Comments on: Money, Mathematics, and Personal Behavior – Dave Ramsey is Right!

By: Gerry Milberger

Gerry Milberger — Sat, 23 Jan 2010 08:41:43 +0000

How much do I owe you for all the Great post.

By: mark

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By: Rob

Rob — Wed, 30 Jul 2008 18:21:03 +0000

Author says: Ramsey often makes the statement on his show that, “If we were doing mathematics, you wouldn’t have borrowed money in the first place!”

It’s more like “If you were so fabulous with math, you wouldn’t be in debt in the first place, so let’s try this my way.”

By: Rob

Rob — Wed, 30 Jul 2008 18:18:38 +0000

J asked: “Did you buy your first house with a wad of cash? Did you pay for 4 years of college with a trash bag full of bills? You never traded on margin?”

Yes. Saved for 4 years.

Yes, but only 2 years of college. Grants and scholarships, and the balance in cash.

No. I never borrow money.

By: J

Sat, 15 Mar 2008 04:31:17 +0000

Oh, another thing.

We have HUGE inflation right now (go look at food prices and gas prices). AND we learn [in ECON 101 that you obviously haven't taken yet] that debtors benefit in high inflation.

Why? Because it’s better to pay it off tomorrow with LOW valued dollars then to pay it off today with HIGH valued ones.

Seriously guy… read a fucking book about this stuff before you going spraying your shit all over the internets.

By: J

Sat, 15 Mar 2008 04:22:53 +0000

uh, this is really stupid.

3% student loans are VERY common.

I have a 3.99% loan right now (just a general NON-secured loan from a commercial bank).

Secondly, If you can make more then the interest rate on your money in a “risk free” investment then it’s best to invest/save that money. Say you get 6% return; that is a 3%+ PLUS you have the Liquidity of that money.

If you have an accident and need cash; what is better? Pulling it from your investment or pulling it from your paid off debit… oh wait, that’s right; you can’t take money out once you pay it off so you would have to borrow that money, which more then likely would be a really bad rate since it’s short notice!

Good plan asshole.

50,000+ * 3% is a decent amount of money to just “give away” because you can’t do simple math. (hint: your lack of math skills are costing you
AT LEAST $1,500 for every $50K)

Secondly the liquidity of having cash on hand is also worth a lot.

Lastly:
“If we were doing mathematics, you wouldn’t have borrowed money in the first place!”

This is a stupid argument. There is good debit and bad debit.

Did you buy your first house with a wad of cash? Did you pay for 4 years of college with a trash bag full of bills? You never traded on margin?

Another thing, if we pretend this argument was true; then the answer would be to LEARN MATH, not to deny yourself of making money and having the security of liquid funds.

“MATH IS HARD! LET’S GO SHOPPING! YAY!”

By: Enginerd

Enginerd — Wed, 12 Mar 2008 14:25:58 +0000

I doubt very much that you can find an interest rate in any money market that beats an interest rate on a loan you have. You probably could in an investment (i.e. S&P Index fund), but only over the extreme long term. In the mean time, your credit rating takes a hit and you’re biting your nails every night.

“If we were doing mathematics, you wouldn’t have borrowed money in the first place!”

That’s just false. Going into debt to go to college increases your future income, just like any business loan. There is risk involved, sure, but the expected return is positive. This statement is only true for consumption-loans, i.e., taking out a home equity loan to remodel your kitchen. You get no return on that money.

Ben Graham wrote that you can’t control the market, all you can control is yourself. Ramsey’s advice seems to be in the same vein. It certainly is good advice, but it doesn’t mean you shouldn’t do math on loans that are completely predictable.