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Pay off all debt using the debt snowball
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Build wealth and give!

Author Topic: Dave Ramsey Plan  (Read 11904 times)

Online aygart

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Re: Dave Ramsey Plan
« Reply #120 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.
Just because things turned out a certain way doesn't mean you were right.

Offline CountValentine

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Re: Dave Ramsey Plan
« Reply #121 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.
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch

Online aygart

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Re: Dave Ramsey Plan
« Reply #122 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
Just because things turned out a certain way doesn't mean you were right.

Online aygart

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Re: Dave Ramsey Plan
« Reply #123 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.
Just because things turned out a certain way doesn't mean you were right.

Online moko

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Re: Dave Ramsey Plan
« Reply #124 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
Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Online aygart

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Re: Dave Ramsey Plan
« Reply #125 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.
Just because things turned out a certain way doesn't mean you were right.

Online aygart

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Re: Dave Ramsey Plan
« Reply #126 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.
Just because things turned out a certain way doesn't mean you were right.

Offline CountValentine

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Re: Dave Ramsey Plan
« Reply #127 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.
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch

Offline gozalim

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Re: Dave Ramsey Plan
« Reply #128 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)?

Offline ExGingi

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Re: Dave Ramsey Plan
« Reply #129 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 or like this 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.

I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline ExGingi

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Re: Dave Ramsey Plan
« Reply #130 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).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online moko

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Re: Dave Ramsey Plan
« Reply #131 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?
Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Online aygart

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Re: Dave Ramsey Plan
« Reply #132 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.
Just because things turned out a certain way doesn't mean you were right.

Offline avromie7

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Re: Dave Ramsey Plan
« Reply #133 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.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline ExGingi

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Re: Dave Ramsey Plan
« Reply #134 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.
« Last Edit: July 24, 2020, 01:10:21 PM by ExGingi »
I've been waiting over 5 years with bated breath for someone to say that!
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