**updated**-Dave Ramsey anyone?

77GreenMachine

77GreenMachine

Phillip Talton
Joined
Mar 30, 2010
Location
Trinity, NC
Who here has done his plan or at their own knowledge has been financially free for a while?
This time last year my wife read the Total Money Makeover book. She got all excited, got me all excited and explained we could be debt free minus our house in 3 years. We then decided to have a kid, so we stopped the debt snowball and started saving. But we still managed to pay down a little extra over time. So here we are now with a 9 week old, and revisited our finances. We are still on track, actually ahead just a bit and can still be debt free outside our house in 2 years! This includes medical bills we have now due to my son needing surgery at birth.

When I explain this to others, even a few family members, they act like I'm crazy or don't have much to say at all. Maybe they don't believe it, or it makes them feel bad about their own finances. Idk, I just wanted to hear from some folks on here. Years ago I was in debt for a stupid motorcycle and got great advice from folks on here. Now me and my wife have school loans and some normal debt. It's really not much compared to many other folks our age. My wife wants a van and I want a truck. But we are super motivated to do without for just a little while longer and pay cash and avoid payments at all cost for the rest of our lives.

With all the pressure to "keep up with the jones" in today's world and several people telling me to just go ahead and buy, payments are a part of life, I'm just looking for extra motivation.
 
Some friends of ours followed the program & are now debt free (minus house) & managed to do this in 2 yrs on a teacher's salary. They had student loans, 2 cars, & credit cards.

My friend loaned me the book & I was stoked about the program & idea of being debt free. But I could never get @Mulishajoe on board. His theory was it's just money, we'll make more tomorrow. Well, something recently snapped in his over-sized head & he's finally agreed to give it a try! (I'm thinking it's my constant nagging of wanting a big-girl house + he'll be closer to the shop to tinker on the jeep). I just created our 1st budget on everydollar.com & I'm hoping it doesn't suck as bad as I'm anticipating! But in the end, I know it'll be worth it. We'll be in the same boat as you ;)
 
We did the Financial Peace class at our church about 6 years ago. Lot of good stuff in there, though I don't agree with everything. Main disagreeances were using debit/credit cards, and the unrealistic returns on mutual funds. It was also heavily about putting together a budget, which was pretty difficult to even consider at the time because both my wife and I were out of work. It was a good refresher, but both of our parents were fairly debt averse and taught us good practices regarding vehicles and credit cards. Fast forward a couple years... I'm pretty aggressive about thing, and once I got working again, I went after things pretty hard. We now have all of our cars paid for, our land is fully paid for, and we owe about 40k on our house. Our savings account is not as big as I'd like for it to be (but really, who's is?), but we have a good cash emergency fund and enough to cover at least 6 months of expenses.
 
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You have to be committed or it doesn't work very well. Make sure to not use the credit cards you are trying to pay off.

I've done a similar method to rid myself of my credit cards years ago and Bri and I now maintain some portions of Dave's ideas in our current lifestyle.

I do finance large purchases. I can get a lower interest rate financing and can keep my cash in a moderate to aggressive fund and earn a higher % than what it costs me to finance. So, it is more profitable to finance. Same with the student loans. So those items aren't high on the priority list to pay off.

For the last 7 years or so, I've been credit card free and paying cash/debit card for everything.

However, I'm currently looking for a decent unlimited 1-2% cash back credit card that I can use as my primary an increase the $ back into my pocket. :D
 
jeepin' jen said:
But I could never get @Mulishajoe on board. His theory was it's just money, we'll make more tomorrow.
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My wife is definitely the saver in our house. I like to save up, and then blow it on something fun! If you blow money as fast as you can make it, theres no safety net, but if you just save it and never enjoy it, whats the point? The key is to find that balance (not saying I've found it, but I at least know what I'm aiming for, haha).
 
jeepinmatt said:
My wife is definitely the saver in our house. I like to save up, and then blow it on something fun! If you blow money as fast as you can make it, theres no safety net, but if you just save it and never enjoy it, whats the point? The key is to find that balance (not saying I've found it, but I at least know what I'm aiming for, haha).
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Yep, I'm definitely the saver & handle all the finances. Thank goodness he doesn't blow it that fast but if there's something he wants, he buys it. We're fortunate that we have a safety net - I really just want to pay stuff off so we can build a new house & get out of the city!
 
Haven't taken the financial peace class. Me and my wife are pretty dedicated to this. We eat out once in a while, and I still buy parts for the jeep occasionally.

@jeepin'jen the budget thing can make it look like your not going to have any life and just scrape by. But if you stick with it for 6 months and start seeing where you cross out some of the expenses going out, it feels great. In the year we've been doing it, me and my wife have paid off 5k and freed up 4 payments, adding it to the next one. We also knocked out a lot of my wife's school loan, which is now below 10k.

My wife is 29, and I'll be 27 in 3 months. We will be debt free well before 35. I stay really excited about it, cause soon enough, I will have a 1 ton V8 rig, and the money to go on big trips quite often.
 
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77GreenMachine said:
My wife is 29, and I'll be 27 in 3 months. We will be debt free we'll before 35. I stay really excited about it, cause soon enough, I will have a 1 ton V8 rig, and the money to go on big trips quite often.
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When I was your age, I hit the life reset button and went back to school. Now I have lots of student loan debt (big, ugly debt), but have the salary to back it up (I'm 38 now). Not all debt is bad, especially if it's the only way to get what you really want. Living debt free would be nice, but having a career that I love for the rest of my life was definitely worth it in the long term. We'll get there after the loans are paid off, then it's much smoother sailing.
 
rockcity said:
However, I'm currently looking for a decent unlimited 1-2% cash back credit card that I can use as my primary an increase the $ back into my pocket. :D
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I have the Citi Double Cash card, pays 2%. Had it about a year, works great for me. Put about 7.5k on it per month, (materials for what work I am still doing, plus almost all household expenses) so it pays good.

Also have a Chase card....they have revolving categories each quarter that pay 5% on up to I think 1500. This past quarter it was amazon and a couple of others, next quarter I think is gasoline.

I use the Chase card for whatever the 5pct categories are, the Citi 2% card for everything else.
 
School loans are necessary debt. My wife's school loans are what enables her to make her very nice salary. I don't stress over them, but we have worked very hard to include them in our overall debt and pay that off as well.
As for credit cards, we do not intend to have any at all whatsoever. No matter the cash back or what have you. I have one that is for work that is for customer entertainment. I get reimbursed for it, but don't always use it. We are thinking of just using our own money for that as well, but there is advantages to using it.
 
If you use your debit card for everyday purchases, you're a fucking idiot.

I've had credit card numbers stolen often enough to know that even though it all works out in the end, its a huge pain in the ass, and the account is locked out for a week or two. The only time my debit card comes out of my pocket is at the bank.

Credit cards have absolutely nothing to do with whether or not you can be responsible with money. Ours get paid off every month, and to date, we've been paid several thousand dollars in rewards for using our cards.
 
I don't regret the decisions that I made when I was younger, but I would have less debt now if I had less fun back then and was smarter about it. Like @rockcity said, make sure not to use the CC's you're trying to pay off. 2 sit in the gun safe and I have one that I consistently pay off every month because it is 0% interest and cash back so I use it for expenses every month just like @shawn is talking about. Approx every 4 months, I have enough cash back that I roll it onto the card and it pays part of that month's bill. Whatever I save that month I just roll it into another card or student loan or whatever. Whatever my minimums are every month on my student loan and CC's, I just double it. I set each month's budget minus $150 so $75 off of each check which goes to a separate account. Between the extra paid on debt and what I immediately put into savings, once you learn to live without it, you forget about it. Its easy to say, but after 2-3 months of that, its no big deal.

What really helped was making a spreadsheet to track and monitor all of my bills, income and paydays. This does a couple of things for me: 1) I have all of my recurring bills outlined with due dates and monthly amounts so I make sure I don't miss anything. 2) I set my budget and can see where I am spending my money every month and can see where I can afford to pay extra or have more disposable income. Its fairly easy for me to track being on salary.
 
Best advice I got was from an old man that said "live like know one else will know, so you can live like no one else can later"
 
shawn said:
If you use your debit card for everyday purchases, you're a fucking idiot.

I've had credit card numbers stolen often enough to know that even though it all works out in the end, its a huge pain in the ass, and the account is locked out for a week or two. The only time my debit card comes out of my pocket is at the bank.

Credit cards have absolutely nothing to do with whether or not you can be responsible with money. Ours get paid off every month, and to date, we've been paid several thousand dollars in rewards for using our cards.
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This. I use my credit card for EVERYTHING, I rarely pay cash for anything, haven't used my debit card other then to get some cash out of an ATM in probably 5 years. I am about to switch to the CITI 2% card pretty soon too, basically will double my cash back with it. If an unexpected expense comes up also I don't have to worry about transferring money around to use a debit card since I don't keep much money at all in my checking account.
 
I have to disagree with the credit card thoughts. VISA offers the same protection on debit cards as they do credit cards. It's required by law.
You spend someone else's money, you pay it back right away and think your winning. But it hurts more when you spend your own money, therefore you spend less.

By no means am I trying to start an argument. Just stating what I have read/learned and believe to be true. Once debt free, it's still a lifestyle change, sticking to a budget that allows you to save but also live and enjoy your money.
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77GreenMachine said:
I have to disagree with the credit card thoughts. VISA offers the same protection on debit cards as they do credit cards. It's required by law.
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I'm not talking about fraud protection. I'm talking about being 500 miles away from home and getting a call from the bank to inform you that your card has been involved in fraudulent activity and has been cancelled. That's exactly what happened to me at Dixie Run last year -- in a span of about 12 hours, I needed to spend about $1500 for a variety of reasons. Halfway through the morning, BoA called me to let me know they were stopping one of my cards because a guy in Rocky Mount tried to buy $300 in money orders with my card number the night before.

In the Dave Ramsey "chop up all your credit cards" scenario, I would have been stuck calling family for a short-term loan and going to Western Union, because it would have been the debit card that got stopped, locking me out of my bank account. But I have four cards, so I cut that one up and carried on with my day. The hardest part was trying to figure out which card had the best cashback benefit out of the ones that were left.

Read the examples in Dave's book and think critically about what he's saying. "Some study said that 60% of people don't pay off their credit card every month, so you should never use a credit card." The fact that "other people" use a credit card as a slush fund does not preclude your ability to get a cashback card, buy the gas and groceries and whatever "normal shit" you buy every month with it, then write them a check when the bill comes.

Developing a budget is one thing. Figure out what you spend, where you spend it, and whether or not those expenses are reasonable and inline with your income. If you're impulsive and an idiot with money, then maybe you have to put your money in little envelopes and only spend what's there. I've known people like that, always asking for advances on their paychecks and shit like that. But most folks can learn to spend within their means. It just means spending the time to figure it all out.

Here's the other thing that Ramsey glosses over: Credit score. Want to buy a house? High credit score == lower interest rate. Don't have credit? You get a high interest rate. That could cost you tens of thousands (if not an even $100k) over the life of the mortgage. How do you get a good credit score? From regularly borrowing and paying back money. Like.... (wait for it..) a credit card! Credit score takes a number of things into account, but it's essentially a measure of your ability to borrow money and pay it back on time. If you never borrow money, how are they to know whether or not you'll pay your bills when they come due? Threads like this come up every few months, and sooner or later, somebody comes along talking about how they pay cash for everything, pay their utilities and mortgage on time, but have a terrible credit score, and don't understand why. There's your answer.
 
shawn said:
I'm not talking about fraud protection. I'm talking about being 500 miles away from home and getting a call from the bank to inform you that your card has been involved in fraudulent activity and has been cancelled. That's exactly what happened to me at Dixie Run last year -- in a span of about 12 hours, I needed to spend about $1500 for a variety of reasons. Halfway through the morning, BoA called me to let me know they were stopping one of my cards because a guy in Rocky Mount tried to buy $300 in money orders with my card number the night before.

In the Dave Ramsey "chop up all your credit cards" scenario, I would have been stuck calling family for a short-term loan and going to Western Union, because it would have been the debit card that got stopped, locking me out of my bank account. But I have four cards, so I cut that one up and carried on with my day. The hardest part was trying to figure out which card had the best cashback benefit out of the ones that were left.
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Yeah, it's a lot less of an inconvenience if there is a fraud lock put on one of my credit cards than if a fraud lock was put on my debit card. One freezes access to my imaginary money account, and one freezes access to my real life bank account. Big difference.

I have a low limit credit card that I have exclusively for that reason, and it's the one I use for online shopping and for hotels, restaurants when I'm travelling (which is a lot). It gets compromised about once or twice a year; this year it's been compromised twice. You never know what happens when that card leaves your hand and a waiter disappears with it for a few minutes. I get a phone call that the card is locked, a fraud affidavit shows up in the mail, a new card shows up, good to go. That's the cost of doing business as a credit card company.
 
I can understand your arguments. I guess I don't think about it since me and my wife both have great credit scores established.
I can't say I'll never use them again, cause there is some good argument points here. We don't really use the envelopes anymore but we use cash for groceries and actually write out the budget each month. The monthly budget is the main tool that puts it in prospective.

Most of the people I work with and are friends with have revolving debt. They trade a vehicle in before its paid for or lease a car, live off credit cards and always think payments are part of life. You explain this debt free scenario to them and see smoke come out of their ears. So I wanted to hear from some other financially mature/smart folks since I can't seem to have a logical conversation about it with anyone other than my wife and best friend.
 
Like Shawn and DSM, I put everything on the credit card. I don't own a debit card. Early last year I got the chase Amazon card that gives extra bonus points on Amazon and then other things that change on a quarterly basis. That's kind of a pain, but it is "free" money. I also have a visa thru my credit union that used to be 1% on everything (and rarely got used), but has now jumped on the bonus bandwagon and is 3% at restaurants. I don't use the Amazon points on Amazon, I pay full price there (maximize the amount to get points back), then use the points to pay my credit card balance.
My wife also has a target cc that gives her 5% automatically, then she's also got a kohls card that gives her good cash back.

I am not broke and I am not a rich person, so all that text in the book does not apply to me. You have to have the discipline to spend what you can afford to, or budgeted to, and pay the entire balance at the end of he month. Don't fall into the trap of using the credit card to,buy some cool shit you can't afford because they gave you a $xx,000 credit limit. I don't even know what my limit is, but it covers my monthly expenses.
 
Never took financial peace but listen to the show regularly. We live on a budget and have no debt of any kind. It feels great but we still have to watch what we do as our retirement plans are behind. I haven't been a forward thinker there.

Credit score can affect all kinds of stuff, even down to getting a phone line. We have good credit but I don't care much about it as we don't plan to borrow. We do use 1 credit card for our purchases for the hacking reasons mentioned above and it gets auto drafted every month.


@jeepinmatt congrats on how far you guys are in the process. Is the shop paid off as well? If so, that's awesome. You've got a nice place out there! I'd love to own a bunch more land...
 
77GreenMachine said:
You spend someone else's money, you pay it back right away and think your winning. But it hurts more when you spend your own money, therefore you spend less.
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Maybe for you, but not for everybody. I do win by using my credit card, I view my CC as my own money just like cash. I know how much money I have to spend every month and can budget fine using a CC.
 
Seems there is a lot of folks FOR credit card use. I never had a problem with it. But my wife's previous husband racked up some that she got stuck with when he rolled out. Maybe when we are debt free and have our 6 months of expenses saved up that's something I would revisit.

I look forward to saving up and paying cash for the truck I want. Ideally I will save and maybe score one of those sweet deals from the guy on here that usually always has some nice trucks with salvage titles. Salvage vehicles don't bother me.

In 2 years my daughter will be in school, so not only will we debt free, our child care cost will be cut in half!
 
Only time I had to finance a vehicle was actually to take a paid in full superduty to the credit union and borrow 100% of its value to have the cash to build the shop. That was years ago when I didn't have much of a clue.

Ended up paying the truck down and selling it because I hated the payments. It did pay the shop off though. Found a $3500 F250 gasser to tow with and worked back up from there.

Having owned a few cheap salvage vehicles before, I'd say to not do that if you can. They can be very hard to get rid of and easy to lose money on. I'm a huge fan of buying something clean with mechanical or other issues and fixing them. Much easier to sell and make some money on if you know what you're doing.
 
You don't get anything for free! You have to work for it and live within your means for a long time to get where you want to be. My wife and I were frugal and cautious for 35 years. We didn't suffer but we didn't take extravagant vacations and didn't "upgrade" our house and cars like a lot of our friends did. Now we are sitting pretty, no debt at all, house paid for, helped both kids buy houses and pretty much do whatever we want as far as vacations, eating out, new cars, etc. A lot of today's financial problems people encounter are because of an inability to delay gratification. Patience, grasshopper!
 
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