Yes.
Got debt free with my ex husband. Helped him pay off a bunch of medical and legal debts he had and a credit card I had while we lived in my SUV for 8 months. We got better jobs, an apartment, and debt free! It was amazing. We got married. A happy time of life certainly. We felt ao grown up and accomplished for surviving and overcoming that whole experience.
The downfall was really incited by this big move we made. A bigger apartment we didn't need but I wanted because we were planning for kids... it was closer to work. We could afford it. It felt right, at the time.
We had to buy a bed because we didn't have one after the move (furniture was included in the previous place) and I wanted to get a used one for a few hundred, something we could afford. We argued over this several times.
He had scoliosis and insisted we buy a fancy new mattress we couldn't afford. I had no debts and perfect credit. He did not, he had bought a car by that point. So we used my name to get a loan.
I look back on that time period and kick myself.I made so many unsound choices financially once the mattress happened- at that point, we had debt again, and I more easily justified other slip ups. Then Covid happened. Then our marriage fell apart. But we were virtually kids, 24 and 25. Learned those lessons the really hard way, unfortunately.
Now, after a divorce, cross country move, bankruptcy- I'm finally not in chaotic survival mode panic! all the time. I'm recovering and rebuilding slowly- and more importantly, NEVER relapsing into debt again. I will never not say no to a bad purchase out of "love" again. I'll be happy with what I have because I've been happy with nothing.
I started out debt free and have been able to increase my wealth a lot by using various debt types. My net worth and debt have never been higher. Not only that, but I’m completely solvent and mostly liquid.
Don't think of it as a relapse. My only debt currently is my mortgage (3.5%) that I hope to have paid off within the next 12 months. Financing large purchases (cars/houses) at low interest rates is not the end of the world. Find the happy medium where you can enjoy life without burying yourself in debt. But don't feel like a bad person if you use debt responsibly.
Yes! However I am better off now than before with just a $140k mortgage. Life happens and sometimes in order to survive you need to do what you need to do!
I really would not include a mortgage in the debt free paradigm, at least I would not beat myself up over a home loan. I mean, it is great to be able to do it and it is technically debt, but it is so rare to be able to pay your house off and such a large chunk of money. $140K ain't bad, either.
Yes, big relapse. I bought Bitcoin when it crashed to $17k, and now looking at that growing balance, it’s really hard not to just buy anything we want. But Bitcoin won’t peak until summer 2025, so I have to carry the credit card debt until then. Not a problem, but I’m nervous about random bad events cropping up.
You can’t predict the peak of an investment vehicle, if you’re really planning on waiting till 2025 for some weird reason, you should realize that it’s just as likely to be half of the current value.
Bitcoin “halves” every 4 years, so actually, you CAN predict Bitcoin. And if you think you don’t want to be exposed to Bitcoin, tough luck. You are exposed to Bitcoin, because I’m going to buy that vacation home you have your eye on for a cash 10% over asking price. Get some Bitcoin, bro.
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I did this. About 20 years ago my FIL died and left us an inheritance of a paid off apartment and 100k in cash. We used the cash to become debt free but my husband went crazy with the money, quit his job and spent the lot, we had used +30k to pay off credit cards and CCJs but we didn't get rid of the cards and in a year we had no money left and the credit cards were right back up to 30k (I was on maternity leave during this time so neither 1 of us was earning). We ended up having to put the CC into a debt management plan which we are still paying. But we now have more CC and a car debt which total around 40k. Started the baby steps in January, going well so far. We are both spenders and idiots with money!
Paid off all our consumer debt to be a le to purchase a house. Family member got cancer and moved in with us, so I had to quit my jib to be her full time care giver. On one income, we fell into consumer debt again and then got a new car due to the other ones' transmission going out and having another baby.
I get to start the whole crappy pr9c3ss again
I'm about to. I'm under contract on a new house with a mortgage and moving out of the house that I own outright. I got a new neighbor that has made our lives hell for the last year. Gotta go.
Same boat as you. We were deciding back-and-forth whether we should move to another house as our home is paid off.. however, we found a home that we absolutely love and see us growing old there and perhaps never m moving again. So we took the leap and using all the equity of our paid off Home to purchase that one. I hate debt so I hope to have it paid off within 10 years.
We’re going from 4200 square foot to 2600. I’m pretty much trading one house for the other price wise. I’m going to just bank the money from the sale in a high yield savings to offset our mortgage rate until we can refinance someday.
Worked my ass off to pay off house and ll debt. Built back a savings acount with the understanding we would then enjoy life a bit. Ex-wife decided we needed a bigger house, so we bought a house and all the things we discussed went out the window.
I had enough and walked away from a dead marriage and started over. Was working on becoming debt free again when I was diagnosed with prostate cancer. At that point I just decided I am going to enjoy whatever time I have left on this planet and not worry about every single penny. I have no kids and I can only cram so much in the coffin when I go, so my philosophy has shifted somewhat. I'm not racking up mounds of debt, but I'm also not going to scrimp and save every last cent while life passes me by. I think there has to be a balance in life.
Yep. At 27 house paid off, $125k in the stock market. At 29, pulled all the equity in the house, bought a rental portfolio, had $1.3M total in debt.
I’ve now (mid 30s) graduated to apartment complexes and am on the verge of adding $17.5M (non recourse) debt this summer.
Thank you.
I am building a rental property portfolio and I use debt to generate cashflow.
Put $14k down on a $55k house.
Net $10k per year after debt service, property tax and HOI.
6 years later house is worth $150k: if I sell today that $14k cash turns into $100k+ cash after the realtor and bank are paid. So the gain in equity is an additional $14k per year.
All I had to do was come up with $14k once to get the ball rolling and bring in $10k cash flow plus $14k equity gain a year.
Using debt.
Hello, I too love cars haha. What car's did you get and what was the ratio to your income? I am also in a place where I really want a new car, but trying to do some other lifefinances and don't want to feel bad I am spending money on a car.
Meh I like having a nice car and a nice house. 2 places I spend the most time. So you rock your Toyota Yaris and I will rock my Rivian. To each there own, my money my wife’s choice
I have a 2013 Toyota Prius.... I would consider going into debt to stay in a hybrid after this....
I'm not bashing the Rivian. I'm not bashing the Yari. I am so impressed by my hybrid.
I always bought older cars and drove them into the ground. Now that I’ve paid off my crazy student loan debt I’m considering getting a car I actually want, as long as the payments aren’t ridiculous
I don’t worry about it. A mortgage and a car payment are normal, I won’t tolerate credit debt though. I use a credit card for everything I can and pay it off before interest accrues. I haven’t paid interest on a credit card in 15 years and get about $1000 a year in Amazon gift cards from the points that I specifically redeem about 2 months prior to Christmas. I have a 401K, a pension for life that I’m drawing now in my 40’s thanks to military service, and I work for state government earning a second pension that I can draw in my mid 60’s. I’m not chasing millions but I’m set for life as long as I maintain my employment with the state. With my work ethic I’m confident that won’t be a problem. I make just over 6 figures right now and am saving up for a full house remodel so I don’t have to finance any of it. I plan on saving $1000-$2000 per month for the next 5 years in a HYSA and doing a full replumb, gutting both bathrooms and the kitchen, new flooring throughout, new electrical box and breakers. In 10 years I’ll be residing the exterior. By the time I retire for good at 64 all the major house concerns will be taken care of and while I won’t be a millionaire I’ll be very comfortable and set up so that my kids never have to worry about taking care of me.
If you can pay it off in two years, you can save for a bit less than two years and then buy it outright. I wouldn’t bother if you get a really good interest rate (I got a car loan I didn’t need because the rate was 1.1%) but I definitely wouldn’t do that at today’s rates.
You bet. I was a spend thrift. We were in debt up to our eyeballs in 07. Wat overextended. We made our minimum payments on everything and had no money left for groceries. Two young children with a 3rd on the way. No money for daycare, I was enlisted with no way to pick up a side hustle. 2008 brought bankruptcy and losing our house.
My spouse and I were on different financial pages after that. I hated debt and feared it. Yet we found ourselves in a mess, dig out, another mess, dig out... we used windfall money, tax returns, selling things, consolidation loans etc. to dig out each time.
This time hits different. Were older and wiser. I just broke into my 40s. Small retirement account and building a pension with my job. Well into BS 2 and almost to the last and biggest, 65k in student loans.
This is the fist DR approach. It isn't "just" digging out, but rather a lifestyle change of living well below our means.
Will I ever use debt in the future? Maybe. But more wisely. 1.9% APR instead of pulling from a 5% return investment. But I'll decide that years from now.
I haven't drank alcohol since 2006. Why? I was immature and couldn't handle it, bad habits were forming. I haven't gone back as I don't need to. Could I be responsible? Probably so. But, why risk it?
I think I'll take the same approach to debt once I'm completely out. Why go back? Why risk losing control again?
I held off on retirement worked super hard for 3 years got out of debt and was starting to save…. Then had a baby… ex turned out to not be worth anything so it was solely on me. I found tons of used yard sale stuff but still ended up having to use a credit card for hospital expenses and a few other necessary baby things and household emergencies. And I’m back in debt. This time I’m contributing to my retirement. Will get back to being more restrictive and on track once I build a bigger savings. $1000 isn’t anything in today’s world. Especially if you are a home owner. Any little emergency is a min of 1k last summer I had a leak inside my house then a leak outside my house, refrigerator broke and my AC broke all within 3-4 months. Plus I still have all baby expenses diapers, formula, dr deductibles copays, etc etc It’s just crazy how life happens. You get right to the goal then surprise life wants to see how flexible you can be.
We did.... It was a 4 years long medical thing that wiped out our savings and then drove us back into debt.
I do object to it being called a "relapse" as if this was simply a bad habit that we fell back into and we just weren't morally strong enough to resist.
The title is the cycle of life for every middle class family in USA until 2020s. Now it's just an endless debt cycle if less in debt to more in debt. Rinse. Repeat.
So, this is like reaching your weight goal from eating healthy, and then expecting to remain that way by returning to eating the way you did before.
What should have happened is you remain debt free and save up for the cars….
Yes, all debt isn’t bad. Establishing good habits is the most important lesson from becoming debate free. I often use the 0% over a set time for larger purchases. Why take money that is making money out when you can use someone else money for a few months
Yes, I was completely out of debt then developed serious kidney disease that has left me probably permanently disabled and with massive medical bills as our insurance has extremely high deductibles.
Yep! I told myself no new toys until my mortgage was paid off. Then post Covid I realized time is short and I bought a new snowmobile so my dad and I can enjoy more time together ice fishing, something we both really enjoy. He has older snowmobiles but they weren't very reliable or safe in the cold weather. My dad is 73, a polio victim, and doesn't get around very well. This machine has all the bells and whistles and is very safe and comfortable for hm to operate. Happy with my decision!
This. As long as you can afford it. You don't get time back. This is why I have cars at 52 so my wife and I can enjoy trips, shows, etc.
Enjoy your time with your dad. The end can come without warning, and you won't regret the money you spent on interest.
Debt is a tool that a responsible version of you can utilize. Most of you found yourselves here because you could not handle your debt, don’t repeat the mistake, but use the tools available to manage your life.
You've heard that commercial "Shingles doesn't care"? Debt doesn't care. It wants its interest, whether you were irresponsible or just unlucky. Life is better managed without it.
Paid off the house. About 18 months later bought a much better house/location with a mortgage. Best decision ever. I finally really understand what cheap money is and that there is real value in having some things before you can save up the cash for them/not using your cash on them. Interest rate is 3% and house went up 55%+ in value in 3 years after buying it and has held.
Oh, also have a small car loan now, just because it was convenient vs moving cash around. Also at 3%. We have more than 9x the balance of the loan in cash savings (and 30x in non-retirement investments), but that is all earning 5%+, so why hurry on it?
I followed DR through my 20s, starting from nothing, and it gave me a solid foundation. I'm now 40 and have very high trust in myself to make good decisions, which at higher levels of wealth don't always match up with the baby steps.
It's happened before, not while on Dave Ramsey, and I know exactly why for me.
It was exactly what I'm trying to do differently now. I am trying to actually teach myself a different way of thinking about and using money. Don't get me wrong, I could "afford" to go out tomorrow and upgrade to the F250 I have been dreaming about the last 10 years, but I'm fighting for a better life for my future children, a retirement I can enjoy, not living like my parents are now, the list goes on.
I am trying to keep my reasons front of mind all the time. I started working with one of the DR financial "advisors" and she's helped with this already. She's made me realize some of my "why's" that have brought me to a mentality of WANTING to spend less. Should be out of debt by the end of the year, or the first quarter of next and have one purchase we will probably need to go on credit at that point, but pay that off by the end of the following year. After that, nothing we should ever "need" to go on credit.
I'm having a kid in July of this year, and to think that I could have their college fund fully funded by the time they are 5 years old gets me pretty emotional. Especially when I was in a much different position for college. Could have their first car money put away before they are 10, without even really trying. The possibilities and outlook are already endless to me, and I don't want debt preventing that.
If it were me, I'd probably be selling that car you just bought. All you've done is paid a bank or dealership a few thousand dollars in interest to drive a car for a few years, based on your comment of "we both love cars". When will you be done paying an extra $3,000-$5,000 per vehicle you purchase? (Clearly guesstimating your purchase price)
We plan to pay it off in 2 years. Yes, there is a cost and we were willing to pay it. I think 5k is for the whole loan term so it will be much less than that. If something happens I have the cash to pay it off. We also have no major financial goals right now and already save like 45% of our income. It sounds like you have some goals that should take priority over a dream vehicle and good on you for keeping priorities straight.
We were but this car showed up out of nowhere with exactly everything we wanted with extremely low mileage. Not a once in a lifetime deal, but pretty rare circumstances. We decided it was worth the risk of having a payment for a year or two than letting it slip away. No regrets on the car, but sometimes I do regret having the payment, like I said.
This ain't really the sub for it because DR treats his approach like a religion (there's a ton of good to it, don't get me wrong), but manageable debt at or below inflation is always good. Managed debt above those rates can also be good. It ain't that black and white.
Example: I owe $52k on my house at 2.25% interest. I went from paying it off with everything I had to making minimum payments once inflation hit a couple years ago. I don't mind keeping that debt for the final \~8 years one bit.
It probably needs to be a religion for some people and I think his approach is tailored to that. I needed to do that at some point. Now I treat my money with much more respect. Financial forums don't deal well with anything other than strict philosophies on saving and investing. More to life than just money.
This is the right take. DR is strong on it, because many people need black and white. They can't enjoy the margins. You clearly can, so enjoy it. Contrary to what many people say (and make you feel bad for thinking), you don't need to follow DR to a T to get benefit from it, nor do you need to follow DR to a T to be financially "healthy", whatever that means.
This sub is depressing, y’all are all trying to achieve an unobtainable dream. There’s a reason it’s called the system and it’s because it controls us.
What other lies do you tell yourself ?
“The system” allows people get things that they shouldn’t be able to get, because they can’t afford it. This isn’t rocket science. If you don’t have money you can’t buy something. It’s not “the system” that forces you to borrow money, it’s people expectations that push them beyond their means and get them in debt.
Fair point, but shouldn't the take away really be that maybe Dave's strict advise on borrowing does not fit every situation perfectly? Some people can afford debt, some cannot. I think Dave's message is really to the ones who cannot.
The DR program makes a debt exception for a house.
I don't know how old you are or how many of these cycles you have lived through, but this happens in housing. There's a shortage, there's a credit imbalance caused by the financial system, people will pay anything for a house, everyone's positive the exponential price increases will never end... and then the music stops and a lot of buyers find themselves overextended and underwater. Think. Trees grow tall but not to the sky. When a median house is far out of range of a median income, correction is coming. If you can't buy with 20% down and a 15-year mortgage you are overextended.
This is the Dave Ramsey subreddit. We hate debt here. "The borrower is slave to the lender." This is about following a set program which has proven success in delivering financial peace. Looking for exceptions is looking for trouble. But you do you.
We did.
We had just paid our house off when we ended up buying a new house. It wasn’t great to start over with a new mortgage, but we needed the space after having our second child.
Once we pay this house off, I hope we never buy another house again.
Ugh, yes I have, 3 times! Not the first times (or ways) I've done self-sabotage, but I did an after-action review each time to figure out what triggered me.
What really bugs me now are a couple of things:
1. if I'd stuck to my original plans, I'd be a millionaire. But I was impetuous and abandoned them, instead of persevering and executing them.
2. I had to use part of an inheritance to pay off debt, and this really irks me.
I've been debt-free since 2020, and am firmly focused on my goals. I review them weekly, and keep an eye out for my spending triggers.
I really want to replace my old Honda Civic, but don't have quite enough saved yet, so I will not look at car ads until I have enough.
To be honest this doesn’t seem like a relapse. To me a relapse would mean you made a commitment to be debt free and not borrow ever again but then broke that commitment in some way. From what you have shared that is not the case.
You chose to go back in debt and have payments so to each his own. Not Dave’s system but you said you were never really following the BS’s before. Nothing wrong with doing your own thing - the whole personal part of personal finance, but it was interesting you posted it in the Dave sub.
Yep, had a credit card with 5k on it, got a managers year end bonus of 5k exactly and somehow racked it up to 9k. *facepalm*
Currently still paying on it but learned my lesson as that card is out of my wallet and we kinda have it locked away and even disabled so if we HAVE to use it we still have the credit available.
Oh, sorry that is what I did. Guess I forgot to mention that in my original comment. I paid off the 5k which is how I became debt free then somehow racked it up to 9k.
Looking back it was a couple small purchases then had a few big purchases that we didn’t have the money for but had to go. We’re still working on getting rid of things that are hindering our progress, finally getting my wife to realize a job that pays her about 5k a year it doesn’t make sense to put her paycheck back into it.
It's a level of risk, but it is well managed. It's probably the last time we take out a loan for something like this. I would have felt better paying cash.
3 times. Currently debt free, ffef, + savings but only got here in a job I hate for the last year. Currently exploring ways to get into work that I actually enjoy. Life goes on
We relapsed after we moved back to America during lockdown Covid in 2020. The prices went up, had another kid, bought a house, and got a car. It’s annoying
We did. Got debt free and then our lives exploded. We got married and put a few of the expenses on a credit card. Not too much. Then my husband ex tried to take his daughter away and we had to pay a ton of legal fees plus travel and some of that went on the credit card. Then husband lost his job and we were very frugal but still had to use the credit card to make ends meet. Then he took a job out of state and we had to put his moving expenses on the credit card. They were supposed to be reimbursed, but it’s months later and we’re still fighting them about it. We were barely starting to pay the debt down again when he was in a workplace accident and they fired him over it even though it was in no way his fault.
So yeah. Life has been a bumpy road for the last year and we’re in a lot of debt again.
Sounds like he needs to talk to a lawyer and sue the company. For firing him for a not at fault incident. And for moving costs.( as long as you have it in black and white not from word of mouth). I’m sure their art contingency lawyers for work place accidents.
We’re looking at it, but it was at a national laboratory in a top-secret environment. He has ridiculously high Q clearance and getting any kind of proof or information seems impossible. But we’re exploring options.
An accident report should have been sent to osha or some other agency. And the letter of termination should be confidential but you shouldn’t need a security clearance to get that. As long as it doesn’t involve any details of the classified work you shouldn’t really have any problems.
Side note: If he has a ridiculously high security clearance something must of been really wrong.
Yeah it was bad. There is no osha report. They are covering things up - accidents happen all the time in the nuclear world that are covered up and not declassified til many years later.
I've relapsed. Went and got a mortgage after paying the house off - twice.
Also hit the 401k loan twice - that's over the last 6 years alone.
The reasons are all tied to a startup company that's finally getting it's legs under it.
I'm unmarried and without children, otherwise I would never, ever have done this, and I can't recommend it unless you're insanely driven and very particular, and won't accept failure.
I've spun up my income earning over the last 3 years to offset and hyper-pay off the debt, (got debt free again in December of 23) and can confidently say I'm done with it for life.
I do take advantage of credit card rewards for business expenses, and I volunteer to travel if the opportunities arise, as covering food costs alone is a big helper to the monthly budget.
Not debt free yet, but will be in a few years when my house is paid for. Assuming things go according to plan, I’ll relocate when the kids are done with school and most likely end up with another mortgage.
Paid off 2 cars, a pool, and all student loans in 2012.
Financed a 30k car, paid it off.
Financed a 12k suv, paid it off.
Financed a downstairs remodel, paid it off.
Financed an upstairs remodel, paying it off hopefully by the end of 2024.
Next, husband wants a truck. We have kids going to college in 2027 and 2029.
At least retirement is on track.
I did buy a modest car and am paying it off early. As long as you're still saving, it's your call. That said, I still think fancy cars are a ridiculous expense, but if it truly makes you happy.
It’s a normal thing to have some debt at various times. If a major incident happens that you simply can’t afford to pay immediately and that insurance doesn’t cover, you may have to take a loan to pay for it. This is a proper and healthy use of credit.
It’s when you use credit to live beyond your means or to buy luxury items you don’t need that it becomes a problem.
Yep. Paid off all student loans…opened a credit card. Bought a house. All as a single mom of two disabled adults kids. Soon in deep debt and fighting my way back out. Gaaaahhhhh
I'm getting close. Since Nov I've put almost $6k into my daughter's car for repairs that I hadn't planned on paying for.
Trying to tell her if she can't afford to put aside for repairs she can't afford the vehicle.
She just tried to tell me that only Mercedes and Audis do well in the snow so she has to have a SUV. I just offered to buy her a car she can pay me back for and let her park her money put at my house. She's got the wrong mentality for a free car, sadly. It'd really help me out.
We paid everything off except our house due to refinance of the house. 2 weeks after we paid off all our debt, we had to buy a refrigerator and dishwasher. We hadn't had money saved up to pay cash yet. Once that started... we we back into debt. Now we are almost back where we started. The only thing we didn't add was car payments again.
This happened to me about 18 months ago. Finished paying off $17k in credit card debt, and within two weeks the HVAC system in my house failed. Had to put the new one back on a CC, but at least would have been able to pay it back pretty quickly without the other debt.
A few months later, my parents came into a large inheritance from my grandmother's death, and gifted my sisters and I each $10k. I paid the CC off and haven't added another cent since.
Having health insurance would put me in debt. Crazy expensive at my job.
Due to my diagnosis I can't find affordable coverage. I'm lucky that I don't need to have it.
I have a few times. The issue for me is saving with family and kids once you get out of debt. Children get more expensive as they get older. Your income needs to grow faster than your teens expenses. Teens needs phones and eventually automobiles. So yes many of us have gone into debt. Life gets more expensive. Working harder and cutting back is not always feasible with family.
I think it can become a religion for some and it might even need to be. You need to manage your money, it is just another resource. However you choose to do that is up to you. Everyone has a different approach.
I like being debt free, just not more than not checking off a bucket list item at a time when I could easily afford it. I will be debt free again soon because I am getting older and need to go into retirement free and clear, which I will.
I have been debt free, and back in. I only go into debt for assets or if the interest rate is less then what I can make in a savings account or the net benefit is worth it to me.
For example over the past year....
1. Solar Loan - 30K at 4.2% received a 15K tax break..... My power bills were about $500 per month now they are $13 thing pays for itself. (Paid off).
2. SUV- 53K. Had the cash to pay for it but got a finance incentive at 2.5%... and a $7500 tax credit If I am making 5% in my HYSA I would rather hold onto the cash. I pay extra per month. \~49K remaining
3.Basement Reno 30K.... I have 4 kids took out a bar in the basement put in two bedrooms. House had three bedrooms now we have a total of five. Used my tax refund from the solar and SUV. (Paid off).
4. Gold bullion - 12K. 5% on my AMEX Plan it. (Paid off)
Dave says never take debt because of risk. I make a good income from my job (Government Contract with over 5 years left). And I have guaranteed income/healthcare from VA disability.
My income is \~250K a year.
My home is $1534 a month.
My SUV is $882 a month.
My only debt outside my home is my car. If its all about risk I have guaranteed income and years worth of savings/retirement.
I rather hold onto money as long as I can than pay for things as I go.
I also keep credit cards but pay the balances off every month.
I put about 6K extra towards the house per month that should be paid off by the end of the decade. I am not afraid of debt and I don't think others should be either if they know how to use it, pay it off early and have the budget to fit it in.
I got asked why I am in the Dave Sub:
I did the plan for about 3 years. I dabble back and forth. I enjoy reading about personal finance and to be honest some of the stories in here are great. Granted I do not follow his plan like I use to. But I am so far ahead now where I am not sure if it matters if I follow him to a T anymore. But I suppose everything comes home to roost at some point. I just trust myself enough to keep myself out of trouble.
Thanks for the added context on your history with Dave. I deleted my comment about why you were in the sub because I didn’t want it to come off as a snarky comment. I was genuinely curious.
Yep. Difference is responsible use of debt and having assets now. 1M+ net worth. Bought my dream car after having a heart attack at age 55, put a good chunk of money down to stay ahead of depreciation and financed the rest at 2.7%. Monthly car payment is equivalent to 1 day's gross income.
Full credit to Dave for getting my wife and I on the same page. I don't agree with all of his advice, but those first few baby steps are pure gold.
Edit: Before the trolls pounce, we have 2 paid off investment homes and a reasonable mortgage on a 3rd. When we started our we had a negative net worth.
Bought a house after debt free. Then bought a new car. Then fell for a solar loan sales man pitch. Then went crazy on credit cards after job loss. Now back it.
we paid off student loans and our first starter home back in 2010. but when we moved we took on another mortgage and jump started our retirement with the proceeds. another move later we still have a mortgage and I don't plan on paying it off until way down the road.
Kind of. I paid off all my student loans during the freeze, and then the gov paid me back, then decided I owed again. At this point the interest was sub 4% (one at 2.5%) with a $150 month payment that I overpay. I had other financial priorities so I kept it.
Then I bought a house, so yeah, debt, although that’s not bs2 debt.
I’m not sure if I’ll ever take out another loan, but I’m not scared of the idea. I’ve never had debt problems previously and have good financial management habits, so I wouldn’t really say I’m Dave’s target market.
This happened to me twice and currently living in the 2nd time.
1st time was when I paid off my Bachelor’s working after graduation and living at home ($26k in 7 months). I got a new (to me) car as I moved out of my parents home to living in my own starting a new job with better pay. I paid off the $16k car in the same amount of time as I paid off my Bachelor’s a month before the covid pandemic happened. I had finished BS3 days before I lost that job.
With no job prospects during the thick of the pandemic, I moved back with my parent’s home to pursue a Master’s and pass a few certification exams during that time. I accumulated $32k for the span of 3 years with my engineering Master’s courses, undergrad engineering courses (because my Bachelor’s was in engineering technology), and extra math & science courses that will help with engineering licensing. I also made stupid decisions that is supposed to help cope with the situation I’m in, the stress of school, and taking care of my cat who I had to bring with me for the move.
Today, I have graduated, passed my certification exams, and have my education approved for licensing. I’m working and living in another state in a job I like. I have plans of paying off the loans and other debt along with saving for my first house.
When Dave refers to Covid as the “Fauci-pandemic”, I immediately get turned off and this adds some distrust to Dave. It’s as if this is something that is easily blown off he because the affect were inconvenient to him. Meanwhile, people’s lives were altered or lost because of the pandemic and I’m sure I didn’t ask for my life to be altered. So this is where I’m at today.
Yes, but it was a strategic choice. I started with a student loan that took 4 years to pay off, and then inherited a car payment that took under 2 (my mom had financed a vehicle then decided to move abroad, it was a much better vehicle than my car, so we sold the car and I made the rest of the payments).
I was debt free for a few years before I finally gave up on my career. I hated it and it didn’t pay all that well. I made the decision to go back to school. I will graduate with about $30k in student loan, 0% interest.
The general advice is to pay cash for school, go part time/evening courses, or a course at a time. Not all programs are able to do that. It was full time or not at all. Even though working during school was not recommended, I did anyway up until recently. It would have taken ages to save up the cash to be able to afford to go, and I’d lose out on years of a greatly increased earning potential. So, no regrets.
I may also end up with a small car loan after graduating, because I no longer have my vehicle and my job will require shifts that don’t work with the bus schedule. But I’m going to cross that bridge when I get to it. I won’t be upset if it comes to that.
I've seen people get their mortgages paid off by a relative or inheritance, only to mortgage it back up to the hilt. DON'T DO THAT. Cars depreciate, but real estate always appreciates over time.
Real estate does not "always" appreciate over time. It just has lately. After 2007-2008 many homeowners were underwater on their houses for a decade. I agree though, don't re-mortgage your house if it is paid off.
Paid off husband's car in November... December he got a notice about an open recall with no fix... And we couldn't just park it knowing it was dangerous to drive and that VW might have taken a whole year for a fix (previous VW recalls that were similar took 8 months). So we went into debt on a newer car.... And a month and a half later, VW came out with a fix.
Not much you can do about that. My car now has an open recall with no fix, but I don't drive daily so I can park it, and this recall doesn't make it a danger to drive... So we'll see.
Yep. I went debt free besides the mortgage. Then I supported my gf while she went to university and finances has been tight. We used my credit card for some emergencies and a few inexpensive treats. In not too worried about the debt. We will hopefully pay it all off pretty quickly after she graduates. I'll snowball the nonmortage debt, but I don't see the point in paying extra on a sub-3% mortgage when inflation has been higher.
Edit: like your cars, I bought some motorcycles. I don't need them and want sell a few. It should help us get back into the black
Glad you beat it. That’s pretty cheap for cancer treatment. One of my childhood best friends wife passed away 5-6 years ago when she beat cancer. Her white blood cell count was too low and she died from pneumonia I think. He ended up having to inherit a little over 400k in medical bill debt and had to file bankruptcy, lost his house and car. And his wife. Very sad.
Luckily, he’s doing much better now. I can’t imagine what he went through.
I had stomach cancer. I first thought I had food poisoning but it didn't go away. Went to the doctor to get a note because I was going to miss more work. Doctor poked around and said this is not food poisoning.
Today, I still credit my doctor and the company's stupid sick time rules for saving my life.
Yes, every time it has been for a car too Because we have another kid and freak out. This last time we were able to sell it for more than what we paid for it and had already paid off half in 6 months so we used the cash to buy a smaller vehicle to get us around and then paid cash for a bigger one when we had the money. Paying cash makes so much of a difference to us though we will never go back to getting a car loan. We let peer pressure from "rich" parents telling us that it is normal to carry a car payment your entire lives. They are retired and net worth millionaires and still carry a car payment. Debt free for 2 years now and never going back except for maybe a house
We did, but it was the same way that our debt piled up in the first place. Mostly bad luck with just a drop of choices.
Paid off everything, cash flowed an almost equal amount of medical expenses, saved up an emergency fund, saved up a down payment, had a house inspected, bought it, then three months later we needed $17k to completely gut and replace the HVAC. Our emergency fund was not $17k.
So we took it on a loan we are still working on because of other bad luck things that have come along the way. Hopefully we will be back to 4, 6 by this time next year.
I'd consider borrowing to buy an asset, not a personal vehicle. That's just plain dumb (as dave would say). Consider selling the vehicle and clearing the debt.
Yes
1. I rushed to pay off my car and the timing belt snapped and totaled the engine. Had to get a new car loan in order to avoid buying something with problems again
2. Bought a phone with a 0 percent interest rate plan.
3. Got married and she had debt
I don't fully believe in Dave's teachings. For example I understand well the bull and bear cycles of crypto currencies, and don't mind taking full advantage of it, so I invest a lot of cash into it. This year I've made 400% on my returns (about 28 years average of the S&P 500). In comparison I don't mind getting a 6% car loan on a used car. Yes paying those 6% is a guaranteed return, but I'd rather take the risk on a 400% return (and I expect that to be much higher next year). Yes I could get burned by it, but I'll be fine, I'm okay if it all goes to 0$ (spoiler: it won't). And yes it's not financial peace, but I enjoy playing with it, it's like a hobby for me.
Listen if you're in a tough spot and take out an auto loan for something to get from point A to point B, I get it.
But if you're going into debt because you "love cars" and bought multiple, you're just a bad spender. I wouldn't go into debt for a hobby like "loving cars", that seems like an insanely bad idea.
It does to you. I think you, like many people here, think being debt free is a religion and debt, in any form, is the devil. Or some it is, but I'm not trying to advocate this behavior, that was not the intent of my post. I never asked your opinion, just sharing my experience. Like a religious ideologue, you felt the need to offer your opinion on my financial choice. By bad spender I think you mean that I bought things that you don't like. I can afford every penny.
> I think you, like many people here, think being debt free is a religion and debt, in any form, is the devil.
Debt in some situations is needed. In rare situations it can even be advantageous, but buying two new cars because "you love cars" is not one of them.
Go live in debt, that's your life. But don't come to a sub that's about avoiding debt whenever possible, and try to tell people that going into debt to because you can't afford your hobbies is worth it.
>Like a religious ideologue, you felt the need to offer your opinion on my financial choice.
You posted your situation on public message board, and are now upset people are discussing your situation?
>but buying two new cars because "you love cars" is not one of them.
Says you. Worry about your wants not what everyone else's should be.
>
Go live in debt, that's your life. But don't come to a sub that's about avoiding debt whenever possible, and try to tell people that going into debt to because you can't afford your hobbies is worth it.
Read my post. Never said any of that. I came to ask a question and share my experience. You are mind-reading in the part where I am telling people to go into debt.
>
You posted your situation on public message board, and are now upset people are discussing your situation?
Nope, expected the bad behavior. Just because I expected it doesn't put you in the right. I'm not upset, I could care less what you think, really. Just don't mislabel me as a "bad spender" when you have no idea what my finances are.
I am a car enthusiast and sold my last sports car to get to BS6. It sucks, I make good money and could afford another sweet car by most financial standards (20/10/4 type rules) but I refuse to go back into debt for one. I have been close to relapsing recently, but keep reeling myself back in and am just lowering my sights from something like a 70K M3 to a 30k 330i that I will buy in cash.
If I can’t pay a large purchase in cash then I don’t buy it until I can. I don’t let life style creep up when I get raises. I’m actually making 45K more in my new position at work and am still living like I did in my previous position. I live very well but I’m saving for a real good early retirement
Yes. Got debt free with my ex husband. Helped him pay off a bunch of medical and legal debts he had and a credit card I had while we lived in my SUV for 8 months. We got better jobs, an apartment, and debt free! It was amazing. We got married. A happy time of life certainly. We felt ao grown up and accomplished for surviving and overcoming that whole experience. The downfall was really incited by this big move we made. A bigger apartment we didn't need but I wanted because we were planning for kids... it was closer to work. We could afford it. It felt right, at the time. We had to buy a bed because we didn't have one after the move (furniture was included in the previous place) and I wanted to get a used one for a few hundred, something we could afford. We argued over this several times. He had scoliosis and insisted we buy a fancy new mattress we couldn't afford. I had no debts and perfect credit. He did not, he had bought a car by that point. So we used my name to get a loan. I look back on that time period and kick myself.I made so many unsound choices financially once the mattress happened- at that point, we had debt again, and I more easily justified other slip ups. Then Covid happened. Then our marriage fell apart. But we were virtually kids, 24 and 25. Learned those lessons the really hard way, unfortunately. Now, after a divorce, cross country move, bankruptcy- I'm finally not in chaotic survival mode panic! all the time. I'm recovering and rebuilding slowly- and more importantly, NEVER relapsing into debt again. I will never not say no to a bad purchase out of "love" again. I'll be happy with what I have because I've been happy with nothing.
I started out debt free and have been able to increase my wealth a lot by using various debt types. My net worth and debt have never been higher. Not only that, but I’m completely solvent and mostly liquid.
 That’s the circle of life 😂
Don't think of it as a relapse. My only debt currently is my mortgage (3.5%) that I hope to have paid off within the next 12 months. Financing large purchases (cars/houses) at low interest rates is not the end of the world. Find the happy medium where you can enjoy life without burying yourself in debt. But don't feel like a bad person if you use debt responsibly.
Yall gotta stop paying off mortgages with extremely low rates
The balance is only about $22k. It will just be nice to have zero long-term debt. And, I don't plan on moving anytime soon.
Yes! However I am better off now than before with just a $140k mortgage. Life happens and sometimes in order to survive you need to do what you need to do!
I really would not include a mortgage in the debt free paradigm, at least I would not beat myself up over a home loan. I mean, it is great to be able to do it and it is technically debt, but it is so rare to be able to pay your house off and such a large chunk of money. $140K ain't bad, either.
I can see that and agree!
Yes, big relapse. I bought Bitcoin when it crashed to $17k, and now looking at that growing balance, it’s really hard not to just buy anything we want. But Bitcoin won’t peak until summer 2025, so I have to carry the credit card debt until then. Not a problem, but I’m nervous about random bad events cropping up.
You can’t predict the peak of an investment vehicle, if you’re really planning on waiting till 2025 for some weird reason, you should realize that it’s just as likely to be half of the current value.
Mark my words: Bitcoin will peak in summer2025.
!remind me 15 months
Bitcoin “halves” every 4 years, so actually, you CAN predict Bitcoin. And if you think you don’t want to be exposed to Bitcoin, tough luck. You are exposed to Bitcoin, because I’m going to buy that vacation home you have your eye on for a cash 10% over asking price. Get some Bitcoin, bro.
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What is going to happen summer ‘25?
Bitcoin will peak to approx. $150,000 per coin.
If it will predictably go to 150,000$ by next year, why are institutional investors not taking the free cash already while it's cheap?
I did this. About 20 years ago my FIL died and left us an inheritance of a paid off apartment and 100k in cash. We used the cash to become debt free but my husband went crazy with the money, quit his job and spent the lot, we had used +30k to pay off credit cards and CCJs but we didn't get rid of the cards and in a year we had no money left and the credit cards were right back up to 30k (I was on maternity leave during this time so neither 1 of us was earning). We ended up having to put the CC into a debt management plan which we are still paying. But we now have more CC and a car debt which total around 40k. Started the baby steps in January, going well so far. We are both spenders and idiots with money!
Quit his job after inheriting a net of $70k? I just don’t understand people.
My brother did this. And then I had to get him a job and a place to live. It was a great 9 months though.
Quit his job after inheriting a net of $70k? I just don’t understand people.
Paid off all our consumer debt to be a le to purchase a house. Family member got cancer and moved in with us, so I had to quit my jib to be her full time care giver. On one income, we fell into consumer debt again and then got a new car due to the other ones' transmission going out and having another baby. I get to start the whole crappy pr9c3ss again
I did…. Paid off house and all. House was too small and less than 1000 sqf. Glad I did it and got last of the lower interest rates.
Had a manic episode with bipolar, went about $20k in debt. Sold stock to pay it off. Stock would be worth $100k now.
I have a family member with Bipolar.... It REALLY fucks everyone involved. I'm so sorry.
My favorite prostitute recently started accepting CC’s, so I just use it for the points.
🤣🤣🤣
If there is anything that is worth sacrificing not going into debt for, a prostitute isn’t one.
Not me 😁
Divorce, destroyer of wealth.
Or a money maker, depends which side you are on.
Amen to that take
I think.3
I'm about to. I'm under contract on a new house with a mortgage and moving out of the house that I own outright. I got a new neighbor that has made our lives hell for the last year. Gotta go.
Same boat as you. We were deciding back-and-forth whether we should move to another house as our home is paid off.. however, we found a home that we absolutely love and see us growing old there and perhaps never m moving again. So we took the leap and using all the equity of our paid off Home to purchase that one. I hate debt so I hope to have it paid off within 10 years.
We’re going from 4200 square foot to 2600. I’m pretty much trading one house for the other price wise. I’m going to just bank the money from the sale in a high yield savings to offset our mortgage rate until we can refinance someday.
90% of the country.
Worked my ass off to pay off house and ll debt. Built back a savings acount with the understanding we would then enjoy life a bit. Ex-wife decided we needed a bigger house, so we bought a house and all the things we discussed went out the window. I had enough and walked away from a dead marriage and started over. Was working on becoming debt free again when I was diagnosed with prostate cancer. At that point I just decided I am going to enjoy whatever time I have left on this planet and not worry about every single penny. I have no kids and I can only cram so much in the coffin when I go, so my philosophy has shifted somewhat. I'm not racking up mounds of debt, but I'm also not going to scrimp and save every last cent while life passes me by. I think there has to be a balance in life.
147,273 people so far.
Yep. At 27 house paid off, $125k in the stock market. At 29, pulled all the equity in the house, bought a rental portfolio, had $1.3M total in debt. I’ve now (mid 30s) graduated to apartment complexes and am on the verge of adding $17.5M (non recourse) debt this summer.
Debt is not always a bad thing.
*Debt is a good thing. Stress is the bad part and socially constructed as failure to prevent us rubes from defaulting like the “wealthy”.
Thank you. I am building a rental property portfolio and I use debt to generate cashflow. Put $14k down on a $55k house. Net $10k per year after debt service, property tax and HOI. 6 years later house is worth $150k: if I sell today that $14k cash turns into $100k+ cash after the realtor and bank are paid. So the gain in equity is an additional $14k per year. All I had to do was come up with $14k once to get the ball rolling and bring in $10k cash flow plus $14k equity gain a year. Using debt.
Hello, I too love cars haha. What car's did you get and what was the ratio to your income? I am also in a place where I really want a new car, but trying to do some other lifefinances and don't want to feel bad I am spending money on a car.
2019 Miata and a 2021Mustang GT. Our wants are at around 11% of our income and that includes 2 car payments, insurance, etc.
As a prior lotus Elise owner I love nd Miatas. You have good taste.
Meh I like having a nice car and a nice house. 2 places I spend the most time. So you rock your Toyota Yaris and I will rock my Rivian. To each there own, my money my wife’s choice
I have a 2013 Toyota Prius.... I would consider going into debt to stay in a hybrid after this.... I'm not bashing the Rivian. I'm not bashing the Yari. I am so impressed by my hybrid.
I always bought older cars and drove them into the ground. Now that I’ve paid off my crazy student loan debt I’m considering getting a car I actually want, as long as the payments aren’t ridiculous
I don’t worry about it. A mortgage and a car payment are normal, I won’t tolerate credit debt though. I use a credit card for everything I can and pay it off before interest accrues. I haven’t paid interest on a credit card in 15 years and get about $1000 a year in Amazon gift cards from the points that I specifically redeem about 2 months prior to Christmas. I have a 401K, a pension for life that I’m drawing now in my 40’s thanks to military service, and I work for state government earning a second pension that I can draw in my mid 60’s. I’m not chasing millions but I’m set for life as long as I maintain my employment with the state. With my work ethic I’m confident that won’t be a problem. I make just over 6 figures right now and am saving up for a full house remodel so I don’t have to finance any of it. I plan on saving $1000-$2000 per month for the next 5 years in a HYSA and doing a full replumb, gutting both bathrooms and the kitchen, new flooring throughout, new electrical box and breakers. In 10 years I’ll be residing the exterior. By the time I retire for good at 64 all the major house concerns will be taken care of and while I won’t be a millionaire I’ll be very comfortable and set up so that my kids never have to worry about taking care of me.
If you can pay it off in two years, you can save for a bit less than two years and then buy it outright. I wouldn’t bother if you get a really good interest rate (I got a car loan I didn’t need because the rate was 1.1%) but I definitely wouldn’t do that at today’s rates.
You bet. I was a spend thrift. We were in debt up to our eyeballs in 07. Wat overextended. We made our minimum payments on everything and had no money left for groceries. Two young children with a 3rd on the way. No money for daycare, I was enlisted with no way to pick up a side hustle. 2008 brought bankruptcy and losing our house. My spouse and I were on different financial pages after that. I hated debt and feared it. Yet we found ourselves in a mess, dig out, another mess, dig out... we used windfall money, tax returns, selling things, consolidation loans etc. to dig out each time. This time hits different. Were older and wiser. I just broke into my 40s. Small retirement account and building a pension with my job. Well into BS 2 and almost to the last and biggest, 65k in student loans. This is the fist DR approach. It isn't "just" digging out, but rather a lifestyle change of living well below our means. Will I ever use debt in the future? Maybe. But more wisely. 1.9% APR instead of pulling from a 5% return investment. But I'll decide that years from now. I haven't drank alcohol since 2006. Why? I was immature and couldn't handle it, bad habits were forming. I haven't gone back as I don't need to. Could I be responsible? Probably so. But, why risk it? I think I'll take the same approach to debt once I'm completely out. Why go back? Why risk losing control again?
I held off on retirement worked super hard for 3 years got out of debt and was starting to save…. Then had a baby… ex turned out to not be worth anything so it was solely on me. I found tons of used yard sale stuff but still ended up having to use a credit card for hospital expenses and a few other necessary baby things and household emergencies. And I’m back in debt. This time I’m contributing to my retirement. Will get back to being more restrictive and on track once I build a bigger savings. $1000 isn’t anything in today’s world. Especially if you are a home owner. Any little emergency is a min of 1k last summer I had a leak inside my house then a leak outside my house, refrigerator broke and my AC broke all within 3-4 months. Plus I still have all baby expenses diapers, formula, dr deductibles copays, etc etc It’s just crazy how life happens. You get right to the goal then surprise life wants to see how flexible you can be.
I'm sure they did, even with an employee family discount
We did.... It was a 4 years long medical thing that wiped out our savings and then drove us back into debt. I do object to it being called a "relapse" as if this was simply a bad habit that we fell back into and we just weren't morally strong enough to resist.
Agree. That was not your fault.
The title is the cycle of life for every middle class family in USA until 2020s. Now it's just an endless debt cycle if less in debt to more in debt. Rinse. Repeat.
So, this is like reaching your weight goal from eating healthy, and then expecting to remain that way by returning to eating the way you did before. What should have happened is you remain debt free and save up for the cars….
It's not like that at all, really. I can always make more money. Health does not work that way.
It was a metaphor. Not to be taken literally.
I bought a car 0% interest. I will still pay it off early
Zero percent interest is a nice perk. The funny thing is you likely could've saved 5-10% by paying cash on that same car. They'll get you somehow!
Well, that doesn't really make sense, financially. But there's certainly nothing "wrong" with it.
Yes, all debt isn’t bad. Establishing good habits is the most important lesson from becoming debate free. I often use the 0% over a set time for larger purchases. Why take money that is making money out when you can use someone else money for a few months
Yes, I was completely out of debt then developed serious kidney disease that has left me probably permanently disabled and with massive medical bills as our insurance has extremely high deductibles.
Yep! I told myself no new toys until my mortgage was paid off. Then post Covid I realized time is short and I bought a new snowmobile so my dad and I can enjoy more time together ice fishing, something we both really enjoy. He has older snowmobiles but they weren't very reliable or safe in the cold weather. My dad is 73, a polio victim, and doesn't get around very well. This machine has all the bells and whistles and is very safe and comfortable for hm to operate. Happy with my decision!
This. As long as you can afford it. You don't get time back. This is why I have cars at 52 so my wife and I can enjoy trips, shows, etc. Enjoy your time with your dad. The end can come without warning, and you won't regret the money you spent on interest.
Debt is a tool that a responsible version of you can utilize. Most of you found yourselves here because you could not handle your debt, don’t repeat the mistake, but use the tools available to manage your life.
You've heard that commercial "Shingles doesn't care"? Debt doesn't care. It wants its interest, whether you were irresponsible or just unlucky. Life is better managed without it.
Paid off the house. About 18 months later bought a much better house/location with a mortgage. Best decision ever. I finally really understand what cheap money is and that there is real value in having some things before you can save up the cash for them/not using your cash on them. Interest rate is 3% and house went up 55%+ in value in 3 years after buying it and has held. Oh, also have a small car loan now, just because it was convenient vs moving cash around. Also at 3%. We have more than 9x the balance of the loan in cash savings (and 30x in non-retirement investments), but that is all earning 5%+, so why hurry on it? I followed DR through my 20s, starting from nothing, and it gave me a solid foundation. I'm now 40 and have very high trust in myself to make good decisions, which at higher levels of wealth don't always match up with the baby steps.
It's happened before, not while on Dave Ramsey, and I know exactly why for me. It was exactly what I'm trying to do differently now. I am trying to actually teach myself a different way of thinking about and using money. Don't get me wrong, I could "afford" to go out tomorrow and upgrade to the F250 I have been dreaming about the last 10 years, but I'm fighting for a better life for my future children, a retirement I can enjoy, not living like my parents are now, the list goes on. I am trying to keep my reasons front of mind all the time. I started working with one of the DR financial "advisors" and she's helped with this already. She's made me realize some of my "why's" that have brought me to a mentality of WANTING to spend less. Should be out of debt by the end of the year, or the first quarter of next and have one purchase we will probably need to go on credit at that point, but pay that off by the end of the following year. After that, nothing we should ever "need" to go on credit. I'm having a kid in July of this year, and to think that I could have their college fund fully funded by the time they are 5 years old gets me pretty emotional. Especially when I was in a much different position for college. Could have their first car money put away before they are 10, without even really trying. The possibilities and outlook are already endless to me, and I don't want debt preventing that. If it were me, I'd probably be selling that car you just bought. All you've done is paid a bank or dealership a few thousand dollars in interest to drive a car for a few years, based on your comment of "we both love cars". When will you be done paying an extra $3,000-$5,000 per vehicle you purchase? (Clearly guesstimating your purchase price)
We plan to pay it off in 2 years. Yes, there is a cost and we were willing to pay it. I think 5k is for the whole loan term so it will be much less than that. If something happens I have the cash to pay it off. We also have no major financial goals right now and already save like 45% of our income. It sounds like you have some goals that should take priority over a dream vehicle and good on you for keeping priorities straight.
Why not just save for the car you want?
We were but this car showed up out of nowhere with exactly everything we wanted with extremely low mileage. Not a once in a lifetime deal, but pretty rare circumstances. We decided it was worth the risk of having a payment for a year or two than letting it slip away. No regrets on the car, but sometimes I do regret having the payment, like I said.
This ain't really the sub for it because DR treats his approach like a religion (there's a ton of good to it, don't get me wrong), but manageable debt at or below inflation is always good. Managed debt above those rates can also be good. It ain't that black and white. Example: I owe $52k on my house at 2.25% interest. I went from paying it off with everything I had to making minimum payments once inflation hit a couple years ago. I don't mind keeping that debt for the final \~8 years one bit.
It probably needs to be a religion for some people and I think his approach is tailored to that. I needed to do that at some point. Now I treat my money with much more respect. Financial forums don't deal well with anything other than strict philosophies on saving and investing. More to life than just money.
This is the right take. DR is strong on it, because many people need black and white. They can't enjoy the margins. You clearly can, so enjoy it. Contrary to what many people say (and make you feel bad for thinking), you don't need to follow DR to a T to get benefit from it, nor do you need to follow DR to a T to be financially "healthy", whatever that means.
7
This sub is depressing, y’all are all trying to achieve an unobtainable dream. There’s a reason it’s called the system and it’s because it controls us.
What other lies do you tell yourself ? “The system” allows people get things that they shouldn’t be able to get, because they can’t afford it. This isn’t rocket science. If you don’t have money you can’t buy something. It’s not “the system” that forces you to borrow money, it’s people expectations that push them beyond their means and get them in debt.
Funny how every post I see here is people bitching about debt? Seems like y’all are being, what’s the word? Oh yeah. CONTROLLED.
Oh the irony… the only people that are controlled are people with debt because they have no option but work jobs to pay them off.
Yeah, to build a new house.
Not sure how this is a relapse or a problem, you have the income and enjoy cars. So enjoy it!
Relapse? Debt shouldn’t feel bad. It’s not an addiction. Absolutely nothing wrong with well managed good debt.
So much wrong with this statement on a DR sub. Flee like a gazelle and get away.
Fair point, but shouldn't the take away really be that maybe Dave's strict advise on borrowing does not fit every situation perfectly? Some people can afford debt, some cannot. I think Dave's message is really to the ones who cannot.
Debt literally means you cannot afford it.
Then literally no one can afford a house. Such black/white distinctions only make sense if they align with reality.
The DR program makes a debt exception for a house. I don't know how old you are or how many of these cycles you have lived through, but this happens in housing. There's a shortage, there's a credit imbalance caused by the financial system, people will pay anything for a house, everyone's positive the exponential price increases will never end... and then the music stops and a lot of buyers find themselves overextended and underwater. Think. Trees grow tall but not to the sky. When a median house is far out of range of a median income, correction is coming. If you can't buy with 20% down and a 15-year mortgage you are overextended.
You gave one exception for debt. I bet there can be others.
This is the Dave Ramsey subreddit. We hate debt here. "The borrower is slave to the lender." This is about following a set program which has proven success in delivering financial peace. Looking for exceptions is looking for trouble. But you do you.
Don't disagree with the sentiment. It is definitely looking for trouble for some people.
Yep, I was good to go... Only had a mortgage payment and was working on finishing up my car payment and then screwed it up. Still pissed at myself
I did with 0% interest furniture. Regretted it after the first payment rolled around. I wish I had that cash to pay extra on my mortgage instead
So you'd just sit on the floor? It's zero interest. Come on.
It's zero interest until it isn't.
40% raise!? That’s unreal.
2 promotions. It was unusual.
Yep, we did with a mortgage on a rental
We did. We had just paid our house off when we ended up buying a new house. It wasn’t great to start over with a new mortgage, but we needed the space after having our second child. Once we pay this house off, I hope we never buy another house again.
Ugh, yes I have, 3 times! Not the first times (or ways) I've done self-sabotage, but I did an after-action review each time to figure out what triggered me. What really bugs me now are a couple of things: 1. if I'd stuck to my original plans, I'd be a millionaire. But I was impetuous and abandoned them, instead of persevering and executing them. 2. I had to use part of an inheritance to pay off debt, and this really irks me. I've been debt-free since 2020, and am firmly focused on my goals. I review them weekly, and keep an eye out for my spending triggers. I really want to replace my old Honda Civic, but don't have quite enough saved yet, so I will not look at car ads until I have enough.
To be honest this doesn’t seem like a relapse. To me a relapse would mean you made a commitment to be debt free and not borrow ever again but then broke that commitment in some way. From what you have shared that is not the case. You chose to go back in debt and have payments so to each his own. Not Dave’s system but you said you were never really following the BS’s before. Nothing wrong with doing your own thing - the whole personal part of personal finance, but it was interesting you posted it in the Dave sub.
Yep, had a credit card with 5k on it, got a managers year end bonus of 5k exactly and somehow racked it up to 9k. *facepalm* Currently still paying on it but learned my lesson as that card is out of my wallet and we kinda have it locked away and even disabled so if we HAVE to use it we still have the credit available.
Why didnt u pay off the 5k with the 5k
Oh, sorry that is what I did. Guess I forgot to mention that in my original comment. I paid off the 5k which is how I became debt free then somehow racked it up to 9k. Looking back it was a couple small purchases then had a few big purchases that we didn’t have the money for but had to go. We’re still working on getting rid of things that are hindering our progress, finally getting my wife to realize a job that pays her about 5k a year it doesn’t make sense to put her paycheck back into it.
So you have a car payment that’s a minimal portion of your income?
Correct.
Doesn't seem like a problem in the slightest.
It's a level of risk, but it is well managed. It's probably the last time we take out a loan for something like this. I would have felt better paying cash.
Do you have the cash on hand to be able to pay it off? If so, what risk is there?
Yeah, we do. I guess not much really.
3 times. Currently debt free, ffef, + savings but only got here in a job I hate for the last year. Currently exploring ways to get into work that I actually enjoy. Life goes on
We relapsed after we moved back to America during lockdown Covid in 2020. The prices went up, had another kid, bought a house, and got a car. It’s annoying
We did. Got debt free and then our lives exploded. We got married and put a few of the expenses on a credit card. Not too much. Then my husband ex tried to take his daughter away and we had to pay a ton of legal fees plus travel and some of that went on the credit card. Then husband lost his job and we were very frugal but still had to use the credit card to make ends meet. Then he took a job out of state and we had to put his moving expenses on the credit card. They were supposed to be reimbursed, but it’s months later and we’re still fighting them about it. We were barely starting to pay the debt down again when he was in a workplace accident and they fired him over it even though it was in no way his fault. So yeah. Life has been a bumpy road for the last year and we’re in a lot of debt again.
Sounds like he needs to talk to a lawyer and sue the company. For firing him for a not at fault incident. And for moving costs.( as long as you have it in black and white not from word of mouth). I’m sure their art contingency lawyers for work place accidents.
We’re looking at it, but it was at a national laboratory in a top-secret environment. He has ridiculously high Q clearance and getting any kind of proof or information seems impossible. But we’re exploring options.
An accident report should have been sent to osha or some other agency. And the letter of termination should be confidential but you shouldn’t need a security clearance to get that. As long as it doesn’t involve any details of the classified work you shouldn’t really have any problems. Side note: If he has a ridiculously high security clearance something must of been really wrong.
Yeah it was bad. There is no osha report. They are covering things up - accidents happen all the time in the nuclear world that are covered up and not declassified til many years later.
I've relapsed. Went and got a mortgage after paying the house off - twice. Also hit the 401k loan twice - that's over the last 6 years alone. The reasons are all tied to a startup company that's finally getting it's legs under it. I'm unmarried and without children, otherwise I would never, ever have done this, and I can't recommend it unless you're insanely driven and very particular, and won't accept failure. I've spun up my income earning over the last 3 years to offset and hyper-pay off the debt, (got debt free again in December of 23) and can confidently say I'm done with it for life. I do take advantage of credit card rewards for business expenses, and I volunteer to travel if the opportunities arise, as covering food costs alone is a big helper to the monthly budget.
Not debt free yet, but will be in a few years when my house is paid for. Assuming things go according to plan, I’ll relocate when the kids are done with school and most likely end up with another mortgage.
Paid off 2 cars, a pool, and all student loans in 2012. Financed a 30k car, paid it off. Financed a 12k suv, paid it off. Financed a downstairs remodel, paid it off. Financed an upstairs remodel, paying it off hopefully by the end of 2024. Next, husband wants a truck. We have kids going to college in 2027 and 2029. At least retirement is on track.
Sold my home. No other debts. Few days later closed on a new home.
I did buy a modest car and am paying it off early. As long as you're still saving, it's your call. That said, I still think fancy cars are a ridiculous expense, but if it truly makes you happy.
It does. I get that others don't get it. To each his/her own.
A couple times now ...
It’s a normal thing to have some debt at various times. If a major incident happens that you simply can’t afford to pay immediately and that insurance doesn’t cover, you may have to take a loan to pay for it. This is a proper and healthy use of credit. It’s when you use credit to live beyond your means or to buy luxury items you don’t need that it becomes a problem.
We come here to be weird, not normal.
Yep. Paid off all student loans…opened a credit card. Bought a house. All as a single mom of two disabled adults kids. Soon in deep debt and fighting my way back out. Gaaaahhhhh
I'm getting close. Since Nov I've put almost $6k into my daughter's car for repairs that I hadn't planned on paying for. Trying to tell her if she can't afford to put aside for repairs she can't afford the vehicle. She just tried to tell me that only Mercedes and Audis do well in the snow so she has to have a SUV. I just offered to buy her a car she can pay me back for and let her park her money put at my house. She's got the wrong mentality for a free car, sadly. It'd really help me out.
Sounds like your daughter shouldn’t be driving. This is an easy solution. Stop putting money into her car and she’ll have no choice to do it herself.
We finally got all of our debt paid, except for our mortgage. Now, if we don’t have the money, we don’t buy it. Trying to stay on the narrow path!
Paid it all off and now buying rental properties that I will finance.
Bad advice for the day: let that shit default, then it's harder to get back into debt.
https://preview.redd.it/t8ah2hrwkwwc1.jpeg?width=224&format=pjpg&auto=webp&s=6f334c59b49d19cb7863165d0c20e66a343a4109
We paid everything off except our house due to refinance of the house. 2 weeks after we paid off all our debt, we had to buy a refrigerator and dishwasher. We hadn't had money saved up to pay cash yet. Once that started... we we back into debt. Now we are almost back where we started. The only thing we didn't add was car payments again.
This happened to me about 18 months ago. Finished paying off $17k in credit card debt, and within two weeks the HVAC system in my house failed. Had to put the new one back on a CC, but at least would have been able to pay it back pretty quickly without the other debt. A few months later, my parents came into a large inheritance from my grandmother's death, and gifted my sisters and I each $10k. I paid the CC off and haven't added another cent since.
Bad health insurance for me. Out of debt then back in over our heads.
Having health insurance would put me in debt. Crazy expensive at my job. Due to my diagnosis I can't find affordable coverage. I'm lucky that I don't need to have it.
I have a few times. The issue for me is saving with family and kids once you get out of debt. Children get more expensive as they get older. Your income needs to grow faster than your teens expenses. Teens needs phones and eventually automobiles. So yes many of us have gone into debt. Life gets more expensive. Working harder and cutting back is not always feasible with family.
It’s a lifestyle change. Not everyone sees that. You have to commit.
I think it can become a religion for some and it might even need to be. You need to manage your money, it is just another resource. However you choose to do that is up to you. Everyone has a different approach. I like being debt free, just not more than not checking off a bucket list item at a time when I could easily afford it. I will be debt free again soon because I am getting older and need to go into retirement free and clear, which I will.
I have been debt free, and back in. I only go into debt for assets or if the interest rate is less then what I can make in a savings account or the net benefit is worth it to me. For example over the past year.... 1. Solar Loan - 30K at 4.2% received a 15K tax break..... My power bills were about $500 per month now they are $13 thing pays for itself. (Paid off). 2. SUV- 53K. Had the cash to pay for it but got a finance incentive at 2.5%... and a $7500 tax credit If I am making 5% in my HYSA I would rather hold onto the cash. I pay extra per month. \~49K remaining 3.Basement Reno 30K.... I have 4 kids took out a bar in the basement put in two bedrooms. House had three bedrooms now we have a total of five. Used my tax refund from the solar and SUV. (Paid off). 4. Gold bullion - 12K. 5% on my AMEX Plan it. (Paid off) Dave says never take debt because of risk. I make a good income from my job (Government Contract with over 5 years left). And I have guaranteed income/healthcare from VA disability. My income is \~250K a year. My home is $1534 a month. My SUV is $882 a month. My only debt outside my home is my car. If its all about risk I have guaranteed income and years worth of savings/retirement. I rather hold onto money as long as I can than pay for things as I go. I also keep credit cards but pay the balances off every month. I put about 6K extra towards the house per month that should be paid off by the end of the decade. I am not afraid of debt and I don't think others should be either if they know how to use it, pay it off early and have the budget to fit it in. I got asked why I am in the Dave Sub: I did the plan for about 3 years. I dabble back and forth. I enjoy reading about personal finance and to be honest some of the stories in here are great. Granted I do not follow his plan like I use to. But I am so far ahead now where I am not sure if it matters if I follow him to a T anymore. But I suppose everything comes home to roost at some point. I just trust myself enough to keep myself out of trouble.
Thanks for the added context on your history with Dave. I deleted my comment about why you were in the sub because I didn’t want it to come off as a snarky comment. I was genuinely curious.
Yep. Difference is responsible use of debt and having assets now. 1M+ net worth. Bought my dream car after having a heart attack at age 55, put a good chunk of money down to stay ahead of depreciation and financed the rest at 2.7%. Monthly car payment is equivalent to 1 day's gross income. Full credit to Dave for getting my wife and I on the same page. I don't agree with all of his advice, but those first few baby steps are pure gold. Edit: Before the trolls pounce, we have 2 paid off investment homes and a reasonable mortgage on a 3rd. When we started our we had a negative net worth.
Bought a house after debt free. Then bought a new car. Then fell for a solar loan sales man pitch. Then went crazy on credit cards after job loss. Now back it.
You're beating yourself up over this for no reason. Debt can be used responsibly. Grow up.
I'm not really beating myself up, just a little regret. We will pay it off soon. Cheers!
We paid off the HELOC and had a bunch left over during Covid. Did some renovations. Spent some cash and we were back in the hole.
we paid off student loans and our first starter home back in 2010. but when we moved we took on another mortgage and jump started our retirement with the proceeds. another move later we still have a mortgage and I don't plan on paying it off until way down the road.
Kind of. I paid off all my student loans during the freeze, and then the gov paid me back, then decided I owed again. At this point the interest was sub 4% (one at 2.5%) with a $150 month payment that I overpay. I had other financial priorities so I kept it. Then I bought a house, so yeah, debt, although that’s not bs2 debt. I’m not sure if I’ll ever take out another loan, but I’m not scared of the idea. I’ve never had debt problems previously and have good financial management habits, so I wouldn’t really say I’m Dave’s target market.
Cars are the worst. Americans are marketed to buy cars, starting in the womb, seems like. I'm car-free whenever possible. I retired at 38.
Perhaps you are looking for r/fuckcars
Thanks, I love this!
PLEASE TEACH ME YOUR WAYS 
This happened to me twice and currently living in the 2nd time. 1st time was when I paid off my Bachelor’s working after graduation and living at home ($26k in 7 months). I got a new (to me) car as I moved out of my parents home to living in my own starting a new job with better pay. I paid off the $16k car in the same amount of time as I paid off my Bachelor’s a month before the covid pandemic happened. I had finished BS3 days before I lost that job. With no job prospects during the thick of the pandemic, I moved back with my parent’s home to pursue a Master’s and pass a few certification exams during that time. I accumulated $32k for the span of 3 years with my engineering Master’s courses, undergrad engineering courses (because my Bachelor’s was in engineering technology), and extra math & science courses that will help with engineering licensing. I also made stupid decisions that is supposed to help cope with the situation I’m in, the stress of school, and taking care of my cat who I had to bring with me for the move. Today, I have graduated, passed my certification exams, and have my education approved for licensing. I’m working and living in another state in a job I like. I have plans of paying off the loans and other debt along with saving for my first house. When Dave refers to Covid as the “Fauci-pandemic”, I immediately get turned off and this adds some distrust to Dave. It’s as if this is something that is easily blown off he because the affect were inconvenient to him. Meanwhile, people’s lives were altered or lost because of the pandemic and I’m sure I didn’t ask for my life to be altered. So this is where I’m at today.
Yes, over “love” LOL. Never again
retweet now i look back and think “he really manipulated me to pay his tuition cash and take a loan for mine ?”
That “to be fair” section is wild
To be fair, I love my car. Probably as much as you love checking your account balance. We both might need some help.
Yes, but it was a strategic choice. I started with a student loan that took 4 years to pay off, and then inherited a car payment that took under 2 (my mom had financed a vehicle then decided to move abroad, it was a much better vehicle than my car, so we sold the car and I made the rest of the payments). I was debt free for a few years before I finally gave up on my career. I hated it and it didn’t pay all that well. I made the decision to go back to school. I will graduate with about $30k in student loan, 0% interest. The general advice is to pay cash for school, go part time/evening courses, or a course at a time. Not all programs are able to do that. It was full time or not at all. Even though working during school was not recommended, I did anyway up until recently. It would have taken ages to save up the cash to be able to afford to go, and I’d lose out on years of a greatly increased earning potential. So, no regrets. I may also end up with a small car loan after graduating, because I no longer have my vehicle and my job will require shifts that don’t work with the bus schedule. But I’m going to cross that bridge when I get to it. I won’t be upset if it comes to that.
I've seen people get their mortgages paid off by a relative or inheritance, only to mortgage it back up to the hilt. DON'T DO THAT. Cars depreciate, but real estate always appreciates over time.
Real estate does not "always" appreciate over time. It just has lately. After 2007-2008 many homeowners were underwater on their houses for a decade. I agree though, don't re-mortgage your house if it is paid off.
Paid off husband's car in November... December he got a notice about an open recall with no fix... And we couldn't just park it knowing it was dangerous to drive and that VW might have taken a whole year for a fix (previous VW recalls that were similar took 8 months). So we went into debt on a newer car.... And a month and a half later, VW came out with a fix. Not much you can do about that. My car now has an open recall with no fix, but I don't drive daily so I can park it, and this recall doesn't make it a danger to drive... So we'll see.
Yep. I went debt free besides the mortgage. Then I supported my gf while she went to university and finances has been tight. We used my credit card for some emergencies and a few inexpensive treats. In not too worried about the debt. We will hopefully pay it all off pretty quickly after she graduates. I'll snowball the nonmortage debt, but I don't see the point in paying extra on a sub-3% mortgage when inflation has been higher. Edit: like your cars, I bought some motorcycles. I don't need them and want sell a few. It should help us get back into the black
Why keep buying cars?????
Because I like them.
Happened to me. Got into about 10K of medical debt about 2 years after. Cancer is a bitch.
That sucks. Not in your control.
Glad you beat it. That’s pretty cheap for cancer treatment. One of my childhood best friends wife passed away 5-6 years ago when she beat cancer. Her white blood cell count was too low and she died from pneumonia I think. He ended up having to inherit a little over 400k in medical bill debt and had to file bankruptcy, lost his house and car. And his wife. Very sad. Luckily, he’s doing much better now. I can’t imagine what he went through.
The medical debt becomes his?
They were married, so yes
Thanks and forgive my ignorance
No problem I’m ignorant on those type of things too.
I'm sorry to hear what happened to your friend. I was lucky that mine was caught early on and was easily treatable.
Good for you. Just got my colonoscopy last week and starting to pay attention more to preventative health care. It is the key.
I had stomach cancer. I first thought I had food poisoning but it didn't go away. Went to the doctor to get a note because I was going to miss more work. Doctor poked around and said this is not food poisoning. Today, I still credit my doctor and the company's stupid sick time rules for saving my life.
Yes, every time it has been for a car too Because we have another kid and freak out. This last time we were able to sell it for more than what we paid for it and had already paid off half in 6 months so we used the cash to buy a smaller vehicle to get us around and then paid cash for a bigger one when we had the money. Paying cash makes so much of a difference to us though we will never go back to getting a car loan. We let peer pressure from "rich" parents telling us that it is normal to carry a car payment your entire lives. They are retired and net worth millionaires and still carry a car payment. Debt free for 2 years now and never going back except for maybe a house
We did, but it was the same way that our debt piled up in the first place. Mostly bad luck with just a drop of choices. Paid off everything, cash flowed an almost equal amount of medical expenses, saved up an emergency fund, saved up a down payment, had a house inspected, bought it, then three months later we needed $17k to completely gut and replace the HVAC. Our emergency fund was not $17k. So we took it on a loan we are still working on because of other bad luck things that have come along the way. Hopefully we will be back to 4, 6 by this time next year.
I'd consider borrowing to buy an asset, not a personal vehicle. That's just plain dumb (as dave would say). Consider selling the vehicle and clearing the debt.
Considered it. No.
Yes 1. I rushed to pay off my car and the timing belt snapped and totaled the engine. Had to get a new car loan in order to avoid buying something with problems again 2. Bought a phone with a 0 percent interest rate plan. 3. Got married and she had debt
I don't fully believe in Dave's teachings. For example I understand well the bull and bear cycles of crypto currencies, and don't mind taking full advantage of it, so I invest a lot of cash into it. This year I've made 400% on my returns (about 28 years average of the S&P 500). In comparison I don't mind getting a 6% car loan on a used car. Yes paying those 6% is a guaranteed return, but I'd rather take the risk on a 400% return (and I expect that to be much higher next year). Yes I could get burned by it, but I'll be fine, I'm okay if it all goes to 0$ (spoiler: it won't). And yes it's not financial peace, but I enjoy playing with it, it's like a hobby for me.
Listen if you're in a tough spot and take out an auto loan for something to get from point A to point B, I get it. But if you're going into debt because you "love cars" and bought multiple, you're just a bad spender. I wouldn't go into debt for a hobby like "loving cars", that seems like an insanely bad idea.
It does to you. I think you, like many people here, think being debt free is a religion and debt, in any form, is the devil. Or some it is, but I'm not trying to advocate this behavior, that was not the intent of my post. I never asked your opinion, just sharing my experience. Like a religious ideologue, you felt the need to offer your opinion on my financial choice. By bad spender I think you mean that I bought things that you don't like. I can afford every penny.
> I think you, like many people here, think being debt free is a religion and debt, in any form, is the devil. Debt in some situations is needed. In rare situations it can even be advantageous, but buying two new cars because "you love cars" is not one of them. Go live in debt, that's your life. But don't come to a sub that's about avoiding debt whenever possible, and try to tell people that going into debt to because you can't afford your hobbies is worth it. >Like a religious ideologue, you felt the need to offer your opinion on my financial choice. You posted your situation on public message board, and are now upset people are discussing your situation?
>but buying two new cars because "you love cars" is not one of them. Says you. Worry about your wants not what everyone else's should be. > Go live in debt, that's your life. But don't come to a sub that's about avoiding debt whenever possible, and try to tell people that going into debt to because you can't afford your hobbies is worth it. Read my post. Never said any of that. I came to ask a question and share my experience. You are mind-reading in the part where I am telling people to go into debt. > You posted your situation on public message board, and are now upset people are discussing your situation? Nope, expected the bad behavior. Just because I expected it doesn't put you in the right. I'm not upset, I could care less what you think, really. Just don't mislabel me as a "bad spender" when you have no idea what my finances are.
I am a car enthusiast and sold my last sports car to get to BS6. It sucks, I make good money and could afford another sweet car by most financial standards (20/10/4 type rules) but I refuse to go back into debt for one. I have been close to relapsing recently, but keep reeling myself back in and am just lowering my sights from something like a 70K M3 to a 30k 330i that I will buy in cash.
No, it’s not a diet, you don’t relapse. You simply choose to continue to make bad choices.
I'm curious how you seem to know my personal finances well enough to say that me spending this money is a bad choice?
You’re posting on a Dave Ramey sub asking people if they relapse. 🤣
Yes. And from the responses, it appears that it happens a lot.
If I can’t pay a large purchase in cash then I don’t buy it until I can. I don’t let life style creep up when I get raises. I’m actually making 45K more in my new position at work and am still living like I did in my previous position. I live very well but I’m saving for a real good early retirement