In my last post where I told you we’re keeping our car for now, I had a few commenters share some pretty interesting points about Dave Ramsey. Here are excerpts. Go to this post and scroll down to see them all.
… Sometimes, I hate Dave Ramsay.
There. I said it. He is just SO rigid, and he makes so many frugal folks feel so guilty! … I just don’t think that ALL debt is the devil. Things like a house and a car, and yes sometimes even a second car, are necessities, and unfortunately our culture has set it up to make it very difficult to buy one without taking on some debt.
It’s not impossible, but at our age with so many other goals to work toward, saving that kind of cash upfront can take a LONG time. I don’t see anything wrong with taking advantage of the healthy credit you’ve built to borrow that money at a good rate, especially since you plan to pay it down quickly. You’re not talking about leasing a brand new sports car here. You’re talking about a used, reasonably priced family vehicle that you will drive for years! …
… I took the Dave Ramsey course, and I had to learn that all of his ideas were not for me. If I had decided to follow his program to a “T” I would have been completely stressed out!
… if I focused on following the program to the letter I would have been obsessed with our money and thus made it an idol in my life instead of focusing on the great life and family that the good Lord has blessed me with! So while I think his program is invaluable, I do think you have to be wise with it and apply to your own life what works for you. …
… When my husband started listening to Dave Ramsey I seethed with hatred. I thought Dave Ramsey was ruining my life. Now, debt free, I couldn’t be more thankful we applied his wisdom to our finances. …
And from the man himself, Dave, who tells us the truth about debt. Um, he didn’t comment on my blog post — this is from his own site :) :
… Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you’re in debt, then you’re a slave because you do not have the freedom to use your money to help change your family tree. …
He points out just how much more you could contribute to building wealth if you didn’t have a stinkin’ car payment (or any other payment). How you could more effectively help your children attend college. How you could actually afford to retire before you’re 95.
These are all true, valid points.
Is there even a “but” to the “debt is dumb” argument? Some might say yes, but I still say debt isn’t optimal.
When we set out to buy our first house, that could very well come around the same time that we’d need a second vehicle (though Shane is really against it and wants to bike or walk or bus…dunno how reasonable that is out there). Or, we’d need to switch from the Ford to a van.
If that vehicle situation does happen around the time of the house purchase, then I don’t see how we could realistically have enough cash to pay for a reliable van.
So our options would probably be:
1. Continue to rent. Continue padding the savings account. Buy the van with cash, but wait on the house.
2. Buy the house. Put something down on a car loan, and go into debt for a reasonable used van. Pay off as soon as possible.
Neither option sounds like a clear winner to me. Perhaps we would need to rent an apartment or house for a few months after we moved, because of course it does take awhile to find a house and have all the inspections and paperwork go through. (Side question: Can you realistically move to a new city and buy a house quickly? Or do you really need to get a month-to-month lease somewhere while you get it all sorted out?)
Since I’m not particularly familiar with most of the Indy metro, I think it will probably take us at least a little bit to figure out where we’d want to live, and then which house we’d want to buy.
Our minimum down payment is 5 percent but I think we need it to be around 10, plus paying closing costs out-of-pocket. I don’t think we could get up to 20 percent without waiting for several more years. I don’t wanna do that. And Dave even says it’s ok to put 10 percent down on a 15-year mortgage. That’s our intention anyway, so whew!
So circling back to the “does Dave Ramsey stress frugal people out?” I think he does, but with good intentions. He wants to motivate us to get out of debt, so that we don’t go back into debt for any reason, ever again.
Is it realistic? I don’t know.
I do know that I won’t be paying cash for a house, so I will have some debt again. And it is entirely possible that we’ll need to take on a bit of debt for another vehicle.
It can be a slippery slope and I do need to be mindful that we don’t let it get out of hand.
Do you disagree with Dave? Does he stress you out?