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May 2019 Moms
chloelavon
member
Finances
chloelavon
member
I haven’t seen a thread about finances and planning for your new addition. What strategies are you using to save? How’s your insurance stacking up?
Personally, I’m a little distraught. We are not nearly as prepared financially for baby #2. My husband and I took Dave Ramsey’s Financial Peace class the year before we found out we were pregnant (which I HIGHLY recommend). In a matter of less than 1 year we paid off all or debts including credit cards, vehicle loans, and my student loan! Unfortunately, we have fallen off the budget wagon and have also purchased a used truck. Now I feel lost and I HATE the payments every month. The costs of a new baby keep adding up in my head and it’s starting to really stress me out. I had to change insurance this year so that adds another layer of unknowns. In the end I know we will figure it out, as I know people have done more with less but it’s still daunting!
Personally, I’m a little distraught. We are not nearly as prepared financially for baby #2. My husband and I took Dave Ramsey’s Financial Peace class the year before we found out we were pregnant (which I HIGHLY recommend). In a matter of less than 1 year we paid off all or debts including credit cards, vehicle loans, and my student loan! Unfortunately, we have fallen off the budget wagon and have also purchased a used truck. Now I feel lost and I HATE the payments every month. The costs of a new baby keep adding up in my head and it’s starting to really stress me out. I had to change insurance this year so that adds another layer of unknowns. In the end I know we will figure it out, as I know people have done more with less but it’s still daunting!
Re: Finances
If if you really want to talk baby finances with us, maybe introduce yourself first and hop in to the discussion before throwing up an extremely personal question up on the board.
BFP: 8/20/2018 - EDD 5/4/2019
Credit is good and important and anyone who doesn’t have a credit card with good rewards and a decent credit limit (I know the limit isn’t entirely up to you based on income, etc) is leaving free money on the table. Obviously you should spend within your means and not spend more than you can afford, which Dave Ramsey seems to think people can’t possibly do if they have the ABILITY to spend more on credit. But debt is how things get done — it’s how the world works. People should be taught how to use it to their advantage without abusing it, and not to fear it. I think Dave Ramsey unfairly brings all this morality into the equation that doesn’t need to be there.
I looked into paying for our car in cash because we had the cash. It was such a bad deal! We actually ended up doing it anyway (I lost an argument with my husband, oh well), but it bothers me that Dave Ramsey would have just said that taking out a car loan is inherently the wrong move without even looking at what sort of interest rate, prepayment penalties, terms you’d be given for a loan.
To be very frank, I’m in the so-called “1%” because I took on a crap ton of debt to go to grad school. I don’t come from money—my parents didn’t help me—but I’m comfortable now. Should everyone do that? No, some grad school is a waste of money and some schools are outrageously priced. Would I make as much money as I do if I hadn’t gone to law school, and more specifically to a top law school when I could have gone elsewhere for free? Most likely no. Would I be able to afford an apartment in an expensive city if I didn’t have take out a mortgage? No, but the amount that apartments in my city reliably go up in value is crazy and it’s an amazing investment. If the market crashes and I lose my job, that will suck, but I also am extremely conservative in my investments and have an emergency fund. I won’t suddenly spiral out of control bc I have 4-5 credit cards in my wallet.
I have enough money to be able to pay off my student loans, but those loans are a lower interest rate than what my money is making. In other words, I make more money each month on investments than I spend on interest in my loans. So it doesn’t make sense for me to pay off my loans as quickly as possible as he would advise, based on my individual circumstances and his blanket belief that owing someone money is inherently a bad thing.
My pet peeve is his “snowball method” of paying off debt. It drives me crazy that he thinks people can’t do basic math and instead will only respond to the personal satisfaction of individual debts being paid off in full; even though you are spending more money in the long run by basing what you pay off on how much money you have in each loan. He is telling you to throw money away because seeing loans disappear will make you happy. I don’t think the people who follow that advice realize how much money it’s costing them.
I should add that much of his advice comes from his religious faith, and I am not a member of that faith, so his advice may follow certain tenets of Christianity that I’m just not familiar with. But I don’t know any serious financial/investment advisors who don’t think he’s dangerous purely from the perspective of the best financial interests of the people who follow him.
I can't say we're financially responsible people. We have a lot of work to do. We actually filed bankruptcy when H got out of the army. But here we are almost 4 years later and we just bought a house, our credit is way better than it was and we keep working on it. We still have bad habits, but we are also a lot more responsible than we used to be. We have credit cards, I have one, H has 3 😳 I think one actually closed out so that's fine, but we pay them all monthly, and we don't really use them right now. We're making efforts to be more financially responsible and honestly it's a constant work in progress.
I understood that I had to pay my loans back when I took them up (because duh), but do not think I fully grasped how interest worked when I went to college. Like, I knew in theory that interest would accrue, but didn’t understand how that would add up. It might not have mattered though —that amount of money was so abstract to me at the time.
@kvh22 ...she thought she could just take out $200k...for free...?
He doesn’t say you need to pay cash for a house, but that you should get a house you can “afford” meaning 20% down and payments no more than a quarter of your take home pay on a 15 year mortgage.
We don’t have consumer debt but I use my credit cards everyday. Sorry Dave!
BFP: 8/20/2018 - EDD 5/4/2019
This sparked a really good discussion! I've really enjoyed reading everyone's perspectives.
We are not Dave Ramsey followers, but we do have hang ups about debt. MH's stems from his parents' overspending and going through bankruptcy in his late high school years. Mine just seems to be a natural inclination to stay debt free. But, I would really like to get us on a system of using a great rewards credit card and paying it off every month. I really feel like we are missing a great opportunity. We are financially responsible, but it's easy to be when you don't give yourself much access to high limit credit cards. We have two open credit cards, one with no balance, one with just a small balance. We have our home and one car payment. We have a great credit score. I just can't figure out why we are so scared. We are very conciencious of living within our means, but I think that maybe we deprive ourselves sometimes and feel guilty for charging something that we really want to do (like a special trip, or a home update). I think I will really work toward trying to get us on a buy and pay off rewards credit card system. Any recommendations on the best cards?
@poshspice I don't use credit cards at the gas pumps either since they are so easy to hack. I'm the annoying one you have to wait for while I go pay inside haha.
I actually love talking about personal finance, so I was kinda bummed the post originated from a drive-by!
BFP: 8/20/2018 - EDD 5/4/2019