Dave Ramsey

[jeep78]

But you're not factoring in rent. If you aren't financing a house, where are you living while you save up for the house? You're already making those payments every month, but in one scenario it's money you're throwing away and never getting back. In my scenario it's equity in a home I'll own.

Also, if you haven't paid collision in over 40 years, that means you've had way more years to save. Of course you should be completely debt free by then.

But comparing yourself to somebody just entering the work force or that still has 40 years to retirement isn't the same thing. In your example, somebody in their early 20's would be paying rent for 15-20 years before you could buy a house cash. That's literally over $120k in rent money you paid because you didn't want to finance a house. That makes absolutely no sense from a financial standpoint.

It used to be very common to have room mates. I did for years and saved on rent. Renting your own place is a luxury that robs you every month

Thinking outside the box is no longer an American trait
There are other ways to find housing than rent
There are situations where you can live rent free or be paid to live somewhere , but those opportunities will not look for you.

 

[jhunter]

OP.....give it a try for a few months and see what works for you and your unique circumstances. Drop me a pm if youd like help getting started

His podcasts can be very informational as well to reinforce the principals you read in the book. Also, it's common on his podcasts to hear "Debt free screams", and before long you'll be thinking, "Hey, this is really possible, dude was $80k in debt and paid it off in 3 years making $75k. I got this."
https://www.daveramsey.com/show/archives/

 

[shootsacanon]

Peanut Butter Yes, it works, do it. Do it exactly as Dave teaches. Do it with focused intensity and full commitment. Listen to the show, watch his YouTube channel, read The Total Money Makeover.

The debt-free scream is real.

 

[Trailrider]

It used to be very common to have room mates. I did for years and saved on rent. Renting your own place is a luxury that robs you every month

Thinking outside the box is no longer an American trait
There are other ways to find housing than rent
There are situations where you can live rent free or be paid to live somewhere , but those opportunities will not look for you.

OK I'm going break this down for you, in today's numbers. I hate roommates. I had them. They're the worst but when I was young and single I had 2 roommates. But yes I did it.

When I got married my wife and I got an apartment. A basic two bedroom 10 years ago in Macon, in a decent neighborhood was around $800 a month. We lived there for 3 years. That was $28800 dollars. During that time we knew we wanted kids and started saving for a house. So we had enough saved for a down payment and bought a house 7 years ago. Both have excellent credit so we got a good rate with 20% down. 7 years we now have about $50k in equity. That's $50k we'll get back if we sell the house, in 7 years time.

So lets do the math. Lets say that in the last 10 years, (3 in the apartment and 7 in our house) we had decided to keep renting so we could buy a house cash.

We would have paid: $96k in rent in 10 years. That's $96k you threw away. Even if I had saved $100k in that time, I spent $96k on rent. Do the math, that makes absolutely zero financial sense. At the end of 10 years you barely broke even in that scenario. I'd have spent $96k to save $100k. Plus, my mortgage is only $500 a month. I can put that extra $300 a month towards savings.

That's why I say, if you're already paying rent, just finance a damn house. If you put a good down payment down and have good credit, you're better off in the long run.

Edit: just looked up current apartment prices in Macon for a decent area, outrageous now. The place I used to live at is $1042 a month now You damn well better believe I'm better off paying a $500/month mortgage.

 

[Joab]

If you do it , no more impulse AK buys

 

[Deleted member 79987]

Any of you use his baby steps guide? How effecting was it for you? I’m about to take the dive.

It's a solid plan PB. I started out reading his book, "The Total Money Makeover". Then I also took the Financial Peace University class. There may be a local class near you too.

The only bummer is that sometimes Baby Step #2 (getting out of debt) can take a looooong minute.

 

[Hayata]

Peanut Butter - I understand you are single and that's basically a good thing as a young man.

Whatever economic principle you choose to follow - ONE OF THE MOST IMPORTANT THINGS - is to make sure your potential mate is on the same page of music. From what I understand most of divorces are based on differences on how to approach money than to infidelity, etc. And let's face it, divorces are EXPENSIVE.

She may be the best thing since sliced bread but if she is a spender and you are a saver, you'll need to do some DEEP soul searching to make sure you can live that way.

My wife and I have separate checking accounts for a reason. Mine balances to the penny. She just wants to make sure she "has enough".

Of course you have to have balance. Not sure you'll snag a girl by offering her a cheap dinner at McD's - but it really is a balance. I think a lot of women would be impressed by your approach of being conservative and saving money for the future. Ok to splurge every now and again but you have to have the discipline to make the splurges are a rare occurrence.

 

[NDIrish1]

PB we did it years ago and have been living debt free since age 42-43..... which now at 52 allows to me to pay my kids private university tuition and be ready to retire soon..... we are not as strict with the program as we once were...... good luck

 

[JimmyJet]

About 20 years ago I had a mortgage broker tell me I would qualify for a mortgage with payments more than 50% of my net take home pay....that’s insane!

Today, I own a home with no mortgage, I have no car payments, no loans or credit card debt....no debt outside monthly living expense....four grown kids with no student loan debt....two with Masters Degrees and one with a Bachelor degree and my wife was pretty much a "stay-at-home mom"....beyond being "blessed"....here is how I arrived at this point..

1. Bought a house in a price range that, with my down payment, the monthly payment was no more than 25-30% of my monthly income...and tried to pay an extra $50-$100 per month on my 30 year mortgage...just doing that can take 8-10 years off your mortgage....
2. Always bought/drove cars that I could pay cash for or pay off in 12 months or less....
3. Carried no credit card debt (pay the balance off each month)
4. Didn’t take expensive vacations or cruises
5. Saved when I could and took advantage of my employers 401k program

My wife did work some....for a couple days a week while the kids were in school....her income was used to pay for Christmas and sports activities for the kids and sometimes we had enough for some vacation money....I never changed my dependent status with my employer as another kid came along so at tax time I had a good refund from the IRS that allowed us to take a vacation or gave us something to put towards a car when needed....I know some would argue that’s a stupid idea but overpaying taxes took the money out of my hands and was a "forced savings" of sort, even though it produced no earnings for that year....

When my kids reached 16 and wanted a car, they had saved enough that they could pay cash for a 5-10 year old car in good shape....dad helped with any needed repairs and the first 6 months insurance to start....I can’t tell you how many of their friends parents bought their kids a new car and gave it to them when they turned 16....only to have the car wrecked in the first few months....same for college education....what I have ALWAYS taught my kids is this....

SOMETHING THAT COSTS YOU "NOTHING" IS WORTH "NOTHING"

Some of this is the "Dave" approach and some is the JimmyJet approach.....but it worked....and ten years ago when I was laid off and out of work for a year and a half, we were able to survive the financial storm and with the house paid off, we still had a roof over our heads....



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[NewLeaf]

Never rented. We kept flipping houses until we paid one off. And we paid less to own than rent. You do you friend, but just know buying has several advantages as long as you can be patient about when to sell.