Posted on 12/27/2005 7:38:51 AM PST by joesbucks
My wife and I have been looking at the Dave Ramsey Financial Peace program. Anyone here tried it? If so, what were your sucesses and what were the difficulties you had in doing it. We did some traveling over the holidays and listened to one of his books on tape and found it interesting.....but words are always easier than actions. We're ready for some pain to make some gain......but are also looking out for problems we can eitehr avoid or use someone elses wisdom when we encounter them.
I do agree with you that it's a myth that extravagant overspending is what keeps the economy going.
I agree 100% with Ramsey in terms of financing one's consumption (housing, transportation, entertainment).
He is wrong, however, to dismiss borrowing for investment with as broad a brush as he does. The vast majority of personal wealth creation in this country is kicked off with prudent borrowing, including mortgages on homes, loans to open up a business, or borrowing the tuition to attend a top-tier business school or some other well-paying professional school.
I know he wants to prevent people from making mistakes, but I think if he acknowledged the constructive role of prudent investment debt, he'd be much more effective in persuading people to avoid BAD investments (overpriced real estate, heavy borrowing to pay for undergraduate degrees or unremunerative graduate degrees, fly-by-night franchise scams).
Agreed, but the typical household is not using debt as a prudent tool in building wealth... THere is a huge difference between borrowing money to buy a truck for your business that is going to make you an extra $100k a year, but cost you $25k a year in payments.... and buying a large screen TV for 2500 on credit at 18%, and paying back $5k for it.
I am not arguing that debt can be used to create wealth, but I am very much arguing with the Myth that debt spending is good for the economy.
Damn! Never heard of that before; a logical extension of never spending your change. What a great idea and, officially now, my first new-year's resolution. :)
Dave Ramsey is good. Follow his advice to get out of debt and start investing in Dividend Reinvestment Programs (DRIPS)
http://invest-faq.com/articles/trade-drips.html
Not along shoreline-Connecticut it ain't! :)
a logical extension of never spending your change
It is a good program, but really it is just a lot of common sense. Don't buy expensive cars, don't charge, pay off all credit cards and have a rainy day fund.
In our class we usually have about 5-7 couples. The interaction really depends on the make up of the class, but typically we have had no problems getting people to at least talk about the various subjects.
The % of people that take it seriously varies too, but generally I would say 70% implement most if not all the principles. When someone sees results in a short period it reinforces the changes.
Dave talks about "Gazelle Intensity", meaning that you have to view debt like a gazelle views a cheetah. You run! You have to get motivated to change, and he does a great job.
The most dificult portion for some people is the dreaded "budget" class. For some it is the first time they have honestly looked at their financial situation. Finding out you are spending more than you make is hard. Finding places to cut back are harder, and sometimes these life decisions cause people to lose hope that they can recover from the disaster they've created.
It's all about choices. Another of Dave's sayings is "Live like noone else, so you can live like noone else".
Debt is destroying the ability to save for most Americans, for your sake and your family I encourage you to take a step towards change. You'll never regret it.
Sorry to ramble on, but I believe in the concepts he teaches. If we could get this info into our children's minds at an early age, our future would be a bit brighter.
Hope this helps. You can Freepmail me if you want more info.
Perhaps there should be a distinction between business debt and personal debt but only because of the differences in need and dollar amounts. Most personal debt is for consumption and for assets that depreciate. Business debt is usually for income producing purposes.
Were debt for all magically eliminated and credit suspended except for homes and income producing activities, the economy would take a brief dip long enough for cash to be accumulated and then normal purchasing would resume. It is very similar to reducing taxes. Tax revenues take a brief dip and then start to gradually increase and continue going up.
True..., but having listened to his program and the callers he deals with, I think he is correct to keep his advice as simple as possible. Frankly, he is not not a "Guru" for those who already know how to budget and when to prudently borrow for investment purposes.
Its like alcoholism, if you're ready to do the hard work that it takes to get your finances in order it will help, if not don't waste the time or money.
This is my second marriage. The first marriage sadly ended in an unwanted divorce (unwanted by me) but it did. We both made decent incomes, and although we managed our debt, there was still debt. The ex came from a family of entreprenuers that used debt as leverage (and sometimes fraud, but that's anotehr story). Thus, even though she did a pretty good job of living to our cash flow means, she was living below what her family provided. And thus we bought some toys that we probably shouldn't have ever bought and had some debt to show for it.
New wife came from a much more modest family situation. However, all of her family was caught up in "things". She lived alone for many years and had no idea what a systematic approach to money and the possiblity of wealth was all about. When we married, she had about $15,000 in debt, which has been paid off.
I was thrilled when about a month ago her sister from Atlanta called and said she was sending a book she was excited about to us for Christmas. During the conversation, my wife turned to me and asked if I had ever heard of Dave Ramsey. I had heard Dave in my travels, but he wasn't carried in my city.
Most of the stuff I knew, but I didn't know the road map to doing it. I was even more thrilled when my wife turned to me and said she was excited and would like to give it try.
I looked on the web and found that a church near us was going to be doing the Financial Peace seminar and we went to orientation a few weeks ago. Classes begin first week of Jan.
The purpose of my questions were to find out how many people normally participate. She's big on warm and fuzzy. Also if there is give and take or sharing of experiences, she gets a lot out of those situations.
As for the number of people who stick to it, I want to be ready in the event there is a number of people who find the course so dramatic a change that they give up.
I'm looking forward to the class. But even I am fearful of doing the budget. IT will be difficult to write down the monthly inflow and outflow and then be accountable for it.
But for my wife to volunteer to do this, I am thrilled.
I decided to take the course. I know most of the ways to do it. I had a hard time setting priorities or finding the right place to begin. I think this is a good trip tik on where to get fuel, where to get on, where to get off and so forth
And where did that money go? Nobody burned it. It wasn't annihilated by anti-money. It went to investors who now have more money to invest.
My point is that all of us have more "stuff" than we need or even know what to do with. If there weren't companies making money by selling that unneeded stuff, then their employees would be out of a job.
Easy credit is the catalyst of a good economy.
Your problem is that you believe that what is good for an individual is good for the whole economy. That's not true at all.
As I said above, some individuals can't handle easy credit, like some can't handle their alcohol. They need help. But the rest of us don't.
As for Apple, they weren't the company that ignited the computer revolution. Microsoft did that by starting a computer culture of perhaps hundreds of thousands of companies, each one building a piece of the puzzle that would have been utterly impossible for any single organization. And many of those companies, I'm sure, were started on the credit card of an entrepreneur that didn't have the years to wait to save the money required, because the market was moving too fast.
Guaranteed to do what?
He says "debt is dumb". I hope that blanket statement isn't the cornerstone of his philosophy.
If so, he is a quack, IMO.
Sorry, Easy Credit for everyone for anything is NOT a catalyst for a good economy... this is a complete myth.
While yes, access to capital is completely neccessary to build economic activity, from a business perspective, its an abject lie to then say that extending that availability to everyone for everything is good for the economy.
When you pay a finance company or bank 20% interest on your purchase.. that money (2 to 3 times the cost of your item) is no longer available to you to buy other things, regardless of wht they are.
Yes the finance company or bank has the money, and they can use it, but their use of it, is going to be far far more narrow than what the hundreds of thousands or millions of individuals are going to do with it.
What this actually winds up doing is restricting money, to only a preset groups. Yes the total cash out there is the same, but the folks its available to for business or actual economic expansion is far more restrictive.
Yes, Mr. Bank will give a credit card, car loan or mortgage to anyone fogging a mirror these days, but they won't give it to Mr. Budding Business Man, wanting to start his own company.... Now this mans idea may creat hundreds of thousands of jobs, and create billions in wealth, but Mr. Banker isn't going to touch it, because he doesn't see it. So, Mr Budding, goes to his friends and relatives (who funded many a new business in the past), and finds his friends and relatives, while they believe in his vision, have no cash, because they have no savings, because they are paying 20% interest on everything they have bought in the last 30 years.
The idea that DEBT CONSUMPTION is a requirement for a good economy is absolutely, positively abject junk. The strongest and fastest growing economies per capita, are not in nations where folks carry huge personal debts for consumption. That's a lie, and its disingenuous and completely dishonest, and immorral as well, to suggest debt consumption is neccessary for strong capitalist economies... NOTHING could be further from the truth.
You just fundamentally can't grasp, that when folks have their own money, and lots of it, working for them, and letting them reap the benefits of compound interest, instead of being slaves to it, they will buy more stuff, more often than anyone can possibly buy on credit.
Good luck and God bless.
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