Comments on: Dave Ramsey Unleashed: How to Apply Ramsey’s ‘Baby Steps’ to Grown Up Finances

By: How Much House Can I Afford? Here are 5 Simple Answers

How Much House Can I Afford? Here are 5 Simple Answers — Thu, 24 Sep 2009 17:21:37 +0000

[...] Dave Ramsey Mortgage: Dave Ramsey takes a very conservative approach to home buying. If you can, he believes you should pay cash for [...]

By: dave in STL

dave in STL — Fri, 12 Jun 2009 14:30:10 +0000

I’m on Dave’s plan, but I didn’t stop my 401K contributions. In fact, when i got a raise last October, I started adding an additional 2% since the market has been “on sale.”

The only reason I would stop 401K (because the match is basically a 100% return) is to pay IRS debt or to pay off a payday lender. Luckily, I’ve never had to deal with either of those.

By: Michelle

Michelle — Mon, 18 May 2009 14:15:39 +0000

double Oblivious’s amen – 1) stopping 401k contributions that trigger a match is (to my mind at least) turning down part of your salary. You wouldn’t say “No, thanks” to a 3% raise? Then why would you not (at least) contribute the amount that will be matched (which in my case is that 3%)? 2) I use 401K contributions to help manage my tax bracket, and i’m sure other do so as well. Not to get into too much detail, but if I were to suspend contributions, that would LESSEN the amount from my net paycheck that is available to snowball debt and increase my liabilities at tax filing season…

By: ObliviousInvestor

ObliviousInvestor — Sun, 17 May 2009 21:14:17 +0000

“This is where Dave Ramsey drives me crazy. Stopping a 401k with a dollar for dollar match for two years in your 30s will have a huge impact in your total balance at retirement.”

Amen to that.

By: Jenny

Jenny — Tue, 12 May 2009 15:11:39 +0000

great post.

By: DR

DR — Sun, 10 May 2009 09:42:30 +0000

WAP, this is where Dave Ramsey drives me crazy. Stopping a 401k with a dollar for dollar match for two years in your 30s will have a huge impact in your total balance at retirement. In fact, if it’s not about the math, why not cash in the retirement account? Although you’d pay a 10% penalty, depending on your balance, it wouldn’t be worse than leaving a good company match on the table. That said, I do agree that’s it’s not just about the math.

By: WAP

WAP — Sun, 10 May 2009 03:09:20 +0000

Actually it does make sense to stop the 401K contribution IF you executre Dave’s plan the way he teaches it and get manical about paying down the debt. As he says this is not about math – if you could be motivated by the math then you wouldn’t be in debt in the first place. It IS about behaviour modification. Get really rserious about paying off the debt and knock it out quickly. Dave doesn’t call to incur tax penalties to cash out tax advantaged acocunts, unless that is the only way to eat. Stopping the 401K for a year or two to kill the debt won’t matter that much. Never paying off the debt and paying a lifetime of interest will negate the advantage of a match quickly.

By: DR

DR — Sat, 09 May 2009 20:20:16 +0000

Linda, you’re absolutely right about Dave’s advice. But I wanted to explore more than just repeat what he says. For example, it makes absolutely no sense to stop contributing to a 401k if you have a very good match from your employer. And for many, it may be a good choice to cash in the 529 fund. So on these points, at least under some circumstances, I’d disagree with Dave Ramsey.

By: Linda

Linda — Sat, 09 May 2009 14:02:56 +0000

Dave doesn’t ask you to cash in what you’ve already started. He asks you to start from where you are. Why would you cash all that stuff in? If you listen to his show or read his books you’ll learn that he doesn’t ask you to cash everything in. He does ask that you quit contributing to them for the time being until you take care of the other stuff and then resume funding them!