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Home > why I do things a little different than Dave Ramsey

why I do things a little different than Dave Ramsey

May 10th, 2007 at 05:09 pm

I love listening to Dave Ramsey's show. I like his Baby Steps. I like the straight up, to the point advice he gives. I think he has a common sense approach to finances.

Now, I started paying attention to my finances before I ever heard about Dave. I had made a budget and given myself goals and set out to achieve them in a manner somewhat similar to Dave's.

However, there are 2 things I feel conflicted on... stopping retirement savings altogether and paying off all my debt with only $1000.00 in an emergency fund.

My parents talked to me for years about the importance of retirement savings. Iras, 401k, ect. I can't seem to get my dad's voice out of my head when I think of stopping the contributions. SO I am bringing it down to 5%, which will allow me to still receive the company match.

Since I am a single woman, living alone, I feel the need to have a much higher emergency fund to feel comfortable. I feel that I need a larger safety net because if something happens, such as breaking a leg & ending up in the hospital, I'm the only person I can rely on to pay my bills.

So I have set a higher emergency fund goal. Its not quite 3-6 months of expenses, but its definately more comfortable. PLUS I do have another source of savings that I'm basically pretending isn't there.

When I bought the house, my county had a down payment program that provided me a $5,000.00 loan towards my closing costs. I had the cash, but I accepted their loan because for the first 3 years, it is completely interest free. So I have my $5,000 cash in my ING account, earning interest and waiting to pay off off the loan in September 2008. If there was ever any major problem, I could touch it, but I REALLY wouldn't ever want to. So I really just pretend it isn't there.

I feel comfortable where my emergency fund currently is at $4,600.01 (I need to update my sidebar numbers). So from now on, all my extra income from overtime, bonuses, ect is going straight to my private student loan. This is something that my parents cosigned for and although they do not have a problem with it, I really want to pay it off as quickly as possible. Then I will work on my Federal student loan.

I'm going to be working up a projection to get the Private loan paid off in 2 to 3 years. Definately doable.

Posted in goals, budgeting | 8 Comments »

8 Responses to “why I do things a little different than Dave Ramsey”

  1. ladymiller Says:
    May 10th, 2007 at 05:55 pm 1178819707
    1178819707

    Just wanted to say that I thought your post was very good. Sounds like you are doing very well, and realy really well for someone so young!! I'd say you have good parents and they have a smart young lady for a daughter!

    I wish you well.

  2. scfr Says:
    May 10th, 2007 at 07:18 pm 1178824695
    1178824695

    Good for you ... I believe that we each have to decide for ourselves what we feel comfortable with. I have gleaned good information from a variety of "financial experts" but there is no single one that I would follow 100%. After all, none of them knows my situation as well as I do, and none of them knows my psychological makeup. Stay open to new ideas and stay honest with yourself, and you'll make the right decision.

  3. monkeymama Says:
    May 10th, 2007 at 07:36 pm 1178825762
    1178825762

    Sounds good to me. I think Dave is good at digging people out of debt, but for the big picture not a great financial guru. I have seen a lot of Dave followers freaking out about a little debt here and there. I used to be quite anti-debt, but my feelings evolve with time, I am now learning how to use interest-free debt to my advantage - and low-interest debt like a mortgage (which builds equity) for investing. All will pay off much better in the long run. If I followed any one financial guru's principles to a T I would probably be missing something, many have their biases. Wink & we all have to evaluate our individual situation. For 1, I always hear as a 1-income family we need a bigger e-fund, but since we have 2 able bodies to work in case of a lost job I don't really get that. Now if my spouse had no job skills or simply couldn't get a job that would be different. I Would feel I would need a much larger e-fund if I was single because then I would only have myself to fall back on. Good thinking. Everyone's situation is so unique. Sounds like you made smarter moves for yourself.

  4. Brooklyn girl Says:
    May 10th, 2007 at 07:36 pm 1178825786
    1178825786

    Student loans can bug you, because they are "debt".

    But if they are locked at 3% or so, it is wiser to just pay the minimum and invest the rest - as it would not be hard to do better.

  5. pjmama Says:
    May 10th, 2007 at 08:08 pm 1178827683
    1178827683

    Too bad the personal student loans dont have that kind of low interest rate... I know from experience, and I have no cosigner... Either way, I'll let you know how I like Harry Potter!

  6. laceshawl Says:
    May 11th, 2007 at 01:04 am 1178845461
    1178845461

    Looking back I wish I hadn't been quite so dedicated to paying off debt that I neglected retirement savings. It is very hard to make up for lost time. You are young and so can make smaller payments as they have plenty of time to grow. I think you are definitely doing the right thing - passing up on a match is like throwing away free money.

  7. Broken Arrow Says:
    May 11th, 2007 at 01:07 pm 1178888847
    1178888847

    I think your strategy is perfectly fine. While Dave Ramsey's exacting formula is a fine starting point, personal finance isn't one-size-fits-all.

  8. fairy74 Says:
    May 11th, 2007 at 04:34 pm 1178901240
    1178901240

    I had the same reactions to Ramsey's plan. I agree that he has some good ideas, but I also like a bigger EF and did not stop retirement contributions...ultimately, you have to decide what is right for you. His way is just one way and if it helps people great!

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