insurance bills to worry about. And peace of mind of having coverage that will never expire.
The main principal behind his plan is, without payments you can use your income to build wealth. Your idea is not only keep a big payment (mortgage), but also add another one.
Title: Re: Dave Ramsey Plan
Post by: Pad18 on July 23, 2020, 02:50:43 PM
Funny but I just finished the book this past week, and will start the "baby steps 3"

I am not an expert in investing at all, and unfortunately no money on the side for emergency or investing.

Things start to change !
Title: Re: Dave Ramsey Plan
Post by: yos9694 on July 23, 2020, 02:54:13 PM
Just want to add a couple of things to this:

WL can be a great vehicle in your fixed income investment basket. If you're only investing in equity then you might not see WL as a logical investment, but 100% equity exposure is not for most people.

A good WL policy is highly similar to a mortgage. Fixed payments with guaranteed equity build up. I can see why someone would choose to put extra money into WL rather than into paying down a mortgage.

The best reasons to not pay off a mortgage early are (wadr to DR)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 05:36:04 PM
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 05:37:45 PM
"Whole life insurance is the payday loans of the middle class" DR
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 05:38:20 PM
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 05:38:42 PM
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 05:39:19 PM
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 05:43:51 PM
"Whole life insurance is the payday loans of the middle class" DR

Can you just give us the transcript or arguments?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 23, 2020, 06:19:02 PM
Can you just give us the transcript or arguments?
Remember this is the guy who said never use CC's but took a CC for his course.  ::)
Title: Re: Dave Ramsey Plan
Post by: gozalim on July 23, 2020, 06:22:30 PM
Remember this is the guy who said never use CC's but took a CC for his course.  ::)
He wanted to run it as a cash business, but then the 'big government' lefties came and insisted on taxable digitlal payment records
 :P
/s
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 06:32:48 PM
Can you just give us the transcript or arguments?

In short, if you are buying it for insurance, you are paying too much, if you are buying for investment there are better investments.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 06:37:12 PM
Why is prepaying a mortgage a good thing with today's mortgage rates? Seems like a dumb thing to do, just take the excess money and invest it - all you need to make is more than ~4% (if not less).

Because you greatly reduced your risk of foreclosure when you don't have a mortgage.

Also, is the choice between paying off your mortgage vs investing, or paying off your mortgage vs buying a nicer car?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 06:39:05 PM
I don't think you want to be bantering about DR around these forums.

You'd be surprised
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 06:40:22 PM
Remember this is the guy who said never use CC's but took a CC for his course.  ::)

I happened to go out to pick up a target order the other week, and DR was on the radio. It so happened that someone called to discuss life insurance with him, and he admitted that he has life insurance (IINM $2MM) but gave the excuse that it was only because his wife wanted it.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 06:43:31 PM
Because you greatly reduced your risk of foreclosure when you don't have a mortgage.

IDK. Recent history has shown that having a large mortgage can sometimes work out well. I remember the person who I helped with a modification about a decade ago who was kicking himself and cursing for having paid down his mortgage.

DR himself would be the first to admit that paying down a mortgage doesn't make sense financially and mathematically. It's an emotional thing.

BTW. Some people are actually at greater risk due to the fact that they don't have the bank on top of them making the real estate tax payments. Falling behind on those can be very costly.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 06:48:44 PM
I happened to go out to pick up a target order the other week, and DR was on the radio. It so happened that someone called to discuss life insurance with him, and he admitted that he has life insurance (IINM $2MM) but gave the excuse that it was only because his wife wanted it.
Whole life insurance? Not a chance!
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 06:51:07 PM
Whole life insurance? Not a chance!

He didn't say what kind he has. I don't know how old he or his wife are, nor at what age he might have purchased it.

Honestly, when one doesn't need insurance, it's beyond me why they would get term rather than a properly overfunded whole life. Reminds me of what I used to tell my wife when we were newlyweds and she would go shopping: spend as much as you want, but don't waste any.
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 07:00:16 PM
He didn't say what kind he has. I don't know how old he or his wife are, nor at what age he might have purchased it.

Honestly, when one doesn't need insurance, it's beyond me why they would get term rather than a properly overfunded whole life. Reminds me of what I used to tell my wife when we were newlyweds and she would go shopping: spend as much as you want, but don't waste any.
if you don't need insurance, why WL vs investing in S&P
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 07:06:52 PM
if you don't need insurance, why WL vs investing in S&P

Why have an apple vs an orange?
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 07:07:05 PM
IDK. Recent history has shown that having a large mortgage can sometimes work out well. I remember the person who I helped with a modification about a decade ago who was kicking himself and cursing for having paid down his mortgage.

DR himself would be the first to admit that paying down a mortgage doesn't make sense financially and mathematically. It's an emotional thing.

BTW. Some people are actually at greater risk due to the fact that they don't have the bank on top of them making the real estate tax payments. Falling behind on those can be very costly.
Care to elaborate on what happened?
"DR himself would be the first to admit..." you don't seem to familiar with the DRP.
Do you actually believe this? let me get this straight, so one who has paid down 500k aggressively over 15 years and has a paid for house, is in a worse financial position than one who has a mortgage?!
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 07:12:12 PM
if you don't need insurance, why WL vs investing in S&P
Why have an apple vs an orange?
Not convinced. And I am your target audience.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 07:14:29 PM
I happened to go out to pick up a target order the other week, and DR was on the radio. It so happened that someone called to discuss life insurance with him, and he admitted that he has life insurance (IINM $2MM) but gave the excuse that it was only because his wife wanted it.
The attack you are responding to is based on the fact that the he set up a system to take card payments, and asked that people only use debit cards but didn't set up the system to reject Credit cards.

He has term life, and he has said many times that for him it's a waste of money. (A waste of money that he can well afford)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 07:14:59 PM
Honestly, when one doesn't need insurance, it's beyond me why they would get term rather than investing in retirement accounts and mutual funds.
FTFY
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 07:17:26 PM
The attack you are responding to is based on the fact that the he set up a system to take card payments, and asked that people only use debit cards but didn't set up the system to reject Credit cards.

He has term life, and he has said many times that for him it's a waste of money. (A waste of money that he can well afford)

I am sure you are familiar with the "Stupid Tax" I would put this in the "SB Tax" column.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 07:18:41 PM
Care to elaborate on what happened?
"DR himself would be the first to admit..." you don't seem to familiar with the DRP.
Do you actually believe this? let me get this straight, so one who has paid down 500k aggressively over 15 years and has a paid for house, is in a worse financial position than one who has a mortgage?!

By paying down the mortgage, all this person has done is convert a highly liquid and safe asset (cash) into a not so liquid and non-guaranteed asset (equity in a home). Said person earned a compound rate of return equal to the interest rate on the mortgage (around 3% in today's market), while possibly forgoing a tax deduction.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 23, 2020, 07:22:46 PM
I happened to go out to pick up a target order the other week, and DR was on the radio. It so happened that someone called to discuss life insurance with him, and he admitted that he has life insurance (IINM $2MM) but gave the excuse that it was only because his wife wanted it.
His wife made him take CC's to.  ;)
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 07:28:15 PM
His wife made him take CC's to.  ;)

I know that on CB forums they consider this argument enough to reject everything Dave Ramsey says, but I think here we can have an honest discussion about the good and bad of his program.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 07:30:51 PM
By paying down the mortgage, all this person has done is convert a highly liquid and safe asset (cash) into a not so liquid and non-guaranteed asset (equity in a home). Said person earned a compound rate of return equal to the interest rate on the mortgage (around 3% in today's market), while possibly forgoing a tax deduction.

Do you recommend that people borrow against their home to invest (or to have "highly liquid and safe" cash)? If not, why?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 07:31:05 PM
Why have an apple vs an orange?

Not convinced. And I am your target audience.

A sound financial plan usually involves having a certain percentage in cash, cash equivalents, or other safe vehicles. If you understand how a properly designed overfunded whole life plan works, you would want that asset class for (at least a portion of) your safe money allocation.

But that's just one benefit of whole life, there are some other benefits that aren't available in any other financial product that I'm aware of (at least not in combination of those benefits).

Quote
investing in retirement accounts and mutual funds.
FTFY

Presumably you're talking about ROTH IRAs. And what does one do after the contributions were maxed? Or where does one put the safe money allocation of the portfolio?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 07:32:56 PM
Do you recommend that people borrow against their home to invest? If not, why?

I don't recommend that, and not only because it would get me into trouble, but because I believe it isn't appropriate for me to recommend any sort of borrowing to anyone.
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 07:39:05 PM
Why have an apple vs an orange?
isn't the single goal to make money conservatively? If I didn't care about taste and all I cared about was nutrition the I'd eat which ever was available and is healthier.
If the process of how you make the money is enjoyable, then I understand your question. Since I don't gamble and the process of generating savings isn't what's enjoyable to me, I don't understand your question.

Has an overfunded WL policy ever performed better than a given 40 yr period of the market?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 07:46:24 PM
2 general points about Dave Ramsey;

1 - His program is based on the idea that עבד לוה לאיש מלוה. In his view and for the many people who follow his program (myself included) the cost of debt (and not just the financial cost) is not worth it

2 - Much of his advice only makes sense as part of his whole program. For example, if someone is planning on continuing to borrow money, it doesn't make sense for them to go crazy to pay off all their debt as quickly as possible.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 08:00:12 PM
isn't the single goal to make money conservatively? If I didn't care about taste and all I cared about was nutrition the I'd eat which ever was available and is healthier.
If the process of how you make the money is enjoyable, then I understand your question. Since I don't gamble and the process of generating savings isn't what's enjoyable to me, I don't understand your question.

Has an overfunded WL policy ever performed better than a given 40 yr period of the market?

Here's another question for you. What performed better over the past 40 years? The S&P 500 or constant maturity treasuries? By how much? What was the level of risk?

Hint: https://res.mdpi.com/d_attachment/data/data-04-00091/article_deploy/data-04-00091.pdf

But that's just me having some fun with facts.

Back to your actual question. Could you please clarify some terms, so we can make sure we're speaking the same language:
1. Making money.
2. Conservatively.
3. "Past 40 years" (are you picking specific dates? If yes, why those dates? What if actual dates when access to funds is different?
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 08:07:32 PM

Not convinced. And I am your target audience.


A sound financial plan usually involves having a certain percentage in cash, cash equivalents, or other safe vehicles. If you understand how a properly designed overfunded whole life plan works, you would want that asset class for (at least a portion of) your safe money allocation.

But that's just one benefit of whole life, there are some other benefits that aren't available in any other financial product that I'm aware of (at least not in combination of those benefits).
FTFY


Presumably you're talking about ROTH IRAs. And what does one do after the contributions were maxed? Or where does one put the safe money allocation of the portfolio?
Baby step number 3.
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 08:11:43 PM
Here's another question for you. What performed better over the past 40 years? The S&P 500 or constant maturity treasuries? By how much? What was the level of risk?

Hint: https://res.mdpi.com/d_attachment/data/data-04-00091/article_deploy/data-04-00091.pdf

But that's just me having some fun with facts.

Back to your actual question. Could you please clarify some terms, so we can make sure we're speaking the same language:
1. Making money.
2. Conservatively.
3. "Past 40 years" (are you picking specific dates? If yes, why those dates? What if actual dates when access to funds is different?
1. Relative security in retirement
2. Whatever seems to consistently make the best return over....
3. ANY given 40 yr period (normal period of retirement savings- 25-65/30-70)
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 08:23:58 PM
1. Relative security in retirement
2. Whatever seems to consistently make the best return over....
3. ANY given 40 yr period (normal period of retirement savings- 25-65/30-70)

Good thing I asked, because none of those correspond to my understanding/definition of the terms I sought clarification for.

I hope you do realize that you didn't answer my important questions in #3. I'm sure you do realize that there's a huge difference if said 40 year period ended at a bull market top or at a bear market bottom (or for that matter even close to those).
Title: Re: Dave Ramsey Plan
Post by: good sam on July 23, 2020, 08:25:42 PM
I don't recommend that, and not only because it would get me into trouble, but because I believe it isn't appropriate for me to recommend any sort of borrowing to anyone.
Lechatchila don't borrow but bidieved don't pay it down.

It's like the analysts who initiate coverage at Hold. What did you teach me?

Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 08:26:41 PM
I'm sure you do realize that there's a huge difference if said 40 year period ended at a bull market top or at a bear market bottom (or for that matter even close to those).

He said "any given 40 year period"
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 08:30:46 PM
He said "any given 40 year period"
I was starting to feel stupid
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 23, 2020, 08:31:49 PM
I know that on CB forums they consider this argument enough to reject everything Dave Ramsey says, but I think here we can have an honest discussion about the good and bad of his program.
Totally unfair. They tear him apart piece by piece.
They teach individuals to repair their credit and what rights they have for free.
I spent many years on that forum. My original impression was the forum was for deadbeats. I was 100% wrong.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 23, 2020, 08:37:33 PM
"Don't take financial advice from broke people", Dave ramsey.

For all those that say that leverage is good, please post your net worth.

Net worth is calculated Assets minus liabilities.

Lines of credit or not assets.......
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 08:41:26 PM
He said "any given 40 year period"

I assume you do realize that a 40 year period that ended 3/9/2009 is very different than a 40 year period that ended 1/9/2020

Are you also ignoring the psychology of a serious drawdown a year or two prior to retirement?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 08:41:38 PM
Totally unfair. They tear him apart piece by piece.

Then please bring up those points so that we can discuss them. I went there to look (when you sent me there last time we had this discussion) and the impression that I got was that people there felt that there was no need to address his arguments, because "he used to accept credit cards".

As to CB in general, I have nothing against them. Other than the Dave Ramsey threads, I've barely read anything there .
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 08:43:11 PM
I assume you do realize that a 40 year period that ended 3/9/2009 is very different than a 40 year period that ended 1/9/2020

Yes, which is why it should be very easy for you to respond to him.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 08:45:10 PM
Yes, which is why it should be very easy for you to respond to him.

I hope you do realize that I am Jewish. I respond with questions.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 23, 2020, 08:45:47 PM
Then please bring up those points so that we can discuss them. I went there to look (when you sent me there last time we had this discussion) and the impression that I got was that people there felt that there was no need to address his arguments, because "he used to accept credit cards".

As to CB in general, I have nothing against them. Other than the Dave Ramsey threads, I've barely read anything there .
AFAIK they don't talk about him anymore since their point of him being a conman is well known.
One thing I remember is saying pay off your lowest CC balance first no matter the interest rate charged on your cards. Is that correct?
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 23, 2020, 08:47:35 PM
When the market crashes after 40 years as you use in your example, the investment for have grown nice. Even you would cash out a small percentage for a living and leave the most possible than it would recover within the next few years plus even more. As we have seen in 2000, 2008 and probably 2020 as well.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 08:51:27 PM
"Don't take financial advice from broke people", Dave ramsey.

For all those that say that leverage is good, please post your net worth.

Net worth is calculated Assets minus liabilities.

Lines of credit or not assets.......
I don't ask for weight loss advice from overweight people.
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 08:51:56 PM
I hope you do realize that I am Jewish. I respond with questions.
but we've already responded to your questions question.
Now please, answer with a different question. Not the same one again.
Also, the question has to be an answer. Not just a random question
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 08:52:32 PM
I don't ask for weight loss advice from overweight people.
that's probably sound advice unless you want to know what not to do.
Title: Re: Dave Ramsey Plan
Post by: farmbochur on July 23, 2020, 08:55:16 PM
Other listeners of Dave can correct me but I believe that these responses are consistent with his philosophy.


A sound financial plan usually involves having a certain percentage in cash, cash equivalents, or other safe vehicles. If you understand how a properly designed overfunded whole life plan works, you would want that asset class for (at least a portion of) your safe money allocation.
Dave's plan calls for having a liquid emergency fund of 3-6 months expenses prior to prepaying the mortgage.



Presumably you're talking about ROTH IRAs. And what does one do after the contributions were maxed?
I've heard Dave advocate for any of the following: (1) Non-qualified brokerage account invested in actively managed mutual funds, (2) real estate, or (3) small business.

Or where does one put the safe money allocation of the portfolio?
Dave would say that it doesn't matter because it's a small percentage of your net worth.
Title: Re: Dave Ramsey Plan
Post by: moko on July 23, 2020, 08:59:06 PM
Other listeners of Dave can correct me but I believe that these responses are consistent with his philosophy.
Dave's plan calls for having a liquid emergency fund of 3-6 months expenses prior to prepaying the mortgage.


I've heard Dave advocate for any of the following: (1) Non-qualified brokerage account invested in actively managed mutual funds, (2) real estate, or (3) small business.
Dave would say that it doesn't matter because it's a small percentage of your net worth.
let's stop talking about DR and actually discuss the issues.
(Of course, it's the DR thread) :)
Title: Re: Dave Ramsey Plan
Post by: farmbochur on July 23, 2020, 09:02:14 PM
Lol, my point was to address ex-gingi's issues. It's not like DR recommends emptying the checking account just to prepay the mortgage. It's only done if one is already sitting on a decent cash cushion.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 09:24:21 PM
When the market crashes after 40 years as you use in your example, the investment for have grown nice. Even you would cash out a small percentage for a living and leave the most possible than it would recover within the next few years plus even more. As we have seen in 2000, 2008 and probably 2020 as well.
2020 fully recovered.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 09:26:47 PM
Other listeners of Dave can correct me but I believe that these responses are consistent with his philosophy.
Dave's plan calls for having a liquid emergency fund of 3-6 months expenses prior to prepaying the mortgage.

Baby step number 3.
Title: Re: Dave Ramsey Plan
Post by: whYME on July 23, 2020, 09:36:17 PM
One thing I remember is saying pay off your lowest CC balance first no matter the interest rate charged on your cards. Is that correct?
One of the themes of his program is that for the vast majority of people the psychological aspect is far more important than the savings offered by the mathematically best option.
i.e. his claim is that from what he's seen over the course of the years is that people are far more likely to stick with it when they start seeing the wins right away and get accounts paid off. So even though mathematically paying off higher interest first is better, if people don't follow through and drop out because  they feel they're not seeing results, יצא שכרו בהפסדו (https://www.proz.com/kudoz/hebrew-to-english/art-literary/467553-%D7%99%D7%A6%D7%90-%D7%A9%D7%9B%D7%A8%D7%95-%D7%91%D7%94%D7%A4%D7%A1%D7%93%D7%95.html)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 23, 2020, 10:04:51 PM
You'd be surprised
Agreed. Thank G'd DRP is really picking up steam in the frum community, "Living within one's means" and "Spending less than one earns" shouldn't be so controversial.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 23, 2020, 10:20:58 PM
"Living within one's means" and "Spending less than one earns" shouldn't be so controversial.
FTFY

+1000000000000
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 23, 2020, 11:42:12 PM
AFAIK they don't talk about him anymore since their point of him being a conman is well known.
I searched and didn't find anything to indicate why they believe he is a conman other than that accepting CC issue.

One thing I remember is saying pay off your lowest CC balance first no matter the interest rate charged on your cards. Is that correct?
Indeed. This fits into my point that his advice has to be taking as part of the big picture of his program. If your goal is to get rid of all debt, then the psychological benefits of the debt snowball are worth more than the saving that you'd get from paying the highest interest debts first.

There have been studies done that show this method to be more effective (in getting rid of debt).
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 23, 2020, 11:50:13 PM
Whole life insurance? Not a chance!
Yes i heard the podcast.  His wife wants a lump sum payout when he dies. And he said he did it as a gift. But he still argues with her about it.  He said it as a disclaimer.

You can go ahead and called it BS, but he had no reason to mention it.
Title: Re: Dave Ramsey Plan
Post by: thaber on July 24, 2020, 03:37:11 AM
This is silly. OP was just saying that people should live within their means and he gives a good framework for that.
For the more sophisticated people, you can ignore the mortgage advice.
For those confident they'll never carry a balance they can ignore the credit card advice. (one of the most responsible people I know had one bad month that ended up being a 60k credit card debt).
For those who sell insurance, they can tell everyone to ignore the life insurance advice.
For those who think he's a conman, don't have a beer with him.
But the hashkafa and attitude toward money in general is very sound, and the mehalech helps a lot of people to can't get themselves out of debt.
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 24, 2020, 03:40:21 AM
I assume you do realize that a 40 year period that ended 3/9/2009 is very different than a 40 year period that ended 1/9/2020

Are you also ignoring the psychology of a serious drawdown a year or two prior to retirement?

what percent of families in our circles go into retirement with a mortgage still over their head?
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 24, 2020, 09:31:10 AM
what percent of families in our circles go into retirement with a mortgage still over their head?
I don't want to be making weddings while still paying a mortgage too.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 09:53:02 AM
I don't want to be making weddings while still paying a mortgage too.

Do you realize that for many people the Taxes and Insurance portion of their mortgage payment is a very significant part that never goes away?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 09:53:52 AM
what percent of families in our circles go into retirement with a mortgage still over their head?
I don't want to be making weddings while still paying a mortgage too.
What percent take a cash out refi to pay for the wedding that their wife thinks is within their means?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 09:55:44 AM
I don't want to be making weddings while still paying a mortgage too.
why not? For anyone who buys a house with a 6year old daughter that can be very difficult.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 09:57:55 AM
Indeed. This fits into my point that his advice has to be taking as part of the big picture of his program. If your goal is to get rid of all debt, then the psychological benefits of the debt snowball are worth more than the saving that you'd get from paying the highest interest debts first.

There have been studies done that show this method to be more effective (in getting rid of debt).
Then the person needs a psychologist not a fake financial advisor.
Do you pay off your small balance first before your high interest balances?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 09:59:55 AM
For those who think he's a conman, don't have a beer with him.
I would love to have a beer with him.  :)
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 24, 2020, 10:08:56 AM
Then the person needs a psychologist not a fake financial advisor.
Do you pay off your small balance first before your high interest balances?
Why psychologist?  The brain has a way of working. Same way when you start a business and its making a little money and you get encouraged that its growing.  This gives strength to continue.   When paying debt if you see debts going away it also gives courage to continue further.  Obviously from a $ standpoint the higher interests should get paid first.  But its not worth if you do it for a short while and get discouraged
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 10:20:10 AM
Why psychologist?  The brain has a way of working. Same way when you start a business and its making a little money and you get encouraged that its growing.  This gives strength to continue.   When paying debt if you see debts going away it also gives courage to continue further.  Obviously from a $ standpoint the higher interests should get paid first.  But its not worth if you do it for a short while and get discouraged
Look we can go back and forth all day. Most successful people will tell you it is their failures that made them stronger.
You teach people the right way. The reason he is so successful is he preys on an individuals weakness.

So let me ask the question. For all those that paid money for his course do you pay your smaller balances first instead of your high interest balances first? It is a straight forward simple question.
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 24, 2020, 10:27:49 AM
Look we can go back and forth all day. Most successful people will tell you it is their failures that made them stronger.
You teach people the right way. The reason he is so successful is he preys on an individuals weakness.

He did a scientific study recently of 10000 millionaires in the country, you can find the data on this but the majority of millionaires in the country pay off their home in 10.2(iirc) years. It may be a weakness to need to see results to motivate you to keep you going but its also pretty normal.

So let me ask the question. For all those that paid money for his course do you pay your smaller balances first instead of your high interest balances first? It is a straight forward simple question.

If you are in debt and following his plan the answer is yes.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 10:38:55 AM
He did a scientific study recently of 10000 millionaires in the country, you can find the data on this but the majority of millionaires in the country pay off their home in 10.2(iirc) years. It may be a weakness to need to see results to motivate you to keep you going but its also pretty normal.
I paid off my home several times and is currently paid off. Might borrow against it again. It has nothing to do with motivation but sound finacial planning.
If you are in debt and following his plan the answer is yes.
That was not the question. Some here have bought his plan. I am asking them what they do.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 10:46:56 AM
Look we can go back and forth all day. Most successful people will tell you it is their failures that made them stronger.
You teach people the right way. The reason he is so successful is he preys on an individuals weakness.

So let me ask the question. For all those that paid money for his course do you pay your smaller balances first instead of your high interest balances first? It is a straight forward simple question.

If his charisma or the psychology behind his plan or something else is succesful in getting people out of bad debt then why would that be anything but a good thing?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 10:47:35 AM
Then the person needs a psychologist not a fake financial advisor.


A behavioral economist? @ExGingi
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 10:49:24 AM
Then the person needs a psychologist not a fake financial advisor.
Do you pay off your small balance first before your high interest balances?

How about if paying off the small balance pushes up the credit score, enabling a new card with a 0% balance transfer to pay off the high interest card?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 10:54:57 AM
If his charisma or the psychology behind his plan or something else is succesful in getting people out of bad debt then why would that be anything but a good thing?
We have no idea how many it has helped or not. Financially we know some of his advice is dead wrong.
Also there is better advice for free. Now if the person doesn't have the willpower then that needs to be addressed first.

I am still waiting for a simple answer to my question from those who purchased his course.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 10:55:31 AM
How about if paying off the small balance pushes up the credit score, enabling a new card with a 0% balance transfer to pay off the high interest card?
Wait, he is recommending that?  :)
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 24, 2020, 11:05:11 AM
We have no idea how many it has helped or not. Financially we know some of his advice is dead wrong.
Also there is better advice for free. Now if the person doesn't have the willpower then that needs to be addressed first.

I am still waiting for a simple answer to my question from those who purchased his course.

His advice is free. If you want more handholding you can pay for it
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 11:09:22 AM
We have no idea how many it has helped or not.
This is really all that matters. The rest is small stuff.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 11:09:30 AM
His advice is free. If you want more handholding you can pay for it
If it is more bad advice, no thank you!  ;)
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 11:12:17 AM
His program is a psychological one.
Oops a thought he was selling it as financial advice. He has a degree in psychology?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 11:16:56 AM
Oops a thought he was selling it as financial advice. He has a degree in psychology?
Who cares.
A behavioral economist? @ExGingi
All that really matters is whether or not it works and not any of these other side shows. Especially not whether it is hypocritical of him to be accepting CCs.
Title: Re: Dave Ramsey Plan
Post by: moko on July 24, 2020, 11:29:29 AM
I still haven't received an answer from our resident experts to the WL vs Term + S&P mutual funds question.
My uneducated research shows that if I invest 10k annually at an overall 8% rate of return annually (very conservative- over ANY given 40 yr period) will be almost 3mil after 40 yrs.
If my 30 term cost $1500 monthly (total $540,000) and my total 40 yr principal is $480,000, then I've invested a total of approx 1mil for a return of approx 3mil + 1mil life insurance peace of mind.
How much would that cost me in WL?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 11:44:04 AM

My uneducated research shows that if I invest 10k annually at an overall 8% rate of return annually (very conservative- over ANY given 40 yr period) will be almost 3mil after 40 yrs.


https://dqydj.com/sp-500-historical-return-calculator/ (https://dqydj.com/sp-500-historical-return-calculator/)



S&P 500 Historical Return Results
Data from Rolling Periods Between:  -  [Link (http://www.econ.yale.edu/~shiller/data.htm)] Using Inflation (CPI) Adjustment: false Calculating Dividend Reinvestment: true Monthly Realized Historical Volatility: 14.107% Annual Realized Historical Volatility: 18.479% All returns are annualized to make them comparable - note the effect this has on apparent returns for shorter time periods.  Volatility is annualized, without inflation, and without dividends.
Summary Statistics Over Period(s)
Length of Investment:40 Years30 Years20 Years10 Years
[/c][/t]
Average Return9.406 %9.436 %9.246 %9.218 %
Median Return9.971 %9.880 %8.041 %8.533 %
Maximum Return13.183 %14.319 %17.948 %21.172 %
Minimum Return4.900 %3.635 %2.048 %-4.021 %
Standard Deviation1.952 %2.210 %3.258 %5.009 %
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 11:46:14 AM

If my 30 term cost $1500 monthly (total $540,000) and my total 40 yr principal is $480,000, then I've invested a total of approx 1mil for a return of approx 3mil + 1mil life insurance peace of mind.
How much would that cost me in WL?


I don't think that you are understanding his strategy of "overfunded WL"
Title: Re: Dave Ramsey Plan
Post by: moko on July 24, 2020, 12:02:37 PM
I don't think that you are understanding his strategy of "overfunded WL"
clearly not. I've been asking for answers for a while and only getting seemingly unrelated questions in response
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 24, 2020, 12:07:11 PM
We have no idea how many it has helped or not. Financially we know some of his advice is dead wrong.
Also there is better advice for free. Now if the person doesn't have the willpower then that needs to be addressed first.

I am still waiting for a simple answer to my question from those who purchased his course.
i purchased it once.

yes i paid off smaller balances first. this helped me feel like progress is being made. and i did make progress. 
a lot about being part of a financial program is being intentional with your money(DR's words)   i have started knowing where every dollar goes because its on my head constantly. B"h I'm in a way better place financially but still listen to him because when you constantly think about how can i be perfect with money, you are more intentional. no more how is my account empty for the month etc.


many people can see they are intentional with every dollar monthly, but only a small percentage actually are.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 12:12:07 PM
If his charisma or the psychology behind his plan or something else is succesful in getting people out of bad debt then why would that be anything but a good thing?

+1000000

While there are definitely things I find wrong with what I hear from Dave Ramsey, there are definitely good things about his preaching, and above all - it is a plan to work with.

I often tell people I meet, when you have a goal you might reach it or you might not, but if you don't even have a defined goal, much less so any plan of action, what are your chances of getting anywhere good?

Any plan with consistency (and coaching definitely helps) is better than no plan and direction. This can be seen in many aspects of life. Are we lacking weight loss plans that might not have any scientific basis (fit for life, for example) but work for people just because they create a certain discipline?

What might make tremendous sense and work for people who understand certain things AND have discipline and drive, might not work for someone who might be lacking in any of those components. I meet with many people, some are my clients (in various areas that I serve) and some aren't, and I can probably have a story to tell you about every type of personality that might exist when it comes to finances.

A huge problem exists with people who are bright enough to understand concepts, but only have cursory knowledge and no experience, and definitely aren't willing to dedicate the time and effort to do the work required for what they understand to be best for them, yet can't appreciate fairly paying someone to do said work (whether in commissions or fees) or to choose an alternative that might not require that much time and effort and might sound less lucrative (potentially).

I have a fresh story from this week of a person who met me to review his options after being laid off. This person, despite being less than a decade away from being eligible for social security retirement benefits, has a grand total of $0 in any retirement savings. Some other savings that he's not really sure about in a local bank account (taxable - for crying out loud, I told him to take that money and put it immediately in ROTH IRAs for himself and his wife, even if he left it at the same bank with the same minuscule interest rate, at least they wouldn't be taxed on it, and given his age he could withdraw anytime penalty-free). There are additional sad details to his story, but one thing I did realize was that this person never got proper guidance, he just survived through life, whether when he was in business for himself or an employee, and never took the time to review and plan.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:14:53 PM
clearly not. I've been asking for answers for a while and only getting seemingly unrelated questions in response
The basic idea of it is to fund more than the minimum premium and have the cash value of the account pay future premiums after a certain point.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 12:16:49 PM
Especially not whether it is hypocritical of him to be accepting CCs.
This shows who he really is.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:20:56 PM
+1000000

While there are definitely things I find wrong with what I hear from Dave Ramsey, there are definitely good things about his preaching, and above all - it is a plan to work with.

I often tell people I meet, when you have a goal you might reach it or you might not, but if you don't even have a defined goal, much less so any plan of action, what are your chances of getting anywhere good?

Any plan with consistency (and coaching definitely helps) is better than no plan and direction. This can be seen in many aspects of life. Are we lacking weight loss plans that might not have any scientific basis (fit for life, for example) but work for people just because they create a certain discipline?

What might make tremendous sense and work for people who understand certain things AND have discipline and drive, might not work for someone who might be lacking in any of those components. I meet with many people, some are my clients (in various areas that I serve) and some aren't, and I can probably have a story to tell you about every type of personality that might exist when it comes to finances.

A huge problem exists with people who are bright enough to understand concepts, but only have cursory knowledge and no experience, and definitely aren't willing to dedicate the time and effort to do the work required for what they understand to be best for them, yet can't appreciate fairly paying someone to do said work (whether in commissions or fees) or to choose an alternative that might not require that much time and effort and might sound less lucrative (potentially).

I have a fresh story from this week of a person who met me to review his options after being laid off. This person, despite being less than a decade away from being eligible for social security retirement benefits, has a grand total of $0 in any retirement savings. Some other savings that he's not really sure about in a local bank account (taxable - for crying out loud, I told him to take that money and put it immediately in ROTH IRAs for himself and his wife, even if he left it at the same bank with the same minuscule interest rate, at least they wouldn't be taxed on it, and given his age he could withdraw anytime penalty-free). There are additional sad details to his story, but one thing I did realize was that this person never got proper guidance, he just survived through life, whether when he was in business for himself or an employee, and never took the time to review and plan.

Even for someone with low income and on entitlement programs can have a tremendous benefit in contributing to retirement plans in that it can help them overcome the benefit trap when they lose benefits while not getting enough income to compensate. By contributing properly (keyword) to a retirement plan that can bring the income down enough to keep the benefits while still receiving the growth in the job or business they are starting and to then start keeping it if needed in a future year when they already are making more.

HT: @avromie7
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:22:19 PM
This shows who he really is.
The idea that this matters to someone who can successfully use his plan to get out of bad debt is ludicrous yet fits with other opinions you have expressed here.
Title: Re: Dave Ramsey Plan
Post by: moko on July 24, 2020, 12:23:36 PM
The basic idea of it is to fund more than the minimum premium and have the cash value of the account pay future premiums after a certain point.
Bott line, am I better off financially with an overfunded WL or pay term and use the excess to by very conservative mutual funds
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:25:05 PM

Any plan with consistency (and coaching definitely helps) is better than no plan and direction. This can be seen in many aspects of life. Are we lacking weight loss plans that might not have any scientific basis (fit for life, for example) but work for people just because they create a certain discipline?


I once discussed a certain chazara program with Rav Meir Stern SHLITA who told me that what the program is doesn't matter as much as that you have a real program in place to continuously do chazara and if that plan is what gets me to do it then it is all that really matters and then I can tweak it to what works for me.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:25:49 PM
Bott line, am I better off financially with an overfunded WL or pay term and use the excess to by very conservative mutual funds

That depends on many factors including tax planning. Like almost everything in life it is good for the right person in the right situation.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 12:28:39 PM
The idea that this matters to someone who can successfully use his plan to get out of bad debt is ludicrous yet fits with other opinions you have expressed here.
Helping someone get out of debt does not make it a good plan. I can teach most people in debt how to get out MSing. That doesn't make it a good plan. According to your logic that is all that matters. Terrible logic.
Title: Re: Dave Ramsey Plan
Post by: gozalim on July 24, 2020, 12:29:54 PM
Even for someone with low income and on entitlement programs can have a tremendous benefit in contributing to retirement plans in that it can help them overcome the benefit trap when they lose benefits while not getting enough income to compensate. By contributing properly (keyword) to a retirement plan that can bring the income down enough to keep the benefits while still receiving the growth in the job or business they are starting and to then start keeping it if needed in a future year when they already are making more.

HT: @avromie7
in this direction :
The 'easy' part of the solution is to contribute surplus (up to 11k) to an IRA up until a quarter into next year.

In theory 401k has higher limits (but needs to be set up in advance). For an employer that doesn't have one set up, how complicated is it to do a 'self' 401k?
(and are the rules for those withdrawals more restrictive)?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 12:30:43 PM
clearly not. I've been asking for answers for a while and only getting seemingly unrelated questions in response

So without actually reading this link, but trusting it's source, as I have read a few of their posts and they seem right and accurate, you might want to start here: https://theinsuranceproblog.com/overfunded-life-insurance/

But before you even go there, I think it's important that you (not referring to you specifically) acknowledge some other things that you might not have a full grasp of. Because while knowledge is valuable, a little bit of knowledge might be dangerous.

I highly recommend reading https://www.mauldineconomics.com/images/uploads/pdf/mwo041406.pdf as a primer. I've mentioned this article several times, and it has been reprinted and republished in many places (I even got permission to reprint and distribute it myself). Read it, read it again, and make sure you understand it clearly.

And after reading that, we should revisit some terms, definitions and assumptions.

And even before we go into understanding the details of the table of rolling returns that @aygart posted, I'm sure you do realize that even when assuming a certain average annualized return, you do realize that there could be major swings along the way, and you have no way to control those swings, nor do you have a way to control the timing of what life throws at you (for good or bad). So while you might see articles like this (https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519) or like this (https://www.forbes.com/sites/advisor/2014/04/24/why-the-average-investors-investment-return-is-so-low/#95606f0111a3) telling you not to sell when investments are down, those articles acknowledge that most people won't necessarily act that way at all times, and I will add that at certain times they might not be able to act that way, for the simple reason that they didn't have enough of a risk-free cushion as part of their overall portfolio or wealth.

Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 12:37:42 PM
in this direction :
The 'easy' part of the solution is to contribute surplus (up to 11k) to an IRA up until a quarter into next year.

In theory 401k has higher limits (but needs to be set up in advance). For an employer that doesn't have one set up, how complicated is it to do a 'self' 401k?
(and are the rules for those withdrawals more restrictive)?

I have had a "solo 401k" in the past. Costs were quite low. Obviously you have to have the right business setup for it. If there are employees, then it's a different ballgame, and costs are higher. You need some critical mass in order to justify (but for some small employers working with a PEO can help, offering large company style benefits, sometimes even with a 401k).

The advantages of it were that I was in full control of it, including the investments, one of the disadvantages compared to a large employer 401k was the lack of certain investment options (especially on the cash, risk-free end). This was totally unanticipated, but the CARES ACT created huge flexibility and opportunity with my 401k balances (not solo - at a large company).
Title: Re: Dave Ramsey Plan
Post by: moko on July 24, 2020, 12:37:54 PM
That depends on many factors including tax planning. Like almost everything in life it is good for the right person in the right situation.
can you or @ExGingi  give 3 examples besides tax  planning that's it would be a better alternative to what I described?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 12:40:19 PM
Helping someone get out of debt does not make it a good plan. I can teach most people in debt how to get out MSing. That doesn't make it a good plan. According to your logic that is all that matters. Terrible logic.
What makes it a good plan is if it works.
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 24, 2020, 12:50:45 PM
Even for someone with low income and on entitlement programs can have a tremendous benefit in contributing to retirement plans in that it can help them overcome the benefit trap when they lose benefits while not getting enough income to compensate. By contributing properly (keyword) to a retirement plan that can bring the income down enough to keep the benefits while still receiving the growth in the job or business they are starting and to then start keeping it if needed in a future year when they already are making more.

HT: @avromie7
This is something that bothers me terribly every time I hear about someone who refused a raise because they'd lose their programs.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 12:53:26 PM
can you or @ExGingi  give 3 examples besides tax  planning that's it would be a better alternative to what I described?

I can give you one reason (not that there aren't other reasons, but I think this one is strong and stands on its own merits):

A wealth accumulation plan founded on overfunded whole life will work. The numbers WILL BE DIFFERENT than what's shown on the illustration, but the concept will work similarly to what is shown on the illustration. It will be a sound plan that won't depend on the timing of events beyond your control. Additionally, it will be protected from certain catastrophic events beyond your control, such as death (and for many people that add the riders - disability, and in more recent years, even riders that provide for long-term care). In any given year, once you have a certain value accumulated, the future values are guaranteed to be higher. And I can only tell you by looking at my own Whole Life plans, that the cash over cash annual growth is in excess of 4%, while I'm able to get a line of credit and borrow against it at 3.25% (or 3%) because the banks know that there's no way they can lose money on this.

On the other hand, BTID (buy term and invest the difference) as you describe, especially if talking over a 40 year period, could work spectacularly, but could also fail (and by fail, I don't mean underperform from expectations that might have been set too high, I mean actually ending up without enough money to pay for life expenses). You seem to be harping on investing at the S&P500 (which sounds great as to passive investing) but other testimony I have heard seems to indicate that Dave Ramsey actually advocates active management. You are also asking to use a 40 year period, ignoring the fact that 40 year term insurance is either non-existant, rare (i.e. other products could be structured to work that way), or would have significant rising costs (or would require repeated underwriting, that might be challenging as we get further along in life).

BTW, for myself, I buy Whole Life, Term, and various investments. I used to also own a VUL which I bought when I was much younger, thought I was very smart and understood everything better. While that policy did serve it's good purpose for several years (possibly not at the most optimal cost) I have intentinally let that policy lapse a few years ago after analyzing it and deciding that it doesn't fit into my overall financial picture. And as @Mordyk mentioned, the important thing about this and many other financial decisions is, that this was an intentional decision.
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 24, 2020, 12:56:59 PM
in this direction :
The 'easy' part of the solution is to contribute surplus (up to 11k) to an IRA up until a quarter into next year.

In theory 401k has higher limits (but needs to be set up in advance). For an employer that doesn't have one set up, how complicated is it to do a 'self' 401k?
(and are the rules for those withdrawals more restrictive)?
IRA limit increased to 6k, or 12k per couple.

Many people in this situation have access to a 401k, with a contribution limit of 19.5k. You can lower income by up to 31.5k, that should be more than enough to get off of programs.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 01:02:32 PM
IRA limit increased to 6k, or 12k per couple.
Correct. Though once you reach a certain age, it's up to 7k.

Many people in this situation have access to a 401k, with a contribution limit of 19.5k. You can lower income by up to 31.5k, that should be more than enough to get off of programs.
You probably meant to say "stay on the programs" rather than "get off of programs". Because that's a huge differentiator that most financial planning and advice doesn't address.

In NY qualifying for Medicaid or Essential Plan is huge. If a person also qualifies for childcare vouchers, that enormous. Section 8 (or other subsidized housing) I don't even know how much (nor do I know if a 401k might disqualify one or significantly reduce the subsidy).

All of that being said, accumulating too large of a balance in a pre-tax retirement account can create other problems down the road, as moving money out of the plan is a taxable event (taxed at ordinary income rates, and a penalty if dones too early).
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 01:04:40 PM
What makes it a good plan is if it works.
This is very short sited. By your logic even if it was illegal as long as it works makes it a good plan.  ::)
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:30:08 PM
This is very short sited. By your logic even if it was illegal as long as it works makes it a good plan.  ::)

It is short-sighted to ignore a plan which would work because of some hypocrisy of its creator to make his plan profitable. The same goes for whether the minutia is the exact best financial advice. That is like saying that nobody should use any navigation system since they don't get you there with the best route. 99% of the time the route will be a lot better than getting lost.

The risk involved is a big factor in deciding what works. That you are making this illogical straw-man argument is in itself a great illustration of the folly of your position.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:33:00 PM
but other testimony I have heard seems to indicate that Dave Ramsey actually advocates active management.
Considering that this is a service he offers, that would make sense. I have given similar advice to someone and told him that if having an advisor to speak to is what will get you to actually fund the investment then it is a price well worth the cost.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 01:35:07 PM
It is short-sighted to ignore a plan which would work because of some hypocrisy of its creator to make his plan profitable. The same goes for whether the minutia is the exact best financial advice. That is like saying that nobody should use any navigation system since they don't get you there with the best route. 99% of the time the route will be a lot better than getting lost.

The risk involved is a big factor in deciding what works. That you are making this illogical straw-man argument is in itself a great illustration of the folly of your position.
Nice deflection when your own logic is used to show how wrong it is.
Your responses of "who cares" "it doesn't matter" speaks volumes.
No reasonable person would judge a plan based on only if it worked or not but that has been your response.
I am ignoring the plan because it is flawed. I am also ignoring the plan because it is put out by a conman.   
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 24, 2020, 01:41:25 PM
Correct. Though once you reach a certain age, it's up to 7k.
You probably meant to say "stay on the programs" rather than "get off of programs". Because that's a huge differentiator that most financial planning and advice doesn't address.

In NY qualifying for Medicaid or Essential Plan is huge. If a person also qualifies for childcare vouchers, that enormous. Section 8 (or other subsidized housing) I don't even know how much (nor do I know if a 401k might disqualify one or significantly reduce the subsidy).

All of that being said, accumulating too large of a balance in a pre-tax retirement account can create other problems down the road, as moving money out of the plan is a taxable event (taxed at ordinary income rates, and a penalty if dones too early).
The goal is to be able to live without programs without ever being in the sweet (sour) spot where every dollar in income results in more than $1 lost in programs.

For someone making the perfect amount of money to maximize programs they still pay 7.65% FICA and lose:
EITC 21.06%
Food Stamps 30%
Section 8 33%
This is already over 90% of the additional income, I may have missed some and this doesn't include other smaller programs like LI-HEAP. By the time you get done you're literally coming home with less money, the goal of putting it into a 401k or IRA is to launch you to the point where you are ineligible for at least some of the programs so you no longer lose more than you make.

The ramifications down the road will be significantly smaller even for someone who never gets off programs because they receive less from programs by the time they reach 70 1/2. For example EITC is tiny without eligible children.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:43:18 PM
Nice deflection when your own logic is used to show how wrong it is.
Your responses of "who cares" "it doesn't matter" speaks volumes.
No reasonable person would judge a plan based on only if it worked or not but that has been your response.
I am ignoring the plan because it is flawed. I am also ignoring the plan because it is put out by a conman.   

Who said only?

"Don't let perfection be the enemy of good"

If it works it is good. If you can direct someone to something better then great! There is no benefit in ignoring something that works because it is flawed. Just perfect it!
That you will ignore based on ad hominem fits you.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 01:45:33 PM
Who said only?
You did!!!  ::)
This is really all that matters.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:51:56 PM
You did!!!  ::)
Only if you consider weighing the risks to be a deflection and not an integral part of figuring out whether or not it works. Being debt free in jail is not considered working.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 01:54:32 PM
Only if you consider weighing the risks to be a deflection and not an integral part of figuring out whether or not it works. Being debt free in jail is not considered working.
Blah blah blah!!!
Stop the non-sense. You asked who said it and I showed it was you. I know it is Friday but I don't need your pretzels.
Claim you misspoke or something and move on.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:56:54 PM
Blah blah blah!!!
Stop the non-sense. You asked who said it and I showed it was you. I know it is Friday but I don't need your pretzels.
Claim you misspoke or something and move on.
If you want to call it mispoke then so be it. mY intent is very clear while you have done little but harp on nonsense.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 01:59:22 PM
The goal is to be able to live without programs without ever being in the sweet (sour) spot where every dollar in income results in more than $1 lost in programs.

For someone making the perfect amount of money to maximize programs they still pay 7.65% FICA and lose:
EITC 21.06%
Food Stamps 30%
Section 8 33%
This is already over 90% of the additional income, I may have missed some and this doesn't include other smaller programs like LI-HEAP. By the time you get done you're literally coming home with less money, the goal of putting it into a 401k or IRA is to launch you to the point where you are ineligible for at least some of the programs so you no longer lose more than you make.

The ramifications down the road will be significantly smaller even for someone who never gets off programs because they receive less from programs by the time they reach 70 1/2. For example EITC is tiny without eligible children.
You left out losing the Cadilac of heath insurance. the child care benefit mentioned by @ExGingi may be location based.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 02:01:39 PM
If you want to call it mispoke then so be it. mY intent is very clear while you have done little but harp on nonsense.
Your intend was to blow off my posts by "who cares" and "This is really all that matters".
Your intent was to show that people only care about and all that matters is if the plan works.
I pointed out how illogical that is and your response was you never said that. You said exactly that!!!
The problem is the posts are there for everyone to see.
Not lets move on.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 02:04:39 PM
I still haven't received an answer from our resident experts to the WL vs Term + S&P mutual funds question.
My uneducated research shows that if I invest 10k annually at an overall 8% rate of return annually (very conservative- over ANY given 40 yr period) will be almost 3mil after 40 yrs.
If my 30 term cost $1500 monthly (total $540,000) and my total 40 yr principal is $480,000, then I've invested a total of approx 1mil for a return of approx 3mil + 1mil life insurance peace of mind.
How much would that cost me in WL?

While I've found this recent blog post (https://theinsuranceproblog.com/whole-life-insurance-versus-stock-market-a-new-and-updated-numbers/) that might address some of your questions, there is an important issue that jumps at me within the set of assumptions you've presented.

I don't know what the starting age you are assuming for this, but you do mention a 30 year term (not mentioning how much, but I'm assuming you're talking about $1MM, even though you seem to be assuming $3MM capital at retirement, so why would you insure for any less than that, especially if a premature death would mean that the capital is needed for a longer period of time) while you keep on talking about ANY given 40 year investment period. So what if year 31 of that given investment period suffers a significant market crash (yes, if the investment isn't touched for the next 10 years there might be a spectacular recovery, or it might take longer like the Nasdaq after the dot.com crash or the Nikkei 225 post 1989, a high which it has never recovered)?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 02:13:24 PM
You left out losing the Cadilac of heath insurance. the child care benefit mentioned by @ExGingi may be location based.

The bottom line is that the welfare state is designed as a honey trap. They make it very difficult to get out of it as incremental increases to self-reliance turn out to be highly detrimental to what's provided by the government. Just look at the difference at the cost of healthcare available in the individual marketplace in NY between someone that's earning up to 200% of FPL and someone just above. While just above might have subsidies, all of the sudden deductibles and co-pays are up, and even with the subsidies the monthly premium is significantly higher. Or look at Child Health Plus. up to 400% of FPL one can get it somewhat subsidized at a maximum family cost of $180/month ($60 per child, with a family max). Go over 400% and it's $280 per child per month.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 02:14:12 PM
Your intend was to blow off my posts by "who cares" and "This is really all that matters".
Your intent was to show that people only care about and all that matters is if the plan works.
I pointed out how illogical that is and your response was you never said that. You said exactly that!!!
The problem is the posts are there for everyone to see.
Not lets move on.
Yes our posts are there for everyone to see and I am therefore not going to continue arguing agains your illogical arguments. The logic behind what I wrote is very clear to anyone willing to see. You want to go on the hamster wheel di it yourself I will not join you.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 02:18:09 PM
While I've found this recent blog post (https://theinsuranceproblog.com/whole-life-insurance-versus-stock-market-a-new-and-updated-numbers/) that might address some of your questions, there is an important issue that jumps at me at the set of assumptions you've presented.

I don't know what the starting age you are assuming for this, but you do mention a 30 year term (not mentioning how much, but I'm assuming you're talking about $1MM, even though you seem to be assuming $3MM capital at retirement, so why would you insure for any less than that, especially if a premature death would mean that the capital is needed for a longer period of time) while you keep on talking about ANY given 40 year investment period. So what if year 31 of that given investment period suffers a significant market crash (yes, if the investment isn't touched for the next 10 years there might be a spectacular recovery, or it might take longer like the Nasdaq after the dot.com crash or the Nikkei 225 post 1989, a high which it has never recovered)?

If nothing else, take out of this that a diversified stock portfolio does not mean that your assets are diversified.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 02:18:43 PM
Yes our posts are there for everyone to see and I am therefore not going to continue arguing agains your illogical arguments. The logic behind what I wrote is very clear to anyone willing to see. You want to go on the hamster wheel di it yourself I will not join you.
No need for the hamster wheel since you now are chaining your tune that other things do matter besides if the plan works.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 02:20:33 PM
No need for the hamster wheel since you now are chaining your tune that other things do matter besides if the plan works.
The change is nowhere but in your own mind.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 02:33:09 PM
The change is nowhere but in your own mind.
So you don't want to keep going? I guess you misspoke again.  ::)

Talking about if the plan works or helped people.
This is really all that matters.
Who cares.
All that really matters is whether or not it works and not any of these other side shows.
What makes it a good plan is if it works.
...but you never said any of that!!!  :)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 02:38:16 PM
Considering that this is a service he offers, that would make sense. I have given similar advice to someone and told him that if having an advisor to speak to is what will get you to actually fund the investment then it is a price well worth the cost.
False.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 02:48:47 PM
..but you never said any of that!!!  :)
I absolutley said all of that and stand by it.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 02:49:18 PM
False.

I'm sorry, profits by endorsing advisors.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 02:56:36 PM
I absolutley said all of that and stand by it.
Hopefully you understand what "all" means.
Then what is the the argument? You are claiming about the plan "All that really matters is whether or not it works and not any of these other side shows."
My point that you disagree with is that if the plan works is not all that matters. I can show a MS plan that works for some here but it is not a good plan for them.
Title: Re: Dave Ramsey Plan
Post by: Lou Bob on July 24, 2020, 03:00:11 PM
Hopefully you understand what "all" means.
Then what is the the argument? You are claiming about the plan "All that really matters is whether or not it works and not any of these other side shows."
My point that you disagree with is that if the plan works is not all that matters. I can show a MS plan that works for some here but it is not a good plan for them.

for all this talk about MS plans...let's hear something good :)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 03:04:10 PM
I'm sorry, profits by endorsing advisors.
Therefore?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 03:06:48 PM
for all this talk about MS plans...let's hear something good :)
My course is 2995.00 but if you order in the next 30 minutes it is only 2495.00
Unlike the conman I only except cash.  :)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 03:08:20 PM
He did a scientific study recently of 10000 millionaires in the country, you can find the data on this but the majority of millionaires in the country pay off their home in 10.2(iirc) years. It may be a weakness to need to see results to motivate you to keep you going but its also pretty normal.
Chris Hogan study.
https://www.amazon.com/dp/0977489523/ref=cm_sw_r_apa_i_qiZgFbCFGN7KH
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 03:13:44 PM
I can show a MS plan that works for some here but it is not a good plan for them.

Is your point that it is not for everyone?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 03:14:15 PM
Therefore?
Therefore it makes sense that it would be a concept that he pushes.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 03:18:20 PM
Is your point that it is not for everyone?
No, my point is and has been "all that matters" is not just if a plan works or not.
Now we really do need:
(https://i.postimg.cc/dVrdgWCx/Secondhand-Easy-Azurevase-size-restricted.gif)
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 03:20:39 PM
No, my point is and has been "all that matters" is not just if a plan works or not.
Now we really do need:
(https://i.postimg.cc/dVrdgWCx/Secondhand-Easy-Azurevase-size-restricted.gif)


Ahh yes the sign of someone harping on some side point such as not liking a word or two and ignoring the real discussion at hand. I guess so.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 03:27:10 PM
Ahh yes the sign of someone harping on some side point such as not liking a word or two and ignoring the real discussion at hand. I guess so.
Lets see if this will help.

You sell energy correct?
I want to save money on energy. I go with a company and they save me money. That does not make it a good plan because they saved me money.
You come along and say that is a terrible plan. I ask why, it worked for me. You point out the flaws and explain how I should be saving more money.
I reply with some BS how first I need to save a little money to make me feel good.

I know you are not going to agree with the analogy so GS!!!

When I say I am done with this I really mean it.  ;)
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 03:31:02 PM
Lets see if this will help.

You sell energy correct?
I want to save money on energy. I go with a company and they save me money. That does not make it a good plan because they saved me money.
You come along and say that is a terrible plan. I ask why, it worked for me. You point out the flaws and explain how I should be saving more money.
I reply with some BS how first I need to save a little money to make me feel good.

I know you are not going to agree with the analogy so GS!!!

When I say I am done with this I really mean it.  ;)
Thank G'd. Now we can have an honest conversation.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 03:35:50 PM
Thank G'd. Now we can have an honest conversation.
When @aygart made the comment there was no response from you. Try a little less hate.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 03:37:18 PM
When @aygart made the comment there was no response from you. Try a little less hate.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 24, 2020, 03:39:55 PM
Therefore it makes sense that it would be a concept that he pushes.
So the product is not a good product, cause he endorses and profits from said endorsement?
That's like accusing Dan of pushing bad products cause he profits off affiliate links.
Title: Re: Dave Ramsey Plan
Post by: whYME on July 24, 2020, 03:52:12 PM
I can teach most people in debt how to get out MSing.
I highly doubt that.

I'll bet most people who try your "plan" to get out of debt only end up deeper in debt.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 04:02:24 PM
My course is 2995.00 but if you order in the next 30 minutes it is only 2495.00
Unlike the conman I only except cash.  :)

This kind?

(https://media1.tenor.com/images/78ea2e67b196f43cd619fad65b9a75b7/tenor.gif)
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 04:05:45 PM
This kind?
...or the shiny stuff. That would get them all out of debt.  ;)
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 04:09:10 PM
Lets see if this will help.

You sell energy correct?
I want to save money on energy. I go with a company and they save me money. That does not make it a good plan because they saved me money.
You come along and say that is a terrible plan. I ask why, it worked for me. You point out the flaws and explain how I should be saving more money.
I reply with some BS how first I need to save a little money to make me feel good.

So here's an argument for you. The plan that saves you money is good, as it improved on your previous situation and you were able and motivated to take action on it. The other plan might be much better, but for whatever reason you might find it hard to act on.

All that matters is action (see Richard Russell article I posted above). There can be flaws in the program, it might be presented by a conman, etc. etc. and there might be plenty of theoretically better plans, but it's the plan that gets one to take action towards improving their situation which is what counts.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 24, 2020, 04:10:05 PM
...or the shiny stuff. That would get them all out of debt.  ;)


I'll just give you the IOUs, but you must include a free action service, i.e. you teach me the MS plan and you execute it for me (without getting my SSN, etc. and while posting collateral for the spending done).
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 04:12:44 PM
So here's an argument for you.
Good argument.  :)
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 24, 2020, 04:30:42 PM
So let me ask the question. For all those that paid money for his course do you pay your smaller balances first instead of your high interest balances first? It is a straight forward simple question.

Yes.

Now a question for you;
Do you recognize the value of motivation in making it more likely that a person reach their goals?
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 24, 2020, 04:37:41 PM
Is this MS plan a side hustle to increase income or away of teaching living within your means and saving?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 05:06:29 PM
So here's an argument for you. The plan that saves you money is good, as it improved on your previous situation and you were able and motivated to take action on it. The other plan might be much better, but for whatever reason you might find it hard to act on.

All that matters is action (see Richard Russell article I posted above). There can be flaws in the program, it might be presented by a conman, etc. etc. and there might be plenty of theoretically better plans, but it's the plan that gets one to take action towards improving their situation which is what counts.

Good vs better or Good vs bad?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 24, 2020, 06:06:45 PM
For those who are interested in the research regarding the effectiveness of the debt snowball.
https://www.forbes.com/sites/robertberger/2017/07/20/debt-snowball-versus-debt-avalanche-what-the-academic-research-shows/

In the example they gave, you save $233 of interest over 4.5 years by paying based on interest rate

That is without taking into account the psychological benefits of the snowball approach, which
1 - makes it more likely that you'll stick to it.
2 - usually leads to paying more each month and finishing sooner.

Obviously if you don't see being debt free as a positive goal, you won't appreciate those benefits.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 24, 2020, 06:14:20 PM
For those who are interested in the research regarding the effectiveness of the debt snowball.
https://www.forbes.com/sites/robertberger/2017/07/20/debt-snowball-versus-debt-avalanche-what-the-academic-research-shows/

In the example they gave, you save $233 of interest over 4.5 years by paying based on interest rate

That is without taking into account the psychological benefits of the snowball approach, which
1 - makes it more likely that you'll stick to it.
2 - usually leads to paying more each month and finishing sooner.

Obviously if you don't see being debt free as a positive goal, you won't appreciate those benefits.
The plan that is best is the plan that one keeps to
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 24, 2020, 06:20:38 PM
The plan that is best is the plan that one keeps to

Even if it's criminal?
/Sarc
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 24, 2020, 06:53:07 PM
Now a question for you;
Do you recognize the value of motivation in making it more likely that a person reach their goals?
Yes but don't put much value in it.
Title: Re: Dave Ramsey Plan
Post by: grodnoking on July 24, 2020, 07:10:35 PM
Yes but don't put much value in it.
שלא לשמה בא לשמה
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 25, 2020, 11:16:04 PM
Yes but don't put much value in it.

Why?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 25, 2020, 11:29:07 PM
Why?
The goal is to pay off your debt. Say you owe 20k. Paying off a card with a 1k balance or paying 1k on a card with a 10k balance will leave you with 19k left to pay. That is the motivation that should be taught. Paying a card off with low interest instead of a high interest card is just wrong. It will take you longer to pay off your 20k debt.

At CB their main goal is credit repair. The progress/motivation is your FICO score. Getting inquires to zero can be seen as a victory but meaningless in the big picture.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 25, 2020, 11:54:14 PM
The goal is to pay off your debt. Say you owe 20k. Paying off a card with a 1k balance or paying 1k on a card with a 10k balance will leave you with 19k left to pay. That is the motivation that should be taught. Paying a card off with low interest instead of a high interest card is just wrong. It will take you longer to pay off your 20k debt.

At CB their main goal is credit repair. The progress/motivation is your FICO score. Getting inquires to zero can be seen as a victory but meaningless in the big picture.
Keep in mind that Dave Ramsey is advocating to no longer have debt and the FICO score is not a great motivator for someone who will no longer be having ccs. Many of these people will have difficulty keeping out of the cc trap and truly are people who the only way out for them is to not have any ccs at all.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 12:01:34 AM
Say you owe 20k. Paying off a card with a 1k balance or paying 1k on a card with a 10k balance will leave you with 19k left to pay. That is the motivation that should be taught.

How do you address the research that shows that human psychology doesn't work that way. I'm referring to research regarding all areas in which motivation is needed (such as weight loss etc.), not just paying off debt.

At CB their main goal is credit repair. The progress/motivation is your FICO score.

Dave Ramsey's advice is a terrible way to reach that goal.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 26, 2020, 12:05:38 AM
How do you address the research that shows that human psychology doesn't work that way. I'm referring to research regarding all areas in which motivation is needed (such as weight loss etc.), not just paying off debt.

Dave Ramsey's advice is a terrible way to reach that goal.
The main point is that it is good advice for the right person. If you are not that person then move on, but there are very likely thousands of people who are now debt free who would have been drowning if not for his system. Anyone who can't understand that needs to get out more.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 12:06:49 AM
The goal is to pay off your debt. Say you owe 20k. Paying off a card with a 1k balance or paying 1k on a card with a 10k balance will leave you with 19k left to pay. That is the motivation that should be taught. Paying a card off with low interest instead of a high interest card is just wrong. It will take you longer to pay off your 20k debt.

At CB their main goal is credit repair. The progress/motivation is your FICO score. Getting inquires to zero can be seen as a victory but meaningless in the big picture.
Last i checked dave ramsey gets paid and gets credit for helping people get out of debt.  All the credit you get is for creating the most political threads on ddf.


So all you logic against his method doesnt make sense when he has studies to back up his claims
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 26, 2020, 12:15:34 AM
Is this MS plan a side hustle to increase income or away of teaching living within your means and saving?

 :-X
Title: Re: Dave Ramsey Plan
Post by: 12HRS on July 26, 2020, 01:38:44 AM
(https://media.giphy.com/media/uLy4Bo680hZxm/giphy.gif)

Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 07:34:54 AM
Last i checked dave ramsey gets paid and gets credit for helping people get out of debt.  All the credit you get is for creating the most political threads on ddf.


So all you logic against his method doesnt make sense when he has studies to back up his claims
This is why it is hard to have honest discussions on DDF. You have many members that don't have the willpower to separate JS from the rest of the forum.

If you try and open your eyes you will see I helped many DDF members. Oh and by the way all that help was free.  :)
Title: Re: Dave Ramsey Plan
Post by: Lurker on July 26, 2020, 07:41:07 AM
Ramsey is the Spirit of financial health. It'll get you there, but it wont be pretty or comfortable and it will end up costing you a lot more than you thought. Oh, and pretty much everyone else who has any experience will think you're crazy for using him/them.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 07:41:41 AM
Is this MS plan a side hustle to increase income or away of teaching living within your means and saving?
It seems we are all over the place with his plan. So his plan is to teach you to live with in your means and save?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 07:47:10 AM
Keep in mind that Dave Ramsey is advocating to no longer have debt and the FICO score is not a great motivator for someone who will no longer be having ccs. Many of these people will have difficulty keeping out of the cc trap and truly are people who the only way out for them is to not have any ccs at all.
Like I said before then they need help in other areas and their financial problem is just one of the symptoms.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 07:49:38 AM
How do you address the research that shows that human psychology doesn't work that way. I'm referring to research regarding all areas in which motivation is needed (such as weight loss etc.), not just paying off debt.
My example was motivation. One that gets you quicker to your goal.
Title: Re: Dave Ramsey Plan
Post by: Lou Bob on July 26, 2020, 07:53:41 AM
My example was motivation. One that gets you quicker to your goal.
you should write a book and host a radio show.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 07:55:55 AM
My example was motivation. One that gets you quicker to your goal.

Do you have research/data to back up that statement?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:01:26 AM
Do you have research/data to back up that statement?
I have simple math. Look if you feel going from 20k in debt to 19k in debt isn't motivation nothing I can say will change that.
Lets me ask you this. All your CC debt is on one CC and it is 20k. As that debt decreases isn't that motivation that what you are doing is working?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 08:10:50 AM
I have simple math. Look if you feel going from 20k in debt to 19k in debt isn't motivation nothing I can say will change that.
Lets me ask you this. All your CC debt is on one CC and it is 20k. As that debt decreases isn't that motivation that what you are doing is working?

Finance ≠ Math
Title: Re: Dave Ramsey Plan
Post by: moko on July 26, 2020, 08:12:12 AM
This thread is begging to be moved to JS
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:16:19 AM
This thread is begging to be moved to JS
Just because there are opposing views does not mean it gets moved to JS.
Title: Re: Dave Ramsey Plan
Post by: yitzgar on July 26, 2020, 08:19:29 AM
Ramsey is the Spirit of financial health. It'll get you there, but it wont be pretty or comfortable and it will end up costing you a lot more than you thought. Oh, and pretty much everyone else who has any experience will think you're crazy for using him/them.
Whichever route you take, if you are in debt, it won't be pretty or comfortable to get there. (He is very clear that this is true as far as his own program)
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:22:04 AM
Does part of his plan still say that debt is bad and you should not have any CC's?
Title: Re: Dave Ramsey Plan
Post by: moko on July 26, 2020, 08:42:43 AM
Just because there are opposing views does not mean it gets moved to JS.
nothing to do with opposing views...
More to do with the hamster wheel.
After you've gone several rounds with the exact same arguments dressed with different wording, it's time to go.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:48:40 AM
nothing to do with opposing views...
More to do with the hamster wheel.
After you've gone several rounds with the exact same arguments dressed with different wording, it's time to go.
Lets go to baby step number one. He wants you to put 1k in an emergency fund while you are still in debt.
Many emergencies will be over 1k, then what? You might not ever run into an emergency and the money is just sitting there instead of lowering your debt.
Title: Re: Dave Ramsey Plan
Post by: moko on July 26, 2020, 09:17:51 AM
Lets go to baby step number one. He wants you to put 1k in an emergency fund while you are still in debt.
Many emergencies will be over 1k, then what? You might not ever run into an emergency and the money is just sitting there instead of lowering your debt.
NIME.
Regardless, that's not what I've seen in most of this thread.
How long did it take me to get an inkling of an answer to my somewhat unrelated WL question (which, btw, the ore I read of the provided info, actually convinced of the opposite)?
Every so often someone begins an debate if some substance but most of the time (at least it seems to me) it's mostly cyclical arguments, round n round.
My actual position on DR, I like a lot of what he , not everything, I'll take what I can use and ignore the rest regardless if he believes that it's all or nothing.
As for my general outlook on debates and arguments, I don't have to be right as long as I get what I want.
If i don't think I'll get what I want I try not to bother (despite being tempted to argue)
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 09:38:38 AM
NIME.
Regardless, that's not what I've seen in most of this thread.
How long did it take me to get an inkling of an answer to my somewhat unrelated WL question (which, btw, the ore I read of the provided info, actually convinced of the opposite)?
Every so often someone begins an debate if some substance but most of the time (at least it seems to me) it's mostly cyclical arguments, round n round.
My actual position on DR, I like a lot of what he , not everything, I'll take what I can use and ignore the rest regardless if he believes that it's all or nothing.
As for my general outlook on debates and arguments, I don't have to be right as long as I get what I want.
If i don't think I'll get what I want I try not to bother (despite being tempted to argue)
When you get two strong willed people go against each other of course you are going to go round n round. The default on DDF is when I am one of those is to blame me. That is fine as I am used to it by now.

If you don't want to discuss his baby steps one by one that is fine with me. Maybe others will defend them.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 09:41:52 AM
Lets go to baby step number one. He wants you to put 1k in an emergency fund while you are still in debt.
Many emergencies will be over 1k, then what? You might not ever run into an emergency and the money is just sitting there instead of lowering your debt.
Read his book, fully understand his method and then come back.  Very hard to argue with you.

The $1k emergency fund is for basics. He gives an example if your car breaks down and u need a few hundred bucks to fix it so you can get to work and make more money. If you don't have the $1000 emergency it will drag you down even more. 

Obviously you need a larger emergency fund. That's why he has baby step 3. But for starters at least have something for the small stuff in life that might turn into bigger issues.


Again please read it and learn his method before arguing against it
 
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 09:50:09 AM
Read his book, fully understand his method and then come back.  Very hard to argue with you.

The $1k emergency fund is for basics. He gives an example if your car breaks down and u need a few hundred bucks to fix it so you can get to work and make more money. If you don't have the $1000 emergency it will drag you down even more. 

Obviously you need a larger emergency fund. That's why he has baby step 3. But for starters at least have something for the small stuff in life that might turn into bigger issues.


Again please read it and learn his method before arguing against it
I am not going to waste my money. I have seen his method many times.

My point is your car example can easily be over 1k and then you will have to borrow. Most Americans live pay check to pay check.
Even if you agree with step #1 it should be moved to at least #3.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 09:55:33 AM
The conversation for the last couple of days are catch 22.

My take = the status quo is just the opposite of save ramsey, we live In a world where if you borrow more you make more. (Lets not discuss this one now). The people that follow dave ramsey have a really Pleasant life without worrying what the next day will bring because it based on you need to have a long term plan.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 09:57:17 AM
I am not going to waste my money. I have seen his method many times.

My point is your car example can easily be over 1k and then you will have to borrow. Most Americans live pay check to pay check.
Even if you agree with step #1 it should be moved to at least #3.
I will stop arguing with you here.  I see that you will argue every point I make.  A fair argument is when both have the same knowledge yet different point of views.  I think in this case you don't really want to understand what he is saying because it takes away from the thrill of just saying "he is wrong because i decided so"

I will answer one last time. Pay check to paycheck means you dont have a dollar for any small issues that can be bigger issues.  You need to pay a dentist, car repair, etc.  This gives you a little more needed flexibility.   Does it cover everything? No. But will it help many situations? Yes.  Therefore its the start.  And when all debt is paid off you focus on full emergency fund.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 09:58:39 AM
The conversation for the last couple of days are catch 22.

My take = the status quo is just the opposite of save ramsey, we live In a world where if you borrow more you make more. (Lets not discuss this one now). The people that follow dave ramsey have a really Pleasant life without worrying what the next day will bring because it based on you need to have a long term plan.
Exactly.  His method should give "financial freedom"    doesn't mean that you can't become richer asap by taking loans.  But for example now with covid, anyone that stuck to his method should have been ok to weather 6 months...
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 26, 2020, 10:00:21 AM
I am not going to waste my money. I have seen his method many times.

My point is your car example can easily be over 1k and then you will have to borrow. Most Americans live pay check to pay check.
Even if you agree with step #1 it should be moved to at least #3.
The reason it's at #1 is to be able to separate old debt from current expenses, if every time something comes up you need to put it back on the CC you're continuing the cycle. As with everything in life nothing is foolproof, but the $1k covers most surprises.

Another big part of his method is the budgeting which includes putting money away every month for anticipated expenses like car or home repairs, so even if something big breaks there should be money in the car expense fund to cover at least part of it with the $1k filling in.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:05:18 AM
I will stop arguing with you here.  I see that you will argue every point I make.  A fair argument is when both have the same knowledge yet different point of views.  I think in this case you don't really want to understand what he is saying because it takes away from the thrill of just saying "he is wrong because i decided so"

I will answer one last time. Pay check to paycheck means you dont have a dollar for any small issues that can be bigger issues.  You need to pay a dentist, car repair, etc.  This gives you a little more needed flexibility.   Does it cover everything? No. But will it help many situations? Yes.  Therefore its the start.  And when all debt is paid off you focus on full emergency fund.
I have a different position than what DR teaches. So if you believe DR then of course we will see it differently.

I will try to explain one more time. You can use that 1k to pay off debt and save money. If an emergency arrives you can borrow against that debt to pay the emergency. Once you are out of debt you can work on your emergency fund. That is why I said it should not be #1. You are financial better off this way.

Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:08:45 AM
The reason it's at #1 is to be able to separate old debt from current expenses, if every time something comes up you need to put it back on the CC you're continuing the cycle. As with everything in life nothing is foolproof, but the $1k covers most surprises.

Another big part of his method is the budgeting which includes putting money away every month for anticipated expenses like car or home repairs, so even if something big breaks there should be money in the car expense fund to cover at least part of it with the $1k filling in.
I understand what he is saying and disagree.
From a financial stand point it is wrong.
We can run the numbers if you want.  :)

Lets move on. Does he use a 12% return for investments?
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 10:12:32 AM
I have a different position than what DR teaches. So if you believe DR then of course we will see it differently.

I will try to explain one more time. You can use that 1k to pay off debt and save money. If an emergency arrives you can borrow against that debt to pay the emergency. Once you are out of debt you can work on your emergency fund. That is why I said it should not be #1. You are financial better off this way.
I see that you know so much about financial advise. How much is your net worth?

Quote from Warren buffet.

"Leverage is like Russian Roulette; 99% of the time it works, but neither 83.3% or 99% is good enough when there is no gain to offset the risk of loss,"

https://www.thewealthadvisor.com/article/why-warren-buffett-wont-play-leverage
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:15:09 AM
But for example now with covid, anyone that stuck to his method should have been ok to weather 6 months...
If you did my method you would have been good for at least 12 months.  :)
I have excel break all household expenses down to the day, bi-weekly and yearly.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:18:03 AM
I see that you know so much about financial advise. How much is your net worth?
Enough to retire and never have to worry about money.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 10:21:48 AM
That can be 500k-50mm it's a very big ballpark to throw. Did you have financial freedom or at least now? I'm not sure your age. DR plan is about having a freedom plan from the twenties up until 120
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 10:24:57 AM
I understand what he is saying and disagree.
From a financial stand point it is wrong.
We can run the numbers if you want.  :)

Lets move on. Does he use a 12% return for investments?
I think to measure the market
10% conservative
12% 30 year period or longer (it probably could be 40 years as well).
12%+ mutual funds that outpreferm I would give it 13-14%
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:29:20 AM
That can be 500k-50mm it's a very big ballpark to throw. Did you have financial freedom or at least now? I'm not sure your age. DR plan is about having a freedom plan from the twenties up until 120
I have had financial freedom from day one.
Look, what his plan wants you to achieve is great. I and many other disagree with things in the plan. 
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:30:36 AM
I think to measure the market
10% conservative
12% 30 year period or longer (it probably could be 40 years as well).
12%+ mutual funds that outpreferm I would give it 13-14%
This is totally unrealistic. Past performance is no guarantee of future performance.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 10:31:06 AM
I understand what he is saying and disagree.
From a financial stand point it is wrong.
We can run the numbers if you want.  :)

Lets move on. Does he use a 12% return for investments?
Financial decisions are behavioral based.  So if you look at dollar signs he may be wrong. But end result he may be right.   I did not say that he is right, I said he may be.  Fully understand his program and then everyone has to decide for themselves
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:37:38 AM
Financial decisions are behavioral based.  Some if you look at dollar signs he may be wrong. But end result he may be right.   Judt a thought
Financial many of the things he does is wrong. Don't fool yourself. Now factoring in motivation that is a different story and is beneficial to some.
I never believed the end justified the means.
With that being said of course others and I could be wrong.
Do we have any verifiable figures on his success rate? 
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 10:52:15 AM
I think to measure the market
10% conservative
12% 30 year period or longer (it probably could be 40 years as well).
12%+ mutual funds that outpreferm I would give it 13-14%

What are you basing this on?
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 11:15:45 AM
What are you basing this on?
Past performance.

Iím my experience people that are busy saying that the market gives less, don't invest at all.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 11:16:14 AM
This is totally unrealistic. Past performance is no guarantee of future performance.
True. But Is a good data starting point
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 11:32:01 AM
Do we have any verifiable figures on his success rate?

What type of figures would you accept as verification that his way works?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 11:32:51 AM
Past performance.

Iím my experience people that are busy saying that the market gives less, don't invest at all.

Should I share with you my investment accounts?

With all due respect, how long is your experience? Were you invested in the market in 2008? in 1999? in 1987?

Let's go back to the questions I've asked earlier. What's the definition of "conservative"? (and let me add, what do you base that definition on?)

Also are you suggesting any type of diversified portfolio allocation, or are you suggesting 100% in the S&P500 (though which vehicle?) If you're suggesting diversified allocation, what's the allocation you're suggesting? Are you suggesting any allocation shift at any time? How about any periodic rebalancing?
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 11:46:07 AM
Should I share with you my investment accounts?

With all due respect, how long is your experience? Were you invested in the market in 2008? in 1999? in 1987?

Let's go back to the questions I've asked earlier. What's the definition of "conservative"? (and let me add, what do you base that definition on?)

Also are you suggesting any type of diversified portfolio allocation, or are you suggesting 100% in the S&P500 (though which vehicle?) If you're suggesting diversified allocation, what's the allocation you're suggesting? Are you suggesting any allocation shift at any time? How about any periodic rebalancing?
Always staying in equity
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 11:56:15 AM
What type of figures would you accept as verification that his way works?
Is there an independent study that was done? I think you agree we can't go by DR figures, correct?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 11:57:38 AM

Also are you suggesting any type of diversified portfolio allocation, or are you suggesting 100% in the S&P500 (though which vehicle?) If you're suggesting diversified allocation, what's the allocation you're suggesting? Are you suggesting any allocation shift at any time? How about any periodic rebalancing?

If you are asking about Dave Ramsey's advice, here is the outline - https://www.daveramsey.com/blog/daves-investing-philosophy

I think the most important part of what he teaches is to never invest in anything you don't understand. He often says that if you meet with an investment advisor and you come out feeling stupid, run the other way.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:00:31 PM
True. But Is a good data starting point
Let me tell you a real life story. When I took out my first WL policy the selling point was the dividends were never cut in the history of this very old company. Based on that I would have millions when I retired. Needless to say dividends were cut the next year and several times the following years. If I relied on that to retire I would now need DR course.  :)
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:04:40 PM
Would it be fair to say his course is mostly motivation and not financial advice?
I mean debt is one of the greatest financial tools you have to be very successful.
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 12:16:29 PM
Our grandparents that came to the u.s. after the war and became very rich here I don't think they became rich through having debt. It was more about saving and investing. You can become very rich without debt.  At times obviously you need it, but its not a prerequisite to being rich
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 12:17:35 PM
Would it be fair to say his course is mostly motivation and not financial advice?

The course, yes. The plan no.

I mean debt is one of the greatest financial tools you have to be very successful.

Sure, it's a faster way to get rich, but it's also a dangerous way.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:30:12 PM
Our grandparents that came to the u.s. after the war and became very rich here I don't think they became rich through having debt. It was more about saving and investing. You can become very rich without debt.  At times obviously you need it, but its not a prerequisite to being rich
There are exceptions to the rules. You think major companies were built without debt.
DR knows 99.9% of those who take his course would never own a house without debt. So is this debt OK?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:31:47 PM
The course, yes. The plan no.
The plan is what I have a problem with. No one has yet to dispute what I said was wrong with the plan on a financial basis.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 12:32:08 PM
The course, yes. The plan no.

Sure, it's a faster way to get rich, but it's also a dangerous way.
100% there not too many buffets or ramsey that have wealth steady for decades. In the heimiaha society rich means someone has nice house, car, few business and lots of workers. In the real world it's about what your net worth is about. It's not about how much money you turn around or money you have in your bank when it's funded from sba, LOC, heloc, these people are broke. And quote again Warren buffet "Whenever a bright person, a really bright person, goes broke that has a lot of money, it's because of leverage. It -- you simply -- you basically can't -- it would be almost impossible to go broke without borrowed money being in the equation."

Link to the article
https://www.thewealthadvisor.com/article/why-warren-buffett-wont-play-leverage
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:35:00 PM
100% there not too many buffets or ramsey that have wealth steady for decades. In the heimiaha society rich means someone has nice house, car, few business and lots of workers. In the real world it's about what your net worth is about. It's not about how much money you turn around or money you have in your bank when it's funded from sba, LOC, heloc, these people are broke. And quote again Warren buffet "Whenever a bright person, a really bright person, goes broke that has a lot of money, it's because of leverage. It -- you simply -- you basically can't -- it would be almost impossible to go broke without borrowed money being in the equation."

Link to the article
https://www.thewealthadvisor.com/article/why-warren-buffett-wont-play-leverage
How did leverage get into this? Leverage and debt are not the same.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 12:35:18 PM
No one has yet to dispute what I said was wrong with the plan on a financial basis.

Many people have, you just disagree. If people were machines, your way would work. People are not machines.

ETA: If CV were an AI, that would actually explain a lot of things...
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:38:17 PM
Many people have, you just disagree. If people were machines, your way would work. People are not machines.
No one has financially.
That is where motivation comes in. Financially paying off smaller debts and not high interest debt first is just wrong. Simple math explains this.
Now you want to bring in motivation then that is a different story for those who need motivation.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:40:59 PM
ETA: If CV were an AI, that would actually explain a lot of things...
Totally unfair. The overwhelming members on this forum I will bet payoff high interest CC's first if they have them. They will also BT to zero interest CC's. Does DR teach that?
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 12:46:04 PM
There are exceptions to the rules. You think major companies were built without debt.
DR knows 99.9% of those who take his course would never own a house without debt. So is this debt OK?
Do you know his stance in buying a house?  Because he ok's a 15 year mortgage. 

Again, another point to prove you don't know what he stands for yet your don't like something.   Its like me disagreeing with the president of Madagascar.  I have no clue who it even is
Title: Re: Dave Ramsey Plan
Post by: Mordyk on July 26, 2020, 12:47:04 PM
Totally unfair. The overwhelming members on this forum I will bet payoff high interest CC's first if they have them. They will also BT to zero interest CC's. Does DR teach that?
He says transferring balances are a band aid. And it makes you feel better temporarily,  but you need a long term solution,  and not a temporary fix
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 12:49:32 PM
They will also BT to zero interest CC's. Does DR teach that?

Not usually, because most of the people he talks to who suggest that are using it as an excuse to avoid changing the behaviors that led them into debt in the first place.

I have heard him endorse things like this for people who have shown (through their actions) that they are serious about changing the way they do things.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 12:49:51 PM
How did leverage get into this? Leverage and debt are not the same.
Please explain.

Debt = borrow money with not reward
Leverage = borrow money that will generate bigger return than borrowing cost.

If leverage could make someone rich and the real wealthy people stand away from it than consumer debt for sure.

Quote buffet "If I owed any money at 18%, the first thing I'd do with any money I had would be to pay it off," Buffett told her. "It's going to be way better than any investment idea I've got."

https://www.google.com/amp/s/www.cnbc.com/amp/2020/05/13/warren-buffett-cautions-against-carrying-a-credit-card-balance.html
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 12:51:26 PM
Final point = don't be so busy which way of paying of debt is better, just start paying it off.
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 26, 2020, 12:52:02 PM
No one has financially.
That is where motivation comes in. Financially paying off smaller debts and not high interest debt first is just wrong. Simple math explains this.
Now you want to bring in motivation then that is a different story for those who need motivation.
If 100 people started the DR plan and on the same day 100 people in the exact same position started your plan, what would it look like 5, 10, or 30 years later? I would bet the overall combined wealth would be greater following the DR plan than yours. Sure the ones who stick to your plan would have a little more than the ones sticking to the DR plan, but more of the ones taking the DR plan would stick with it and continue with it many years later. You're entitled to disagree with this premise if you have evidence to back it up.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:52:54 PM
Do you know his stance in buying a house?  Because he ok's a 15 year mortgage. 
I know his stance from 20 years ago and it seems nothing changed.
A 15 year mortgage is massive debt. This is why a say he is a hypocrite. Now I am not arguing with you. Just stating my position.
Title: Re: Dave Ramsey Plan
Post by: farmbochur on July 26, 2020, 12:53:24 PM
DR knows 99.9% of those who take his course would never own a house without debt. So is this debt OK?

He wouldn't personally do it, but debt on a primary residence is within the guidelines of what he teaches (provided down payment is 20%+ and monthly payment is <25% take-home pay).

see 3:10 on the sound clip
https://www.daveramsey.com/askdave/home-buying/pay-cash-or-borrow#
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 26, 2020, 12:55:20 PM
Not usually, because most of the people he talks to who suggest that are using it as an excuse to avoid changing the behaviors that led them into debt in the first place.

I have heard him endorse things like this for people who have shown (through their actions) that they are serious about changing the way they do things.
Another important part of the equation is how much you'll actually save by transferring, most people he speaks to will be debt free within 2 years, and generally don't have 20% interest credit cards just waiting years until they pay it off.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 12:55:30 PM
https://sndup.net/4rq8

For those who know Yiddish.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 12:57:14 PM
He says transferring balances are a band aid. And it makes you feel better temporarily,  but you need a long term solution,  and not a temporary fix
WOW.
Paying off low balances also makes you feel better and is a temporary fix.
Transferring to a zero % card will get you out of debt sooner. I am not saying adding new debt but making it easier to pay off existent debt.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 12:59:50 PM
WOW.
Paying off low balances also makes you feel better and is a temporary fix.
Transferring to a zero % card will get you out of debt sooner. I am not saying adding new debt but making it easier to pay off existent debt.
Alot ot the zero apr have a transfer fee as well.
I am in the financial service business, I have seen people that had it all written out, zero apr etc. But life is always not as planned. Banks are money making companies.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:06:52 PM
Alot ot the zero apr have a transfer fee as well.
I am in the financial service business, I have seen people that had it all written out, zero apr etc. But life is always not as planned. Banks are money making companies.
Of course you want 0 transfer fees and 0 or low interest.
The point I am making is it is valuable tool that he dismisses.
If you can't pay it off at 0% interest then DR himself will not be able to pay it off at 18%. This is simple math.
This is what I am talking about, common financial sense.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:09:12 PM
If you want to talk about his motivation on the plan that is fine. When you say it all makes sense on a financial level I will tear it apart.
Now when you put the two together then who knows.
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 01:12:07 PM
Of course you want 0 transfer fees and 0 or low interest.
The point I am making is it is valuable tool that he dismisses.
If you can't pay it off at 0% interest then DR himself will not be able to pay it off at 18%. This is simple math.
This is what I am talking about, common financial sense.
You are like someone who is saying.

I only have buisnees debt (that is personal guaranteed), like the business is some third party.

Maybe your fine with this as well....

It's not always about the numbers or how you name it.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:16:29 PM
You are like someone who is saying.

I only have buisnees debt (that is personal guaranteed), like the business is some third party.

Maybe your fine with this as well....

It's not always about the numbers or how you name it.
Sorry you lost me. I am talking personal debt.
Consolidating your CC's to the lowest possible interest rate is sound "financial" advice. Do you or anyone taking his course disagree with this?
Title: Re: Dave Ramsey Plan
Post by: YoelFried on July 26, 2020, 01:25:18 PM
Sorry you lost me. I am talking personal debt.
Consolidating your CC's to the lowest possible interest rate is sound "financial" advice. Do you or anyone taking his course disagree with this?
Btw, Dave actually recommends to consolidate debt if it will save a bigger amount of money. But to consolidate or not is not the point.


https://youtu.be/OymGGEEhlVA

https://youtu.be/f0pYRLqWIPU
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:38:54 PM
Btw, Dave actually recommends to consolidate debt if it will save a bigger amount of money. But to consolidate or not is not the point.
Others here say his position is no. The first video he says no. Financial he is 100% wrong and I hope everyone understands that.
He gets back to you are the problem. The problem is he treats everyone like an idiot.
Here is a way for all of you to follow his debt snowball and pay it off sooner.
BT small amounts to different cards. This way you can pay off at 0% and still get that feel good feeling.
That tip is free.  :)
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 26, 2020, 01:46:32 PM
WOW.
Paying off low balances also makes you feel better and is a temporary fix.


How is it a temporary fix?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:48:25 PM
How is it a temporary fix?
You still need to pay off the high balance debts and it is going to cost you more.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 01:52:12 PM
We can keep going in circles but I know you all understand what I am saying.
Do any of you feel comfortable enough were you are currently at to transfer your CC debt to a 0% card?
We can run the numbers but you all know it will save you money.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 05:08:19 PM
https://sndup.net/4rq8

For those who know Yiddish.

The ending might be a little off. Might be better off with ending with זעצט מען אן.... (http://www.kaveshtiebel.com/viewtopic.php?p=44945&sid=f816634a01ab41345904e6715df3bca3#p44945)
Title: Re: Dave Ramsey Plan
Post by: moko on July 26, 2020, 05:11:22 PM
The ending might be a little off. Might be better off with ending with זעצט מען אן.... (http://www.kaveshtiebel.com/viewtopic.php?p=44945&sid=f816634a01ab41345904e6715df3bca3#p44945)
now I've learned that kaveshteibel and yen coffee room are blocked on my device by Gentech due to "safety policy"
Title: Re: Dave Ramsey Plan
Post by: aygart on July 26, 2020, 06:39:05 PM
You still need to pay off the high balance debts and it is going to cost you more.

His concept is that you can then use the payments you had been making to the smaller balance accounts towards the larger balances.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 06:44:46 PM
His concept is that you can then use the payments you had been making to the smaller balance accounts towards the larger balances.
I fully understand his concept.  ;)
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 26, 2020, 08:02:21 PM
@CountValentine I agree with you that DR pay off low balance rather than high interest debt is illogical.

Question for you,
If one is allowed to pay 100% of their tax bill in March, would you suggest regardless to pay in installments or rather to put the installments into a interest bearing account and then pay in full at year end.
If you have 0% apr card which you can pay in full each month,would you suggest to pay in full, or better don't pay until the promo is over and put $ into a savings account?

What would you do, and what would you tell others to do?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:20:55 PM
I always pay as late as possible.
0% cards I would pay minimum each month until BT 0% runs out.

During the BT frenzy I had over 200k @ 4.5-5% just sitting there.
I have 4 kids.
1 I would say do it and even more if you can.
2 others I would say do it and I would watch them
The other one H*LL NO!!!  :)
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 26, 2020, 08:29:09 PM
Amazing
I asked you a question and you answered it.

ממנו יראו וכן יעשו
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 08:32:23 PM
Amazing
I asked you a question and you answered it.

ממנו יראו וכן יעשו
We are not in JS.  ;)
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 09:02:44 PM
I always pay as late as possible.
0% cards I would pay minimum each month until BT 0% runs out.

During the BT frenzy I had over 200k @ 4.5-5% just sitting there.
I have 4 kids.
1 I would say do it and even more if you can.
2 others I would say do it and I would watch them
The other one H*LL NO!!!  :)

But doesn't keeping balances (even at 0%) hurt your score?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 09:23:01 PM
But doesn't keeping balances (even at 0%) hurt your score?
Yes.
Title: Re: Dave Ramsey Plan
Post by: thaber on July 26, 2020, 10:00:00 PM
I always pay as late as possible.
0% cards I would pay minimum each month until BT 0% runs out.

During the BT frenzy I had over 200k @ 4.5-5% just sitting there.
I have 4 kids.
1 I would say do it and even more if you can.
2 others I would say do it and I would watch them
The other one H*LL NO!!!  :)
The reason you don't get DR, is because you're a responsible and smart person who doesn't play stupid and doesn't borrow money unless they are certain they can pay back.
You are an exception to the rule, which is why 40-60% of American I have revolving credit card debt, and 70% have nothing in savings put away.
All those people need hand holding, motivation, and should not have debt at all, like child #4. DR helps them, because you're not their dad.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:10:17 PM
The reason you don't get DR, is because you're a responsible and smart person who doesn't play stupid and doesn't borrow money unless they are certain they can pay back.
You are an exception to the rule, which is why 40-60% of American I have revolving credit card debt, and 70% have nothing in savings put away.
All those people need hand holding, motivation, and should not have debt at all, like child #4. DR helps them, because you're not their dad.
40-60% and 70% figures sound right. IMHO they all don't need hand holding.
Child #4 (second oldest) hopefully will be financially responsible soon. It isn't the DR plan but the CV plan.  :)
Title: Re: Dave Ramsey Plan
Post by: thaber on July 26, 2020, 10:13:16 PM
40-60% and 70% figures sound right. IMHO they all don't need hand holding.
Child #4 (second oldest) hopefully will be financially responsible soon. It isn't the DR plan but the CV plan.  :)
All don't or don't all?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:19:43 PM
All don't or don't all?
I would say many of them do not need hand holding.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 10:26:48 PM
I would say many of them do not need hand holding.

So what do they need?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 26, 2020, 10:35:07 PM
So what do they need?
Many of them, better paying jobs.  :)
Probably basic financial skills, learning a budget and the like.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 26, 2020, 11:58:30 PM
Many of them, better paying jobs.  :)
Probably basic financial skills, learning a budget and the like.

Jobs or entrepreneurship?

IDK about basic financial skills. Where do you draw the line between basic and beyond? Sometimes I feel like crying for people who didn't seek guidance or help at an earlier stage, and come to me with a specific issue, when there's so many simple things that could have been done over the years to put them in a better position now. Even without changing anything about their jobs and income.

What justification is there for a person who has been in business for himself previously, and then on a company payroll for over a decade, to have $0 in retirement savings.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 27, 2020, 08:39:08 AM
Many of them, better paying jobs.  :)
Probably basic financial skills, learning a budget and the like.

Do you believe that people who are overweight just need more information about healthy food?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 09:14:41 AM
Do you believe that people who are overweight just need more information about healthy food?
A small amount might.
Title: Re: Dave Ramsey Plan
Post by: SMS331 on July 27, 2020, 11:24:16 AM
The 1st 5-6 minutes of his interview with Ben Shapiro he explains that while mathmatically it makes no sense, he found that it wasn't an issue with the math, it was a problem with the person as if it was a math problem they never would have gotten into debt in the first place.

Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 12:07:11 PM
The 1st 5-6 minutes of his interview with Ben Shapiro he explains that while mathmatically it makes no sense, he found that it wasn't an issue with the math, it was a problem with the person as if it was a math problem they never would have gotten into debt in the first place.



Hence, as I said:

Finance ≠ Math
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 27, 2020, 10:05:02 PM
What happens when you lose your job and cant make payments towards your WL policy?
What happens to all other payments when you lose your job? Housing? Medical insurance? Utility Bills, etc.?

If the policy was properly overfunded, and especially if the policy is (even partially) seasoned, the policy will have enough to self support itself through the hard time. Also, if policy was set up with regular overfunding, it's easier to dial down the premium amount while keeping the coverage unaffected.
From what I gathered after sitting down with a LIA today is that in the first 4 years, one would lose everything they put in (Not so with retirement accounts.) and that the break even point would be in year 11.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 27, 2020, 10:07:47 PM
Here is another way to look at this:

Prepaying a (presumably fixed rate) mortgage converts a guaranteed CASH LIQUID asset into non-guaranteed, illiquid HOME EQUITY.

Now I know that when home prices are rising and banks are easily giving HELOCs, many people might not realize the risks involved. But remember that HELOCs can be frozen, shut down, or simply not offerred at any time the banks don't want to lend. Also, while we've seen an outstanding increase in home values (especially in BKLN and LKWD), prices don't always go up (they are possibly a little down from their peak). And here's something many people miss - prepaying a mortgage is irrelevant to your net worth, I actually know people that were kicking themselves for not having larger mortgage balances during the Making Home Affordable loan modification days.

Also, don't forget tax ramifications.
Care to elaborate?
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 27, 2020, 10:12:39 PM
This, and its about the freedom one has when the pressure of paying monthly bills is removed. (not in the sense of freedom to stop working but the freedom to be able to search for the right opportunities without the pressure on your head of making ends meet)

obviously there are some expenses that will never disappear.

So now that we agree on that. What's there to argue about? Based on that argument, the Dave Ramsey Plan should be instructing people to purchase heavily overfunded Whole Life insurance in a way that it's either fully paid off or self sustaining in 10 years or less. No more life insurance bills to worry about. And peace of mind of having coverage that will never expire.
Do you market WL as life insurance or an investment?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:14:19 PM
Care to elaborate?
You are paying off pricipal dollar for dollar.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:15:06 PM
Do you market WL as life insurance or an investment?
I would guess as an investment with a side benefit of free LI included.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:21:20 PM
Probably basic financial skills, learning a budget and the like.
Just understanding some of the basics will help many.
You are paying off pricipal dollar for dollar.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 27, 2020, 10:34:33 PM
You are paying off pricipal dollar for dollar.
Because you greatly reduced your risk of foreclosure when you don't have a mortgage.

Also, is the choice between paying off your mortgage vs investing, or paying off your mortgage vs buying a nicer car?
well said.
Here's something many people miss-for the vast majority of people ( I would be comfortable saying well over 90%) the other choice wouldn't be "wow, we saved an extra $450 this month, let's invest it" rather at the end of the month they ask "WTH is that extra money?" So paying towards one house is relevant to one's net worth, and is one of the tools to build wealth and retire with dignity. 
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:37:29 PM
Here's something many people miss-for the vast majority of people ( I would be comfortable saying well over 90%) the other choice wouldn't be "wow, we saved an extra $450 this month, let's invest it" rather at the end of the month they ask "WTH is that extra money?" So paying towards one house is relevant to one's net worth, and is one of the tools to build wealth and retire with dignity.
Does paying off your house really build wealth?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:38:49 PM
Here's something many people miss-for the vast majority of people ( I would be comfortable saying well over 90%) the other choice wouldn't be "wow, we saved an extra $450 this month, let's invest it" rather at the end of the month they ask "WTH is that extra money?" So paying towards one house is relevant to one's net worth, and is one of the tools to build wealth and retire with dignity. 
That comes down to the behavioral aspect of it not which makes more financial sense. If someone is otherwise blowing it on stupidity then they are better off paying down their mortgage. If they have the disipline to invest it that would be better.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:39:50 PM
Does paying off your house really build wealth?
Not one penny more than the saved interest. THe appreciation was yours before paying off the mortgage as well.
Title: Re: Dave Ramsey Plan
Post by: Kobe bryent on July 27, 2020, 10:40:51 PM
Not one penny more than the saved interest. THe appreciation was yours before paying off the mortgage as well.
There is always a risk of foreclosure.
For the record I would never count appreciation on a net worth statement, solely the equity. 
That comes down to the behavioral aspect of it not which makes more financial sense. If someone is otherwise blowing it on stupidity then they are better off paying down their mortgage. If they have the disipline to invest it that would be better.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:41:45 PM
Not one penny more than the saved interest. THe appreciation was yours before paying off the mortgage as well.
Keep the financial basics coming!
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:45:36 PM
There is always a risk of foreclosure.
For the record I would never count appreciation on a net worth statement, solely the equity. 
WHat is the equity? It is the CURRENT value of the house minus the amount owed.

That it makes financial sense to do over blowing it does not mean it builds wealth it means it is preserving wealth. Preventing foreclosure is also not building wealth but preserving wealth.

Building>preserving>losing
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:49:00 PM
For the record I would never count appreciation on a net worth statement, solely the equity.
How do you figure the value of a house when it is paid off for your net worth?
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:49:39 PM
Keep the financial basics coming!
Why would you think that people who have a difficult time keeping to facts regarding other things would do any better when it comes to finance? We can talk about financial basics until we are blue in the face and it won't help any more than talking about science regarding other topics.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:51:29 PM
Why would you think that people who have a difficult time keeping to facts regarding other things would do any better when it comes to finance?
Hopefully they will understand it is in their best interest to learn.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:52:49 PM
We can talk about financial basics until we are blue in the face and it won't help any more than talking about science regarding other topics.
I disagree. Lets see if anyone disputes the dollar for dollar when paying off early.
Title: Re: Dave Ramsey Plan
Post by: aygart on July 27, 2020, 10:56:24 PM
Hopefully they will understand it is in their best interest to learn.
Just like they all do regarding health?
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 27, 2020, 10:56:59 PM
Lets see if anyone disputes the dollar for dollar when paying off early.

No one who had listened to any DR would dispute that.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 10:59:58 PM
No one who had listened to any DR would dispute that.
DR or not if you didn't understand this hopefully after you give it some thought it would be clear.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:14:58 PM
Paying off a mortgage, other than the interest saved, is exchanging one type of asset (guaranteed, liquid cash) for another type (illiquid, non-guaranteed equity in real estate).
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:20:03 PM
From what I gathered after sitting down with a LIA today is that in the first 4 years, one would lose everything they put in (Not so with retirement accounts.) and that the break even point would be in year 11.

Highly untrue with an OVERFUNDED Whole Life policy.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:22:25 PM
Do you market WL as life insurance or an investment?
Definitely Life Insurance. But it's difficult to ignore the benefits on the asset side of one's personal balance sheet.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 11:23:40 PM
Definitely Life Insurance.
Are you allowed to market it as an investment?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:28:34 PM
From what I gathered after sitting down with a LIA today is that in the first 4 years, one would lose everything they put in (Not so with retirement accounts.) and that the break even point would be in year 11.

When is your break even with a home purchase/mortgage? I.e. When does your equity equal or exceed the sum of your payments (and please don't disregard closing costs)?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:30:23 PM
Are you allowed to market it as an investment?

I've heard of you being the Sheriff of certain DDF threads, have you now become a compliance officer?
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 27, 2020, 11:31:53 PM
I've heard of you being the Sheriff of certain DDF threads, have you now become a compliance officer?
Was wondering if what I heard was true.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 27, 2020, 11:35:41 PM
Was wondering if what I heard was true.

I don't think I would ever get in trouble with compliance over what I say about products during a sales process. If anything I tend to over disclaim (which doesn't mean that the client will not selectively hear or remember, and why written notes are of utmost importance).
Title: Re: Dave Ramsey Plan
Post by: yos9694 on July 28, 2020, 02:15:19 PM
What would (or does) DR say about the US national debt? If the next stimulus bill passes we will be $27.6 Trillion in debt, which is 137.6% of GDP. If we have to do it, then we have to do it, but how do we get out of here without bankruptcy?
Title: Re: Dave Ramsey Plan
Post by: avromie7 on July 28, 2020, 02:17:25 PM
If the next stimulus bill passes we will be $27.6 Trillion in debt, which is 137.6% of GDP. If we have to do it, then we have to do it, but how do we get out of here without bankruptcy?
The answer is simple, getting it done is the hard part. Drastically scale back government spending
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 28, 2020, 02:21:06 PM
The answer is simple, getting it done is the hard part. Drastically scale back government spending

ROTFLMAO....

There's only one way out of this kind of a debt hole. It's been tried and tested for thousands of years. Hint (https://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640) (Though R&R don't seem to say thousands, only hundreds).
Title: Re: Dave Ramsey Plan
Post by: whYME on July 28, 2020, 02:40:00 PM
Hint (https://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640)
tl;dr?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 28, 2020, 02:47:13 PM
tl;dr?

In today's day and age, there's no need to actually read the book to know what it's about. There's been enough publicity of this dissertation to the extent that just mentioning R&R brings it to mind.
Title: Re: Dave Ramsey Plan
Post by: whYME on July 28, 2020, 03:01:55 PM
There's been enough publicity of this dissertation to the extent that just mentioning R&R brings it to mind.
I'll take your word for it (https://emoji.tapatalk-cdn.com/emoji53.png)
Title: Re: Dave Ramsey Plan
Post by: David61 on July 28, 2020, 11:42:03 PM
Not one penny more than the saved interest. THe appreciation was yours before paying off the mortgage as well.

The saved interest PLUS the portion of the money you would have squandered frivolously, PLUS the habit setting practice of prioritizing long-term financial health over instant gratification.
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 29, 2020, 10:14:34 AM
Paying off a mortgage, other than the interest saved, is exchanging one type of asset (guaranteed, liquid cash) for another type (illiquid, non-guaranteed equity in real estate).
Does this apply if every dollar of principal gets added to HELOC?
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 29, 2020, 10:25:18 AM
Do behavioral aspect of financial planning ever outweigh the actual financial benefits? Do they have some value?
 
Case in point when deciding which retirement account to use, in Canada there is TFSA and RRSP - simialr to Roth IRA and 401K
Main difference between TFSA and roth IRA is that TFSA you can withdraw at any point tax free not only in retirement.

1)If TFSA makes more financial sense (based on current and future tax bracket estimates), but isn't actually forced savings, would one recommend RRSP for the forced savings, or at least give that some value.
2) If RRSP makes more financial sense but since it's locked up is highly illiquid, (is that even a word @ExGingi) would you recommend TFSA for liquidity.

 
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 29, 2020, 12:11:45 PM
The saved interest PLUS the portion of the money you would have squandered frivolously, PLUS the habit setting practice of prioritizing long-term financial health over instant gratification.

None of those have anything whatsoever to do with math.

If you would take the same amount and put it somewhere where it would grow by more than the interest saves, and would go towards building wealth and possibly provide other benefits, why would it make sense to prepay one's mortgage?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 29, 2020, 12:16:39 PM
Do behavioral aspect of financial planning ever outweigh the actual financial benefits? Do they have some value?
 
Case in point when deciding which retirement account to use, in Canada there is TFSA and RRSP - simialr to Roth IRA and 401K
Main difference between TFSA and roth IRA is that TFSA you can withdraw at any point tax free not only in retirement.

1)If TFSA makes more financial sense (based on current and future tax bracket estimates), but isn't actually forced savings, would one recommend RRSP for the forced savings, or at least give that some value.
2) If RRSP makes more financial sense but since it's locked up is highly illiquid, (is that even a word @ExGingi) would you recommend TFSA for liquidity.

I claim total ignorance of Canadian plans, laws, and taxes.

AFAIK illiquid is a word, but I believe the ultimate arbiter for the English language 'round here is @Yehuda57.

Mathematically, if everything else remains constant (if you think that is a fact, I have a bridge to sell you) there is no difference between a ROTH IRA and a Traditional IRA. However there are even some built-in differences that make sure that things won't be constant. For example, a traditional IRA has RMDs which a ROTH IRA doesn't. Those RMDs can have a significant impact at retirement. Other types of planning which require asset transfers are easier (and won't affect taxes at that point) with ROTH IRA (after age 59.5) than with traditional IRAs.
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 29, 2020, 01:18:17 PM
I claim total ignorance of Canadian plans, laws, and taxes.


So theoretically, all other things equal - is money that is locked up until retirement
1) Good - forces less consumption
2) Bad - why make it illiquid if not needed
3) Somewhere in the middle
Title: Re: Dave Ramsey Plan
Post by: yungermanchik on July 29, 2020, 01:21:56 PM
So theoretically, all other things equal - is money that is locked up until retirement
1) Good - forces less consumption For people with NO self discipline
2) Bad - why make it illiquid if not needed For people with self discipline, who know how to would invest in better short term investments
3) Somewhere in the middle For people with self discipline, who don't know how to wouldn't invest in better short term investments
@ExGingi am I right?
Title: Re: Dave Ramsey Plan
Post by: AussieMan on July 29, 2020, 01:35:45 PM
@ExGingi am I right?
The money in the retirement account is obviously also invested, the question is, is making it untouchable good or bad.
The only way it's bad is if at some point you would need the money and have to withdraw it early, and then suffer consequences.

The thing is, people may write the "right" answer, even though they know that it's not practical. Risk tolerance is an emotional financial concern, and I'm suggesting that making funds untouchable could be be as well.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 29, 2020, 01:43:09 PM
@ExGingi am I right?

Is there a right or wrong?  Only about facts. Here you're talking about emotions and psychology.

As to the facts. Again, I don't know anything about Canadian laws or programs, but in the US a traditional IRA isn't illiquid. There are consequences such as taxes and penalties which are applicable, but in general if a request goes through before market close, the funds could be available by the next business day (or two). I don't call that illiquid, there are just some fences around it.

With a 401k there's usually easier access in the form of loans.

CARES act created huge access opportunities to almost all retirement accounts.
Title: Re: Dave Ramsey Plan
Post by: Yehuda57 on July 29, 2020, 02:51:16 PM
A little ironic that I got tagged in a thread that started after I quit DDF about a topic I got into since I quit  :)

I read some of the thread, but not all, so forgive me if I'm repeating things.

1) DR is catering to people who are stuck in debt. These are people who made mistakes and didn't know how to handle money. If they had good financial planning knowledge, they wouldn't be in the mess in the first place. Saying something like "Why would you pay off lower interest first?" and following that up with "I've always had financial freedome [and never been in debt]" shows you aren't the DR target.

Take me for example, and I'm saying this even though I'm not anonymous. I found DD and started opening up credit cards and earning miles. It was awesome. Did a whole bunch of things I could never have afforded. Paid my bills on time, had a amazing credit score without a penny to my name. Life happened. Expenses ended up being more than I was earning. One job cut my salary by 40% rather than fire me outright. I was never an extravagant spender, don't have a car, live in a small apartment, but the CC bills became unpayable. I did 0% balance transfers and was treading water for a while. Then I missed a payment on one card. Then another on a different card. Before I knew it I was 80k in the whole, with no shovel to dig out of it.

I hate to say it, but I worry that more DD(F)ers fell into this than we like to imagine. No CC farms, no swiping scams, just spending more than we can afford to on high interest CCs.

2) As such, the DR advice is not necessarily the most mathermatically sound advice. He says so himself. It's behavioral. It's about planning, budgeting, and being in control. It is absolutely beneficial for the kinds of people in point 1 above to pay off a smaller debts earlier, even if it is lower intrest. The whole point is to change behaviour, not be the most optimal mathematical plan.

3) I have learned his plan without reading his book (though I could, for free, at the library) or paying him a penny. I've listened to him on youtube and I got the picture. The fact that he has built a multi million dollar self help and media empire doesn't mean he preys on anyone. And even if it would have cost me $100 to learn his plan, it would have been the best $100 I'd have ever spent.

4) Some people have mentioned $1000 not being enough of an emergency fund. True, that's why it's called a *beginners* emergency fund. Step 3 grows that to 3-6 months of expenses.

5) All the talk of WL vs Mutual funds, etc. - once you get into step 4,5 & 6 you should be speaking to an advisor who can go through the options with you.

Thank G-d, I should be debt free within a month, and complete step 3 soon after that. Then I can come back to DDF to hear the outcome of the arguements for step 4, 5 and 6. :)
Title: Re: Dave Ramsey Plan
Post by: ExGingi on July 29, 2020, 02:58:38 PM
A little ironic that I got tagged in a thread that started after I quit DDF about a topic I got into since I quit  :)

I read some of the thread, but not all, so forgive me if I'm repeating things.

1) DR is catering to people who are stuck in debt. These are people who made mistakes and didn't know how to handle money. If they had good financial planning knowledge, they wouldn't be in the mess in the first place. Saying something like "Why would you pay off lower interest first?" and following that up with "I've always had financial freedome [and never been in debt]" shows you aren't the DR target.

Take me for example, and I'm saying this even though I'm not anonymous. I found DD and started opening up credit cards and earning miles. It was awesome. Did a whole bunch of things I could never have afforded. Paid my bills on time, had a amazing credit score without a penny to my name. Life happened. Expenses ended up being more than I was earning. One job cut my salary by 40% rather than fire me outright. I was never an extravagant spender, don't have a car, live in a small apartment, but the CC bills became unpayable. I did 0% balance transfers and was treading water for a while. Then I missed a payment on one card. Then another on a different card. Before I knew it I was 80k in the whole, with no shovel to dig out of it.

I hate to say it, but I worry that more DD(F)ers fell into this than we like to imagine. No CC farms, no swiping scams, just spending more than we can afford to on high interest CCs.

2) As such, the DR advice is not necessarily the most mathermatically sound advice. He says so himself. It's behavioral. It's about planning, budgeting, and being in control. It is absolutely beneficial for the kinds of people in point 1 above to pay off a smaller debts earlier, even if it is lower intrest. The whole point is to change behaviour, not be the most optimal mathematical plan.

3) I have learned his plan without reading his book (though I could, for free, at the library) or paying him a penny. I've listened to him on youtube and I got the picture. The fact that he has built a multi million dollar self help and media empire doesn't mean he preys on anyone. And even if it would have cost me $100 to learn his plan, it would have been the best $100 I'd have ever spent.

4) Some people have mentioned $1000 not being enough of an emergency fund. True, that's why it's called a *beginners* emergency fund. Step 3 grows that to 3-6 months of expenses.

5) All the talk of WL vs Mutual funds, etc. - once you get into step 4,5 & 6 you should be speaking to an advisor who can go through the options with you.

Thank G-d, I should be debt free within a month, and complete step 3 soon after that. Then I can come back to DDF to hear the outcome of the arguements for step 4, 5 and 6. :)

Great post, and very emotional. Kudos. You were tagged for your mastery of the English language, and ended up writing a great post which I can only agree with about the practical application of DR vs the mathematical correctness, while making some typos along the way, and ignoring the question for which you were tagged.  ;)
Title: Re: Dave Ramsey Plan
Post by: yeshivabucher on July 29, 2020, 04:58:57 PM
A little ironic that I got tagged in a thread that started after I quit DDF about a topic I got into since I quit  :)

I read some of the thread, but not all, so forgive me if I'm repeating things.

1) DR is catering to people who are stuck in debt. These are people who made mistakes and didn't know how to handle money. If they had good financial planning knowledge, they wouldn't be in the mess in the first place. Saying something like "Why would you pay off lower interest first?" and following that up with "I've always had financial freedome [and never been in debt]" shows you aren't the DR target.

Take me for example, and I'm saying this even though I'm not anonymous. I found DD and started opening up credit cards and earning miles. It was awesome. Did a whole bunch of things I could never have afforded. Paid my bills on time, had a amazing credit score without a penny to my name. Life happened. Expenses ended up being more than I was earning. One job cut my salary by 40% rather than fire me outright. I was never an extravagant spender, don't have a car, live in a small apartment, but the CC bills became unpayable. I did 0% balance transfers and was treading water for a while. Then I missed a payment on one card. Then another on a different card. Before I knew it I was 80k in the whole, with no shovel to dig out of it.

I hate to say it, but I worry that more DD(F)ers fell into this than we like to imagine. No CC farms, no swiping scams, just spending more than we can afford to on high interest CCs.

2) As such, the DR advice is not necessarily the most mathermatically sound advice. He says so himself. It's behavioral. It's about planning, budgeting, and being in control. It is absolutely beneficial for the kinds of people in point 1 above to pay off a smaller debts earlier, even if it is lower intrest. The whole point is to change behaviour, not be the most optimal mathematical plan.

3) I have learned his plan without reading his book (though I could, for free, at the library) or paying him a penny. I've listened to him on youtube and I got the picture. The fact that he has built a multi million dollar self help and media empire doesn't mean he preys on anyone. And even if it would have cost me $100 to learn his plan, it would have been the best $100 I'd have ever spent.

4) Some people have mentioned $1000 not being enough of an emergency fund. True, that's why it's called a *beginners* emergency fund. Step 3 grows that to 3-6 months of expenses.

5) All the talk of WL vs Mutual funds, etc. - once you get into step 4,5 & 6 you should be speaking to an advisor who can go through the options with you.

Thank G-d, I should be debt free within a month, and complete step 3 soon after that. Then I can come back to DDF to hear the outcome of the arguements for step 4, 5 and 6. :)
Thanks for sharing; definitely opened my eyes a lot more just by reading this
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 29, 2020, 11:20:33 PM
I hate to say it, but I worry that more DD(F)ers fell into this than we like to imagine.

If you are making a list you can add me. Similar situation, and just finished step 3. Trying to figure out 4,5 and 6 now
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 29, 2020, 11:25:56 PM

Thank G-d, I should be debt free within a month, and complete step 3 soon after that.

Let us know when to be listening for your Debt Free Scream...
Title: Re: Dave Ramsey Plan
Post by: Yehuda57 on July 30, 2020, 12:46:31 PM
If you are making a list you can add me. Similar situation, and just finished step 3. Trying to figure out 4,5 and 6 now

I think it's fair to say @zh cohen is an intelligent person. These issues are not born of a lack of IQ.

@Dan often writes disclaimers about using credit cards as one would use cash. I read them, understood them, and agreed with them. I've since wondered if reading real life stories of people who, like me, started with that intention but ended up in an uncontrollable downward spiral would have helped, or if I'd have nodded in agreement and proceeded without a plan or control.

What definitely has not helped is the mocking and scolding the few who have posted questions about their debt on this forum have received.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 30, 2020, 01:10:06 PM
I think it's fair to say @zh cohen is an intelligent person. These issues are not born of a lack of IQ.
IQ was never a question when it came to this issue.
What definitely has not helped is the mocking and scolding the few who have posted questions about their debt on this forum have received.
If anything I said has come off as mocking or scolding I apologize in advance.
My beef is with the person (DR) and some of the financial part of his course, not any member taking his course.
@Dan often writes disclaimers about using credit cards as one would use cash. I read them, understood them, and agreed with them. I've since wondered if reading real life stories of people who, like me, started with that intention but ended up in an uncontrollable downward spiral would have helped, or if I'd have nodded in agreement and proceeded without a plan or control.
Your story and others will/would help.
I think the problem is we never know beforehand how it (CC game) effects an individual.

Great to see you posting again even if it is short lived.
Title: Re: Dave Ramsey Plan
Post by: zh cohen on July 30, 2020, 01:18:41 PM
I think it's fair to say @zh cohen is an intelligent person.

Thanks for the compliment

I think the problem is we never know beforehand how it (CC game) effects an individual.

Even someone who manages well for many years, can get in trouble when their life circumstances change (as was in @Yehuda57 and my case).
Title: Re: Dave Ramsey Plan
Post by: Dan on July 30, 2020, 01:21:05 PM
I haven't been following this thread at all, but thanks for the tag and thanks for sharing @Yehuda57.

LMK if you want to write a post for DDMS of the steps you took to climb out of debt and what (if anything?) you could have done differently when falling into debt.
Title: Re: Dave Ramsey Plan
Post by: CountValentine on July 30, 2020, 01:24:16 PM
LMK if you want to write a post for DDMS of the steps you took to climb out of debt and what (if anything?) you could have done differently when falling into debt.
The pitfalls to look out for would be helpful.
Title: Re: Dave Ramsey Plan
Post by: Yehuda57 on July 30, 2020, 02:01:11 PM
If anything I said has come off as mocking or scolding I apologize in advance.
My beef is with the person (DR) and some of the financial part of his course, not any member taking his course. Your story and others will/would help.
I think the problem is we never know beforehand how it (CC game) effects an individual.

Great to see you posting again even if it is short lived.

I didn't have you in mind with the mocking and scolding, and it wasn't in this thread.

I did have you in mind with my comments about DR. I think your "beef" stems from a fundamental misunderstanding of it being an emotional/behavioral answer to what you see as a mathematical problem.

I haven't been following this thread at all, but thanks for the tag and thanks for sharing @Yehuda57.

LMK if you want to write a post for DDMS of the steps you took to climb out of debt and what (if anything?) you could have done differently when falling into debt.

I'll try put something together, bl"n.

One thing I think is commendable is that you have always posted warnings about the pitfalls of credit cards, even though it's something you make money off.
Title: Re: Dave Ramsey Plan
Post by: Dan on July 30, 2020, 02:11:08 PM
One thing I think is commendable is that you have always posted warnings about the pitfalls of credit cards, even though it's something you make money off.
I never saw that as mutually exclusive.
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 03:03:59 AM
IRA limit increased to 6k, or 12k per couple.

Many people in this situation have access to a 401k, with a contribution limit of 19.5k. You can lower income by up to 31.5k, that should be more than enough to get off of programs.
CMIIW, but I believe NY State of Health uses MAGI which includes IRA contributions.
Title: Re: Dave Ramsey Plan
Post by: gozalim on August 02, 2020, 09:53:09 AM
CMIIW, but I believe NY State of Health uses MAGI which includes IRA contributions.
IINM IRA (not Roth) deducts from MAGI
Title: Re: Dave Ramsey Plan
Post by: avromie7 on August 02, 2020, 10:11:53 AM
IINM IRA (not Roth) deducts from MAGI
I thought so too, but it looks like not. 401k deductions do lower MAGI.

Not all programs use MAGI, for example EITC is based on AGI. Health insurance tax credits are based on MAGI, but you don't take out IRA deductions.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 10:43:29 AM
I thought so too, but it looks like not. 401k deductions do lower MAGI.

Not all programs use MAGI, for example EITC is based on AGI. Health insurance tax credits are based on MAGI, but you don't take out IRA deductions.

Based on https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/

IRA contributions do not get added back to AGI to arrive at MAGI for ACA.
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 10:57:49 AM


Based on https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/

IRA contributions do not get added back to AGI to arrive at MAGI for ACA.

That seems to be a fairly basic description of MAGI. If you dig a little deeper, you get to https://www.healthcare.gov/reporting-deductions/ which suggests you do have to include IRA contributions as income.
Title: Re: Dave Ramsey Plan
Post by: avromie7 on August 02, 2020, 11:07:21 AM

That seems to be a fairly basic description of MAGI. If you dig a little deeper, you get to https://www.healthcare.gov/reporting-deductions/ which suggests you do have to include IRA contributions as income.
The healthcare.gov website is really confusing, I believe it's saying 2 things
1) Report IRA deductions
2) Don't report child or dependant care expenses.
Title: Re: Dave Ramsey Plan
Post by: gozalim on August 02, 2020, 11:41:55 AM
To simplify:
Which line in the tax return do they ask for?
And how does turbo tax compute that line ?
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 01:52:51 PM
The healthcare.gov website is really confusing, I believe it's saying 2 things
1) Report IRA deductions
2) Don't report child or dependant care expenses.

It looks somewhat confusing when viewing on a mobile browser, but looking at it on a desktop browser there is no confusion whatsoever in my mind.

And

Based on https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/

IRA contributions do not get added back to AGI to arrive at MAGI for ACA.

is accurate.

https://www.healthcare.gov/reporting-deductions/

(https://i.imgur.com/P41g4S2.png)

Also see:
http://laborcenter.berkeley.edu/pdf/2019/magi.pdf (attached to this post)
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 06:28:57 PM
It looks somewhat confusing when viewing on a mobile browser, but looking at it on a desktop browser there is no confusion whatsoever in my mind.

And

is accurate.

https://www.healthcare.gov/reporting-deductions/

(https://i.imgur.com/P41g4S2.png)

Also see:
http://laborcenter.berkeley.edu/pdf/2019/magi.pdf (attached to this post)
According to what you highlighted, you can only deduct IRA contributions if you don't have a work retirement account, so again no 401k AND IRA.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 06:36:34 PM
According to what you highlighted, you can only deduct IRA contributions if you don't have a work retirement account, so again no 401k AND IRA.

That's pretty obvious. That is also how it works on the taxation end.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 06:41:32 PM
According to what you highlighted, you can only deduct IRA contributions if you don't have a work retirement account, so again no 401k AND IRA.

I just now went back to the post that triggered the current discussion, and it is obviously mistaken.

IRA limit increased to 6k, or 12k per couple.

Many people in this situation have access to a 401k, with a contribution limit of 19.5k. You can lower income by up to 31.5k, that should be more than enough to get off of programs.

If contributing 19.5k to a 401k one cannot contribute an additional deductible 12k per couple into IRAs, except if total household income for married filing jointly is under $104,000
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 06:42:07 PM
That's pretty obvious. That is also how it works on the taxation end.
That depends on your income. You could do both up to a certain threshold.
Title: Re: Dave Ramsey Plan
Post by: avromie7 on August 02, 2020, 06:44:54 PM
I just now went back to the post that triggered the current discussion, and it is obviously mistaken.

If contributing 19.5k to a 401k one cannot contribute an additional deductible 12k per couple into IRAs.
You're correct, I made a mistake. The second spouse can still contribute $6k to an IRA.
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 06:45:24 PM
That depends on your income. You could do both up to a certain threshold.

Not as far as I can recall, unless things changed.

Source?
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 06:46:20 PM
Not as far as I can recall, unless things changed.

Source?
https://www.investopedia.com/ask/answers/07/401(k)_ira.asp
Title: Re: Dave Ramsey Plan
Post by: ExGingi on August 02, 2020, 06:52:35 PM
https://www.investopedia.com/ask/answers/07/401(k)_ira.asp

I stand corrected. It does depend on income

https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work

Household income would need to be under $104,000 to make it fully deductible.

But now going back to ACA eligibility, I am not sure that it would be treated any different than on the tax side.
Title: Re: Dave Ramsey Plan
Post by: Joe4007 on August 02, 2020, 07:03:20 PM
I stand corrected. It does depend on income

https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work

Household income would need to be under $104,000 to make it fully deductible.

But now going back to ACA eligibility, I am not sure that it would be treated any different than on the tax side.
Well, it explicitly says no work retirement account and they're pretty much talking about households earning less than 104k.
Title: Re: Dave Ramsey Plan
Post by: 12HRS on August 03, 2020, 01:01:14 AM
You're correct, I made a mistake. The second spouse can still contribute $6k to an IRA.

how many spouses are there?
Title: Re: Dave Ramsey Plan
Post by: avromie7 on August 03, 2020, 09:22:18 AM
how many spouses are there?
Whoops, I meant "the spouse".