College Debt

[Casey]

I guess I'm going to have to Google Dave Ramsey....

I hear he makes some good kool-aid.

 

[Enginnneeer]

(minimum wage back then was $3.25?).

$3.25! This reminds me of hearing about the sliderule from a coworker.

 

[ramicoce]

We've never had much, if any debt (now it's just the house, and we're knocking that out), but we still consider ourselves Ramseyites except on the credit card issue. We have one card that we have available for emergencies (like my $1400 car repair last December) and online purchases (solely because I can't build up the trust to use my check card). The point of getting rid of the card is to make it less likely that you'll spend money (it's a lot easier to pull out the card than part with cash), but if you don't use it and/or it's not easily available, I figured it's not an issue.

Ramsey's point of paying off your debts goes beyond just the numbers; it's a state-of-mind, a mental thing, a way of life. If you stop accepting debt as part of your financial plan, you'll have greater control over your finances. You'll stop paying interest to someone else, which is always great, but you'll also instinctively avoid impulse purchasing and buying things you don't really need and/or can't readily afford. Plus, without the required monthly payment out, every penny coming in goes to savings, building that uncommitted pile much quicker and making early retirement more and more likely.

 

[ramicoce]

I guess I'm going to have to Google Dave Ramsey....

You can podcast the first hour of his daily show for free. Just look it up in iTunes/Zune or check out his website (daveramsey.com)

 

[Road Guy]

I was lucky, the GI Bill paid for most of mine and I worked part time to pay for the rest, didnt get a cent from mom and dad for either the Bachelors or Masters Degree's.

Although when I did come home from college I noticed my parents had spent a lot of money on the house so I guess they put the money to good use.

I had sort of a falling out with my folks when I turned down some partial football scholarships to some small schools and when they started the "I'm not paying for you to go to school and party" I played the FU card and joined the Army to pay for college..

I didnt see the point at playing division II football, getting the same beatdowns in practice to play in front of 200 people, maybe I was wrong........

 

[ramicoce]

1. His path isn't the most efficient way to pay off debt....2. He trains people his method for finance, but doesn't educate people about finance at all...

3. He says he has a heart of a teacher...

4. Its absolutely disgusting how he panders..

1. I think he's working with psychology here, which is probably far outside the realm of any of us engineers. You are correct, it would make more sense mathematically to go after the largest interest rate (i.e. the bookie). However, there's a tremendous sense of accomplishment as each debt gets paid off. When you're trying to change someone's life, you have to find a way to motivate them. When someone starts this large task, that first completed account encourages them that they can do this. As you move up, you need less and less reinforcement because you've already had so much success and encouragement. As you close on that final greatest debt, you build the excitement and drive to tear through it. Man, it gets me excited just thinking about it! (and, again, we're out of debt).

2. Yeah, but that's not really the point. Try teaching my wife about finance. She'll tune you out after about 30 seconds. She's a heck of a saver, but has no interest in learning nitty-gritty financial details. You're right, many of the callers are hurting on financial knowledge, but I imagine a lot of that is because they're similar to my wife in that finance doesn't particularly interest her.

3. Yes, he sells books/CDs/FPU, but there is a cost for producing and distributing all of that. He's also encouraged people to share their books with others; that's not going to earn him a sale. I've noted the same though, but you know what, he's found a way to both help people and make a living. Good for him. If his product is successful in improving lives, I'm good with it. I don't expect him to sacrifice himself and give everything away for free. The truth is though, you can learn all the principals taught in his books and FPU simply by listening to his radio program for a week, and that doesn't cost a dime.

4. True, and this probably comes from his previously being a preacher. I kind of like it though... as a society, we're moving away from relying on the family, church, and neighbors to assist in a time of need and relying more on the government. I'm willing to bet that we've also shifted our donations away from the church too compared to our grandparents. If more people tithed more regularly, the churches would be in a better position to reclaim some of that calling, and reduce the demand on the government (and our taxes, in an ideal world--- i know it's a dream though, especially in Tallahassee).

 

[ramicoce]

I was lucky, the GI Bill paid for most of mine and I worked part time to pay for the rest, didnt get a cent from mom and dad for either the Bachelors or Masters Degree's.

Yeah, I was lucky too. I picked up a bunch of small scholarships through undergrad, combined that with a co-op, a 2 year ROTC scholarship, GI Bill, and reserve income as an enlisted guy (when it used to be one weekend a month), and ended up making money going to school. Grad school was on a fellowship, so that was pretty lucky too. Now we're planning for our son (who'll join us any day now), but we won't cover 100% of it. I think I had a greater a appreciation for school because I had full responsibility for finding funding for it (I had to keep grades up to keep the scholarships, etc.) just as I took better care of my car because I paid for it myself.

 

[Capt Worley PE]

I saw his site...lotta stuff for sale.

 

[ramicoce]

I saw his site...lotta stuff for sale.

There is, and it's definitely a business, but the books are probably also in your library. Plus, someone correct me here if need be... if you listen to his radio show (or free podcast) for a week, you'll probably learn everything in the books.

 

[mudpuppy]

From what I've read here, it sounds like Ramsey has a dogmatic approach to personal finance, which IMO is often a good way for people to get lead astray. "Oh, I have $1000 in the bank for emergencies like Dave Ramsey said, so I'll be ok!" Or, "Oh, I'm saving 15% of my income for retirement like Dave Ramsey said so I'll be ok!". While these strategies may work just fine for some people, they may not make sense for others.

As unappealing as it may sound to some people, they need to get educated about finance and sit down and cruch the numbers for their own personal situations--and then tailor their financial plan to fit their own lives. To rely one person's one-size-fits-all plan is just asking for trouble.

And if they really can't or won't sit down and do it themselves, there are independent financial advisors out there that can do it for them for a fee (but be careful about relying on a bank or brokerage employee for financial advice--they often have tremendous conflicts of interest).

 

[chaosiscash]

As unappealing as it may sound to some people, they need to get educated about finance and sit down and cruch the numbers for their own personal situations--and then tailor their financial plan to fit their own lives. To rely one person's one-size-fits-all plan is just asking for trouble.

Well put.

 

[maryannette]

Back to the original topic, college student loans. Is it okay to borrow money to get a college education?

 

[Supe]

Back to the original topic, college student loans. Is it okay to borrow money to get a college education?

There aren't many investments out there one can make that have the guaranteed results of a college education. I'd rather take out a loan for education than just about anything else.

 

[Chucktown PE]

That's another area where Dave Ramsey would disagree with you. I don't follow DR's plan but I am in good shape financially, I use credit occasionally, but have no consumer debt, and a good bit of money in investments/retirement accounts.

I would take out a loan for college if I had to. Fortunately I didn't have to but I agree with Supe. A colllege education at a state school, with a degree in some profession (parks, recreation, and tourism management doesn't count) will pay for itself in very little time.

 

[Desert Engineer]

On the topic of your education as an investment, occasionally at work I joke while wearing a hard hat that I need to protect my brain since I still owe money on it, and that I can’t damage my investment.

 

[chaosiscash]

(parks, recreation, and tourism management doesn't count)

What's wrong with a PRTM (Party Right Through May) degree? :th_rockon:

 

[Guest]

Well put.

+1

There aren't many investments out there one can make that have the guaranteed results of a college education. I'd rather take out a loan for education than just about anything else.

I completely agree ... I would still be forming concrete on a construction crew if I had NOT taken out those loans for college. Moreover, I think my quality of life would be severely DIMINISHED - so there is more than just the palpable financial well-being but also the intangible improvements in your life that a college education offers.

:2cents:

JR

 

[ramicoce]

Back to the original topic, college student loans. Is it okay to borrow money to get a college education?

I think it's ok if a.) the degree is required for the career you want to pursue, b.) the career is well-paying enough that you won't carry student loan debt forever, c.) you still minimize costs, i.e. public school with in-state tuition, and d.) you have absolutely no other way of paying for it, including working through college. Someone already mentioned it, but it is sad when people go massively into debt in order to get an education that supports a meager paying job. As long as someone's thought through it, honestly minimized costs, developed a plan before getting the loan, and sticks to that plan, I don't think anyone can fault you (not that it's really any of their business). Of course, this requires that you have some clue about why you're going to college in the first place and not simply going because it's grade 13 (I'm from Northern Virginia, everyone went to college - clue or no clue).

 

[snickerd3]

Don't forget about the MRS. degree. My sister went to a rather pricey private college and a LOT of her female classmates openly admitted they were after the MRS degree.

 

[benbo]

c.) you still minimize costs, i.e. public school with in-state tuition

I would agree with everything you say here, except this to a certain extent. Although state schools provide an excellent education, there is still some advantage to going to an Ivy League school if you can get in. Not necessarily from the education but from the connections. I just notice that every time I read something from some famous writer, or see some head of this or that corporation, many times they graduated from the Ivy League, or Stanford, or something like that. And in Engineering of course there are the other really good schools - U of I, Caltech, MIT, even (dare I say it) GT. Of course, you have to plan it all out carefully, and weigh everything. And get all the free scholarships you can. I could see going 70 K in debt to get a Computer degree from Stanford, but I couldn't see going 200K in debt to get a Modern Dance degree from Princeton.