Two personal finance guru's, John Cummuta & Dave Ramsey, seem to have the right idea to getting rich. Slowly. I talk more indebth about these guys at my blog (www.debtfree4ever.net). However, in a nut shell they both teach cutting up your credit cards, paying off you debt, once 1 debt is paid apply that payment to the next so that everything including the mortgage is paid off faster. Then they differ, one says to build a savings during this time, the other says to build it after all the debt are paid. Cummuta says to make payments everyweek instead of once a month so as to cut the interest that you are paying. If you ask me both these guys make sense and if everyone would follow their advice to a tee, everyone in America would be millionaires.
Do I advocate buying the CD's and books, no. With carefull research, you can get the same info for free. In fact I just gave it to you. Thing is some of you will call me a cook and ignore it.
Do I advocate buying the CD's and books, no. With carefull research, you can get the same info for free. In fact I just gave it to you. Thing is some of you will call me a cook and ignore it.
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Re: John Cummuta & Dave Ramsey
Sat, September 2, 2006 - 1:55 PMGreat advice. Although I don’t listen to it - Dave Ramsey also has a Nationally Syndicated TV and Radio show. You can get much of his advice there for FREE as well.
Thanks for the post Kevin.
Sincerely,
Philip A. Foster, MA
Life Coach
Maximum Change Coaching
www.maximumchange.com -
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Re: John Cummuta & Dave Ramsey
Wed, September 6, 2006 - 8:02 PMYou are correct people can gleam the info for free from Dave's show and book. You also can get the info for free from www.debtfree4ever.net. However, many people need the personal instructions a instructer/coach. With that a Dave Ramsey class is a great idea, and for those that are low income, Dave does have a program called "Share It," (I think that's the name) to help them go through the program for free.
Basicly though Cut up Using credit Cards, Don't take out any credit and pay CASH for everything. -
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Re: John Cummuta & Dave Ramsey
Wed, September 6, 2006 - 10:15 PMForgive me if I'm simply being dense, but this seems like a pretty basic formula for debt reduction. How does this apply to building wealth aside from creating the financial leeway to afford more credit? I know it's important to be able to manage your money well, but this seems like a guide for living within your means rather than expanding your means, and I don't see what this provides for those not suffering from massive consumer debt. -
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Re: John Cummuta & Dave Ramsey
Mon, September 11, 2006 - 7:28 PMfoster-
you are right, it is basic information. However 97% of Americans are in debt like crazy and have no savings. Infact the national savings average is -2%. The idea these two teachers, and on my on blog, is to get rid of all credit cards and other debts, and then put all that money into savings for retirement and to buy future vehicles or whatever with cash rather then credit. -
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Re: John Cummuta & Dave Ramsey
Mon, September 11, 2006 - 11:55 PMAh, wow. Those are some scary numbers. Its too bad there isn't a more direct method of getting this information to people who need it. I hope, if nothing else, they can get people to sit down and determine exactly where they stand financially. I know that can be a daunting task, let alone potentially altering your lifestyle in a manner as drastic as abandoning consumer debt altogether. -
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Re: John Cummuta & Dave Ramsey
Sun, September 24, 2006 - 7:17 PMthey are scarry and the numbers are there for anyone to see. Basicly, the idea is to return to the concepts of our grandparents, who came out of the depression and paid cash for everything.
What is more alarming, is that we haven't seen savings and debt ratio's like we have now since the great depression. -
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Re: John Cummuta & Dave Ramsey
Sun, September 24, 2006 - 7:30 PMNow that is very scary!
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Re: John Cummuta & Dave Ramsey
Sat, February 16, 2008 - 1:17 PMPaying off your debt is one of the things that will keep you poor for a long time.
Getting other people to pay off your debt is how you get rich.
Debt by itself is neither good nor bad. Debt is merely a tool, to be well used or to be misused.
It is what you do with the proceeds from debt that determine whether you become poorer or become richer. If you squander the money that you borrow, you will become poorer. If you successfully invest the money that you borrow, you will get richer.
Repaying your debt with the proceeds of investment is one way of getting other people to pay your debts. The classic example is getting a mortgage to buy a rental property; the rental income (other people's money) should pay the mortgage (your debt) payments for you. Eventually, the debt will be retired and the rental income will continue to come in.
Saving money to make a down payment is one thing, but saving until you can afford to buy the house without borrowing anything in the way of a mortgage is foolish - you could wait a lifetime before it happens.
Assuming you find a business deal that requires $1,000,000 and has a guaranteed return of your capital as well as a great return on your investment, think about this: Is it easier to save a million bucks to get the capital, or is it easier to borrow the million bucks to get the capital? Most people are not able to save a million dollars in their lifetime. So would you go into debt for a million and take the profit or stay debt-free and let the profit go to someone else? (It's a trick question - the real answer is that you do whichever will cause you to sleep well)
Credit Card debt tends to be expensive debt. Mortgage debt tends to be cheap debt. It's worth a person's while to figure out how to manage their debt efficiently, in order to reduce costs. Emphasis should be placed on repaying expensive debt before repaying cheap debt (although all debt should be repaid on time and as agreed).
The reason most folks have trouble is because they are not taught how to MASTER their debt. Americans in particular are taught how to SPEND, SPEND, SPEND. It's no wonder there is a lack of savings. In addition, there are tax breaks for borrowers and tax penalties for savers. That wasn't the case 100 years ago.
Also, think about this: How much would you borrow if the interest rate on that debt were negative? As I once explained to my mother: "If they are paying you to borrow money, then you need to borrow as much as you can for as long as you can".
Cummuta and Ramsey don't tell the full story.
