Dave Ramsey

I'd like to recommend the principles taught by Dave Ramsey.



No personal debt (credit, margin, mortgage, loans, etc.)

Emergency fund (6 months of expenses)

15-30% of income to retirement accounts at reputable broker (Vanguard, Schwaab, USAA)

Banking at Credit Unions and local banks

Monthly itemized forecast budget (I use mint) ***this is key, most ppl would be shocked to know that they spend $1200 bucks a year on starbucks

**STICK TO YOUR BUDGET***



From experience, I can tell you that being in debt, or using debt is like running a marathon with a boat-anchor. I got rid of all mine, and now buying high quality food like Upgraded Whey and Bulletproof coffee is no big deal.



From Dave Ramsey, "Your greatest wealth building asset is your income."



Tips:



Cars:

Pay cash for cars. (used)

Don't buy a new car unless you have a net worth of more than a million.

Leasing is the most expensive way to operate a vehicle.



Investing:

Sophisticated investing strategies are simple scams.

Keep it simple.... Mutual fund, trusted broker, long-term. I invest in Vanguard 2035 funds..... piece o cake



STUDENT LOANS: (next bubble burst in this country)

Very dangerous. Treat it like having cancer and cut it out of your life as quickly as possible.

Very possible to pay cash for college. Bissonet's "Debt-free U" on amazon.

Remember, there is no bankrupting student loans, so make sure that college is 4-years and a marketable degree.



Mortgage: If you must borrow, this is it... 20% down, 15-year fixed rate, less than 25 net income of primary income.



Insurance: Term-life only.... no gimmick (cancer insurance) or whole life crap.



Note on credit scores. Some of you lead lifestyles that necessitate the use of credit cards. Or others may need it for security clearance or job hunting (yes, they check your credit scores now).

If you have to do this, then try following Clark Howard's protocols.... Keep a zero balance, charge every few months, and pay off immediately. For me, its too much a pain in the butt. I use my debit.



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Good books:

Thou Shall Prosper, by Rabbi Daniel Lapin

Entre Leadership, by Dave Ramsey

Total Money Makeover, by Dave Ramsey

Poor Charlie's Almanac: http://www.poorcharliesalmanack.com/ <
of berkshire hathaway fame
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Comments

  • Dave Ramsey has good stuff... I personally like Ramit Sethi (get rich) and Clark Howard (be a smark consumer) better.
  • I've heard Ramit Sethi's book is good, but haven't read it yet. Do y'all have a reccomendation on the best place to start in terms of learning about investing? I track my monthly budget/personal finances pretty well, but I need to figure out how to invest what I'm saving.
  • edited June 2012
    Sethi is a real good place to start and so is Clark Howard if you're listening at the right times. I'm not sure who you bank with (if your answer is Chase, Citi, or BOA, you're doing it wrong) but you can get information from them; I've been able to get lots of good information from Charles Schwab and my Credit Union... but one of the tenants of Sethi's work is that its not that difficult to understand and a great mass of people are intimidated when they ought not be. Money Magazine and Kiplingers are good places too, if you read them for 3-4 months you'll get something like an idea.



    Your own goals are very important... for example, all I want is to be a millionaire when Im 55. As a public school teacher, this may sound like a difficult goal... but I'm well on my way with rather vanilla investments and good personal finance habits.



    Shoutout to Mint.com too.
  • If you want to actively invest, might want to start with reviewing all of Buffet's annual reports. image/wink.png' class='bbc_emoticon' alt=';)' /> He tends to do it right.



    http://www.berkshirehathaway.com/letters/2011ltr.pdf
  • I wouldn't trust someone who thinks stimulus & bailouts are beneficial to economic recovery.
  • Great job, i mean.
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  • ... I'm not sure who you bank with (if your answer is Chase, Citi, or BOA, you're doing it wrong) ...
    Can you explain this a little more? Is it directed towards investing, savings, checking? I'm not sure why a credit union is better in any regard. Thanks.
  • I actually saw Dave Ramsey live a few years ago. He's one of those "gurus" that kept telling people not to pull out of the market and to keep investing even though the bottom was nowhere in sight. My friends who invited me to see him and really believed in what he was saying now have empty 401Ks. They threw 15% of their income into Ramsey-approved mutual funds that bled money year after year.



    I think what he says about debt is smart, but his investment advice is absolutely terrible.
  • Yes, he also made fun of Peter Schiff for telling people to invest in gold back in the early 2000's- yet the market crashed, Gold and silver went up, people who listened to Ramsey lost a fortune. Glad I kept some silver.
  • You guys are right, being smart about your money is very important to stay out of debt and have a steady income. This is slow income.



    Being in the wealth hacking, there are so many more ways to increase your net worth. Some examples include real estate, licenses, copyrights, publications (books, blogs, magazines), etc.



    Remember, your most valuable asset is TIME. I understand investing in mutual funds, but I do not want to be rich when I am 60. I want to be set and retired by the time I am 30. Look into this book http://www.amazon.com/The-Millionaire-Fastlane-Wealth-Lifetime/dp/0984358102. Great read if you can step out of your comfort zone, and begin to command real wealth.

    Pure Cacao: Chocolate, Health, & Your Sex Life - amzn.to/1frG1OY

  • Btw, I am not affiliated with MJ DeMarco or Millionaire Fastlane.



    I give you this because the book helped change my perspective on money and life.

    Pure Cacao: Chocolate, Health, & Your Sex Life - amzn.to/1frG1OY

  • Fredrick: What do you think of going into some debt to get a mortgage that allows you to generate rental income (and put that money back into paying off your mortgage quicker) vs saving up to buy a house outright and paying rent until you do?
  • Dave is awesome. I quoted Dave in a recent blog post about how to eliminate your cell phone bill. Check it out if you guys are interested.



    http://phoneforfree.wordpress.com/
  • 'prolit' wrote:


    Fredrick: What do you think of going into some debt to get a mortgage that allows you to generate rental income (and put that money back into paying off your mortgage quicker) vs saving up to buy a house outright and paying rent until you do?




    My personal preference would be save up and pay cash, but I'm a bit of an oddball. With debt comes risk, and risk tolerance is different for everyone. Mathematically, if it makes sense to borrow 50k to invest in real estate then it also makes sense to borrow 50million to invest in real estate.



    I'm not against borrowing money, I just choose not to do it for myself.
  • All this is easier said than done. Habit changing is definitely the first but hardest step, especially if you have a spouse and children.
  • Greg CarletGreg Carlet ✭✭
    edited June 2014
    Ha! Yes, this describes my life for sure, as I'm sure it does most people. The hardest thing for me is that I am a planner, which in theory is a really good thing, but makes it hard to be flexible and roll with the punches sometimes. But I am learning and growing.
  • "The Intelligent Investor" by Benjamin Graham.



    It's the book that Warren Buffett cites as the #1 reason for his investment success. Benjamin Graham was also Warren's mentor, as well as his teacher in school. Employer, as well. I would highly recommend reading that book, especially if you're looking to learn sound principles for investing.


     


    If the top investor on the planet cites that book as the reason for his success, then chances are it's a good place to begin ;)




    I've heard Ramit Sethi's book is good, but haven't read it yet. Do y'all have a reccomendation on the best place to start in terms of learning about investing? I track my monthly budget/personal finances pretty well, but I need to figure out how to invest what I'm saving.



  • benjamin graham changed the way i view speculation vs investment.  i second that recommendation.  warren buffet is more of a peddler in government influence and takes advantage of getting in front of legislation and regulation that will work out to his favor than he is the top investor on the planet, but that shouldn't take anything away from the intelligent investor and its value.


     


    not fond of dave ramsey.  sure, his position is safe and probably a good choice as a dumbed down way of handling oneself for the average person.  what i do like about him and where i agree is that consumer debt is bad and sticking to your budget is critical.  you shouldn't be borrowing for cars and tvs and stuff (unless you're getting 0% financing deals).  don't buy things you can't afford.  with interest rates what they have been and still are, though, paying down your mortgage is silly.  there are much better ways to put that money to use.  anything shorter than a 15-year mortgage is a misdirection of your income and puts you in a position of having a higher monthly outflow to which you are committed.  you want a lower payment to have more cash flow and to have more flexibility in case something bad happens.  large emergency funds in accounts with the nonexistent yields in today's world are not necessary and not productive.  you just need a credit line you can lean on if there is an emergency that you will pay back down when the emergency passes.

  • I like a number of the things Dave Ramsey says (get rid of bad consumer debt. get away from bad loans)... but he does have ideas of "your house is an asset" and "live below your means" and things like that. After reading Kiyosaki's work... I agree with "Live below your means"... AND with the expansion of "and then EXPAND your means". I still haven't tapped into the 'making debt work for you' part of Kiyosaki's work. 



    But yeah, cutting up my credit cards (for now) was one of the best things I've ever done. :) Esp with my 2 visa-debit cards.



    I do like some aspects of Buffett. Especially his eschewment of technology, plus his focused think time. A+ on low information diet. I do need to read "Intelligent Investor"


    I also like what Dr Oz said, in one interview with Darren Hardy of Success Magazine. "I don't create a 'rainy day' fund. I tithe to myself. I create a 'peace of mind' account, instead of a 'rainy day/emergency' account." I like this thought process better. Having an 'emergency' fund tends to somehow create more emergencies.



    Re: mortgage - I'm really drawn to the 'get assets/business going, which will then pay for your house' rather than getting a mortgage. I plan on eventually buying a house outright. I want to finish my life without ever having a mortgage :) And I shall.

  • if interest rates were set by the market instead of manipulated by central banks around the world and artificially, i would agree with you about not ever having a mortgage.  if the government that steals my income didn't subsidize my mortgage by stealing a little less from me if i pay mortgage interest, i'd agree.  as it stands, though, borrowing for housing is dirt cheap, and, if one were convinced of the stability and/or ever-increasing nature of housing prices, would be a no-brainer.


     


    there are places in the world where it would make sense to buy real estate as an investment and to think of your home as an asset.  places where housing is valued according to what it is worth.  i don't live in one of those places.  i don't know what it is like where you live, but i suspect not much different.  i buy into the peter schiff school - that housing is incredibly overvalued in the US and much of the western world and another bubble is in place that, when popped, will make 2008 look like tiddlywinks.  interest rates will eventually rise and housing values will fall.  it may take decades, but i expect it will come.  i have a mortgage and "own" my home because as a father responsible for a family, i can't be in a position of having a landlord who can decide that i need to get out and move my family.  control of where i live is the only reason.  otherwise, i would rent.  ideally, i would rent.  that would mean a loss of control and a lack of stability, though.  my mortgage is really just a living expense.  given that i need to own my home and with borrowing ludicrously cheap, there's no reason in the world not to borrow as much as i can and pay it off as slowly as possible.  if it's possible to borrow this cheaply for something other than housing, it should be done.


     


    hard to stomach saying "i like what dr oz said" in any context, but i'll agree with what you stated.  mindset is huge and you make a great point about the value of that subtle shift in name.  the idea of paying yourself (which is the best thing about kiyosaki - i don't like his work as a whole, but he has some real gems here and there) is huge.  i think this is kinda merging a couple things, though, that don't necessarily relate.  i think it's best to have peace of mind by having credit that could be tapped if needed vs leaving money idle that could be put to work.  pay yourself, as harv eker puts it, by putting 10% of income into a "play account" that you use to nurture yourself - to spend on things that make you feel wealthy and give you a wealthy mindset and blow off steam.


     


    and yes, buffett is a brilliant and his success is a marvel and there is a lot to be learned from him.  i don't like him and i stand by my statement that his success isn't completely what it seems on the surface, but i did state it without due softness.

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