Where are my anti-debt/credit card people at?

[roymunson]

Never carried a balance on a CC, but use it for the points I get in return. Debt on the appreciating assets like house, business, and recreational land. My property is up close to 50% since I bought it in 2017. Out paced inflation and interest, PLUS I get to hunt it whenever I want.

No debt is one way to skin the cat, but not the only way. People with no self control should draw hard lines. Just because an alcoholic shouldn't ever take a drink, doesn't mean someone with self control can't.

 

[simplepeddler]

You are not right and you are not wrong either. Let's say you are at Bass Pro, buy a $900 tent, $1500 binos and $2K rifle and can now pay with cash, a check, a charge card, debit card or apply for a Bass Pro card and receive a 10% discount. A 2% cash back card gives you $88. A new Bass Pro card gives you $440. None of the other payment options give you anything.

The best advice when spending is...

View attachment 513824

That's Dave advice too! LOL

 

[Bailer]

On another note, if you're happy where you live and don't see a change in status quo for lifestyle (including political leanings) and you have a stable income, do NOT pay off a mortgage early other than working at paying down the total interest paid over the life of the loan.

Paying off a mortgage ealry will hurt your credit rating, even if you don't keep CC's.

Really? How many points have you seen a credit score go down due to paying off a mortgage early? I’ll check myself, as mine should be paid off by the end of the year.

We do have a couple credit cards. One my wife likes for the points and one I use only for hunt applications.

 

[william schmaltz]

I commented on the credit card thread. We use AK Airlines cards and they save us about $3-4K a year in airfare. The balances are paid automatically each month. It's essentially a debit card. With that said, me and my wife (fiance at the time) took the total money makeover class 8 years ago. I would HIGHLY recommend that to any couple as part of their pre marriage counseling. It starts the conversation at least and will put both parties on the same page. Money problems are the #1 cause of divorce. I would love the see the divorce stats for couples that have taken that class vs. couples that have not.

We paid off our massive school debt in about 3 years ($120K) and then bought a house 4 years ago. I have zero regrets. I can't imagine having a mortgage and $1200 worth of school payments going out the door every month. Even if it meant I had another $50K in house liquidity. I love the peace of mind of having a house payment and only a house payment! When the world shut down because of Covid and the money stopped for a month or two, it was a breeze for us mentally because of the foundations of Total Money Makeover. We also dealt with the loss of a child in 2021 and I can't imagine if we would've had to deal with financial stress and a pile of debt payments on top of that.

As others said, Dave is mostly for people that are out of control. Nothing wrong with that. It's ignorant to say that he's right or wrong, as everyone's situation is different. We stopped paying extra on our house and are piling money away to go towards real estate opportunities. We will use debt in the process, something Dave would strongly disagree with. On the other hand, if it wasn't for Dave, we would not have our financials in order to take advantage of such investment opportunities.

I find it odd how obsessed people are with their credit score. If everyone is as responsible with their money and credits cards as they claim, what does it matter if you have a good or great credit score? If you eliminate $2K a month from your budget by paying off your mortgage early, who gives a damn what your credit score is, you have an extra $25K/year of income! You could literally fly to AK and do a moose and caribou hunt every year; but you're worried about your credit score. I guess the borrower really is slave to the lender. We check our credit report twice a year to make sure no one is committing fraud in our name. Couldn't even guess what our scores are and would never make life decisions based on some arbitrary score with no guideless that seems to be set by someone akin to the wizard of oz.

 

[roadrunner]

Really? How many points have you seen a credit score go down due to paying off a mortgage early? I’ll check myself, as mine should be paid off by the end of the year.

We do have a couple credit cards. One my wife likes for the points and one I use only for hunt applications.

About 125 is what mine did.

 

[Andrew12gauge]

I think it can be boiled down to one thing, NOTHING IS FREE. if you get cash back, someone somewhere some how is paying for it. If you get a lot of air mile and fly for free someone somewhere is paying for it. Nothing in this life is free.

Maybe others should be better with their finances, me I’ll take advantage of the “free” money that I get from my credit card, just put an extra $830 into my bank account last week from my 2022 cash back rewards on my Costco card


Sent from my iPhone using Tapatalk

 

[GatorGar247]

Everything I own is paid off.. I use a credit card for every purchase. It allows me to pay one bill at the end of the month and also get a little extra cash back.. The main reason I use a credit card is because it's someone else's money. If it's stolen/ hacked or whatever it's not my money being stolen like it is with a debit card.
You just have to know how to manage money. Ramsay's target audience for the most part don't know how to manage money. A credit card is a tool.

 

[peterk123]

I'm like many others here. I have a credit card. Balance is paid off every month.

Also no mortgage, no car loans, nothing.

Here is a great statement for you guys. Don't remember where I saw it. ...... be the wealthiest person in your neighborhood. Let it sink in. It's brilliant. Everyone can do it. It just requires you to give some wants.

 

[Bachto]

I commented on the credit card thread. We use AK Airlines cards and they save us about $3-4K a year in airfare. The balances are paid automatically each month. It's essentially a debit card. With that said, me and my wife (fiance at the time) took the total money makeover class 8 years ago. I would HIGHLY recommend that to any couple as part of their pre marriage counseling. It starts the conversation at least and will put both parties on the same page. Money problems are the #1 cause of divorce. I would love the see the divorce stats for couples that have taken that class vs. couples that have not.

We paid off our massive school debt in about 3 years ($120K) and then bought a house 4 years ago. I have zero regrets. I can't imagine having a mortgage and $1200 worth of school payments going out the door every month. Even if it meant I had another $50K in house liquidity. I love the peace of mind of having a house payment and only a house payment! When the world shut down because of Covid and the money stopped for a month or two, it was a breeze for us mentally because of the foundations of Total Money Makeover. We also dealt with the loss of a child in 2021 and I can't imagine if we would've had to deal with financial stress and a pile of debt payments on top of that.

As others said, Dave is mostly for people that are out of control. Nothing wrong with that. It's ignorant to say that he's right or wrong, as everyone's situation is different. We stopped paying extra on our house and are piling money away to go towards real estate opportunities. We will use debt in the process, something Dave would strongly disagree with. On the other hand, if it wasn't for Dave, we would not have our financials in order to take advantage of such investment opportunities.

I find it odd how obsessed people are with their credit score. If everyone is as responsible with their money and credits cards as they claim, what does it matter if you have a good or great credit score? If you eliminate $2K a month from your budget by paying off your mortgage early, who gives a damn what your credit score is, you have an extra $25K/year of income! You could literally fly to AK and do a moose and caribou hunt every year; but you're worried about your credit score. I guess the borrower really is slave to the lender. We check our credit report twice a year to make sure no one is committing fraud in our name. Couldn't even guess what our scores are and would never make life decisions based on some arbitrary score with no guideless that seems to be set by someone akin to the wizard of oz.

This is my favorite response of this whole thread.

 

[Grassymike]

I'm like many others here. I have a credit card. Balance is paid off every month.

Also no mortgage, no car loans, nothing.

Here is a great statement for you guys. Don't remember where I saw it. ...... be the wealthiest person in your neighborhood. Let it sink in. It's brilliant. Everyone can do it. It just requires you to give some wants.

The only problem I have with this , is what if your neighbor is extremely wealthy.....

 

[rayporter]

an 800 score and no debt. except for a card paid off every month. paid cash for the house i live in back in 93. retired in '03.

i would like a better house and have been looking but going back in debt........

has any older folks went back in debt late in life?

 

[MattB]

I commented on the credit card thread. We use AK Airlines cards and they save us about $3-4K a year in airfare. The balances are paid automatically each month. It's essentially a debit card. With that said, me and my wife (fiance at the time) took the total money makeover class 8 years ago. I would HIGHLY recommend that to any couple as part of their pre marriage counseling. It starts the conversation at least and will put both parties on the same page. Money problems are the #1 cause of divorce. I would love the see the divorce stats for couples that have taken that class vs. couples that have not.

We paid off our massive school debt in about 3 years ($120K) and then bought a house 4 years ago. I have zero regrets. I can't imagine having a mortgage and $1200 worth of school payments going out the door every month. Even if it meant I had another $50K in house liquidity. I love the peace of mind of having a house payment and only a house payment! When the world shut down because of Covid and the money stopped for a month or two, it was a breeze for us mentally because of the foundations of Total Money Makeover. We also dealt with the loss of a child in 2021 and I can't imagine if we would've had to deal with financial stress and a pile of debt payments on top of that.

As others said, Dave is mostly for people that are out of control. Nothing wrong with that. It's ignorant to say that he's right or wrong, as everyone's situation is different. We stopped paying extra on our house and are piling money away to go towards real estate opportunities. We will use debt in the process, something Dave would strongly disagree with. On the other hand, if it wasn't for Dave, we would not have our financials in order to take advantage of such investment opportunities.

I find it odd how obsessed people are with their credit score. If everyone is as responsible with their money and credits cards as they claim, what does it matter if you have a good or great credit score? If you eliminate $2K a month from your budget by paying off your mortgage early, who gives a damn what your credit score is, you have an extra $25K/year of income! You could literally fly to AK and do a moose and caribou hunt every year; but you're worried about your credit score. I guess the borrower really is slave to the lender. We check our credit report twice a year to make sure no one is committing fraud in our name. Couldn't even guess what our scores are and would never make life decisions based on some arbitrary score with no guideless that seems to be set by someone akin to the wizard of oz.

Good for you. As you suggested, Ramsey is personal finance 101. His advice is great for people flirting with financial disaster and trying to work toward stability, but I doubt anyone can become really wealthy using his system. I used to work with high-net worth real estate investors ($50M-$100M portfolios). Every one used leverage to help build their portfolio. They started out highly levered and, once they experienced economic cycles, saw the light on low/moderate leverage (30-60% LTV). Debt was an important tool as they could buy 3-4x as many properties with debt than with straight equity. I truly believe none would have been able to achieve the results they did if they were Dave Ramsey acolytes.

On the margin, FICO scores can impact your ability to get credit, the amount of the credit, the terms of the credit, and the pricing of that credit. DR followers shouldn't care, but for those of us who may want to borrow for an opportunity that may arise, it makes sense to be somewhat mindful of it. Past a point, it is just a number used in a @!&% measuring contest.

 

[fwafwow]

Good for you. As you suggested, Ramsey is personal finance 101. His advice is great for people flirting with financial disaster and trying to work toward stability, but I doubt anyone (other than Dave Ramsey) can become really wealthy using his system.

I fixed it for you

 

[william schmaltz]

Good for you. As you suggested, Ramsey is personal finance 101. His advice is great for people flirting with financial disaster and trying to work toward stability, but I doubt anyone can become really wealthy using his system. I used to work with high-net worth real estate investors ($50M-$100M portfolios). Every one used leverage to help build their portfolio. They started out highly levered and, once they experienced economic cycles, saw the light on low/moderate leverage (30-60% LTV). Debt was an important tool as they could buy 3-4x as many properties with debt than with straight equity. I truly believe none would have been able to achieve the results they did if they were Dave Ramsey acolytes.

On the margin, FICO scores can impact your ability to get credit, the amount of the credit, the terms of the credit, and the pricing of that credit. DR followers shouldn't care, but for those of us who may want to borrow for an opportunity that may arise, it makes sense to be somewhat mindful of it. Past a point, it is just a number used in a @!&% measuring contest.

He wouldn't claim people can become massively wealthy with his system. That's unless they have a massive income. It takes high levels of risk to become massively wealthy. We can all agree there. I also follow Robert Kiyosaki and Grant Cardone closely and they're always saying you need to take risk to build 7-figure+ wealth. Dave's whole thing is low to no risk; slow and steady WILL win the race and will put you well above average net worth. Anyone that followed Dave's stuff to the nail starting before the age of 30 with an average income would retire with several million dollars and not a single payment to the bank (unless our markets completely collapsed; that's based on average return since market inception). He has the data in a comprehensive white paper on his website to prove it. And a massive pile of testimonials from low income earners that are millionaires because of following his principles. The book Everyday Millionaires is a short read and summarizes all the data if you got an open mind. That's all the average person wants. Owning rental property and becoming massively wealthy is not even a thought to the average household. It's simply paying the bills they're drowning in.

I'd argue his advice is for the average American and not a small cohort of out-of-control people everyone claims it's for. The average American household income is $85K before taxes. The average credit card debt per household is $6K. Average mortgage payment is $1,500. Average car payment is $650 x 2 per household. Average household student loan debt is $30K. I'm sure I'm missing other big debts the average household has (ATV, boat, camper, motorcycle, etc). Add in the eating out, recreation, vacation, and entertainment most households have and the math doesn't really add up that the average American household is in happy land. And that's shown by our divorce rate. (now is a good time to point out, the average household cannot responsibly use credit cards as the data above shows. They're losing their ass on interest chasing points and cash back)

I used Dave to set my family in a position to invest. If we had the average car payment, student loan payment, and whatever else; the investing in real estate conversation wouldn't even be a possibility at our table. As is the case with most Americans. No one is arguing with you that the extremely wealthy are highly leveraged. Me, you, and Dave all agree on that. For every one of them highly leveraged $50-$100M guys, there are five that are busted broke. For me, it's all about finding the sweet spot between that and Dave. And it takes an extremely disciplined person. Those disciplines were instilled in me through Dave. That is all and I'm grateful for it. Several have that discipline without his advice. Good for them, but that's far from average. I'm willing to take on some of the risk to build wealth outside of what he teachers, but I have the fallbacks in place if it fails. Most people are not like that. Dave was one of the people that didn't have the fallbacks and that's why he went bankrupt.

Going back to the average American household number above, there's no banker in their right mind that would give that person a highly leveraged real estate loan based on their debt to income ratio. They wouldn't even get to the part of the conversation when the credit score is looked at. I have no idea what my credit score was when I bought my house. But we were not pre-approved when we put in our offer. When we called the bank and told them our income with no debt and what we wanted to borrow, they simply laughed and told us to put in the offer. We could've essentially had a credit score of 0.

edit to add: there was a guy on here a few years ago in a similar thread claiming how stupid people were for paying off debt when buying debt is so cheap and the market is red hot. I can't imagine the situation he's in today.

 

[Nick992]

On another note, if you're happy where you live and don't see a change in status quo for lifestyle (including political leanings) and you have a stable income, do NOT pay off a mortgage early other than working at paying down the total interest paid over the life of the loan.

Paying off a mortgage ealry will hurt your credit rating, even if you don't keep CC's.

If you have no debt and a paid for house, why do you need a credit score?

After a year or two without and debt, your score goes back to 'indeterminable', like when you were a kid without any credit.
If you want to move and get another mortgage, there are companies that do manual underwriting for people who don't have a score.

 

[MattB]

edit to add: there was a guy on here a few years ago in a similar thread claiming how stupid people were for paying off debt when buying debt is so cheap and the market is red hot. I can't imagine the situation he's in today.

He is probably crushing it if he was borrowing to buy residential investment properties. Just 2 years ago sub-3% mortgage debt was available. Rents in many markets are up 20-40% over that same period and we've been looking at high-single digit inflation so we are repaying un-inflated borrowings with highly inflated dollars. Property values are certainly off their highs in most markets, but cash flow and not property values is what repay loans.

In anticipation of retirement, in 7/21 I sold a rental property and used the proceeds in part to pay off my 2.5% $1,760/mo. mortgage on my primary residence. Those are 2 of the worst financial decisions I have made in my adult life. I have to assume Ramsey would applaud them.

 

[roadrunner]

If you have no debt and a paid for house, why do you need a credit score?

After a year or two without and debt, your score goes back to 'indeterminable', like when you were a kid without any credit.
If you want to move and get another mortgage, there are companies that do manual underwriting for people who don't have a score.

Better to have it and not need it than to need it and not have it.

What a better way to increase your wealth than to borrow money at a low rate to aquire an asset that is self paying on that debt until you own it free and clear and it continues to make passive income for you?

A house is not really considered an asset. It doesn't make money for you until you sell it...

 

[fwafwow]

He wouldn't claim people can become massively wealthy with his system. That's unless they have a massive income. It takes high levels of risk to become massively wealthy. We can all agree there.

I think that some do it with hard work and/or ingenuity - perhaps with some risk. And I'm not claiming to be one of those.

I also follow Robert Kiyosaki and Grant Cardone closely and they're always saying you need to take risk to build 7-figure+ wealth. Dave's whole thing is low to no risk; slow and steady WILL win the race and will put you well above average net worth. Anyone that followed Dave's stuff to the nail starting before the age of 30 with an average income would retire with several million dollars and not a single payment to the bank (unless our markets completely collapsed; that's based on average return since market inception). He has the data in a comprehensive white paper on his website to prove it. And a massive pile of testimonials from low income earners that are millionaires because of following his principles.

I don't have any reason disagree with the above, but I am interested in the white paper to see the underlying data. I tried to find it on his website, but it wasn't obvious. What was obvious was that he's now got a way to make money off of lots of different things. If you can save me some time and send me a link, I would very much appreciate it. This came up in another thread a year or two ago and I never found the study.

The book Everyday Millionaires is a short read and summarizes all the data if you got an open mind. That's all the average person wants. Owning rental property and becoming massively wealthy is not even a thought to the average household. It's simply paying the bills they're drowning in.

I can't speak for @MattB but I took the real estate point as an example of how some people use leverage. And I don't think anyone is saying (or should say) that there is no downside to using leverage.

I used Dave to set my family in a position to invest.

This is great, our country would be far better off if everyone got to a position to be able to invest. But his advice on how to invest is one area in which I think his opinion isn't supported by the general view of those who invest for a living - or perhaps more importantly - people who aren't paid for investing but who study financial markets. His comparison of mutual funds and ETFs, as an example, is riddled with statements that are not IMHO complete, and in some respects misleading - but at the end of the summary, there's a convenient link to connect with a SmartVester Pro, which I suspect might have financial ties to him.

 

[alaska_bou]

Blaming debt on credit cards is like blaming obesity on the availability of food. It all comes down to personal responsibility. Credit cards are becoming essential in modern life and, like it or not, we are moving to a cashless society. Good luck keeping an 800+ credit score without one. And that is without mentioning the buyer protection and convenience they offer plus the rewards/perks that are actually significant. I have over a half million points on my two primary cards. I get extended product warranties, cell phone damage protection, free companion tickets, reimbursement for Global Entry, free airport lounge access, etc, etc. All this without ever paying a dollar in interest.

 

[william schmaltz]

This is great, our country would be far better off if everyone got to a position to be able to invest. But his advice on how to invest is one area in which I think his opinion isn't supported by the general view of those who invest for a living - or perhaps more importantly - people who aren't paid for investing but who study financial markets. His comparison of mutual funds and ETFs, as an example, is riddled with statements that are not IMHO complete, and in some respects misleading - but at the end of the summary, there's a convenient link to connect with a SmartVester Pro, which I suspect might have financial ties to him.

I mostly agree with you. I've made it clear that I don't follow his investing advice. Not even his advice on some debt. And I do agree that some of his stuff has unfortunately turned into informercials, and it does make a guy question how much he's benefitting. I have not listened to his show in probably 3 years, but still see social media posts from him every so often and there is a good bit I don't agree with. And again, his investing is extremely low risk, that's his whole spiel. Milquetoast monotony with minimal risk.

Like I said, I haven't listened to him in probably 3 years, so maybe he took down the white paper. I can't imagine anyone ever looked at it. I know they did it all blind and with a 3rd party. This is all I found. https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research

My whole thing is that the average person doesn't even have the money to invest. The money comes in, they send 75% to the bank in the form of debt payments and barely stretch out the other 25% while fighting with their spouse. It's sad. I was one of them and it effing sucked. And how many average Roksliders came to this thread maybe ready to get their shit under control and saw people bashing Dave because they love their air miles or don't agree with his real estate investing and now those people are just going to go back to another 5-10 years of living paycheck to paycheck and fighting with their wife and will never even get to the point of having surplus funds to invest. The baselines of Dave's plan can be lifechanging for people like that. There's no denying it. And living in a country that's 31 trillion or whatever in debt now, I think everyone could use a crash course on living on less than they make. I also feel like the people that are the biggest critics of Dave have never really listened to him. They see the bullet points and disagree and never truly understand what he's really trying to say/do.

He is probably crushing it if he was borrowing to buy residential investment properties. Just 2 years ago sub-3% mortgage debt was available. Rents in many markets are up 20-40% over that same period and we've been looking at high-single digit inflation so we are repaying un-inflated borrowings with highly inflated dollars. Property values are certainly off their highs in most markets, but cash flow and not property values is what repay loans.

In anticipation of retirement, in 7/21 I sold a rental property and used the proceeds in part to pay off my 2.5% $1,760/mo. mortgage on my primary residence. Those are 2 of the worst financial decisions I have made in my adult life. I have to assume Ramsey would applaud them.

That guy made it sound like he was putting it all the stock market and beating the interest rate.

We probably agree more than disagree. See above. I've made it clear I don't follow most of Dave's investing or debt advice and really wouldn't recommend it to someone with a level head. I bought a pile of crypto in early 2020 and made a boat load. Dave hates crypto with the force of a million suns. I plan to buy a bunch more before the halving happens March 2024. I'm not a Dave Kool-Aid guy. But what he offers is better than what the vast majority of people in this country are doing. That's all. And as someone who was stuck in that wheel, it makes me sick seeing people still in it.