Comments on: Dave Ramsey’s 7 Baby Steps

By: Buddystips

Buddystips — Tue, 08 Sep 2009 02:26:02 +0000

Patrick,

Thanks for the listing of DR Baby Steps. I listen to him on radio, but more for the experiences of those calling in then for his advice to them. I don’t agree with sequencing (e.g., step 1, then 2, then 3, etc.). This is especially true related to Step 2 and Step 4…I believe you should do both at the same time, simply because “time” makes a difference. If it takes you 3 years to eliminate all debt, that is 3 years you have lost in investment grow and compounding. So I promote doing both at the same time. In this way, you win twice over. Again, I really enjoy your Blog and the folks that participate in it. I look forward to reading the series. Thanks again!

By: E.F.

E.F. — Wed, 05 Aug 2009 03:48:40 +0000

Good for you, goddess. You are doing great considering your age. Not everyone needs Dave Ramsey’s course however. Many people, myself included, are already completely debt free.

By: goddess1812

goddess1812 — Thu, 23 Jul 2009 00:59:42 +0000

Everyone here needs to go to a Dave Ramsey Financial Peace Course. You would then have a fuill explanation as to why he does things the way he does. It truly is an amazing course.

I took the course and am in the process of paying off our mortgage early and I am STOKED! We have completed Baby Steps 1-4 (no kids so we don’t need #5).

I am 27 Years old, have $50,000 in the bank and the only debt we have is the mortgage.

Woo Hoo! I can’t wait to be debt free!

By: E.F.

E.F. — Sun, 05 Jul 2009 23:32:22 +0000

Hi Patrick! Great blog! I have pretty much always lived a debt-free lifestyle, but what I love about Dave Ramsey is that he has made this lifestyle cool. About step 6, I’d like to make two points: First of all, making more money in investments rather than paying off the mortgage only works if people actually invest the money. There is much evidence that most people just spend it instead. Second, looking just at the low interest rate is deceiving about the real debt load of a mortgage. The average homeowner with a 30-year mortgage pays back three times that amount. The true cost of a $200000 mortgage then is $600000! Perhaps some people can make this much in the stock market, but that was a gamble even in the 90s when I paid off my house. Most of my friends invested in tech stocks (and thought I was an idiot). Well, I ended up owning my home free and clear while they lost almost all their money. Living truly debt free (no mortgage) leaves enough money for savings, investments, and fun things like travel. Most of all, it gives me piece of mind.

By: Scott Evans

Scott Evans — Sat, 16 May 2009 02:59:46 +0000

Dividend Growth Investor,

Borrowing money to invest is stupid.

1. Risk. Stretching the money over 30 years in order to invest will not put you ahead if lets say the stock market falls 50% along with home values…such as the situation that we are in now.
2. Taxes. Paying 6% interest in order to make 8-12% in good markets may sound like a good idea, until you have to pay taxes on the capital gains and dividends which will more than likely increase greatly.
3. Cash is king and a great asset. Someone making 50000 per year can build wealth with no debt while one making 100,000 per year with a mortgage and 2 car payments will not be able to build wealth or be able to not live paycheck to paycheck.

By: Brian

Brian — Sun, 10 May 2009 17:13:01 +0000

My wife and I have been working Dave Ramsey’s baby steps for a little over a year now (working toward accomplishing #3) and our whole perspective on money has changed. The challenges experienced through living the baby steps long term really stems from your view of money. If you initially approached these baby steps as one approaches a diet you will likely not have the will power to continue long after you begin. Dave Ramsey is trying to instill in people a life style change, not a diet. If you make $40,000 per year, your consumption must be something less than $40,000 per year or you will never achieve anything. This caused a paradigm shift in how we see money. We got off the earn-to-spend cycle, but that is a choice and I think you have to get mad before you make that decision.

By: Patrick

Patrick — Wed, 22 Apr 2009 02:13:34 +0000

babsnea: This is where having a strong budget comes into play. You will need to consistently spend less money than you earn, and use the left over money for the things Dave Ramsey recommends. A lot of this will depend on your income and many other factors. Some people simply do not earn enough money to save very much. But if you earn enough to save, then you will need to create a solid budget and stick to it.

By: babsnea

babsnea — Wed, 22 Apr 2009 00:25:13 +0000

The first few Baby Steps are easy (do without, see progress, reach goal in a reasonably short period of time) compared to trying to live the Ramsey way later in the steps (keep emergency fund fully funded, save for cars, pay off mortgage, keep investments at 15%). There is very little discussion about this by Dave or anyone else. Is anyone else experiencing this? Can anyone make suggestions where to find some support for people like me?

By: the Dad

the Dad — Thu, 19 Mar 2009 06:56:50 +0000

Martina, Dave ain’t here…

A useful post nonetheless and a good round-up of the baby steps. Well done.

the Dad, climbing out

By: Martina

Martina — Tue, 10 Mar 2009 11:59:32 +0000

Dear Dave,
My husband and I are presently attending your Financial Peace University. We have completed baby step 1,2 and 3. I have a 30 year mortgage. Unfortunately we refinanced the house 3 years ago at a interest rate of 6.5% and owe about $320’000. The house appraises right now for about $400. My husband and I have been making 1 extra payment each year sense we refinanced the home. We divided that payment in 1/12 payments and added it to our regular mortgage payment and applied it to our principles. Right now we are in the position to make double payments each month. But this would really limit us from making any spontaneous decisions like going on short weekend trips and so on. What would you recommend?
Thank you for taking the time of responding.
Martina