Would like the boards thoughts on what the tail end of a Dave Ramsey plan looks like. Other thoughts welcome as well.

Paid off the cars, student loans and all other debt.

4 years into 15 year house note is our only debt. (3.125% interest). Maxing out retirement contributions (401k/IRAs).

Two young kids. No separate college savings. Plan to pay at the time it is needed as house will be paid off.

My family went through a period of living below our means to pay off all our debt. (Emergency fund funded for 12 months expenses.)

Brokerage balance (non-retirement) is approaching exceeding the mortgage balance (so could pay off the house if we wanted).

My next major "want" / splurge is a near new vehicle for me. I'm driving a 10 year old vehicle. It's fine but getting older and I would enjoy a newer luxury truck. Call it $50k.

I don't want to be one of those people who just never spend their money and save it till they die. However, I also appreciate how wasteful a $50k vehicle is. (If I'm only going part way and spending $30k, I'd rather keep what I have and wait until I can buy what I want.)

I am searching for a trigger to ease up some on living below our means vs. enjoying life now. For those that followed Dave Ramsey, did you go all the way to having the house paid off and college funded for the kids before easing up? What was your trigger to let off? TIA

I fight the same internal battle all the time. Our only debt other than feeding twin babies is about 6.5 years left on a 15 year mortgage.

I want a boat, well two boats actually, and have wanted one for a long time. I can afford to pay cash but then I have a boat I need to store and fuel and maintain. It will make me very happy to have and use. The time available to use concerns me.

At least with the truck you will use it every day.

House & vehicles paid. 12 month emergency fund in place. Last child a freshman in college. Wife has said she wants to retire once daughter graduates. If that happens, I plan to continue living the way you are now.

My wife & I (like you) have been living below our means for so long, that I am not looking for the "trigger" point to buy something that is an unnecessary luxury.

My focus is continuing to build my portfolio so that when I do retire, my bride & I are very comfortable. Once I decide to retire, that will be my "trigger".

Probably not what you are looking for but it works for me!

It sounds to me like you are at a point where you should have a pretty good slush fund line item added to your budget. Add the slush fund to your budget and spend it on whatever you want. Trucks, boats, unexpected weekend trips, whatever you are into.

My house is paid off and I have no debt. It's a good stress free situation to be in. I would pay off the house and then splurge

Buy the truck, get cheap financing or pay half down.

As long as you aren't "splurging" on a Lambo, you should be fine.

$50K for a truck is doable.

Good thread. You can definetly afford it, but it can feel like your not being money-smart if you take on new debt or deplete your current savings. One way to go about it is to set aside money for this splurge separate from your current savings and wait until it's built up a set amount.

If you want to know what Dave thinks about the back half of the baby steps, "The Legacy Journey" is a good start. I don't think it will explicitly answer your question, but will give you some good food for thought as you move into this next phase. We took the course at about the stage you're at, and it gave us some motivation to work the next few steps, all the way through paying our house off. We've loved having the freedom of no mortgage, but we've also refocused on building wealth. It also helped us think about ratios for enjoying our money and continued investing, though this balance is never easy to figure out.

For us, the point of getting to baby step 7 was not to reset; the wealth-building journey isn't over. It did give us a clear moment to rethink our free-spending ratios (which we did increase). I wouldn't say a 50k truck is right or wrong, but I do take the position that a "splurge" mentality can push you off track. Not intended to be a knock on you, just a friendly caution.

Similar to aggieband83, probably not what you want to hear, but that's the perspective we've taken.

At this point, we have a monthly budget that is comfortable that we stick to. All extra funds go to the brokerage account.

I have an easier time spending a few thousand to take a family vacation vs. buying a vehicle.

Not sure how I missed it but had not heard of "The Legacy Journey". Thank you for pointing out. Just read the book or is this more a class / study type thing?

We took the class. I have not read the book, although the online summary tracks with the course. The class is similar in style and structure to Financial Peace University.

I've struggled for a LONG time with spending money on anything that doesn't maintain or increase in value. "Toys", vacations, nice electronics, etc. We have never had debt outside of the mortgage, but I have worked so hard to get ahead and save for early retirement that I have passed on a lot of "stuff" that most spend on.

We recently bought a second home for weekend getaways. Nothing special, but we felt much better "splurging" on an asset that should appreciate in value. We have taken, and are planning some vacations that are bigger and better than San Antonio or Crystal Beach...but still within a reasonable budget. I may actually blow some money on boots!

The biggest key for me was realizing that I was the only person in my family that received joy from watching my investment accounts grow. Looking at my accounts, I "wasted" about 1/10th of what I invested. (Not counting the property in either category). It didn't kill me to spend the money, and made some great memories with the family. Priceless.

When u can pay cash.

Your last paragraph hits home for me. My wife could care less. I keep us grounded financially because I don't want to work until I am 65. We need to live a little more.

Ragoo said:

---

Your last paragraph hits home for me. My wife could care less. I keep us grounded financially because I don't want to work until I am 65. We need to live a little more.

---

In six years, my oldest child starts college. In 16, my youngest will graduate college (God willing). Watching them experience new things is worth adjusting my budget. We are still very frugal, but the kids don't realize it which makes it easier on me!

I am 32 and my kids are just 14 months. I hope I have set a good enough financial foundation to splurge while they are growing up. I want to take them all over the country and world.

Edit: typed my age off by a decade. Yuck.

What percentage of your budget do you save (beyond retirement) before you say that's enough, beyond this spending is ok.

What Body Odor said. Name the fund, then spend it. I have no clue why somebody would want a new car, but I guess they have to sell them to someone.

If you're trying to honor your previous work of living debt free, pay for the truck with cash out of your "brokerage acct" you mentioned. I think it'd be silly to work so hard and all of the sudden go back into debt.

One of the Dave metrics when analyzing cars is keeping the $ spent on cars no more than 1/2 your income. So the $50k truck + wife's car should be 1/2 or less of yall's income. I like this in theory since it's dumb to have such a large asset in your life that will be depreciating quickly.

Congrats on your progress and the financial situation you have created.

94chem said:

---

What Body Odor said. Name the fund, then spend it. I have no clue why somebody would want a new car, but I guess they have to sell them to someone.

---

For years I went the low mileage certified pre-owned with a really nice warranty route. Infiniti usually had fantastic deals. Almost like buying a new car at 30% discounts.
YET...recently , for many reasons, the prices of good low mileage certified used has approached damn near 90% of new. Might as well buy new especially if you time it right and get the end of model year discounts.
Even Dave admits to buying a new car with cash but he also admit that he is rich and can easily afford it.

It is really important that as you are in your accumulation years you keep your perspective and attitude right. As the OP said nothing is sadder than denying yourself so much when you are young enough to enjoy things in order to accumulate so much wealth that you die rich and allow your offspring the pleasure of spending your hard work and denial.
Building wealth ,quite frankly, is the easy part ( assume we are all Aggie grads with good degrees and relatively healthy and sane) its doing it in a balanced approach where we can live a quality and eventful life as young uns while also saving responsibly and avoiding debt is the hard part.
Buy the damn car, do NOT get into debt and enjoy life......

Quote:

---

For years I went the low mileage certified pre-owned with a really nice warranty route. Infiniti usually had fantastic deals. Almost like buying a new car at 30% discounts.

YET...recently , for many reasons, the prices of good low mileage certified used has approached damn near 90% of new. Might as well buy new especially if you time it right and get the end of model year discounts

---

That has always been our strategy, too. Bought a '16 Volvo at the end of that year with 9K miles. It came out to about the same price as a 2017 one, BUT had lots more options that we wanted and an extended warranty. I see what you're saying though.

We're in a unique situation expense wise as both our jobs pay our health insurance premiums and my job comes with a work truck. And of course, DINK helps. Still hold onto our mortgage; though we could pay it off. However, the math still works out to keep it, but less so with the new tax plan.

Beyond that, we maintain a +50% savings rate and splurge wisely. Our MO has been to take an angle if it's available, e.g. r/churning, and minimize the maintenance items. I'll never turn down a night out, but I will call, call, call again to get Comcast to lower my internet rate.

We live in Houston and skied 14 days last year, 2x international trips last year, saw Hamilton in NYC last year and had dinner at Eleven Madison Park and Gramercy Tavern. That's some splurging! But we didn't pay for a single flight or hotel. Amex Concierge got us Hammy tickets at face. EMP was totally worth the money. And we still maxed every bit of tax advantage space and plenty more into taxable savings.

Quote:

---

For years I went the low mileage certified pre-owned with a really nice warranty route. Infiniti usually had fantastic deals. Almost like buying a new car at 30% discounts.

YET...recently , for many reasons, the prices of good low mileage certified used has approached damn near 90% of new. Might as well buy new especially if you time it right and get the end of model year discounts.

---

I understand that.

My most recent new car purchase (and last, I presume) was my Pontiac Vibe in 2005. I saved GM points for 7 years ($3500), bought the previous year model, and got it for about $15K. That's about the most I'll spend on a car. My new car now is an '06 Honda Pilot - $8K. It feels new to me (lost my Pontiac minivan in Harvey). I used to look for the 2 - 3 year old cars, but they're so well made these days that I've started looking more at 6 - 8 year old cars that I can drive for 6 - 7 years.

But not to derail, OP can buy what he wants as long as he names the money beforehand. I've got 6 kids, so I know I can't wait to save for college. I would completely pay for a baby's college with $40K, and use the other $10K to buy a car.

I'm really interested in this as well. Currently the wife and I are on schedule to pay off her vehicle in 3 months and the only debt would be our mortgage(14 years of 15 year) left. However, we wil have two children in daycare(one for 3 more years and the other for 5 years) with the monthly payments for the two of them together is more than our mortgage.

We put to 401k, IRAs and savings for us and our two kids individual savings account. As long as there is no substantial disaster, we should be able to pay off our house and be completely debt free in 7 years...all before we are 40.

I am interested in the age of the posters here to see if we are in the same boat as others. I enjoy thinking about the future of being debt free before I'm 40 and saving my butt off to retire early. I don't want to have to work a second into my 60s, unless I do it for the joy of work.

I am 40. Could have been debt free for a long time, but at 3.125% interest, who cares?! My taxable accounts averaged over 20% return last year. My income has also more than tripled from what I made when I bought my house. In addition to retirement accounts, I added roughly another 15% of my income to my taxable investments.

Right now, my plan is to have no debt by 50 through normal payments only. One kid should be done with college, one in the middle, and one should be middle of HS.

So this is how we look at it. Once all the primary goals have been met which is basically no debt besides our mortgage, we have a set percentage that goes to various places (retirement, brokerage, college savings, regular savings). Our regular savings account is what we would use for items like this. We have established our own rules for that account that dictate how we treat our cashflow into and from it that basically, if it doesn't break those rules and we agree on the purchase, we go for it. This is essentially how we structured our rules:

• Minimum balance of $25k to always be able to cover a large emergency expense
• 15% of take home goes into regular savings
• Maximum balance of $100k (once this balance is reached all additional savings get diverted to brokerage until such time as the balance falls again)

With those rules in place, basically as long as we don't violate any of them, it gives us the freedom to "splurge" without hurting any of our long term goals (that 15% into the brokerage is not something i have factored into retirement planning so if it happens it's just gravy)

dlp3719 said:

---

What percentage of your budget do you save (beyond retirement) before you say that's enough, beyond this spending is ok.

---

Personally, I don't have a top line % in mind. I look from the bottom up. My goal every month is to sock away at least one extra mortgage payment. If I've done that, and have additional free cash available, then I'm OK with spending a little.

The Original AG 76 said:

---

94chem said:

---

What Body Odor said. Name the fund, then spend it. I have no clue why somebody would want a new car, but I guess they have to sell them to someone.

---

For years I went the low mileage certified pre-owned with a really nice warranty route. Infiniti usually had fantastic deals. Almost like buying a new car at 30% discounts.
YET...recently , for many reasons, the prices of good low mileage certified used has approached damn near 90% of new. Might as well buy new especially if you time it right and get the end of model year discounts.
Even Dave admits to buying a new car with cash but he also admit that he is rich and can easily afford it.

It is really important that as you are in your accumulation years you keep your perspective and attitude right. As the OP said nothing is sadder than denying yourself so much when you are young enough to enjoy things in order to accumulate so much wealth that you die rich and allow your offspring the pleasure of spending your hard work and denial.
Building wealth ,quite frankly, is the easy part ( assume we are all Aggie grads with good degrees and relatively healthy and sane) its doing it in a balanced approach where we can live a quality and eventful life as young uns while also saving responsibly and avoiding debt is the hard part.
Buy the damn car, do NOT get into debt and enjoy life......

---

Paying for a car with cash is not smart in these low interest rates. I use to buy cars for cash when rates were 7-8%, but when you can get 2-3% 4 year loans you are a fool fo pay cash. Leave your money invested in the market and make at least 8% or more on average. I assume if you can pay cash for car you can afford 48 payments at minimal interest. Debt is not bad in a low interest rate environment, just don't over do it. Same goes for a house. I paid off my house many years ago. It was not a good economic decision, but it was a piece of mind decision and I knew that. Considering rates went even lower after I paid it off it was a decision that was even worse economically. What I could have made on that payoff value in the market over the last 8 years would have been double++. I could have paid off the principal with what I would have made in the market and got the mortgage deduction as well. Dave's suggestions are not always some of the best, especially his suggestion of only using a debit card.

drill4oil78 said:

---

The Original AG 76 said:

---

94chem said:

---

What Body Odor said. Name the fund, then spend it. I have no clue why somebody would want a new car, but I guess they have to sell them to someone.

---

For years I went the low mileage certified pre-owned with a really nice warranty route. Infiniti usually had fantastic deals. Almost like buying a new car at 30% discounts.
YET...recently , for many reasons, the prices of good low mileage certified used has approached damn near 90% of new. Might as well buy new especially if you time it right and get the end of model year discounts.
Even Dave admits to buying a new car with cash but he also admit that he is rich and can easily afford it.

It is really important that as you are in your accumulation years you keep your perspective and attitude right. As the OP said nothing is sadder than denying yourself so much when you are young enough to enjoy things in order to accumulate so much wealth that you die rich and allow your offspring the pleasure of spending your hard work and denial.
Building wealth ,quite frankly, is the easy part ( assume we are all Aggie grads with good degrees and relatively healthy and sane) its doing it in a balanced approach where we can live a quality and eventful life as young uns while also saving responsibly and avoiding debt is the hard part.
Buy the damn car, do NOT get into debt and enjoy life......

---

Paying for a car with cash is not smart in these low interest rates. I use to buy cars for cash when rates were 7-8%, but when you can get 2-3% 4 year loans you are a fool fo pay cash. Leave your money invested in the market and make at least 8% or more on average. I assume if you can pay cash for car you can afford 48 payments at minimal interest. Debt is not bad in a low interest rate environment, just don't over do it. Same goes for a house. I paid off my house many years ago. It was not a good economic decision, but it was a piece of mind decision and I knew that. Considering rates went even lower after I paid it off it was a decision that was even worse economically. What I could have made on that payoff value in the market over the last 8 years would have been double++. I could have paid off the principal with what I would have made in the market and got the mortgage deduction as well. Dave's suggestions are not always some of the best, especially his suggestion of only using a debit card.

---

You are so correct. We have mortgages on both of our homes at 3.75% and have no intention to pay them off ( for a while) . As long as the interest is deductible it is basically free money. I see what you mean about a car , it sore of a hang up with me to have a debt for a rapidly depreciating item. I will be considering financing my next one if I can get the special finance rebates and 0 or 1% paper.
And , yes, Daves credit card phobia is an overkill for us BUT it is vital for the VAST majority of Americans who prove daily that they can NOT manage debt..as in ..his listeners !

From everything I've seen, Dave Ramsey is geared towards people with no self control in regards to finances. They've made bad debt decisions for so long that in order to get in control of their finances they shouldn't allow themselves any debt, even if it "makes sense" like not paying off a low interest auto loan ASAP so you can invest and make 8% returns in the market.

Dave Ramsey is great if it's what you need to get your finances in order, but it's not for everyone.

Agree 100%. Ramsey hates debt because he got over extended in real estate and then Hammered when banks called his loans. He didn't mind debt when making **** piles of money. Just after being sued and declaring bankruptcy did he grow a disdain for debt.

The Original AG 76 said:

---

As long as the interest is deductible it is basically free money.

---

I hear people say this all the time, and I think many people believe it means something different than it actually means.

You do mean you get a discount on your interest if it's over the standard deduction, right?

Sell the kids and pay cash