Debt Elimination Question

[tzone]

In the fall of 1984 my first quarter of university tuition was $274. In the fall of 2021 my payment for my son's first quarter of university tuition (not incl. room/boarding/books/etc) will be $21,500. Now that's what I call inflation.

Yep. I have to make a payment similar to that here in a few weeks for my daughters first year of school.

 

[tzone]

Some will see this as justification to why the government needs to intervene in the top half of the graph.
other’s will see that intervention as the cause of the top half of the graph.

interesting how that works.

If the government "intervenes" the top half of the graph will skyrocket even higher. They'll mess up a wet dream.

 

[SAJ-99]

I don't know which specific data sets were used for this chart, but often prices in these studies are adjusted for increased quality/longevity and/or decreased lifecycle costs. So if I could make a new version of my truck that lasted 1 year longer on average and was 10% more fuel-efficient, in some inflation data I could raise sales price by 5-10% on the sticker price and economists would report this as 0% inflation in the cost of my truck - as they look at value received over the expected life of the product, not just sticker price upfront. Not sure that is the case here, but this methodology is definitely used in the federal CPI calculation.

Hedonic adjustments- a matter of much economic debate.

The top half is almost all services. The bottom half all manufactured goods.

 

[Deleted member 28227]

Still, I'd rather get my medical treatment here in the US than in revered Canada, or anywhere else.

My mom got her hip replacement done in Vienna. My uncle got his done in SF.

My uncle's MD trained under my mom's MD, he literally learned how to do the specific procedure from him as my mom's MD is one of the best in the world.

My mom was able to stay in the hospital for 7 days, in her own room and received physical therapy from the house staff, my uncle was discharged after less than 48 hours. Because my mom was at the hospital her pain was managed with local anesthetics and then over the counter pain killers. My uncle was handed a elephant sized jar of opioids and sent on his way.

My mom paid nothing out of pocket. My uncle... well... it wasn't zero lol

Austria is about the size of Massachusetts, a comparison to the US is apples to elephants, a medical system that works for a country that small and homogenous would never be feasible in the US at a national scale.

The US has amazing hospitals and medicine, pretty hard to beat Mayo as far as patient experience and outcomes, but there are also a lot of terrible hospitals in the US and there are a lot of superb hospitals in other countries.

 

[Deleted member 28227]

Dave Ramsey would probably say sell the trailer and pay it off, plus pay off the student loans.
Boom ! You're debt free on all that stuff.

Tim 🛋️ The Couch Guy on Instagram: "Sick advice, Dave 🙏"

51K likes, 1,484 comments - thefulltimeflipper on September 23, 2021: "Sick advice, Dave 🙏".

www.instagram.com

 

[Jwill]

Never go full Ramsey.

 

[Pucky Freak]

 

[ignorethefringes]

Tim 🛋️ The Couch Guy on Instagram: "Sick advice, Dave 🙏"

51K likes, 1,484 comments - thefulltimeflipper on September 23, 2021: "Sick advice, Dave 🙏".

www.instagram.com

I wish I could love and laugh at this both. I literally just recommended someone get 100% financing through a credit union to buy their first house so long as they stay well within their monthly budget with the payment.

It gets them to stop paying rent sooner, keeps their emergency fund with a higher balance, and many credit unions don't charge PMI on their 100% in house products. Win, win, win. The only drawback is a slightly higher rate that they can refinance out of later if need be.

 

[TN2shot07]

First - NOBODY should follow one person for all their information on a subject (known as a cult)
I’m always amazed at the hate Dave gets. You can nitpick the details but it’d be hard to argue that if the average person lived on less than they make, avoid debt, and consistently invested 10-15% of their income during their working life that the financial outlook of our country would be drastically better.

 

[The_Jim]

Retirement approacheth. We have two significant non-mortgage debts, a student loan that we are paying for the parent's privilege on our son's education, and a trailer. Student loan is about $48K, the trailer about $25K. We have $48K available to pay down one or the other, or some part of each.

The student loan is with us to the grave, cannot bankrupt out of it, etc.

The trailer has some value as collateral, we could sell it if in a bind and not have that debt.

Seems to me that marking off the student loan on September 29 is the best approach, since no payment has to be made until then and the cash stack can still grow until we pay off. But I am not a finance and planning expert, so I thought I would appeal to other nonfinancial experts here on a hunting forum. Just kind of turning this over in my hands, trying to decide which is best (and the student loan payment is about 2X of the trailer).

Thanks for weighing in!

The peace of mind from being debt free is amazing. Sounds like your keeping the trailer LOL.

Pay of the student loans today!!!

Then pay of that trailer as soon as you can!

Then enjoy your retirement without any payments!

 

[Dakotakid]

Question- does the student loan have compound interest?
We have several and looked to refinance wife’s 80k at 7%but it is not compounding.
My last payment is due this month after 20 years.
The old mentality of “go to college, get a good job” is not holding value anymore.

Our nest egg is from wife’s father who was a professor and left her a chunk, ironically.

 

[Deleted member 28227]

First - NOBODY should follow one person for all their information on a subject (known as a cult)
I’m always amazed at the hate Dave gets. You can nitpick the details but it’d be hard to argue that if the average person lived on less than they make, avoid debt, and consistently invested 10-15% of their income during their working life that the financial outlook of our country would be drastically better.

I'm always amazed at the hate *Hitler* gets. You nitpick the details but it'd be hard to argue that it...

Yeah the details are the entire point, that's what makes it's bat shit crazy and unreasonable. How you get from not having piles of credit card debit to envelopes of cash under your mattress is beyond reason.

 

[TN2shot07]

I'm always amazed at the hate *Hitler* gets. You nitpick the details but it'd be hard to argue that it...

Yeah the details are the entire point, that's what makes it's bat shit crazy and unreasonable. How you get from not having piles of credit card debit to envelopes of cash under your mattress is beyond reason.

Getting out of debt sucks because it usually means making major changes to how you live and what you believe. Its not bat shit crazy to do it or complicated but it’s not a fun process. It’s not any different than people who make the decision to work on losing weight and making healthier decisions. Discipline and telling yourself no are not that common in our current culture but it does work

 

[Deleted member 28227]

Getting out of debt sucks because it usually means making major changes to how you live and what you believe. Its not bat shit crazy to do it or complicated but it’s not a fun process. It’s not any different than people who make the decision to work on losing weight and making healthier decisions. Discipline and telling yourself no are not that common in our current culture but it does work

Again high level principles sound, details... absolutely crazy. Especially because his followers don't realize his 'advice' is behavior modification for addicts rather than best practice finance. In a capitalist society you can only succeed by leveraging debt, his no debt reasoning only makes sense if you don't have discipline.

 

[TN2shot07]

Again high level principles sound, details... absolutely crazy.

I apologize, I’m confused on what details you’re calling crazy?
- Paying off debt?
- 3-6 month savings for emergencies
- 10-15% savings for retirement
- save for kids college if applicable
- pay off mortgage

 

[TOGIE]

his no debt reasoning only makes sense if you don't have discipline.

this is exactly who he is speaking to. and it's a great market, this is the land of the free and the home of lack of discipline.

i always like to say that leverage is what makes the american dream possible. dave ramsey knows this too.

but honestly, for the average middle class american, beyond a mortgage and even sometimes an occasional auto loan, there's little to no reason to be going into debt for anything. too many americans don't realize that.

overall, i'd argue the guy makes good financial sense. a thinking man does need to realize he's speaking to the lowest common denominator middle class american with a lot of his advice though, which is A LOT of americans.

 

[VikingsGuy]

There is good debt and bad debt. Knowing the difference, how to use the good and avoid the bad, is key to actually succeeding financially. Zero debt is not a path to financial success unless you really dumb down the definition of success. Absolutists on any topic are almost always shown to be wrong in the long run - this topic is no different.

Of course zero debt is better than run away revolving balance debt, but neither extreme is the ideal way to build personal happiness and financial success.

ymmv

 

[Deleted member 28227]

I apologize, I’m confused on what details you’re calling crazy?
- Paying off debt?
- 3-6 month savings for emergencies
- 10-15% savings for retirement
- save for kids college if applicable
- pay off mortgage

No credit cards
No debit cards
No debt
Paying in cash
Having envelopes of money all over your house
20% down on a house in the current market

again...

I'm always amazed at the hate *Hitler* gets. You nitpick the details but it'd be hard to argue that it...

Yeah the details are the entire point, that's what makes it's bat shit crazy and unreasonable. How you get from not having piles of credit card debit to envelopes of cash under your mattress is beyond reason.

paying off debt is a high level idea

Advocating, no convincing people, that using the banking methods of a drug dealer is so stupid it's beyond belief.

 

[TOGIE]

No credit cards
No debit cards
Paying in cash
Having envelopes of money all over your house
20% down on a house in the current market

i think that may be out of context.

basically when some 26 year old making to 50 grand a year comes to dave ramsey and is like "i'm drowning in hundreds of thousands of dollars in student loans and credit card debt and a new truck loan and i'm not sure how to fix my situation because i'm on the road to bankruptcy" dave ramsey is like "okay dumbass we need to practice extreme discipline."

that's not his blanket advice for every person of every persuasion.

a lot of his advice is how to teach discipline for those that clearly lack it and get out of debt they probably shouldn't be in. not necessarily how to live for the rest of your life.

 

[TN2shot07]

No credit cards
No debit cards
No debt
Paying in cash
Having envelopes of money all over your house
20% down on a house in the current market

again...


paying off debt is a high level idea

Advocating, no convincing people, that using the banking methods of a drug dealer is so stupid it's beyond belief.

- Nothing wrong with no credit cards. There are plenty of people who use them responsibly and are able to take advantage of rewards. The gigantic balance of credit card debt that Americans carry shows this obviously isn’t true for everyone.
- I’ve never seen any financial advice pushing people away from debit cards. They work like a credit card except it’s your money so no chance you add to your debt
- When learning to budget cash for certain categories can really help the learning curve. (Groceries, personal money, etc)
- I don’t think anyone recommends you having cash stashed all over your house either?
- 20% down is a goal to avoid PMI, not necessary just saves you from paying insurance for the bank. Keeping the payment at a reasonable % of your income is way higher on the list when I’m talking to people