Poll

What baby step are you up to?

$1,000 Rainy day fund
Pay off all debt using the debt snowball
3 to 6 months of expenses in savings
Invest 15% of household income into Roth IRAs and pre-tax retirement (401k Etc.)
College /Simcha fund for children
Pay off home early (prepay mortgage)
Build wealth and give!

Author Topic: Dave Ramsey Plan  (Read 10350 times)

Offline Kobe bryent

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2017
  • Posts: 1038
  • Total likes: 429
  • DansDeals.com Hat Tips 5
    • View Profile
Dave Ramsey Plan
« 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 one’s means." Comments like "I know many people that spend within their means no matter what. To each their own." remind me how it isn't just common sense but rather financial education that will change the way we look at personal finances.

Offline moko

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Jul 2011
  • Posts: 2983
  • Total likes: 259
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #1 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 one’s means." Comments like "I know many people that spend within their means no matter what. To each their own." 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.

Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Offline Euclid

  • Dansdeals Platinum Elite + Lifetime Silver Elite
  • *****
  • Join Date: Jun 2010
  • Posts: 504
  • Total likes: 258
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #2 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).

Offline Kobe bryent

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2017
  • Posts: 1038
  • Total likes: 429
  • DansDeals.com Hat Tips 5
    • View Profile
Re: Dave Ramsey Plan
« Reply #3 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.

Offline Euclid

  • Dansdeals Platinum Elite + Lifetime Silver Elite
  • *****
  • Join Date: Jun 2010
  • Posts: 504
  • Total likes: 258
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #4 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.

Offline gozalim

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Oct 2008
  • Posts: 3318
  • Total likes: 127
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
Re: Dave Ramsey Plan
« Reply #5 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 ?

Offline aygart

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: May 2008
  • Posts: 10229
  • Total likes: 3994
  • DansDeals.com Hat Tips 7
    • View Profile
    • Lower Watt Energy Brokers
  • Programs: www.lowerwatt.com
Re: Dave Ramsey Plan
« Reply #6 on: June 08, 2020, 04:50:34 PM »
and where are you earning a safe %4 ?
my whole life policy

@ExGingi
The thing with the hamster is that running on the wheel is actually what it is trying to do.

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8395
  • Total likes: 2073
  • DansDeals.com Hat Tips 12
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #7 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).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline gozalim

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Oct 2008
  • Posts: 3318
  • Total likes: 127
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
Re: Dave Ramsey Plan
« Reply #8 on: June 08, 2020, 05:39:37 PM »
and -in context of this discussion- you can 'prepay' it?

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8395
  • Total likes: 2073
  • DansDeals.com Hat Tips 12
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #9 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8395
  • Total likes: 2073
  • DansDeals.com Hat Tips 12
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #10 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline gozalim

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Oct 2008
  • Posts: 3318
  • Total likes: 127
  • DansDeals.com Hat Tips 0
  • Gender: Male
    • View Profile
Re: Dave Ramsey Plan
« Reply #11 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?
« Last Edit: June 08, 2020, 08:28:39 PM by gozalim »

Offline aygart

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: May 2008
  • Posts: 10229
  • Total likes: 3994
  • DansDeals.com Hat Tips 7
    • View Profile
    • Lower Watt Energy Brokers
  • Programs: www.lowerwatt.com
Re: Dave Ramsey Plan
« Reply #12 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?
The thing with the hamster is that running on the wheel is actually what it is trying to do.

Offline CountValentine

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Mar 2013
  • Posts: 8612
  • Total likes: 1897
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Dave Ramsey Plan
« Reply #13 on: June 08, 2020, 09:22:20 PM »
and where are you earning a safe %4 ?
US Saving Bonds
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch

Offline CountValentine

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Mar 2013
  • Posts: 8612
  • Total likes: 1897
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Dave Ramsey Plan
« Reply #14 on: June 08, 2020, 09:22:49 PM »
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch