Current Events > So why exactly can't most Americans even have $500 in savings?

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DarkRoast posted...

That's just flat out untrue. He's very much for credit cards with cash back and ones that don't have yearly fees.

But I think where things get hairy is that the common argument is that you need a credit card in order to improve your credit score, however the reality is that credit scores themselves are nowhere near as useful as they used to be. Especially if you have a decent income. Paying off my student loans absolutely murdered my credit score, but it also made my debt to income ratio zero. Pretty much anyone will give me a loan at a good rate if I want one.

.....nah, lol

He's pretty much ideologically agaist credit cards

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Also, I'd like to point out that I have a credit card, and I buy basically everything on it, because I get cash back. I have way more in my bank account than I would ever need to pay off that one card if it ever got maxed, so there's literally no reason for me not to use it since it has cash back and no yearly fee.

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Mix of people who simply have been dealt a shitty hand through various different circumstances and just cannot keep up with things and people who are so fundamentally stupid about their spending habits that it's a wonder that they remember to breath.

Poverty is a self-sustaining problem. It takes money to make money.

Example: You buy work boots. Cheap or Expensive? Cheap because you only have $20. So you buy cheap, and in 3 months they're worn out, causing you to need to buy another pair. Whereas the expensive boots would have lasted you 2 years or more, costing you less over time.

Good investments cost more up front but save you money in the long run. If you have no money, you pay less immediately but more over time.

The same is true for many types of products and situations.

Sometimes you spend a bit more money to save money.

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DarkRoast posted...

Also, I'd like to point out that I have a credit card, and I buy basically everything on it, because I get cash back. I have way more in my bank account than I would ever need to pay off that one card if it ever got maxed, so there's literally no reason for me not to use it since it has cash back and no yearly fee.

That's a very good thing, you did the opposite of Dave's advice

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DarkRoast posted...

Also, I'd like to point out that I have a credit card, and I buy basically everything on it, because I get cash back. I have way more in my bank account than I would ever need to pay off that one card if it ever got maxed, so there's literally no reason for me not to use it since it has cash back and no yearly fee.

I agree but Dave Ramsey definitely does not. Unless he's completly turned a 180 on it within the past couple of years.

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SilvosForever posted...

Poverty is a self-sustaining problem. It takes money to make money.

Example: You buy work boots. Cheap or Expensive? Cheap because you only have $20. So you buy cheap, and in 3 months they're worn out, causing you to need to buy another pair. Whereas the expensive boots would have lasted you 2 years or more, costing you less over time.

Good investments cost more up front but save you money in the long run. If you have no money, you pay less immediately but more over time.

The same is true for many types of products and situations.

Sometimes you spend a bit more money to save money.

It's the same issue with used cars. Used cars with a lot of miles are cheap, but they cost more in the long run with repairs.

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Solid Snake07 posted...

I agree but Dave Ramsey definitely does not. Unless he's completly turned a 180 on it within the past couple of years.

Yeah actually you may be right, I just looked his website and it's pretty clear he doesn't like credit cards. I take back what I said.

In fact, I have to go one further and agree with you guys that it comes across as kind of ridiculous and oversimplified. He states that the rewards are basically minuscule and insignificant compared to the potential penalties, using the argument that many Americans can't pay off their credit cards. But he doesn't address what actually responsible people who have the money to pay off their cards should do.

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you should still be saving money regardless of how much you make.
10-15% sounds like a good number.

Solid Snake07 posted...

I wouldn't say he gives the "shittiest investment advice" it's just pretty conservative investment advice, similiar to what a lot of financial advisors would recommend, minus prioritising paying off your mortgage.

Tbf his demo is basically people who can not be trusted to juggle debt.

My problem with his investment advice is that he advocates funds with front-end loads, and advises people not to use credit at all. (Well, except for his preferred mortgage lender. Huh?)
If anybody else said the stuff he does, they'd be laughed out of business, but Ramsey acolytes think he has healing hands.

He got called out a few years ago for promoting a mutual fund that he partnered with and got a kick back from. So then he decided to switch to promoting the AIVSX, he uses the fact that it's average 12% a year since 1934 while ignoring the fact that it has underperformed the index over the 15, 10, 5, 3 and 1 year time windows.

He's out of date on how student loans currently work in the US. He keeps talking about Sallie Mae as if it's still THE only federal student loan servicer, and not one of many, and not a private lendor (one of many). "Kick out Sallie Mae"... is outdated.
I also think he's not a fan of higher education. He boils education down to "doctor, lawyer, engineer, and underwater basketweaving gender studies". It's just the way he talks about it that irks me. He underestimates the current costs of "in state" public institutions

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I was never really taught how to save and budget

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It boils down to housing

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BignutzisBack posted...

He's good for people who can't manage money and need to get out of debt, once you get out of debt he instantly turns into one of the dumbest motherfuckers on the planet. He gives some of the shittiest investment advice I've ever seen by a "professional"

I'd also agree with this. His baby step and envelope plans are solid but he definitely runs his mouth on topics he really isn't qualified on, like the covid-19 pandemic.

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Will_VIIII posted...

I'd also agree with this. His baby step and envelope plans are solid but he definitely runs his mouth on topics he really isn't qualified on, like the covid-19 pandemic.

Honestly, his audience has a huge amount of overlap with Rush Limbaugh and Sean Hannity, and that should tell you everything.

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DarkRoast posted...

That's just flat out untrue. He's very much for credit cards with cash back and ones that don't have yearly fees.

But I think where things get hairy is that the common argument is that you need a credit card in order to improve your credit score, however the reality is that credit scores themselves are nowhere near as useful as they used to be. Especially if you have a decent income. Paying off my student loans absolutely murdered my credit score, but it also made my debt to income ratio zero. Pretty much anyone will give me a loan at a good rate if I want one.

He tears into people that still want to use credit cards. I often catch some of the clips on my lunch breaks. Though at this point its for some of the other personalities.

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I work a low paying job. I don't take very much home because of it, I barely break even each month. The stimulus checks are the only reason I am technically earning extra on top of what I have. Thinking about asking for a raise or getting a different job.
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I will say that mostly following his plan is how I was able to buy a house last November. I only started catching his youtube videos in January 2020 or so.

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Dave Ramsey is good for motivation on getting out of debt, and for beginner investment advice. Like super beginner advice for people who dont know any personal finance at all.

That is his target audience and why he is so adamant on never use credit cards. Hes obviously trying to prevent the inexperienced from ending up where they started. Once you get beyond the debt and stuff, you can be more sophisticated on how you invest and how you use credit.

I used to enjoy listening to his show when I had debt but stopped after I paid it all off.

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there are many ways to ensure that you can save money, but they are usually uncomfortable for the person to take those actions, so instead they bitch about it and do nothing about it.

having a roommate will be your best decision to save money. someone to split the rent and utilities. other things are not upgrading your phone so much, no cable tv, not setting a/c and heat too high/low, preparing food at home, not eating out so much, bringing lunch to work, etc. it takes many forms of discipline that many americans just do not have.

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Speaking as a Canadian, who up until recently was working low income, let me break it down a bit.

Where I live, rent is about 650/m. Internet is 130, Heat and Light is also 130ish depending on the month, but I'm on a plan so it doesn't shoot up to 220 during the winter. Add that up, which is 910. Add on to that Food, Prescriptions and gas, and I was easily hitting about about 1400/m. My job was paying about 12.5/h which would turn out to be about 1,500/m. But then you have to remember that most jobs take money away for taxes among other things so closer to 1450.

That's assuming I was working 30 hours a week. Which by the by, I wasn't. During the course of a year, retail stores have a certain amount of hours to give to their employees. Most of those hours are wasting during three specific times: Christmas, Thanksgiving/Black Friday-or Thanksgiving/Halloween if your Canadian, and Easter. I suppose 4th of July if your American. So after Christmas starting in January a lot of retail stores tone down the hours they give their employees to stupidly low numbers.

One Job I had gave me 5 hours a week.
Another Job gave me 5 hours every 2 weeks.

This would last until mid-April, to the beginning of May.

Now I'm no expert, but that isn't enough to save jack all. Obviously everyone is different, and every area is different. But until you break yourself from the retail spectrum, you can't really save anything. I'm 35. I've only now gotten my life in order. I'm out of the retail circuit, in a full scholarship for College with a house fully paid off thanks to dad taking a little bit out of my paychecks every paycheck since I started, so I would have enough for a downpayment for a house. Coupled with him getting a second mortgage on his own home, because in his words "I'll long be gone before you pay your home off, I'd rather see you not be homeless".

I'm one of the lucky ones. Some aren't so lucky.

It only takes one major expense to wipe out your savings. Most people can't go long enough to build a proper savings before such an event comes up.

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gotta buy drinks for buddies, simp for mistress, take care of the kids and gamble. Hard drugs also cost a lot. American life is rough.

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Son Of Spam posted...

It only takes one major expense to wipe out your savings. Most people can't go long enough to build a proper savings before such an event comes up.

Exactly. My cars wiper motor broke last July. Cost me 200 dollars to get replaced. Driving home that day I got it out of the shop and both brakelines failed. Another 1100. Couple weeks later the undercarriage gave way(due to how bad our winters are and the salt put on the roads, it does a number on our vehicles), another 800 or so dollars. 2 grand, gone in less than 2 weeks.

I'd like to bring up another issue: disability. If you're on disability, you either need to be able to jump from disability straight to earning enough to support yourself with benefits like health insurance, or you need to not work at all. If you earn money while on disability, it is subtracted from your monthly check. If work and earn any money too many months in a given time frame (not even consecutive months, mind) you lose both your financial assistance and your state medical coverage.

The advice to just improve yourself and everything will be fine absolutely goes to shit if you have expensive medical bills. It's hard as hell to get insurance that will pay for anything expensive in the United States. And when they do pay, it isn't enough. My mother had an excellent professional job with health insurance, and she had more spending money once she got on disability than she did while working because her medical costs were so high.

The final trap with disability is that, while you are on disability, you aren't allowed to save money or have assets that are worth much. You can't try to work because you lose benefits, you can't save up any money because you lose benefits, and it is often impossible to get the kind of medical coverage you need to stay alive and function unless you stay on disability. And those monthly checks? You'd literally be making more if you could get 40 hours of minimum wage.

The system is designed to create suffering and to take away personal autonomy. It's disgusting.

Mostly people living beyond their means. Back when I was a financial advisor, I saw couples who made $200-300k who were living paycheck to paycheck and drowning in debt, and I also saw couples who made like $80k and yet had enough to save and live comfortably. No matter your income, you can't outrun bad decisions.

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"why do poor people exist?"

is essentially what this topic is asking

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i have always had a savings account that wasnt empty

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soulunison2 posted...

This has to be the most out of touch topic Ive seen today

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the only reason to watch dave ramsey is to lol at the callers who buy $50k trucks on a $25k salary and then are genuinely puzzled why they are having financial troubles

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Romulox28 posted...

the only reason to watch dave ramsey is to lol at the callers who buy $50k trucks on a $25k salary and then are genuinely puzzled why they are having financial troubles

I think my favorite one was the couple who had just finished their surgeon degrees and had 2 separate offers. One to stay in New York for 250 grand a year, or another for something like 1.6 million over 3 years but they would be working near the arctic.

Or the guy who talked about making 100k a month wanting to know if a Phantom was worth picking up. The comments section is golden saying he was trolling Dave the entire time.

Romulox28 posted...

the only reason to watch dave ramsey is to lol at the callers who buy $50k trucks on a $25k salary and then are genuinely puzzled why they are having financial troubles

I would facepalm at that so hard

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Americans also think it's a great idea to move out of home at the age of 18 with zero savings.
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