Dave Ramsey - Talk to me Tara

Our Lil' Family wrote: Ok, so DH is in a kick and wants to pay off his student loans like yesterday. What would Dave suggest. We have no other debt besides that and our house. So what should our plan be...how much extra should we put towards his loan?

~Roo'sMama~ replied: I'm interested in hearing your answer too Tara! We just saw part of the Susie Orman show a few days ago and she was saying that student loans are the most important to pay off because they never go away until you pay them and bankruptcy won't dissolve them. Not that we're planning on filing bankruptcy, but I don't really want to hand down Scott's student loans to our kids someday. Scott has said that he wants to find a way to pay them off quicker than scheduled, but I have no idea how we're going to do that.

PrairieMom replied: dave ramsey suggests you first save up a general emergency fund of $1000, when that is done you throw every spare penny you have at your debt from the one you owe least on, taking that out first, so, if you only have the one loan then you would pay every cent you have extra on your school loan until it is gone. No eating out, no movies, no extras. Buying only the essentials until that loan is paid off. Then you would attack your mortgage in the same way until it is gone.

PrairieMom replied:
Dave would say you "live like no one else so you can live like no one else" so, you have a garage sale, sell your extra stuff. sell your car, and only do with one if you can, or buy a cheap one. Take the $ you make and toss it onto your loans. Get onto a monthly budget and stick to it. Look for ways to decrease your bills., analyze your services like garbage, cell phone, to see if you can be doing things for cheaper. Get rid of non essentials like the chemical lawn care guys, cable TV, and put that $ onto your loans. NO eating out. Adjusting your diet at home to reduce your grocery bill. pinching pennies everywhere you can to save anything you can to put onto your loans.
After saving your $1000 emergency fund , which is for EMERGENCIES only, then he has you do a debt snowball, attacking your loans from the least amount to the highest amount. when you get one paid off , you take what you were paying and apply it to the next loan, and you keep doing that until all you have left is your mortgage.

Our Lil' Family replied:
This is what I'm pitching a kid fit about......we lived like this to make it through school, now that he's making money I don't want to live like this again!

Maddie&EthansMom replied: You need to call Scotty. He IS Dave Ramsey.

We also have the kit from when he taught the class.

Our Lil' Family replied:
No....I don't want to hear what he's going to tell me! lol

PrairieMom replied:
I guess I don't see the issue. I live like this and am doing fine. I have no type feelings about it at all.

Our Lil' Family replied:
I'm just a spoiled brat Tara, that's all. Don't want to give up my DVR and Netflix subscription. Guess I'm addicted to TV......

Maddie&EthansMom replied:
We live like this, too (and have forever.) But I will admit, I have my days. And my days, too. So glad my hubby keeps me in line and holds me accountable!

Maddie&EthansMom replied:
Hahahahahahahaahahahahahaha!

Ha

Ha

Ha!

Try living with him!

PrairieMom replied:
I thought i would have a really really hard time with getting rid of the TV too, and really it was just scary at first , and the first few days were a bit strange, but I seriously don't miss it at all. And really , you can watch nearly everything you would ever want to see online. All the major networks have their shows online, there is Hulu, and I do have netflix, but only the $10 a month one. We saved over $100 a month by dropping our land line , and cable and just keeping internet, and seriously don't miss it at all.

~Roo'sMama~ replied:
Lol. I'm the same way. Except TV I can live without... I like having it but if we don't have it I don't miss it much. I don't like watching stuff on the computer... but if we got a Wii (which we will once Scott starts making an income, now that it's gone down in price) we'd be able to watch netflix and stuff on the tv. MY big problem is I love eating out. We don't go to a sitdown restaurant often at all, and we try not to hit McDonalds too often but I have my days when I really just want my nuggets and fries and coke!

~Roo'sMama~ replied:
This too... we've never had money. We've been married 8 years and we still don't have curtains because they cost too much. I never have more than one pair of jeans at a time and I wear $3 flip flops in the summer and I have one pair of shoes for winter. I'm not expecting that we'll be rich now that Scott's done with school... it's not like he went to med school! But after awhile things will finally not be so tight for us and I'd really like to finally have the stuff we've never had the money for.

Our Lil' Family replied: See....Sara gets me!!

coasterqueen replied:
Same here. Our philosophy...you only live once and you can't take it with you, so enjoy it now. Of course, make sure you save for your kids so they have something when you go.

I refuse to live how I grew up when I've busted my bum to get where I'm at. I'm enjoying it in every way I can.

PrairieMom replied:
See, we are saving and planing so that we can enjoy our retirement and not have to worry about how we will live, loosing our house and becoming dependent on our children. We want to live comfortably, and hopefully leave something to our children, and not just $, we want them to know how to not live beyond their means, and how to live a life where they don't have to fear for how they are going to pay their bills.

Our Lil' Family replied: I get that Tara, I really do. DH must have listened to Dave on the radio yesterday and heard a guy that had the same amount of debt paid it off in 18 months......yeah.....so I guess I might be giving up that DVR....hopefully we can compromise in some way so we're not bare bones on luxuries here.

coasterqueen replied:
You can't live life more freely AND save for retirement? We are. Retirement/college savings, etc is our first priority. Our kids know what is right and wrong and how life works and when we can afford something and when we can't. But I refuse to not live life now while my kids are growing up, just so I can live life after their out of the home. It is ENTIRELY POSSIBLE to do both, you just have to not look at one person's situation and assume it's that way for everyone.

And when I say save for your kids, I'm not just talking about money. Besides money, OUR HOME and OUR LAND will be the one true gift given to our children. It's the one thing we fought very hard for and has been in the family for generations and it will be there for them as well. In both our families, land/home is the most important gift to give to your children (passed down) - it has been done for generations after generations in our families and we plan to do the same for ours.

PrairieMom replied:
As always, you do things differently than us. Have different priorities. No big.
Its not like I am feeding my kids bread and water while I save for my retirement or anything. We put ourselves in a financial situation that allows me to be a stay at home mom. So, we don't take as many vacations, I buy my children used clothes and we do without a lot of things that others would consider to be luxuries. But my desire to live "green" fits hand in hand with that. Yes my kids don't have a lot of things that other kids have, but they don't need it either. We choose to do without a lot of stuff.

But, more to the point, if you ask Dave Ramsey, no you can't enjoy little luxuries while you are in debt. If you follow his plan, you do with the bare minimum until you are completely out of debt, and have a savings, then never use credit again. If you don't have $ for it, you don't get it. That includes paying cash for big ticket items like cars, campers, and boats. The OP is about what Dave Ramsey teaches.

Maddie&EthansMom replied: Same here, Tara.

We don't have any debt. If we can't pay cash for it, we don't get it. Which means we do without a lot---but we have everything we need. I have to pinch pennies. I have to shop sales and shop around for the best deal. If I can't get something really cheap--I don't get it.

But, I think everyone should live this way--regardless of how much money you have. I'm not bitter about this b/c I'm cheap by nature ( ) But, sometimes I wish we did have more money to take that Disney vacation--or go to the beach. At the same time, I'm grateful that we don't have credit card debt looming over our heads. To me, that would be more stressful.

PrairieMom replied:
I'm not trying to tell other people how to live, or what is right and wrong, but this method makes the most sense to me. It is what works best for me and my family.
This summer we had to replace the roof, $5500 , we will be painting the house $3000, I need a dental crown $1000, just took the kids to the dentist $400, and I did not once have to stress about how we were going to pay for these things that we need, because we scrimped and saved ahead of time. We had the ability to pay cash for all of it. It was so nice to not have to panic and worry about it. We didn't have to go get a loan and have to worry about making payments on it for the next 5 years. What a relief!

youngmomofone replied: We are going to sort of do this especially since I just got a job. We have medical bills as our debt and then we recently had to buy a new car because our other one died (would have cost 10k to fix it, seriously) . So after not having a car note, we are stuck with one again. So, after the medical bills are gone I'm going to pay off the darn car in at least half the time of our loan (loan is 62 months since we didn't have any $ for down payment ).

Too bad I can't be like other people I know and use my paychecks for fun and games

coasterqueen replied:
I completely see your point and the OP on Dave Ramsey's teachings.

I am cheap as well. I don't go buy expensive clothes, toys, and such. I shop sales, Walmart, coupon when I can, etc. I don't penny pinch when it comes to food because that's too important to me (buying organic), so I penny pinch in other areas. I buy used clothes, we recycle school supplies/bags, we do a lot of stuff that others do to "save" from being too frivolous with our money. We find ways to save on gas, etc, etc. I just think the occasional "luxury" isn't a big deal, even if it means going into a little debt to get it as long as you can handle it and pay it back in a timely manner. Maybe it's Ryan and my upbringing of having NOTHING growing up, having no one to help us from the time we were 17....just makes us think of life differently than a LOT of other people. We are fine with that, though. The first thing I swore when I had to move out on my own was I was not going to suffer without air conditioning, especially if I work a 40 hour week busting my arse to make a living....I'm going to have "luxeries" (even air conditioning) in this life, I work hard for it.

And O M G Tara, I would flip if I had to spend that much on those house repairs even if I DID have the money to pay for it. LOL. See, that just shows you we ARE ALL different in some way.

coasterqueen replied: BTW, sorry Naomi for taking over your post. I'll be quiet now. Yeah, I know, shocking.

Our Lil' Family replied:
Don't be sorry, I'm thankful for the discussion!!!

My mom raised me to be a saver....and I do...just not as much as I probably should. I am thankful though that we do have a savings account, due to our tax returns, and we haven't had to touch it, not even for vacations. DH is right though. Due to the amount of his student loan, our payment is probably more than a car note. I will probably need a new car in the next 5 years so getting rid of that payment would really free up $$ to save and hopefully pay cash for my new vehicle.

So according to Dave....I should chunk all of my extra $ to that loan right? I have more than $1000 in savings....should I take some off that money OUT and send it to apply to principle??? I always thought you should have a 3 or 6 month savings??

PrairieMom replied: dave says $1000 emergency fund until you are out of debt except for your home. Then save 3-6 months, then pay off your home / save for retirement at the same time.
I don't know if he would suggest you take $ our of savings or not. I suppose he would, because the $ you are making on interest is less then the interest you are earning on your loan. so you would be ahead of the game to pay towards your loan with it. If you follow his logic.

And yes Karen, I am not thrilled about seeing our savings decrease that much. Especially for something as lame as a roof and a tooth. but I would way rather have had it on hand then have to go get some stupid loan. It irks me even more that we had to replace the roof at all, since our house is only 10 years old, and these were supposed to be 30 year shingles, but they were faulty. There is a class action suit against the company and they are compensating people. I hope to get some of that back. maybe $1500? I won't know till I jump through all the hoops.

coasterqueen replied:
I am just floored at what it costs to roof and paint, lol. I guess having a husband who is a jack of all trades, you don't see those costs because they aren't there. Rule of thumb on shingles...they say 30 years, but they 9 times out of 10 never last 30 years, or at least what my hubs tells me. But 10 years? They should have lasted longer than that. We built our home in 1999 and so our home is 12 years old this September and our shingles are still lasting strong, thankfully.

It is good, though, that you were able to pay for all that outright.

And Naomi....thanks. I understand on a loan being same as a car note. We had two car payments for a long time, one car payment the same as TWO car payments, so essentially three car payments going on at once. We will never go that way again, we have one car payment and one car paid off hoping to last until the one is paid off, then we'll replace the one that will probably be barely running then. Two car payments suck...buying two cars outright sucks.....the cost of cars suck! So I'll never feel relief on that one. Living out in the country, though, we have to have two vehicles no matter what, so we could never go down to one. Although we do try to ride together every day just to use one vehicle and save on gas.

PrairieMom replied:
I noticed that these needed replaced 3 years ago, but I kept putting it off and putting it off. The ones they took down have curled up edges and had shed 90% of the composite off. They were WAY worse then I thought they were. Our whole neighborhood has them. We are keeping many roofers families well fed.

MommyToAshley replied:
We are the same way, we are completely debt free except for our house... and we're getting close to paying that off too. We have always believed that if you can't pay cash for it, you don't get it even if you have a decent job. You never know what will happen and we wouldn't want to be stuck with debt if we lost work. We go on vacations every now and then, but we only do that now that we are debt free. I would never consider going into debt for a vacation or luxury item.

However, with that said, I understand that people go into debt for other reasons-- School loans, losing a job, medical emergenices, etc. It was rough when I first got out of college and I had to work hard to pay off that debt. I did have to do without a lot of luxuries... I think I was the only person that didn't have a cell phone. Now that our debt is paid off, I don't feel guilty having few more luxuries .... I don't go overboard but I could certainly save more if we changed our lifestyle. I just think that it is ok to enjoy a certain quality of life as long as you are responsible. So, I totally get what Naomi is saying.

Maddie&EthansMom replied:
Absolutely!! And everyone has their own budget they have to work with. Some people can afford more on their income than others. But for us to take a vacation right now---we would have to go into debt. However, I don't think everyone that takes a vacation goes into debt for it.

Also, everyone spends their money differently. I have luxuries. More than I care to admit. I sacrifice other things to be able to afford it--much like most of you, I assume.

Naomi...what it boils down to is what works for you and Tim and your household. You guys need to agree on something that you are comfortable with.

Karen--I giggled about the air conditioning. That's not an option here.

~Roo'sMama~ replied: AC is a luxury I'm hoping to not have to go without after this summer! The summers here aren't terribly hot, but the I don't tolerate the humidity well at all. And I'm sick of getting damp towels out of the bathroom cabinet and mopping up the puddles of water that drip from the toilet tank.

I totally hear what you're saying too, Tara, and I hope that after we have a regular income again we'll be able to find a good balance with our spending and saving. But believe me, McDonalds will be budgeted in every once in awhiel!

PrairieMom replied:
I don't follow the plan to the letter either. I could really be scrimping more and putting more $ towards our mortgage, but we are already paying extra, I don't want to have to eat rice and beans for the next 10 years until we get it paid off. I would rather take a couple extra years of house payments and eat a little better now.
I think its important to take it as seriously as works for your family. We take what he teaches, and make it work for us.

Our Lil' Family replied: Thankfully there has been no mention of cutting DVR, yet! I have a couple months still I think. He wants to make sure we're sending in extra payments and they are deducting it correctly before we really start chunking away at it.

Maddie&EthansMom replied:
Woo Hoo!!! So glad you get to keep your DVR!!

Girl, I know how you lived before and you sacrificed a lot!! I don't blame you for wanting to hang on to that one thing! And you should be able to keep it! You'll find a way.

~Roo'sMama~ replied:
I hope you get to keep it for awhile then! We're planning on cutting our cable and just keeping the internet. We have really crappy cable anyways... it's the super basic version. The channels go all the way up to 22, ( ) but I kid you not, 3 of them are PBS (two of them have slightly different show line-ups so more choices for the kids which I don't mind. the other one doesn't even have kids shows... it's PBS life or some such nonsense) 2 of them are abc, 2 of them are NBC and 2 of them are cbs. I have no idea why they're doubled up like that. Then we have Fox, QVC and a couple C-spans and there you have it. We'd like to get an antenna and converter box - it would cost a bit up front but then we'd be able to get decent tv for free.

Maddie&EthansMom replied:
Sara--I'm pretty sure we have a converter box. I'll check. If we still have it and you decide you want to cancel cable, it's yours.

~Roo'sMama~ replied:
oh wow, thanks Aimee! I'll talk to Scott and find out if we are for sure going to do it. Well we are for sure going to cancel cable... we've paid through July 10th so I think we're going to cancel it right before then. But I don't know when we'd get an antenna - Dh checked and for our area we'd need a larger one that would cost around a hundred dollars in order to get anything in. So it might be awhile before we'd be able to do that.

PrairieMom replied:
If those are the only channels you are able to watch anyway, have you looked into just watching them online? try hulu.com or the major stations. I watched The whole season of survivor on CBS.com.
I think If you search Clicker.com for your show they will direct you to what ever website it is on.

~Roo'sMama~ replied:
Yeah, we just don't have a way to watch stuff on our tv through the internet right now, and I have this thing about wanting to sit on my couch while I watch tv. We could watch on the laptop I suppose, but I don't like doing that... plus looking at the laptop for more than a few minutes usually makes me sick anyways. What I really want to do is buy a Wii - we have a couple games anyways that we bought when we lived with my parents who have a Wii. Then we could pay $8 a month for netflix view instantly and all would be good. Except we just started getting into the show How I Met Your Mother so I'd have to see about watching that online.

PrairieMom replied: How I met your mother isn't on hulu. I think its on netflix, but not instantly. I have looked. LOL

~Roo'sMama~ replied:
Aww man! That's just my luck. Well I guess it'll be on instant access someday and I'll watch it then.

Our Lil' Family replied: Sara, we had 22 channels allllll during Grad school. Thankfully Disney and PBS were included, and the major networks. I watch too much Bravo now to lose it though!
Actually, we had only 22 channels from the month Thomas was born (I cried when they came out to turn off the cable....hormones!) till the month we moved into our new house....so even when Tim was working...we still kept the basic $13/month cable.

~Roo'sMama~ replied:
Yeah it's not so bad, but the good old days of having food network and tlc were nice too. And we pay $30 for our 22 channels. When we first got our cable service it was $30 for internet and $10 for cable if we got them both (or vice versa... can't remember.) But somewhere along the way the deal apparently stopped and we didn't realize it until recently because the payment was coming out of our checking account automatically until last year some time when we stopped automatic payments so Dh's mom and sister would have to pay for it since they lived here and never gave us the $$ for it. So now it's $30 for internet and $30 for tv and $60 is just way too much to spend on it when we're not even getting good tv.

~Roo'sMama~ replied:
I realized today while flipping through the channels that one of them is a 3rd NBC. 2 of them are actually KTTC - some local division of NBC. And we also have WGN - I watched I dream of Jeanie and Bewitched today. And Ion which I don't watch, and some kind of sports news channel. But anyways out of 22 channels we have about 11 different choices - for $30 a month. Yeah we're so canceling it!

Our Lil' Family replied: Cable prices are really ridiculous. And we don't have all the extra packages. For digital cable, just the expanded package with DVR (no movie or sports extras) and the BOTTOM of the barrel internet we pay $110 a month. We only just got a HD TV in February so I don't see us cutting the digital cable.

Between TV and Cell phones we pay $200/month....really....that's just crazy. I could probably do without a cell phone before cable though. I could go to a prepaid easily but DH has to have a smart phone to have his medical books on there. I really dislike talking on the phone, to MOST people....Aimee and I could rattle on forever and that's fine but generally speaking I hate the phone.

Maddie&EthansMom replied: Same here. I only talk to you and Liz on the phone. If I have unlimited texting, I'm good.

I forgot how expensive your cable is! We pay an outrageous amount in cell phones...and we just added Maddie on our plan.

I have no idea how much we pay for any of those things, but I know it's not cheap. That small house is looking better everyday!

coasterqueen replied: Oh gosh I hope you don't have to give up the DVR. That's the only way I get to watch ANYTHING...and really it's just used for AMC.

As long as I'm bringing a paycheck home, my husband won't be the only one making financial decisions. Thank goodness that's a 50/50 for us that I don't have to feel guilty about any expenses.