I am looking for an education on products and services with practical advice for long-term financial stability.

What are your recommendations for a comprehensive financial planning book?

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Depends on a lot of variables. That being said, do a search for Dave Ramsey.

I've used Dave Ramsey’s Total Money Makeover with positive results, but I trying to figure out what to do next.  Dave Ramsey’s advice is to hire one of his ELPs, which I am not keen on doing.  I would like to have a better understanding of the financial world before purchasing a service.

I do not like Dave Ramsey.  I agree with most of what he teaches about living inside of your means and keeping a ready emergency fund but that is about where it ends for me. 

Mr. Ramsey does not actually teach one to build up a credit history that will let you easily buy a house.  Having a credit card and a credit history is part of job history checks more and more.  There is no reason not to use a credit card up to 1/3 of its balance and maintain it at that level to build up a great credit score.

Really if you know how to calculate interest rate, payments and total loan amount using two of the three bits of information to find the last, you are well off.  I learned this from a finance textbook. 

Add to this skill, building a real budget that includes non-monthly events such as getting the tires changed and sticking to it.  If you need to buy something big wait 2 weeks and see if you still need it.

As to investing I tend to bet the market using index funds that are not managed so I keep the profits.

Credit history is a bank marketing scheme -- a coup wherein they taught people to judge their financial well-being off how subservient to bankers they are.  Except ... it isn't at all indicative of financial health.  It measures borrowing and repayment.  Not wealth.  You borrow, they profit ... they raise your score and tell you how financially healthy you are because of it.

It isn't necessary to take out a mortgage, much less employment, and isn't relevant to those who only buy stuff they can pay for.

JB

While agree that it the banks risk assessment of you, your credit score, and how your build a credit score is all about the banks making money, it is how financing the western world works.  It is called leveraging when used in other facets of business.  If you have a good credit score which is built by paying it of every month or better maintaining a balance of 1/3 of your limit, the banks can quickly assess your value to them and give you a loan.

It just happens to be how finance works.

Again, only if you want to borrow money.  If you pay for what you buy, "how financing in the western word works" is entirely irrelevant.  Financing in the western world is largely broken, and has consumers living above their means, going into debt to buy crap they don't need to impress people they don't like.  Instead of your money working for you, it works for them.

 

Count me out.  I'm aiming for a credit score of ZERO by the time I'm 50 ... and I have a plan to get there.  "The borrower is slave to the lender" -- Prov 22:7

 

Borrowing money is not an indicator of financial wellbeing ... exactly the opposite, actually.  And there's really nothing more pathetic than sitting across a desk begging some banker for a car, or a house, or a credit card, or whatever.  Its pathetic even if they say 'yes'.  I've done it.  Hated it everytime.

 

I'm looking for a financial plan that gets me out of the borrowing cycle permanently, not one that makes me better at it.  One wherein I don't need to borrow, beg, or enslave myself.  One wherein my personal financing system profits me rather than some anonymous banker.  Ramsey's plan does that.

 

JB

I'm curious:  What's Ramsey's advice for leaving tax deductions on the table in favor of liquidity?  We just skipped out on a $400 federal refund in order to maintain close to six months expenses in liquid savings.  Probably the right decision, but it hurt.  And it's hurting more as that emergency fund, given the cost of living here, gets close to the price for a whole house in most of the country.

I'm not clear on exactly what you did.  Are you talking about not claiming a justified deduction ... or not engaging in a behavior that would've been deductible?

If its the former, I don't understand how you gain liquidity by not claiming a justifiable deduction.  I doubt Ramsey would ever suggest overpaying the government.

If its the latter -- probably more likely -- liquidity is the purpose of the emergency fund ... though he suggests 3-6 months, not necessarily six.  It isn't an investment.  You're knowingly passing on investment income (and tax deductions, I guess) in favor of quickly accessible money so as to avoid liquidating long-term investments when something goes wrong.  The idea is to save that up ... then get into the investments with other money that you're sure you won't need to repair the car, or the house, or for medical bills, or whatever.

JB

We didn't max out deductible IRA contributions, though we had the cash on hand, and even though the new job means we won't qualify for the rebate in 2014 and may be hit with AMT, so it was a now-or-never thing.

I think "investment" in this context is tricky, because it's possible to choose funds that mimic liquid savings for all but tax purposes.  That is, low-risk, low-yield funds, such as bond funds.  Normally, when you invest, you're balancing financial risk with financial reward.  With tax planning, you balance chance-of-penalties v. present-tax-benefit.

I have had excellent credit ever since college, when I was turned down for a credit card based on a lack of credit history.  It has served me well.  I had no trouble getting a home loan.  Car financiers throw themselves at me.  

I don't know anything about Ramsey, but I hear often here at AoM that you should pay cash for everything.  Which means you have to rent while building up the complete price of the house!  Bad idea.  It's an even worse idea to go into credit card debt, but if you pay it off every month, there's no problem, and many of us do.

Ramsey is not entirely opposed to mortgages, so long as it is a 15-year fixed mortgage where the payment is less than 25% of your household income.  I've never heard him suggest renting and saving up to full-pay a house ... unless it was a second house, or something.

He is opposed to all other borrowing.


JB

I think the amount you can afford is situational to your expenditures.  But any rule of thumb has that problem.

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