Spacefem (spacefem) wrote,

Dave Ramsey's Financial Peace

Okay, after I read Millionaire Next Door, Dave Ramsey showed up in the local free library so I figured it was a sign. I had some preconceived notions about the guy, I didn't think I'd like him, but you have to read things you disagree with so I picked it up. Also, there aren't many pages and the print is big so hey, quick read.

In most non-fiction books I think you can get a good sense from the first few chapters, then the last half just re-enforces it... this one is sort of the opposite. The last half of the book has the gems, the first half is mostly preaching. Here's what really bugged me: every financial book has one chapter about how we overspend on crap we don't need. A lot of americans just go to the mall too damn much, drawn in by labor day sales or whatever, it can add up to real credit card debt. But in Dave Ramsey's book it gets like four chapters... seriously like half the book. And when he does get to the specific advice for people like single moms, he starts off by telling them they just buy too damn many overpriced happy meals for their kids because they need convenience.

Dave Ramsey is a guy who went after the real estate market, made out like a gangbuster, then lost it all being super greedy. He was a douche. The he spends half his book telling us to stop buying blenders? When 60 percent of bankruptcies in America are due to medical bills, or up to 40 percent of welfare recipients have a disability? WOW.

Whenever I feel the need to judge the poor I think back to my college days, when the families from town would pull up to the dorms in barely-running cars with their kids to go through the trash that us students were throwing out... these people were stuck in a place so flooded with students that nearly every job paid minimum wage. How do you save up? How do you escape? Can you escape, if a family member needs you, if the only jobs you could get here don't look impressive on resumes?

These people were not buying too many purses at the mall.

So that's why I'd recommend skipping the douchy, judgy first half of Dave Ramsey's book.

AFTER THAT he's actually got some good tips. I especially liked his "baby steps" - it's a simple set of priorities that look tackleable:

1) Save up a $1000 emergency fund
2) Pay off all debt (except your house), starting with the lowest balances first, they're easiest to knock out!
3) Increase that emergency fund to 3-6 months of expense
4) Invest 15% into retirement
5) College savings
6) Pay off your mortgage
7) Build wealth, invest, etc.

Some especially good tips I appreciated: he confirmed that an individual trading stocks on the stock market is bound to do poorly. I've learned that too, but it was a pricey lesson. I like that his "starter emergency fund" is only $1000, it seems a lot more doable than the 3-8 months I see recommended out there, eesh! He basically confirmed that what I'm doing now is good: instead of trying to figure out the latest greatest investment opportunity, I'm just paying extra on my house. It's safe, and easy. I've read Rich Dad Poor Dad and it makes you feel like you've got to get into real estate or something NOW, and I just don't feel right doing that.

I also like his quick and easy budget lite tool on his website, it's a simple proposal for what percentages of your income should go where. All the budget talk prompted me to shift some things around, we have a very specific food & grocery budget that sometimes suffers (aka... gets a cash boost from the savings account) on weeks when marc's gotta buy gas, because that's at least a day of food. I figure well crap, if gas is a relatively fixed expense, why not just put all our gas on our gas card so the food budget is really the food budget, and we know if we're sticking to it? BTW this is not something DR would recommend, he hates ALL cards and recommends writing checks for EVERYTHING because that way you feel the cash going out (like cash) and have a record... yeah that's bullshit. I did have a month this year where I couldn't pay my balance on my card, I paid a $20 interest fee, and earned $30 in cash back points that month that I applied straight back to stuff I bought on the card. I also bought furniture on credit, when I bought my house. 36 months no interest. I'm making automatic payments to have it done with way before 36 months. Dave would say this is all evil and I'll miss a payment and get fleeced... I have not found this to be true.

Anyway this entry is plenty long, the conclusion is that every book I read has some stuff I take and some stuff I leave, and this was no exception. I'm not going to be a dave ramsey follower, not going to start writing checks like it's the 1970s THAT'S for sure. I am going to get my emergency fund to six months, because that seems like a nice next goal. This book is good for a few simple tips if you can get past the philosophical yammering.
Tags: books, books i hated, finance
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