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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Creit Counseling?||Date: 6/7/2001 2:23 PM|
|Author: aja91||Number: 75089 of 308470|
I didn't find it irritating at all. In fact, I expected it because his is a ministry. As with anything, take what you need and leave the rest. He gives good, sound, financial advice that's definitely worth a look. And if you come away with something more, great. If not, that's fine too.
The same type of financial advise is available elsewhere WITHOUT having to wade through the religious stuff. Being not-Christian, I don't like it. I know that there are others who feel the same way. If it doesn't bother you, that's great, use him.
Here's the non-religious summary of his plan:
(1) Save $1000 for a mini-emergency fund. If needed, sell extra "stuff" to make this happen quickly. Pay minimum on all debt, and minimize/cease all retirement fund/education fund contributions at this time.
(2) "Snowball" all non-mortgage debt. This means you come up with extra money to put towards the first debt each month, then roll that whole payment into paying off the second debt, and so on. Dave has you order by lowest-to-highest balance, rather than interest rate. Again, minimize/cease all retirement fund contributions at this time. Do not charge anything else during this time - save the money up for any purchase in a "sinking fund" and use that money as your "credit card."
(3) Finish funding emergency fund. This is 3-6 months of living expenses. (Yes, you guessed it, no IRAs of 401k just yet).
(4) Fully fund all available retirement vehicles - 401(k)/403(b) and Roth IRA being the preferred mechanisms. No need to put more than 15% of your income combined in these accounts.
(5) Fully fund college education for children, if any. Use Educational Savings Accounts (aka Educational IRAs) up to the maximum, and supplement with UTMA/UGMA accounts.
(6) Pay off the mortgage on your home.
I have some financial concerns with this -- I think you can certainly apply more than 15% to retirement if you're so inclined. I also think it makes sense to investigate 529 plans if you're saving for a child's college education. And then there's old "should I invest or pay off the mortgage?" question. . .
However, there's certainly a lot of good material in this plan that you can utilize, so I hope this summary is useful for those who wish to avoid Mr. Ramsey's evangelizing but do wish to hear his financial ideas. (If you don't mind the evangelizing, go to his website and listen to some of the lessons online - he's a pretty entertaining speaker).
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