Ours is pretty big right now - 6 months’ living expenses - because we don’t feel very secure in our employment. Some of it is in the savings account at our credit union; some is in a money market at Vanguard; the rest is in a short-term bond fund at Vanguard. (Both Vanguard accounts have check writing privileges.)

You’re not the first person I’ve heard from who used debit cards to rent cars (sometimes with a block, once where the block resulted in bounced checks). I’ve also heard from others who had debit cards refused. (When traveling for business. For Microsoft.)

I’d like to see a round-up of company policies, so that I’d know - for example - that company X takes debit but company Y won’t.

Personally I prefer not to use a charge card for that sort of thing. But that’s me, and we all come out on different places on the risk assessment of debit vs credit vs charge

I had never taken the time to really put it all down on paper before. So, now besides looking forward to paying off the mortgage, I look forward to my monthly accounting to see if I’ve made progress toward my ultimate goal of financial freedom.

I wish I had signed up much earlier to give myself credit for having dug out of that pretty big debt hole. It can be easy to forget how much progress I’ve already made.

I haven’t been in debt in years and was already out when I started getting interested in personal finance. But aside from a few specific techniques like the debt snowball or debt consolidation, everything that applies to getting out of debt also applies to saving. JD may talk about using various techniques to pay down debt faster, but the techniques work just as well for building up your net worth.

It’s like using a hose to fill your swimming pool rather than fight a fire. All the steps to hook up the hose and get the water running are the same, but instead of pouring it on the fire you pour it into your pool. Which in this case is a pool filled with money.

@Mrs Micah
I haven’t actually heard this nugget of advice, but I can see why its a good one psychologically (which is how the whole Dave Ramsey thing works). You will probably lose out financially by not contributing to a 401(K) with a match, but over only two years, its not such a big deal.

@jd
I’m hoping that you’ll be out of debt really soon, so that you can write some stuff on the next step - about living debt free. I need some inspiration.

Ramsey is speaking specifically to people who can get out of debt within 2 years or so. If one can do that, then he thinks they should put every resource into it, including ignoring the free money just to get free.

On the other hand, for those who can’t get through with 2 years of gazelle-like intensity (me, for example, who won’t even earn in the next two years what my husband and I owe), he does recommend putting some into 401(k) or savings. Because we’re going to have to live intensely, frugally, but we also have to build for the future. Paying off the debt may take 5-10 years. (mine’s $119,000 that’s not my own.)

I don’t remember the page in Total Money Makeover, but he talks about it in there. He just says that most people who get intense actually can pay it off within the 2 years or so if they’re willing to commit to his program.

Maybe he means don’t max out your 401K after employer match until you are out of debt? I can agree with that. I just can’t see how literally refusing to accept $300-$500 a month is sound financial advice, even if you have to put $150 in the bank to get it.

This of course is just my perspective.

http://www.csus.edu/sfsc-ymm/04_credit_cards/buying_on_credit.html

It shows how you can make a $5000 purchase for your home and it will actually cost you over $6500 at approximately $18% interest, 3 years later.

You could make some comparisons between the net cost/benefits of buying sooner with a loan vs saving and paying cash, but that’s not really a how-to. The how-to is “don’t go into debt, save.”

Of course, it may just be that I’m old, crotchety, and paid off my (consolidated) student loans 7 years ago. (Remember the bit about being old?)

https://www.mytotalmoneymakeover.com/?event=displayFreeContent&intContentID=7717

Why?

Because when they’re done with the credit cards and other debt, they freed up even more money that they can invest. His advice for retirement is to invest 15% of income like this:

- Company 401K up to the maximum % they will match.
- IRAs/Roth IRAs for the remaining %.
- If that maxes out the amount for an IRA/Roth IRA, but doesn’t meet 15%, then go back to the company 401K.

Becoming and staying debt free is the biggest key to financial freedom and building wealth. Investing money when you owe money[1] is foolish.

[1] Mortgages are ‘ok’ debt if you did it right[2], since you build equity by paying off the loan.

[2] Put enough down that you can buy the house you want with a payment that is no more than 25% of your take home pay, on a 15 year, fixed rate loan.

If I didn’t in my 401K every month and instead put that money towards credit cards, I would be throwing away $2 for every $1 saved, because that is how much my employer matches.. Also, I would be missing out on probably several years of compounding, not to mention paying more taxes on my salary.

Now, my employer offers an excellent match, and not all do, but most will at least match you dollar for dollar.

IMO, not starting your 401K the very same day you start your very first job and sticking to it until the bitter end, is foolish, to say the least.

Likewise, debt on a house should be paid off as fast as possible, because that amount of interest you’re paying over time is huge. If I paid only my minimum payment for the 30 years on my mortgage, I’d pay twice as much as that loan just in interest!