OT: Budgeting Tips

[Bulldog from Birth]

Dave Ramsey is an amateur. His entire stance on housing and the position it puts people in heading to retirement is crazy town. While I do agree that paying off a house is a great thing to do, it is not more important than investing money when you have a lower than 5% interest on the mortgage. Here is the thing, it is way, way, way better to have the money invested to pay off your house versus paying it off faster for some reason.

Ramsey’s plan reduces risk but also probably reduces your final net worth vs a strategy with more investing in the market. If you follow the Ramsey plan, you’ll absolutely be a millionaire in retirement. If rather than pay off your house in 8 years, you do it in 30 years and invest all those extra payments into real estate or the stock market, you’ll probably end up with a net worth that’s 20% higher. But there’s also a 10% chance you have bad luck or bad timing and end up taking it on the chin and coming up short.

 

[TilloDwg]

He's in the crockpot business, not microwaves.

Ramsey’s plan reduces risk but also probably reduces your final net worth vs a strategy with more investing in the market. If you follow the Ramsey plan, you’ll absolutely be a millionaire in retirement. If rather than pay off your house in 8 years, you do it in 30 years and invest all those extra payments into real estate or the stock market, you’ll probably end up with a net worth that’s 20% higher. But there’s also a 10% chance you have bad luck or bad timing and end up taking it on the chin and coming up short.

 

[PBDog]

bottom line is ramsey’s audience is people too lazy or stupid to manage their money. they can basically place the blame or credit on ramsey and not take any real responsibility for themselves

 

[Boom Boom]

Ramsey’s plan reduces risk but also probably reduces your final net worth vs a strategy with more investing in the market. If you follow the Ramsey plan, you’ll absolutely be a millionaire in retirement. If rather than pay off your house in 8 years, you do it in 30 years and invest all those extra payments into real estate or the stock market, you’ll probably end up with a net worth that’s 20% higher. But there’s also a 10% chance you have bad luck or bad timing and end up taking it on the chin and coming up short.

Yes, but it's also a plan built for people that are really bad at budgeting, willpower, finances, etc. I think it knowingly sacrifices some returns to play to the psychology of its audience, to do it in a way that leads those particular people to better success. Slightly better returns doesn't mean much if they get discouraged and quit investing.

 

[IBleedMaroonDawg]

I am trying to start getting rid of credit card debt. I also have a hefty hospital bill from the year and a half I spent in the hospital. It really hurts me. Sometimes, it keeps me awake at night. My main point is to ensure I don't leave any debt to survivors. I'm not old, but I need to start making plans that way. We started today and made her head of household. We probably should've already done it. We let out a plan starting this week that we will try to follow hopefully by Christmas we should be somewhat better.

 

[Pilgrimdawg]

She is a rebelbearshark living in Oxford. I have a good job in the Golden Triangle and live 5 minutes from campus.

Find a new girlfriend asap.

 

[Pilgrimdawg]

You guys sound like me and my wife about 40 years ago. You are focusing on trying to manage your money and make good decisions and that is so very important for everyone, especially younger families. Keep focused and as time goes on your salaries will increase and things will get a lot easier. What you are experiencing is life and yours sounds like it’s very typical in today’s world. It will get better. Since you are working in a financial world, LISTEN to your customers and to others that you work with. There are lots of good tips and advice to be had out there just in casual conversation and yes, even here on the six pack.

and as a side comment, it’s a challenging world out there these days and yet, College Sports wants to exist and prosper under the NIL / portal system. If you are managing your finances carefully, I can’t think of anything that is a bigger waste of money.

 

[bomanishus]

Probably already been discussed, but a couple of points here:
- If you do, stop drinking alcohol and buying coffee at a coffee place like Starbucks- it is expensive.
- Keep the wife happy. Y'all's house is her 'thing' and she is going to want to nest in it. Figure out how to make that happen reasonably.
- Ebay is your friend for shoes, shirts, etc.
- No need to be in a hurry about paying off the mortgage - let it ride with the prescribed monthly payments.
- Good for you on tithing - you will grow and be blessed in ways you cannot see right now.

 

[CoastTrash]

don’t start private school in k3. Your wife will love it and before long you will have several kids in private school even though the public schools are really good.

 

[MSUDC11-2.0]

don’t start private school in k3. Your wife will love it and before long you will have several kids in private school even though the public schools are really good.

We thankfully live in a district with solid public schools and my wife is a public school teacher, so in our case private school isn’t really something we are counting on.

Having said that, this daycare bill sucks lol. $150 every week ain’t fun. Our only child is 2 so I got at least two more years of this, possibly 3. And that’s only if we don’t have more kids, which I’m not banking on right now but you never know.

And I do get why some prefer private schools, depending on how the public schools are where you live.

 

[Boom Boom]

don’t start private school in k3. Your wife will love it and before long you will have several kids in private school even though the public schools are really good.

Oh no

 

[TrueMaroonGrind]

I used to think this but if you have a 30 year note that is 5% less than the historical average, that seems like relatively little risk for a good return. Plus, you're house note is going to continually shrink on an inflation adjusted basis, that monthly nut should got easier and easier to manage, especially if you aren't in a jurisdiction where property taxes and/or insurance are going crazy. The principal and interest over a 30 year term is going to basically be cut in half over the term if inflation is at 2.5% per year.

I was paying a little extra on my mortgage for a bit. That stopped last year. I’m early 30s w/ a 3% mortgage. I’ve taken the approach of taking that extra and putting it into savings/brokerage. Once my liquid assets are greater than my mortgage balance I’ll make the decision of whether to wipe it out.

There are two reasons why 1) the low mortgage rate is severely outpaced by hysa or the market 2) you receive no extra financial peace until the whole balance is paid. If you hit catastrophe 2 years before your house is paid and default they take your house even if you have been doubling up your payment for years.

Obviously if I was older or my interest rate was higher I would change my mind. However that’s where my head is right now.

 

[TrueMaroonGrind]

Sure, and here's the thing. It's OK to like him, follow his advice, and even be very appreciative for help that he provides you. It's also OK not to.

Dave does good things and does bad things. It’s almost like he is human like the rest of us.

My biggest complaint with Dave is he deals with absolutes. Personal finance is not one size fits all. I do also understand why he takes that approach. A lot of his audience are not in the position to need leeway. They need a series of executable steps to fix their life. Once you are out of the ditch his advice starts to get questionable. If you are doing well financially he is not a good source of information IMO.

 

[patdog]

I was paying a little extra on my mortgage for a bit. That stopped last year. I’m early 30s w/ a 3% mortgage. I’ve taken the approach of taking that extra and putting it into savings/brokerage. Once my liquid assets are greater than my mortgage balance I’ll make the decision of whether to wipe it out.

There are two reasons why 1) the low mortgage rate is severely outpaced by hysa or the market 2) you receive no extra financial peace until the whole balance is paid. If you hit catastrophe 2 years before your house is paid and default they take your house even if you have been doubling up your payment for years.

Obviously if I was older or my interest rate was higher I would change my mind. However that’s where my head is right now.

With a low interest rate mortgage, just pay it off on schedule and invest more. While you’re mostly right that the real benefit of paying extra isn’t seen until you pay it off, you can lower your monthly payment by re-amortizing your existing loan if you’ve been making extra payments. If your balance is 20% less than the originally scheduled balance, you can re-amortize it over the original term. I had no idea until my brother did it a couple years ago.

 

[Boom Boom]

With a low interest rate mortgage, just pay it off on schedule and invest more. While you’re mostly right that the real benefit of paying extra isn’t seen until you pay it off, you can lower your monthly payment by re-amortizing your existing loan if you’ve been making extra payments. If your balance is 20% less than the originally scheduled balance, you can re-amortize it over the original term. I had no idea until my brother did it a couple years ago.

And I believe you can drop PMI as well.

 

[Shmuley]

I am trying to start getting rid of credit card debt. I also have a hefty hospital bill from the year and a half I spent in the hospital. It really hurts me. Sometimes, it keeps me awake at night. My main point is to ensure I don't leave any debt to survivors. I'm not old, but I need to start making plans that way. We started today and made her head of household. We probably should've already done it. We let out a plan starting this week that we will try to follow hopefully by Christmas we should be somewhat better.

You know this already, but it bears repeating. The most STUPID of the "Stupid Taxes" you will ever pay is carrying credit card balances.

 

[patdog]

And I believe you can drop PMI as well.

Hopefully you were never dumb enough to have PMI in the first place. It’s a big monthly outflow with zero benefit to you. But if you do have it, as soon as your mortgage drops to 80% of the fair value of the property, get a new appraisal & drop the PMI. Also, note that this can come from either paying your mortgage down or from appreciation of the property.

 

[TrueMaroonGrind]

With a low interest rate mortgage, just pay it off on schedule and invest more. While you’re mostly right that the real benefit of paying extra isn’t seen until you pay it off, you can lower your monthly payment by re-amortizing your existing loan if you’ve been making extra payments. If your balance is 20% less than the originally scheduled balance, you can re-amortize it over the original term. I had no idea until my brother did it a couple years ago.

Interesting. I didn’t know that was an option. Is there a fee associated with re-amoratizing?

PS. In response to Boom boom We did have PMI for a couple of years and paying extra did allow us to remove PMI a year or two early. We stopped paying extra shortly after PMI dropped based on the strat above. It might be worth paying to get below the PMI threshold to save a big chunk of money.

 

[TrueMaroonGrind]

Hopefully you were never dumb enough to have PMI in the first place. It’s a big monthly outflow with zero benefit to you. But if you do have it, as soon as your mortgage drops to 80% of the fair value of the property, get a new appraisal & drop the PMI. Also, note that this can come from either paying your mortgage down or from appreciation of the property.

I would bet an overwhelming majority of first time home buyers now a days will have PMI. 20% is not near as attainable as it used to be.

 

[patdog]

Interesting. I didn’t know that was an option. Is there a fee associated with re-amoratizing?

PS. In response to Boom boom We did have PMI for a couple of years and paying extra did allow us to remove PMI a year or two early. We stopped paying extra shortly after PMI dropped based on the strat above. It might be worth paying to get below the PMI threshold to save a big chunk of money.

1. If there’s a fee, it should be nominal.
2. Completely agree. If you have PMI & can afford to make extra principal payments it is the #1 best investment you could make to get the PMI taken off early.

 

[Pilgrimdawg]

Classic example of what not to do. Got up early this morning to take my little grandson fishing and stopped by Hardee’s on the way to the lake. $17.68 for 2 biscuit combo’s. That’s just a dumb way to spend your money even if you can afford it. 2 biscuits, 2 fake hash browns, 1 apple juice, and 1 coffee. That’s just crazy. Shame on me for being too lazy to fix us a little breakfast before heading out. A perfect example on how to not be thrifty with your money.

 

[sandwolf.sixpack]

bottom line is ramsey’s audience is people too lazy or stupid to manage their money. they can basically place the blame or credit on ramsey and not take any real responsibility for themselves

Haha, what a take.

"If you follow a financial plan that was developed by a financial professional instead of developing your own, you are lazy and stupid and shirking your responsibilities!!!"

Incredible.

 

[johnson86-1]

Hopefully you were never dumb enough to have PMI in the first place. It’s a big monthly outflow with zero benefit to you. But if you do have it, as soon as your mortgage drops to 80% of the fair value of the property, get a new appraisal & drop the PMI. Also, note that this can come from either paying your mortgage down or from appreciation of the property.

I believe pmi rates can vary pretty significantly. If your pmi is essentially bumping your rate up by less than 1%, even if it’s notdeductible, I don’t think a first time buyer paying it so they can get in the market is dumb. Just depends on the market and how hot it is.

 

[3407Dewey]

Yes we moved in May. And then had **** absolutely hit the fan immediately afterward. You spend the money on buying the new house, then Movers cost $2K, then we get into the new house and realize that basically the whole house needs to be repainted (was not evident until the previous owners took everything off the walls and emptied cabinets), so that was another $4K, then we got hit with a major medical emergency in early June that cost after $2,500 after insurance. And it was not one that you just get over quick, it was one that took an emotional toll too, I’ll leave it at that. Then you get in the new house and obviously the wife wants to slowly furnish and decorate, which in a vacuum isn’t bad but it felt like death by a thousand cuts.

Candidly, three months ago I was very content with where we were financially and now I feel like I’m trying not to drown. Also don’t want to be too hard on the wife right now as some of the things in our personal life I referenced earlier have been quite challenging.

I know it’s not always gonna be like this but man when you’re in the middle of it, it’s rough.

I haven’t read all the replies but wanted to let you know that I understand how tough some of that is. I support a family of five on my income only. The plan was for my wife to go back to work full time once the youngest kid was old enough for school. However, one diagnosis after another and she hasn’t been healthy enough to do that. Our youngest is now in 5th grade.
So challenges include paying for everything on one income (I am in higher education and nowhere near a CPA salary), stepping up around the house to do at least (more) 50% of the chores, making time to be a dad to my kids, and sometimes most difficult: not being a resentful jackass. My wife didn’t ask for this and it’s not her fault. She would be healthy if she could and contribute more if she could.
All of it is hard but it’s also made me more dependent on my faith. You definitely learn to rely on God more when you simply can’t handle it by yourself. My advice for what it’s worth: Having your financial affairs well ordered is important but not nearly as important as the person you are while going about it. Your family needs you at your best more than they need “stuff”. I’m going to try to take my own advice.

 

[PBDog]

Haha, what a take.

"If you follow a financial plan that was developed by a financial professional instead of developing your own, you are lazy and stupid and shirking your responsibilities!!!"

Incredible.

if you follow any plan blindly without educating yourself then the shoe fits

 

[OG Goat Holder]

Classic example of what not to do. Got up early this morning to take my little grandson fishing and stopped by Hardee’s on the way to the lake. $17.68 for 2 biscuit combo’s. That’s just a dumb way to spend your money even if you can afford it. 2 biscuits, 2 fake hash browns, 1 apple juice, and 1 coffee. That’s just crazy. Shame on me for being too lazy to fix us a little breakfast before heading out. A perfect example on how to not be thrifty with your money.

Food is so ridiculous. I hope the automated kiosks help curb some of this, so we don’t have to pay dipslts $15/hr to get high and take orders.

 

[Maroon Eagle]

Food is so ridiculous. I hope the automated kiosks help curb some of this, so we don’t have to pay dipslts $15/hr to get high and take orders.

I’ve been steering clear of kiosks BEFORE all the fecal bacteria on kiosks stories articles came out.

#dirtykioskscreens
#customerscanbenasty

 

[sandwolf.sixpack]

if you follow any plan blindly without educating yourself then the shoe fits

So everyone that follows Ramsey's plan is doing so blindly and without educating themselves? That's ridiculous.

Personal finances can be an extremely difficult thing to manage, especially for people with a family. You go a hundred miles an hour all day juggling your jobs and the kids with 2 adults that are stretched thin and managing different elements of the household responsibilities as time allows...there are a lot of variables to account for and it can be tough to get on the same page with your spouse. So some people -- even very capable, productive people -- need a rigid, black and white plan to follow, and Ramsey provides that. To call those people stupid, irresponsible, and lazy is just an awful take.

For the record, I think Ramsey is an insufferable, arrogant dickhead, and I don't follow his plan....but I would be a lot better off if I did.