Dave Ramsey - Worth it or Nah?

[Anonymous]

For those of you who know of him and his Financial Peace University.

I owe a little over 3.5K on my car. It's my only debt. I have the money in my account to pay it all off right now, and I know that's what Dave teaches (the whole beans and rice thing) but the thought of having 3.5K less in my account makes me nauseous. As it stands now, my budget is set to have it paid off by July. My loan is 6 years, but this July will be exactly at the the 3 year mark so I will have paid it off early.

I have no other debt.

Would you write a check for the 3.5K right now, leaving you with 10K in the bank or do you think it's ok to wait?

Given the current global pandemic situation I'm a little nervous to spend money. I'm currently still working (from home) but I know the company is hurting and I live in an expensive area of the country.

I feel like 3.5K is right on that line of being small enough that it's easy to pay off in payments but also I COULD write a check today and be done with it, ya know?

Pay it all now

Keep with the plan and pay it off in July

[HungLikeAHorsefly]

I'm a big fan of Dave Ramsey, even though I disagree with the idea that all debt is always bad. I think he's a little too fervent on that issue. Also, some of his other advice like always paying the highest interest rate first doesn't actually lead to optimal results in all cases (when you do the math). But it's an okay heuristic for people who need it.

What I suggest you do is calculate up how much you'll end up paying in interest on your loan if you let it go for its entire lifecycle (i. e., make the regular payments until it's done), and once you have that number, decide if being liquid right now is worth that amount of money over the next 3 years. That's essentially the price tag of not paying it off right now.

I'm personally trying to stay as liquid as possible during this pandemic. Of course, if you're worried about cash flow (having a steady income), then maybe paying off the loan now makes sense, as it'll decrease your non-discretionary expenses going forward (thus increasing your cash flow, however slightly).

[N192K001]

Do you watch to the videos in his YouTube™ channel?

A few days (or weeks?) ago, he mentioned that during this COVID-19 financial-crisis, you don't necessarily pay-off ALL your debts regardless of your financial situation. You must also look at your income and the security thereof.

If you can afford it and have enough extra to last you for as long as you're projecting you need cash, go and do it! If you're in more doubtful situation, preserve your cash-supply.

His channel is right here:
https://www.youtube.com/user/DaveRamseyShow/videos
Enjoy!

[Wonderer89]

Not really... I think the premise that all debt is bad debt isn’t necessarily true and that it’s good to keep saving even if you are still in debt (to a point).
In your situation it would depend what your living expenses are and if your job is relatively secure in the current climate. Do you have a months worth of expenses saved or 6 months? Is your loan fixed or variable rate, are there any exit fees or by paying early will you actually save on interest?
Personally if you had 6 months of expenses covered after paying off the loan, I would just pay it. The payment you usually make can go back into savings to replenish it over the next year but you’re still covered in the worst case scenario

[ArrowheadSW]

First of all, good for you for realizing that debt needs to be paid off and you've saved money to get ahead financially. Normally I'd say to pay it all off, but during this uncertainty I would probably hold off on paying it all off for now until the economic outlook improves.

[Anonymous]

Pay it off in the installments... cash is King well until negative interest rates start