Dave Ramsey Plan

[jj1000]

Pay down your 2% mortgage with your 4% APY savings account makes a lot of sense.

NOT!

[Mordyk]

Didn't watch, but did they ask him how exactly his plan would work for a family with say 4-8 kids paying private school tuition?

He answered that basically the numbers don't lie.  And what will happen is A. You will need to increase your income. B. You will crash and burn.   One way or another this will be the outcome.  So be hyper focused on option A.

He didn't say that your life can be cheaper.  He said even if your life is more expensive, the math doesn't look down and say that they won't apply to our community.

Pay down your 2% mortgage with your 4% APY savings account makes a lot of sense.

NOT!

Obviously these numbers sound messed up. But if you understand that money is 80% behavior( that's what Dave said)  then you understand that although the math might not make sense, the overall concept does

[farmbochur]

https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research




I found teachers surprising.

Less surprising when you consider that teachers have greater representation than most other professions in the baseline population. If you're using the chart to guide career choices, a more useful statistic would be the % of those with occupation X that became a millionaire. The way it's presented is similar to anti-vaxers pointing to high vaccination rates among those hospitalized with COVID in a baseline population with very high vaccination rates. Still, I think it still shows that achieving financial independence has more to do with lifestyle than income.

[Dan]

then you understand that although the math might not make sense, the overall concept does

So Dave's rules are for people who are bad at math?

[Mordyk]

So Dave's rules are for people who are bad at math?

No. He said math isn't everything.  Listen to the podcast with an open mind.  I think you will appreciate it

[jj1000]

So Dave's rules are for people who are bad at math?

Why not? A massive percentage of the population fall into that category. It's likely bad math mixed with habits and emotion that people have.

[Yakov15]

So Dave's rules are for people who are bad at math?

If anything the opposite. For example he says when paying off credit cards, don’t do the math and look at the high interest cards first, even though it makes math sense.

[Dan]

For example he says when paying off credit cards, don’t do the math and look at the high interest cards first

Lol, what?

[Yehuda57]

Lol, what?

Not sure if your bemusement is at that this comment in particular, which made no sense, or the theory of paying off the smaller debts. If it's the former, I'm with you, if it's the latter, it has been discussed upthread. The idea is that getting out of debt is more behavioral than mathematical. Paying off the smallest debt gives you a victory that is extremely empowering and encourages you to keep going, whereas paying off a small part of a higher-interest debt might make sense mathematically, but you'll end up giving up because you don't experience the victory of wiping away a complete debt.

[CountValentine]

Pay down your 2% mortgage with your 4% APY savings account makes a lot of sense.

NOT!

Simplistic view.

[jj1000]

Living Lechayim kosher money interview with Dave Ramsey
https://youtu.be/61Zmr3W0EoM

Dave Ramsey is an extremely sympathetic guy. I can see that in just one interview. Must be one of his best selling points.

[Euclid]

Dave Ramsey is an extremely sympathetic guy. I can see that in just one interview. Must be one of his best selling points.

Empathetic?

[jj1000]

Empathetic?

Empathy and Hope are his brand.

Ya.

[aygart]

So Dave's rules are for people who are bad at math?

Like people who disregarded math and have lots of CC debt?

[aygart]

Empathy and Hope are his brand.

Ya.

Hope is one of the main things needed for many who are in debt to actually get themselves out of it.

[Yakov15]

Not sure if your bemusement is at that this comment in particular, which made no sense, or the theory of paying off the smaller debts. If it's the former, I'm with you, if it's the latter, it has been discussed upthread. The idea is that getting out of debt is more behavioral than mathematical. Paying off the smallest debt gives you a victory that is extremely empowering and encourages you to keep going, whereas paying off a small part of a higher-interest debt might make sense mathematically, but you'll end up giving up because you don't experience the victory of wiping away a complete debt.

Dan asked if it’s made for people who are bad at math. And I showed an example where DR says that if you will start doing math to pay back debt it will backfire. So I was just showing a case where he speaks to people that are doing good math. Clearly he’s not just talking to people who are bad at math. Whatever. 
I’m not sure which part of my post doesn’t make sense.

[Lurker]

Less surprising when you consider that teachers have greater representation than most other professions in the baseline population. If you're using the chart to guide career choices, a more useful statistic would be the % of those with occupation X that became a millionaire. The way it's presented is similar to anti-vaxers pointing to high vaccination rates among those hospitalized with COVID in a baseline population with very high vaccination rates. Still, I think it still shows that achieving financial independence has more to do with lifestyle than income.

+1. Also not so surprising when you stop picturing the science teacher from PS 151 and realize that (tenured) professors, private and prep school teachers, and a host of specialists and tutors are likely the bulk of those millionaires.

[zh cohen]

Pay down your 2% mortgage with your 4% APY savings account makes a lot of sense.

NOT!

What about when you factor in risk? (In this case the risk isn't in the investment itself, it is in the chances that you will withdraw the investment.)

[David61]

What about when you factor in risk? (In this case the risk isn't in the investment itself, it is in the chances that you will withdraw the investment.)

Forced savings is similar to principles referenced in mussar and halacha of staying away from the yetzer hora, and also principles used in succesful dieting.

Relying on self control in the moment of temptation is often not the best recipe for success with long-term objectives.

Statistics show  that math is not the only consideration, for most humans. (The book the Millionaire Next Door is one resource)

[ExGingi]

https://futurescopes.com/dating/wealthy-dating/3407/10-professions-most-millionaires
A major surprise in the above-mentioned Spectrum report is the inclusion of teachers in the newest millionaire households in America. According to the report, educators came behind managers with a 12% share in the millionaire households. One important reason for this is the fact that educators live in a dual-income household which propels it into the millionaire club unlike financiers and doctors who may be taking home higher individual salaries but living in single-income households.

But more than it being about the second income, it's about both spouses having an appreciation for earned money and no-one that needs to fill up their time spending.

IME many educators retire with north of $1MM in their retirement accounts (often on top of generous public pensions if they worked for government school systems).