A close friend is looking at buying a house. They're making a lot of bad decisions with it. They asked me to look at it and let them know what I thought. They wanted affirmation, but I could not give that to them. I presented the facts - this house has a crappy and expensive HOA (and I'm somewhat of a defender of HOAs), is overpriced for the area and the economy, and is almost a textbook case of being underwater in a few months. They didn't like that. I didn't even touch on the fact that they're pre-approved for WAYYYYY too much and that both of them have been unemployed for a few months at a time in the past 2 years, and can't afford the payment without both incomes.
Right or wrong, my business or not... if they buy this house, they're on a fast-track to foreclosure and bankruptcy. I don't want that for them, though it may be necessary for them to learn. I'd like for them to learn from someone else.
So, I think they're the exact people Dave Ramsey is perfect for. I am not. I disagree with a lot of what he says, because I am good at math and am not drowning in debt to begin with. But my friends? Well, they'd be in much better shape.
All this being said... What Dave Ramsey (or something else?) book would be best for a couple who are young, ignoring good advice from multiple people who know what they're talking about, and about to make a bad, potentially crippling financial decision? Bonus points if it is available as a Book on Tape. I looked through, but he has about 73 books and I'm not sure which should be the starting point.
TIA.
The Total Money Makeover - start here.
You have to follow the 7 steps - sometimes he encourages you to rent and pile up cash for a down payment on the house.
In 1987 my wife and I were both working and were approved for houses up to $190,000. We bought a starter house for $92,000 and breathed a bit and in case one of us lost a job or got sick it wouldn't have been a tragedy for our family.
Total Money Makeover is fine.
It is a great place to start. But if they won't listen to people who care about them, odds are they won't listen to Dave either.
Your Money or Your Life is also good conceptually but starting to show age in the examples it provides.
Here the guy from ESI Money does a write up on a few of his favorites:
https://esimoney.com/the-best-personal-finance-books-of-all-time-your-money-or-your-life/
Is there any way they would take the class? You could give it to them as a gift. What you get with the class is awesome, and the support of the teacher and classmates is great as well. My kids took so much to heart, especially about avoiding college debt.
I fuly anticipate them ignoring the book. Maybe the class would work. Probably would ignore that too. But I'll at least try.
I have not been able to make it to a class, or any of his events. The books I’ve glanced at spend WAY to much time bragging about testimonials, and what the program will do for you than giving you tolls to help. My wife did get me hooked on listening ( and watching, when available) to him... has helped me reinforce the ideals my dad tried to teach me.
I would definitely recommend helping them find one of the classes.
In reply to 03Panther :
That's kind of the point. The "plan" doesn't really require tools. It's just budgeting with a debt reduction plan big on building your reward center (pay off lowest balance first to "Own" debt) vs most economical path (But less rewarding because you may be stuck on a big $$ account for a long time).
I mean literally that is the entire plan. Know where your money goes and don't have debt.
It's a good plan overall (Maybe not the best plan but better then use 110% of your income to service debt). The big part of it is motivation to realize that 1) this alternative being presented is ok you still will be happy, 2) there are other people who do this, what the consumer society presents as Normal doesn't have to be.
That's the important part the radio program, the classes, the books give. It's the mental tools to go against what the world presents as normal.
In reply to nocones :
I’m sorry you missed my point, but no, that’s not kinda the point. But none of that address mtn’s question. For a concise answer from my point ov view...
I did not find the books helpful. I recommend a class, and listening a lot on the radio/internet.
i disagree with your first paragraph (written to me not mtn) but the rest is a great spot on concise discription of Financial Peace University.
FWIW: If not paying cash for a house Dave calls it out as 1/4 of your take home pay for a mortgage (plus taxes/ins) X 15 year fixed.
Where does your friend sit with that parameter?
Datsun310Guy said:
FWIW: If not paying cash for a house Dave calls it out as 1/4 of your take home pay for a mortgage (plus taxes/ins) X 15 year fixed.
Where does your friend sit with that parameter?
Uhhhhh Hahhaha, haha, ha. Yeah, they may meet it at 1/2 take home for the payment, on a 30 year fixed.
In fairness, around here it is really difficult to hit that for young people unless you're making good money. But they're too far on the other end of it.
In reply to mtn (Forum Supporter) :
If one person loses their job or gets sick it will take approx 100% of the salary to make the mortgage?
Save for a bigger down payment? Also there is an idea of gazelle intensity. You are so focused on saving and paying off debt that you survive on beans and rice. Whatever it takes....
In reply to mtn (Forum Supporter) :
Your best shot is blatant honesty about your own situation. For me, it would go something along the lines of... I made some financial mistakes when I was younger. I had student loans, credit cards, car payments, too much house and more. I had to make significant changes in order get control. I wish someone had talked to me before I made all of those mistakes. That is why I am talking to you now.
If they accept your offer then go through the class with them as their accountability partner. That is the most likely method for success.
In reply to tester (Forum Supporter) :
I think he said it best. Long shot, but prolly the only shot.
