chrisreedrules
Master Blaster
Credit is a wonderful tool if managed correctly. Kind of like a blow torch.
For anyone thinking of taking out a loan
- Thread starter JJ8Flyer
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dasleben
That's just, like, your opinion, man
+100!
In the past year I've done some rather expensive things: I bought my car out of its lease (with excellent terms, I might add), bought a professional-level drum kit, and gotten LASIK. None of these things were cheap.
Had I listened to Ramsey (I've read the book), I'd be driving a beater car with a questionable history, trying to make my old glasses work, and have zero creative outlet. I'm not saddled with debt, but I did use debt as a tool in each one of these purchases (the drum kit will be paid off within the next couple months on a 0% financing offer). Of course, I could have saved into the tens of thousands by not buying these things, but these things make me happy. I like being happy. Use it while you've got it*.
*Of course, I am saving and contributing to my 401k to get my full company match. Free money, suckas.
GypsyPilot
Mohawk Town
Most of you pro-credit cheerleaders are REALLY missing the point. The average credit card debt in this country stands at over $15,000, and the amount of student loans that young people are currently facing is staggering. I'd imagine we all know a friend (or a few friends) that have WAY more car than they can afford. That stuff is a huge problem, and this is what people like Dave Ramsey are for.
ATN and Dasleben - Yeah fellas, we get it. I get it. Zero interest when you know your ass is going to pay it off make sense. But that isn't typical. You guys must know that, it's so obvious that debt is a HUGE issue for much of the modern world. Credit Card companies are sneaky and underhanded, and I enjoy being a "deadbeat" by paying my balance off each month. Although a few years old now, here's a great Frontline episode on how credit card companies try to lure people into debt:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/
As far as the new vs. used car debate - I've done both, and maybe I'll buy a new car again. But I was able to buy an outstanding used car (a Toyota SUV no less!) for an awesome price. But it takes patience and having the cash ready to go. Most people aren't capable of instantly dropping down a few thousand bucks, so they finance. Financing is a small portion ownership costs for a new car anyway... There are higher registration fees, higher insurance costs, etc.
ATN and Dasleben - Yeah fellas, we get it. I get it. Zero interest when you know your ass is going to pay it off make sense. But that isn't typical. You guys must know that, it's so obvious that debt is a HUGE issue for much of the modern world. Credit Card companies are sneaky and underhanded, and I enjoy being a "deadbeat" by paying my balance off each month. Although a few years old now, here's a great Frontline episode on how credit card companies try to lure people into debt:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/
As far as the new vs. used car debate - I've done both, and maybe I'll buy a new car again. But I was able to buy an outstanding used car (a Toyota SUV no less!) for an awesome price. But it takes patience and having the cash ready to go. Most people aren't capable of instantly dropping down a few thousand bucks, so they finance. Financing is a small portion ownership costs for a new car anyway... There are higher registration fees, higher insurance costs, etc.
exneophyte
Well-Known Member
I think one thing that is being overlooked here is that the financial guru books are meant for people who have little financial savvy or are in such a bad spot, they feel like there is no way they can dig out. More than the process itself, the books focus on trying to overcome the mental games people play with themselves to justify living beyond their means and using credit to do so.
When I met my wife, her finances were horrendous with her debt being close to the cost of TWO zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board. She read it and that day we laid out a plan to eliminate her debts and pay cash for her masters & doctorate degrees because normal school loans weren't available to her. For her Dave Ramsey was a wakeup call that credit was not free money. It also opened her eyes to how her current rate of spending at high interest rates was doing nothing but digging the hole deeper. Four years later, all of that debt is gone and she incurred no additional student debt from her masters and doctorate programs. Credit is no longer the devil and the focus is now on ensuring that our income is greater than our expenses and that there is plenty left over for investments.
Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
When I met my wife, her finances were horrendous with her debt being close to the cost of TWO zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board
. She read it and that day we laid out a plan to eliminate her debts and pay cash for her masters & doctorate degrees because normal school loans weren't available to her. For her Dave Ramsey was a wakeup call that credit was not free money. It also opened her eyes to how her current rate of spending at high interest rates was doing nothing but digging the hole deeper. Four years later, all of that debt is gone and she incurred no additional student debt from her masters and doctorate programs. Credit is no longer the devil and the focus is now on ensuring that our income is greater than our expenses and that there is plenty left over for investments.Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
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lr31apilot
Well-Known Member
I think one thing that is being overlooked here is that the financial guru books are meant for people who have little financial savvy or are in such a bad spot, they feel like there is no way they can dig out. More than the process itself, the books focus on trying to overcome the mental games people play with themselves to justify living beyond their means and using credit to do so.
When I met my wife, her finances were horrendous with her debt being close to the cost of two zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board
Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
Great post!
Inverted
mmmmmm wine
I think one thing that is being overlooked here is that the financial guru books are meant for people who have little financial savvy or are in such a bad spot, they feel like there is no way they can dig out. More than the process itself, the books focus on trying to overcome the mental games people play with themselves to justify living beyond their means and using credit to do so.
When I met my wife, her finances were horrendous with her debt being close to the cost of two zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board
Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
I was never horrible, but my wife was the more financially savvy one of the two of us. We do the exact same thing. Fantastic post.
A couple things to consider, as this thread has morphed from student loans to all types of debt. There is such thing as good debt as I am sure has been said (I don't feel like going through and looking). You have to look on how and when you will pay off. As I said earlier regarding our car payment, it would make more sense to finance, build credit using the auto loan, and pay 300 dollars of interest rather than tie up liquid cash. Houses are very similar, they are good debt. Getting 60k of student loans to go flight instruct for 3-4 years, then go to a regional for 10 years is probably not a great financial decision. You will be paying 1,000 dollars a month worth of loans making not much more. Debt can be a thin line between sink or swim, and is often a risk. But if you are smart about it, you can use it to your advantage.
SlumTodd_Millionaire
Most Hated Member
I have a lot more than $15k in debt. But I also have assets that far, far exceed the amount of debt that I have. Simple math shows that liquidating assets to pay off the low-interest debt would be an absolutely horrible idea. The debt has served a purpose, and the cost of servicing the debt is incredibly low. Sending money to banks to pay off debt instead of putting it in investments would make absolutely no sense mathematically, yet that's what Dave Ramsey would say to do.
When someone says "they have a lot of debt," my answer is always "so?" If someone has $500k in debt, but he's paying 1% interest on that debt and has more assets than $500k, then I would cheer him on as being brilliant. America doesn't have a debt problem. America has a net worth problem. The problem is someone with $15k in debt but $0 in assets. Someone with $15k in debt but $100k in assets is doing just fine (provided that the debt is of a reasonable interest rate). What we need to do is start teaching people how to grow their net worth. And no financial gurus are focusing on that. Why? Because it's more complex than simple little folksy sayings and short stories that you can fit between commercial breaks.
dasleben
That's just, like, your opinion, man
Absolutely, and I meant to add in my previous post that Ramsey, et al. are a great start for people who need to get themselves out of serious debt (other than mortgages and student loans). However, once your finances are controlled, debt can be used responsibly. No need to live like a hermit.I think one thing that is being overlooked here is that the financial guru books are meant for people who have little financial savvy or are in such a bad spot, they feel like there is no way they can dig out. More than the process itself, the books focus on trying to overcome the mental games people play with themselves to justify living beyond their means and using credit to do so.
When I met my wife, her finances were horrendous with her debt being close to the cost of TWO zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board
Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
SlumTodd_Millionaire
Most Hated Member
And those are the people who are most harmed by bad advice. Remember the concept of primacy that we were all taught in the FOI. Once someone is used to improper money management, trying to teach them the right way later will be incredibly difficult. Instead of handing someone in a financial hole a Dave Ramsey book, sit down with them and explain real money management. Show just how much money they will save over 10 years by paying off high interest debt first. Show them why paying off 3% debt when low-risk investments earn 6% is a bad idea. Don't get them off on the wrong foot.
exneophyte
Well-Known Member
It's actually good to hear that your wife was financially savvy. It's unfortunate and it is a stereotype, but traditionally women are not brought up to understand finances. My biggest financial mentor is a female and she's actually trying to change that fact. My dad had me double checking his checkbooks, credit statements and taxes by the time I was 12. He never would have intended to leave my sister out of that, but in his day the man did all of that.
It's similar to anyone getting a $60k-80k MBA in todays environment. Not only do you have to run the numbers on if you should get an MBA at all, you also have to determine if that $80k MBA is going to pay for itself better than say a $20k MBA.
GypsyPilot
Mohawk Town
You have a lot more than $15,000 in revolving credit card debt?
exneophyte
Well-Known Member
Completely agree with you here.
Completely agree with you there.
In my wife's case it wasn't 3%. It was a combination of about 40% high interest credit cards(>20%). About 30% lines of credit(>20%). About 30% private student loans at a variable rate of prime + 9%. About the only thing she had to show for it was an undergraduate nursing education.
I feel like you're trying to simplify "real money management" into something that can be taught in a few fireside chats. Did you learn what you know in a few hours? I know I sure didn't.
Can you teach "real money management" and convince the person why they should do it in a few hours? If you can, then we have a program to develop, market and sell. I'm truly not trying to be antagonistic. If you've got a way, I'm all ears.
🦈💜
Well-Known Member
I'll chime in on this one.
Yeah, I did the whole thing without debt, and while I don't regret any decision, if I knew then what I do now, I would take out a loan.
-Fox
Inverted
mmmmmm wine
Totally agree. I was just using aviation as a related example.
SlumTodd_Millionaire
Most Hated Member
Absolutely. I've been paying anywhere between 0-3.99% interest on it for about 10 years, and I'll never pay it off as long as they keep offering me such low rates. If the "specialty" rates disappeared tomorrow and the rate jumped up above 6% or so, I'd pay it all off in cash, but I would be an idiot to do that as long as they're willing to give me rates that are effectively zero.
SlumTodd_Millionaire
Most Hated Member
Obviously, that's some very bad debt that needed to be fixed. But it's also the kind of situation where Ramsey's methods are the worst. Because her rates were so high, the "debt snowball" could end up costing her many, many thousands of dollars in additional interest. That's why I get so mad at Ramsey. He's the best friend of credit card companies.
Everything? Of course not. That's takes years. But the basics that can help someone get out of debt? Absolutely. It can be taught in less than 10 minutes, in fact.
There's no program to be sold, because it's not "sexy." I compare it to the diet industry. We've known for many years that the only real way to lose weight is to eat less calories than you burn. But that's "boring." Nobody wants to hear that (including my fat ass), so instead, we have a multi-billion dollar industry devoted to helping people lose weight with gimmicky methods and programs. Those things sell, just like Ramsey's folksy nonsense, but the thing that actually works gets ignored. And in the end, it's no more effective. People are still fat, just like people who bought Ramsey's books and listen to his idiotic radio show are still poor and in debt. It doesn't work any better, it's just in more interesting packaging.
That's an addiction.I think one thing that is being overlooked here is that the financial guru books are meant for people who have little financial savvy or are in such a bad spot, they feel like there is no way they can dig out. More than the process itself, the books focus on trying to overcome the mental games people play with themselves to justify living beyond their means and using credit to do so.
When I met my wife, her finances were horrendous with her debt being close to the cost of TWO zero-to-hero ATP educations. Credit cards were paying off credit cards and various high interest lines of credit like a game of whac-a-mole. 1/3 of her income was going to eating out and she was trying to live like she did in the "good old days" when money rarely an issue. The final straw was when she took out an $8,000 line of credit at 26.99% interest so that she could purchase a $6000 car just prior to our marriage. The other $2000 was so she could take a trip to Vegas with a girlfriend of hers. Being very financially savvy myself I'd been trying to explain to her that changes needed to be made, but she didn't really want to listen.
We took a cruise for our honeymoon and I brought out Dave Ramsey on a rainy day at sea given that she was trapped on board
Dave Ramsey is not the end all be all of financial literacy, but it does provide people with an easy to understand process that enables them to improve their financial picture that many have benefitted from, my family included.
exneophyte
Well-Known Member
There's more to the story about how it got to that point that unfortunately I cannot get into it on a public form.
GypsyPilot
Mohawk Town
0-3.99% interest for revolving credit? That's great! Guess what though? Joe Schmoe public isn't paying that. Again, guys like Ramsey are for the folks paying crazy rates. I've never even heard of rates such as yours for revolving credit, I would assume you understand that's not typical?
exneophyte
Well-Known Member
Before we attack @ATN_Pilot about his low rates, I would encourage you to do further research on why he receives his rates. This is a complex formula that in and of itself he explained in recent previous posts.