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 10195 times)

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8325
  • Total likes: 2065
  • DansDeals.com Hat Tips 10
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #15 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online CountValentine

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Mar 2013
  • Posts: 8585
  • Total likes: 1886
  • DansDeals.com Hat Tips -1
  • Gender: Female
    • View Profile
  • Location: Poland - Exiled
  • Programs: DAOTYA, DDF Level 3, 5K Lounge
Re: Dave Ramsey Plan
« Reply #16 on: June 08, 2020, 09:41:06 PM »
I've seen HELOCs being shut down for people with perfect credit.
Home value falls?
You're so far up Trump's a** you can see Giuliani's feet.  HT Baruch

Offline 12HRS

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 5035
  • Total likes: 464
  • DansDeals.com Hat Tips 6
    • View Profile
Re: Dave Ramsey Plan
« Reply #17 on: June 08, 2020, 10:19:06 PM »
What happens when you lose your job and cant make payments towards your WL policy?

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8325
  • Total likes: 2065
  • DansDeals.com Hat Tips 10
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #18 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline 12HRS

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 5035
  • Total likes: 464
  • DansDeals.com Hat Tips 6
    • View Profile
Re: Dave Ramsey Plan
« Reply #19 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.

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8325
  • Total likes: 2065
  • DansDeals.com Hat Tips 10
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #20 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).
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline 12HRS

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 5035
  • Total likes: 464
  • DansDeals.com Hat Tips 6
    • View Profile
Re: Dave Ramsey Plan
« Reply #21 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.

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8325
  • Total likes: 2065
  • DansDeals.com Hat Tips 10
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #22 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online moko

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Jul 2011
  • Posts: 2978
  • Total likes: 258
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #23 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
Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Offline 12HRS

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Jun 2013
  • Posts: 5035
  • Total likes: 464
  • DansDeals.com Hat Tips 6
    • View Profile
Re: Dave Ramsey Plan
« Reply #24 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.

Offline David61

  • Dansdeals Gold Elite
  • ***
  • Join Date: Jan 2011
  • Posts: 147
  • Total likes: 30
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: NYC
Re: Dave Ramsey Plan
« Reply #25 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.

Online moko

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Jul 2011
  • Posts: 2978
  • Total likes: 258
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #26 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 (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
Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Offline ExGingi

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Nov 2015
  • Posts: 8325
  • Total likes: 2065
  • DansDeals.com Hat Tips 10
    • View Profile
  • Location: 770
Re: Dave Ramsey Plan
« Reply #27 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.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Online moko

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Jul 2011
  • Posts: 2978
  • Total likes: 258
  • DansDeals.com Hat Tips 1
    • View Profile
Re: Dave Ramsey Plan
« Reply #28 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?
Using your g-d given right of stupidity is an option, not a requirement. Please use sparingly.

Offline Mordyk

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: May 2013
  • Posts: 3249
  • Total likes: 338
  • DansDeals.com Hat Tips 3
  • Gender: Male
    • View Profile
  • Programs: Hilton Diamond, SPG Gold and whatever
Re: Dave Ramsey Plan
« Reply #29 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