Debt is a sin!

[JoeR]

BUMP:

I've been listening to Dave Ramsey off and on for a few years now. I just bought the Total Money Makeover e-book last week, because I just wanted some motivation and reminders to make certain decisions about our finances. I am almost a CPA (one test section left), so I have a good grasp of finance and money matters. I simply like Dave Ramsey (for the most part) because listening to his show keeps me motivated to spend wisely, think through larger financial decision more wisely, and be willing to go for it when I have opportunities to make more money.

I agree that he gets a condescending tone at times. I haven't noticed it being directed more strongly at women. It hasn't garnered my attention, anyway.

[exOBCstudent]

(03-05-2012 11:00 AM)JoeR Wrote:  BUMP:

I've been listening to Dave Ramsey off and on for a few years now. I just bought the Total Money Makeover e-book last week, because I just wanted some motivation and reminders to make certain decisions about our finances. I am almost a CPA (one test section left), so I have a good grasp of finance and money matters. I simply like Dave Ramsey (for the most part) because listening to his show keeps me motivated to spend wisely, think through larger financial decision more wisely, and be willing to go for it when I have opportunities to make more money.

I agree that he gets a condescending tone at times. I haven't noticed it being directed more strongly at women. It hasn't garnered my attention, anyway.

My parents put me through that book as I was entering college and it really helped to keep me from making some mistakes that would cost me later. I've got about 2k left on my car payoff then I'm debt free! That's gonna be a party day that we'll be having in the next few months.

[laurat99]

Our church is starting Dave Ramsey's Financial Peace University next month, but I don't think we'll be participating. Our only debt is our mortgage and we are paying on principal every month. As for the original post title, I don't think being in debt is a sin, but by NOT being in debt, we have financial freedom to do things others wouldn't.

I'm scared to be in debt, always have been.

[C_Fresh]

(01-31-2011 10:23 AM)Josh Wrote:  I'm not a big fan of Dave Ramsey. Some people find that his advice and methods for getting out of debt work for them. However, his investment advice is *cough*bull____*cough*. He's also very much like a fundamentalist when he universally denounces credit cards as evil. I hope this won't come across as bragging, but I'm not the only one in the world who has a credit card, but has never paid interest to a credit card company (I'm probably not their favorite customer...). It is possible to use cards responsibly and benefit from them, a fact that Dave ignores. Of course, one could write this off by saying that his audience is too stupid to determine whether they can responsibly handle credit or not. I can't believe that one could sustain such a large audience after belittling them for so long, but Dave Ramsey and your local fundamentalist preacher both illustrate that my belief is not true.

With that said, debt isn't a sin, but it's not a good idea, and I avoid it at all costs.

CC companies make money from the merchants as well, so its not like they don't make money from your use, it just isn't your money they are collecting.

I was raised on the idea of having no debt or as little as possible. I've always paid off my credit cards every month and avoided interest. I did end up with some other debt eventually. I got a student loan for my senior year of college $5.5k and a Line of Credit that I used to fund a business startup and other expenses. I bought a 'new' car last year so now I have a car loan. I've got a mortgage too so I often miss the days where I didn't have all that money going out every month.

I've been working a similar snowballing plan and will be paying off my LOC when my tax return arrives. Should also have some left over to pay on the student loan. My goal is to have the student loan paid off by the end of next year if not sooner. Focus then moves to car loan (lower interest than student loan) and then once those are all paid off, start putting some extra money on the mortgage every month. I think once I'm down to just the mortgage my plan will be to put 1/2 my extra monthly income onto the mortgage and the other 1/2 into savings.

[artsim]

A lot of people that say this about debt have home loans which are a fine tax write-off. Apparently some sins are not so sinful when applied to the things you do versus everyone else.

[C_Fresh]

(03-05-2012 12:07 PM)artsim Wrote:  A lot of people that say this about debt have home loans which are a fine tax write-off. Apparently some sins are not so sinful when applied to the things you do versus everyone else.

And its not like the tax writeoff for mortgage interest is 1:1. If it was, I wouldn't mind it so much. If I remember correctly, you only get to write off the interest and it is used to reduce your taxable income. So if you paid $10k in interest you only get back the difference between the taxes on say $50k taxable income vs $40k. It does help soften the blow though.

[JoeR]

(03-05-2012 12:07 PM)artsim Wrote:  A lot of people that say this about debt have home loans which are a fine tax write-off. Apparently some sins are not so sinful when applied to the things you do versus everyone else.

The mortgage interest as an itemized deduction is no good reason for having a mortgage. I DO have a mortgage, but it isn't for the tax "write-off". The tax effect of my mortgage was about $600-700 this past year, as compared to paying 10 times that amount in interest for the deduction. It's not worth it from that standpoint.

[JoeR]

(03-05-2012 12:40 PM)C_Fresh Wrote:  And its not like the tax writeoff for mortgage interest is 1:1. If it was, I wouldn't mind it so much. If I remember correctly, you only get to write off the interest and it is used to reduce your taxable income. So if you paid $10k in interest you only get back the difference between the taxes on say $50k taxable income vs $40k. It does help soften the blow though.

I see we were both responding about the same time.

[artsim]

(03-05-2012 12:40 PM)JoeR Wrote:  

(03-05-2012 12:07 PM)artsim Wrote:  A lot of people that say this about debt have home loans which are a fine tax write-off. Apparently some sins are not so sinful when applied to the things you do versus everyone else.

The mortgage interest as an itemized deduction is no good reason for having a mortgage. I DO have a mortgage, but it isn't for the tax "write-off". The tax effect of my mortgage was about $600-700 this past year, as compared to paying 10 times that amount in interest for the deduction. It's not worth it from that standpoint.

Given that most everyone has to spend some amount of money for shelter, it is a benefit to have a tax deduction for mortgage interest payments rather than paying rent which is not deductible and doesn't accrue ownership equity.

[notdrinkingthekoolaid]

Don't be attacking Dave now!

I'm teasing...slightly. We took FPU because someone paid for us to take the class. We were so broke when we took it, we couldn't afford it. Being broke was in large part a problem of our own making with too much debt, but we found ourselves stuck in the middle of the housing crisis, circling the drain.

Fast forward to now and our financial life is completely different. We aren't debt free, but we are living far more responsibly than we were before we "met" Dave. I don't know that we will ever be completely debt free. We are to the point now that we need to start rebuilding out credit so that we will qualify to get a mortgage again when the time comes. Otherwise, I've found the principles he teaches to be useful and we are teaching our kids about money--things we were never taught.

I haven't listened to his radio program much, but his tone gets more harsh when someone is simply making stupid decisions. He has more sympathy when life has happened and someone is just stuck.