Posted on 10/02/2012 3:06:32 PM PDT by Kaslin
Dear Dave,
I’m in college with a full scholarship. I work part time and should be able to graduate with no debt. What can I do now to best utilize the money I make?
Tyler
Dear Tyler,
You’re in a fantastic position right now. First, I think your main goal is to study hard and be 100 percent certain you’re graduating on time with no money issues. The next thing is to make sure you have plenty of cash on hand to make the transition to the real world. In a case like this, transition can mean anything from moving to a new city to simply finding a different place to live. You’re coming to a time in your life where you really can’t have too much cash saved.
If it were me, I’d just save every penny I could and drop it in a savings account. You can worry about investing and growing your money later, after you’ve settled into your new life and have some stability. Just think how cool it would be to graduate with $20,000 in the bank. Then, when you change gears and move out into the real world, you can do some really cool things with the money that’s left. Set three to six months of expenses aside as your emergency fund, then you can even begin to think about buying a home and investing in Roth IRAs and other pre-tax retirement plans.
But your biggest investment right now is making sure you finish school and have the cash on-hand to transition smoothly afterward. And you’re in a great position to make that happen!
—Dave
Dear Dave,
My wife and I are following your plan. We want to start a family, but we’re still in debt and still owe about $8,000 on our car. Should we pay that off and fully fund our emergency fund before we think about having children?
Robert
Dear Robert,
When two people who are married and love each other very much decide it’s time to share that love with a family, then it’s time. You’ve done a great job of managing your money, setting goals and formulating a game plan, so there’s no reason to wait.
If it were me, I’d begin aggressively paying down the car now. Then, when the doctor confirms she’s pregnant, you can temporarily push the pause button on your Total Money Makeover. If you haven’t managed to pay off the car at that point, use the money you were putting toward it to build up a big cash pile of savings, and go back to regular payments on the car after the baby comes.
By doing this you really lose no ground on your get-out-of-debt plan. You’re just redirecting your resources in case you need additional money down the road. But who knows? It may take you guys a while to get pregnant. And if that happens, you could have the car paid off and plenty of opportunity to save up more before the little one arrives!
—Dave
The kid's on a full scholarship and Dave tells him to quit with only a BS? No advanced degree? He didn't even ask what the kid's academic and career goals were!
That's the last time I'll ever take him seriously.
For starters, the student may have provided Dave with a much more detailed letter, in which he stated the specifics of his degree. The question may then have been abridged, to save on space and time.
Next, a graduate degree isn't necessarily required for many fields. The writer clearly didn't sound like he was pursuing business, medical, or law school, so additional schooling isn't required. Presuming he doesn't have some "fluffy" liberal arts degree, he's better off trying to enter the workforce now, and get some practical experience. He can start to save, learn about whatever discipline he enters, and think about what an advanced degree might enhance his resume.
Believe the "Gospel according to Dave" if you want to. Couldn't hurt--too much.
I'm sure the standards you set for yourself are so high, you can't possibly find a way to appreciate someone who's learned the hard way. Whatever Dave did in the 80's, he seems to have turned his life around. I'm not an ardent supporter, but when I've listened, he seems to have his values firmly grounded. That's good enough for me.
No, I don't take him seriously because he didn't even consider that scenario.
The question may then have been abridged, to save on space and time.
To construct such a hypothetical presumption is a discourse unworthy of this forum.
Next, a graduate degree isn't necessarily required for many fields.
Obviously not. Which is why it was crazy of Dave not to ask.
Presuming he doesn't have some "fluffy" liberal arts degree, he's better off trying to enter the workforce now, and get some practical experience.
Rarely is that true of technical degrees which are the bulk of the degrees worth having. There is so much lost facility along with a biologically slower learning rate at a later date that it simply isn't worth the risk.
Dave Ramsey ping!
“Ramsey has been a fast and loose flim-flam man.”
Yeah, the fact that his common sense approach has changed the lives of millions of families is irrelevant.
“In the 80’s he got called out by a major creditor and had to declare bankruptcy.”
Yep, after behaving like a “normal” American and sophisticated financial investor, he over leveraged himself and declared bankruptcy. This included SEVERAL creditors.
“Probably why keeping debt low-to- nothing is his current hobby horse.”
He learned from his mistakes and decided he would never again be in debt to anyone. After his BK, he lived on cash and figured out what worked for him. Then he thought about it and realized that what worked for him was simply common sense that was NORMAL a generation or two before.
Then he used that experience to write a book that he sold out of the trunk of his car. That led to him starting a class that took years to establish and perfect. Eventually, he was offered an opportunity to host a radio show. After a few years of working his tail off, things started to take off. He has now sold millions of books and has just celebrated his 20th year on the radio.
As he was working through all of this, he decided to go back to all of his previous creditors and he paid them all of the money that he had originally claimed in BK. He realized that in his new line of work, he SHOULD make his creditors whole. That is a person of integrity.
You may call him a “fast and loose flim-flam man” all you want, but the fact is that he has helped millions of people better their lives and become financially stable. These folks are independent and are generally not in the moocher class. Just imagine how much stronger our citizenry would be if everyone lived by the common sense principles that Dave teaches. Just imagine how much stronger our country would be if our federal budget used the same principles.
Clearly your opinion of him is not based on factual truth, so I suspect you have an underlying reason for what you posted. I’ll refrain from making any specific accusations.
I wish you luck with your own financial approach.
Dave Ramsey Ping (I’m keeping my fingers crossed that this one is not a double ping!)
First of all, unless Jim Robinson deemed you to police the worthiness of one's posts, you'd be better served keeping your opinions to yourself. Anyone with familiarity of the process knows that when questions like these are asked in a forum like Ramsey's, they are often abridged or revised for clarity.
To remind you once again, the student wasn't asking about furthering his education, career advice, or what the merits of a graduate degree were...he asked what he could be doing financially, to be in the best position after his schooling. Ramsey gave some very reasonable advice, which was certainly prudent. He also placed some responsibility on the student, allowing him to decide whether or not his undergrad degree would be adequate for his career needs. If the student decides graduate school is a necessity, Ramsey's advice is still sound: there's no substitute for having extra cash around, whether you're starting a career, or headed to grad school.
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