Anyone have experience with Dave Ramsey classes?

[maroonandwhite]

The wife and I and decided to get ourselves out of debt. We aren't broke or anything and pay all of our bills but we do waste a lot of money on eating out and buying whatever we want. I know Dave Ramsey kind of re-invented the wheel here and it's just common sense to make a budget and stick to it but he has lot's of helpful advice and ways to go about really sticking to a budget and getting out of debt. His "envelope methods" seem to be a good way to get you attached to your money and make it harder to let go of.

 

I am wondering if anyone has any experience with his classes and can tell me if they are worth the money. Our first goal is to get completely out of debt with nothing but recurring monthly bills and the house note left. Also any discussion on the matter of saving,investing, getting out of debt,etc. is welcome. Thanks!

[z0mbies fear me]

Hey. Im Josh. I'm 28 and have been married for 3 years. When I told my dad that we were expecting our first child he paid for us to go thru Dave Ramsey's "Financial Peace University" back in August. It was a real eye opener. We just had about $3000 in debt and but were always broke. Now we have no debt (except for our mortgage) and we have a $5000 emergency fund. It really works if you can stick with it. Would highly recommend it

[Sam1]

Haven't taken any of his classes, but we started doing a few of his things recently because we were just fed up with stuff. 2 people pulling in a six digit income and we didn't have much savings at all it was just completely ludicrous. We used his budget suggestions in the book "total money makeover" and are on the right path now, just in the past 3 months we've zeroed out 5 credit accounts and are saving hundreds of $ a month just by using that emeals.com system (and eating more healthy). Like Z0mbies, we now have a substantial emergency fund as well, which we had nothing but about $1k before this.

 

Funniest thing is, after we cleared up those credit accounts, they have all increased our limits by a substantial amount, a few have double, one tripled and one even quadrupled... Them increasing the limit also raised my credit score by a good amount, it was completely silly to not see how this all worked before.

 

His system doesn't really tell you anything you don't already know, it just helps you understand how/why and gets you going.

Edited January 10, 2013 by Sam1

[maroonandwhite]

I agree Sam1, it's not like we don't already now this stuff. I guess it just helps to really have it all structured. I may look into the emeals thing.

 

We are pretty close to your situation. We make good money for our age but don't ever seem to have money left over for savings. We have two nice vehicles that will last a long time(with two nice loans), a nice motorcycle (another loan) and another small loan I will be knocking out this week. It's kind of overwhelming when you just add up how much debt I'm in but I figure if we do it right we can have it all but the house paid off in about 2 years. I plan on cancelling any lines of credit I have open and following the advice of my grandparents that always seem to be right; "If you don't have the cash don't buy it".

[KaNuckles]

What everybody said. You already know the stuff. You just need your eyes opened to it. FPU is great. I recommend it.

[xRUSTYx]

I plan on cancelling any lines of credit I have open and following the advice of my grandparents that always seem to be right; "If you don't have the cash don't buy it".

 

DON'T DO THIS ...

 

Keep those lines of credit open, and use them a couple of times every year, paying off the balances the next month.  Aging these accounts is a GOOD thing when it comes to your credit profile.  The older the accounts, the better.

 

You may not need credit now, but you may need it in the future, you just never know :)

[monkeylizard]

DON'T DO THIS ...

 

Keep those lines of credit open, and use them a couple of times every year, paying off the balances the next month.  Aging these accounts is a GOOD thing when it comes to your credit profile.  The older the accounts, the better.

 

You may not need credit now, but you may need it in the future, you just never know :)

 

You won't if you really follow Dave Ramsey's teachings. Keeping a good credit score "just in case" is sort of like keeping that pack of Oreos on the top shelf of the pantry while starting a diet.

[maroonandwhite]

You won't if you really follow Dave Ramsey's teachings. Keeping a good credit score "just in case" is sort of like keeping that pack of Oreos on the top shelf of the pantry while starting a diet.

This is kind of what I was thinking. Nothing wrong with doing what Rusty is suggesting but I personally would rather not have that temptation there. Call me weak willed but it is what it is.

[xRUSTYx]

You won't if you really follow Dave Ramsey's teachings. Keeping a good credit score "just in case" is sort of like keeping that pack of Oreos on the top shelf of the pantry while starting a diet.

 

This is probably where I disagree with Dave Ramsey the most.

 

While I fully understand why Dave Ramsey might say this, I don't agree with it entirely.

 

I'm a small business owner -- My credit has helped me succeed in business.  I have lines of credit totaling 6 figures & more, however, I carry no balance, and use them sparingly.  Just because the lines of credit are there, don't mean you have to use them.  It comes down to self control .... Unfortunately - 90% of American's don't have it.

 

Credit even helps with the small things ...

Small or no deposits on

1)  TV

2)  Internet

3)  Cell Phones

4)  Water/Gas/etc...

 

For most American's, Dave Ramsey's teachings work and will keep you out of debt.  I simply disagree with certain things ... that's all :)

Edited January 10, 2013 by xRUSTYx

[maroonandwhite]

You make good points Rusty. As I and you pointed out, most Americans (myself included)lack that self control. I am young and when my wife and I really started making money we wanted to spend spend spend. I am just glad we have realized the error of our ways.

 

One additional question since we are talking about credit scores. If I have a credit score in the 700's now and I cancel my lines of credit will my score go down significantly over time?

[MacGyver]

I'll give the opposite view to Rusty's point - also as a small business owner.

 

But first, an explanation by a forensic analyst about what a credit score really is.  Your credit score is nothing more than a number that's assigned to you by an algorithm designed by the credit companies that lets all the other ones know how nicely you play in the system.  That is, it's about your relationship with credit.  You can think of them as a drug dealer grading their junkies on how likely they are to pay every week when they come around.  The higher your score, the better junkie you are.

 

Unfortunately, the way the system is set up, there is one purchase for which a good credit score is necessary - your house.  If it weren't for that, you could conceivably tell the bureaus to go screw themselves and be fine paying cash for everything.

 

If you cancel or pay off all of your credit accounts - your score will go down over time.  They also look at debt-to-income ratios.  Believe it or not, the people who have the highest score are actually the most highly leveraged (in debt), but they pay their accounts on time.  Lack of revolving accounts will mean worse credit scores which will impact your ability to borrow from the major banks.

 

Now, that said, as a business owner I can authoritatively say that I am in business today because I have not borrowed money to run my business.  An early mentor of mine taught me that you can do anything you want so long as you find someone willing to pay for it, and that's how we operate.  I got into business because I was tired of answering to the man - how ironic would it be to simply get into business to answer to another man - the bank.

 

I've been in business for myself for 8 years.  I'd like to think I'm a smart guy, but sometimes even the smartest of people get things wrong.  Being in debt as a business owner amplifies bad decisions in a major way.  Take this example:

 

We've worked with a few partners over the last eight years.  Maybe they've had great ideas, or great potential markets or both.  We've worked with several to explore those opportunities.  At several points in each of these cases, there's been optimism and the desire on behalf of our partners to go get funding and "make this thing big."  We've resisted every time, demanding organic growth.  That is, starting small, vetting opportunities and letting success be the driver for growth.  As good as ideas sound at the beginning, sometimes things don't work out like you planned.  The idea wasn't as good as you thought.  There was competition that beat you to market.  You didn't understand your market.  Whatever.  Sometimes you get it wrong.  My belief is that success is built on the lessons we learn from failures.  Failure is often necessary.  A business hitting a home run on the first pitch is the exception as opposed to the rule.  Businesses will very often get things wrong. 

 

Being a small business in today's environment where the economy sucks, the administration hates you and not a single person out of the 536 elected representatives at the Federal level has a clue about what it takes to create a job is tough.  In fact, it's brutal.  Every day.  If you take on a bunch a debt, and make a bad decsion, you're done.  You cannot fail forward, get up and brush yourself off.  You simply fail.

 

Just my perspective.  But, I think there's a reason why debt has been viewed as evil - that's right, evil - throughout history.  It will own you.  You're not serving God, others or yourself.  You're serving it.  It owns you...

[Xtarheel]

My niece and her husband did the Dave Ramsey class and paid off $70k of student loans in 2 years. They are now debt free! They both picked up a second job and she even had a third job for a while.

[maroonandwhite]

My niece and her husband did the Dave Ramsey class and paid off $70k of student loans in 2 years. They are now debt free! They both picked up a second job and she even had a third job for a while.

I am almost thankful I didn't follow through with college for this reason! Good for them.

[xRUSTYx]

MacGyver ...

 

I think you and I think along the same lines, I just happen to look at Credit a bit differently.

 

I don't look at Credit Ratings, as Credit Per say .... I look at good Credit as a smart business tool.

 

Examples:

1)  Business Office Leasing .... You aren't taking on debt or credit, your simply using your Personal Guarantee (Credit Rating) as a sign of financial health.

2)  Merchant Account ... Again, you aren't taking on debt or credit, your using yourself as the personal guarantor of that account.

 

The sad part of most startups -- whether you take on debt or not -- is you, as the owner, have to be the "Personal Guarantor" of so many things.  This is where good credit is a MUST in my opinion.

 

My company has zero debt, and I did not take out any sort of SBL to start it.  I used money the wife & I had saved away to start the business. 

 

DEBT is evil.  Credit is not :)  Credit could be used for GOOD or for EVIL purposes :)  If you're smart, credit can be used to your advantage :)

[MacGyver]

That's fair.

 

The part where we're both probably in the same boat is that small business credit is pretty much non-existant right now.  Unless you have equal or greater assets to back it, you're not getting it.

[gregintenn]

You won't learn a lot from him, but you will be motivated. You can do this on your own, or pick up a copy of his book. The gist of his program is "don't buy crap you can't afford".

[maroonandwhite]

You won't learn a lot from him, but you will be motivated. You can do this on your own, or pick up a copy of his book. The gist of his program is "don't buy crap you can't afford".

Like a $100 class haha. I thought it was kind of counter productive to spend money right off the bat for a class to tell me to save money. If motivation is all he offers then I may just pass. I'll throw a few bucks his way once I get the debt paid off to say thanks though. We are at what I would call the tipping point. We aren't struggling to pay any bills or anything, pay our tithe faithfully every month and don't have too much crap we don't need although one could argue buying a motorcycle to save summer mileage on a truck is stupid. We just waste way too much money on fun stuff that could be paying off loans early.

 

In my immediate case I don't see how any more credit could be beneficial. We have two cars and a house we are likely going to be leaving anytime soon so we won't need it for those purchases. When I sat down last night and did a real budget I was pretty much ashamed at how much we blow.

[gregintenn]

I do suggest his book. Get it at the library if you don't want to buy it.

[monkeylizard]

The class has pretty much the same information as his book The Total Money Makeover without as many example stories but with more detail. In class you can ask questions. There are guides in the book to help you build a budget, but the class will help you do it in more detail for example. It also helps to keep you honest by making you do the materials for class, rather than buying the book, reading chapter 1, then burying it on the coffee table under the newspaper. The class materials can be worked on together with your wife and you'll have conversations as you work through it. Reading the book doesn't generate that interaction. 

 

Personal finance is mostly about behavior, not math. Remember that you're trying to change behavior, not learn something you already know. If the class will help force you to do it, then take the class. Money well spent.

 

We're on Step 6 and I'm really looking forward to Step 7. It's a great way to live and I'll never go back if I can help it.

 

 

As far as credit score goes, if you're on the Dave plan, you'll only be financing your first home, and then on a 15yr fixed with at least 10% down (preferrably 20%) and NO OTHER DEBT. If you show up at a bank with 20% in cash, a steady income, and no other debt, they'll do a manual underwriting to get that loan approved. You don't need a FICO score for that.

Edited January 10, 2013 by monkeylizard

[Sam1]

This is probably where I disagree with Dave Ramsey the most.

 

While I fully understand why Dave Ramsey might say this, I don't agree with it entirely.

 

I'm a small business owner -- My credit has helped me succeed in business.  I have lines of credit totaling 6 figures & more, however, I carry no balance, and use them sparingly.  Just because the lines of credit are there, don't mean you have to use them.  It comes down to self control .... Unfortunately - 90% of American's don't have it.

 

Credit even helps with the small things ...

Small or no deposits on

1)  TV

2)  Internet

3)  Cell Phones

4)  Water/Gas/etc...

 

For most American's, Dave Ramsey's teachings work and will keep you out of debt.  I simply disagree with certain things ... that's all :)

 

+1 on this

[Guest Fatboy]

I picked up one of his books at a yardsale several years ago. I had some debt at the time and several student loans. I began the snowball affect by paying off bills smallest to largest. After getting that off my shoulders we bought a new house on a thirty year note, by paying extra toward the principle every month we paid it off in six and one half years. Not having a house payment is a huge relief, it's well worth the short term effort and sacrifice required to do this plan. Whether you take the class or not it takes a dedication and change of mindset that must be shared by you and your partner. Dave Ramsey just provides the motivation and tools, some people can get that from his books, others may need the class.
P.S. I paid 25 cents for the book.

[timthetoolman]

I took the classes....been debt free ever since, and have money to blow on gun stuff (ie budget  ;) ) I didnt entirely listen to Dave though.  I keep one CC for online purchases , work , and travel.  I keep a zero balance on it.  The only note I carry is on my house, and that's solely because I dont want to stay in it and need my saved capitol for when I find the right piece of land.  

 

I recommend the class, even if you dont agree with all of it.  The point of view you come away with is very valuable.  Besides his teachings are nothing new...save for a rainy day...pay cash...negotiate....maybe I am just a country boy, but these things have served me well.

[Ropin4gold]

I found that the class helped me. Having someone to "answer" to was helpful to me. I guess it was the whole peer pressure thing.

[Guest Torrin]

It is up to you whether you want to do the class or not.  I bought "The Total Money Makeover" in 2003 and I listened to Dave on the radio and podcasts for 5+ years.  I have been COMPLETELY debt free since 2008 and I have NEVER needed a credit rating for anything.  Contrary to popular belief, any reputable lender will write a home loan with 20% down and a process called manual underwriting.  It takes a bit longer and you need to provide tax returns and W2's, however you can get a mortgage at an equally good rate without a credit decent rating.  (Somehow mine has stay above 720, since Lifelock checks it every month)  Renting an apartment is harder to do, but if you follow Dave's plan, you will own your house outright in about 10 years.

 

There is no magic bullet here, it is a simple formula, spend less than you make, use cash, make a budget each month BEFORE the month begins, don't buy things that dramatically go down in value (new cars, mobile homes, etc).  If you are willing to sacrifice in the short term, the long term is pretty awesome.

 

The only caveat to credit ratings is if you own your business, sometimes it can be hard to establish needed relationships with banks, landlords, etc.  But if you have the money in the bank, your issues will be few and far between.

Edited January 19, 2013 by Torrin

[maroonandwhite]

Thanks for all the advice guys. Following Dave's plan I have paid off all of my debt in a little under a week! :rofl:  I'm kidding of course. The wife and I are however very excited about taking on this challenge and getting to be debt free in what we hope to be a little over a year and a half.