Comments on: Dave Ramsey’s Alternative To The Bailout

By: Drew

Drew — Mon, 20 Apr 2009 03:38:44 +0000

Besides, Dave Ramsey’s advice might just be what saved me to begin with. I might be in a whole lot more trouble if I had not strapped on my boots and trudged through the world of debt I was in at one time. We need his fresh advice and his voice across our airways offering hope to those who do and do not need it.

By: Drew

Drew — Mon, 20 Apr 2009 03:36:04 +0000

@ Laura… I happen to be someone that had a great job and due to the economic collapse lost my job. I was able to find another like the one I had, then lost that one 6 months later. I was current on my home and had no problem till this all happened. I was even on Dave Ramsey’s plan of being debt-free. I was close, but married into some small debt and now we are struggling. Should I be punished for losing my job? I know several people that are struggling due to the economic collapse, not due to irresponsibility. I don’t want a free ride, but I wouldn’t mind a helping hand. If I was making the money I was making there would be no problem, in fact I would be doing better than most. While some of the people that this plan would help would be those that are irresponsible, it will also be helping those who fell on hard times and are sincerely trying to make things work. Saving half of us might help keep the nation afloat… leaving all of us with stained credit and no homes will do nothing but create more problems for the nation…

By: martman

martman — Wed, 15 Oct 2008 17:25:05 +0000

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By: tlange

tlange — Sat, 04 Oct 2008 17:45:21 +0000

I thought that Dave’s plan was a great idea. It is too bad that no one in Congress would listen to him. Then again they are all broke anyway and won’t listen to common sense advice. Just look at how they spend money so foolishly. I think Dave would be a great Secretary of the Treasury or some sort of Budget director in the McCain administration!

By: Tim

Tim — Fri, 03 Oct 2008 00:43:45 +0000

Dave is absolutely wrong and this is a terrible idea.

1. let’s give people fixed rate mortgages to bring them current…hmmm, if they could have afforded a fixed rate mortgage to begin with, they wouldn’t be in this mess having taken out interest only, alt-a, arm, option arm, subprime mortgages to begin with. his assumption is that people can afford a fixed rate mortgage, which completely ignores reality. In the end, instead of letting people lose their homes, he wants to delay the inevitable.

2. Dave then wants to back these reset fixed mortgages with insurance rather than upfront costs. hmm, let’s go back to THEY CAN’T AFFORD THE MORTGAGES TO BEGIN WITH, which means we are going to be paying much more in insurance once those mortgages fail.

3. Let me get this straight, someone who defaults on a mortgage not only gets a second try from scratch but then gets to walk away scott free afterwards? where’s the lesson in that? or is the lesson, do wrong and then do wrong again because it won’t hurt you again. Hello, punish is designed to prevent a behavior. we are positively reinforcing bad behavior.

4. Dave then wants to suspend capital gains tax. let me see, how the hell are we going to pay for anything as a govt without the nearly $1 trillion in capital gains revenue since 95% of the revenue comes from the taxes of 5% of the population? how stupid is that. so instead of the $700b, he wants to forego over $1trillion in tax revenue? so $700b versus over $1trillion, let me see how my math is.

5. Dave then wants to suspend mark to market. let me see, ENRON and WORLDCOM come to mind. we don’t trust wall street because they lie, so what do we want them to do, put their own evaluations leaving the door for ENRON and WORLDCOM part II. Let’s not forget the compounding reason for this mess is that values of mortgaged backed securities were ficticious to begin with. So we are going suspend a mechanism that gives a real number for one that essentially gives us a ficticious one? yeah, real smart Dave.

6. cancel golden parachutes: ok, who the hell wants to be a ceo with that kind of a clause? it’s also quite amazing that the loudest amplifiers of the no golden parachute bandwagon is congress who have themselves a golden parachute funded by the taxpayer. pension and medical coverage for life with cola adjustments after only one term in office. i would much rather see restricted common stock issued, which would force execs to perform less their locked in shares tank. we still need to reward people for reaching the pinnacle of success in this country. limiting compensation packages does not do it. are they bloated? yes, so make their packages tied to the company and restrict their ability to sell shares for at least 5 years.

By: Jan

Jan — Thu, 02 Oct 2008 20:15:40 +0000

Yes,I too wonder where Lisa could live on so little!!!!! Rent in the Pacific NW is not cheap…even for something I could not live in!
Dave Ramsey’s ideas make a great deal of sense! It certainly would help “mainstreet” and not “Wall Street”!

By: Kenny

Kenny — Thu, 02 Oct 2008 17:59:56 +0000

@Lisa
Where do you live? I’m not sure how anyone could live on $16k in a major city without government assistance. In my area, a 2 bedroom apartment (nothing fancy) would cost between $14-18k a year alone. We spend nearly $18k a year on just our apartment and utilities (gas + electric). We have a small (700 sq ft) apartment with no major amenities (no dishwasher, no pool, no security, etc). And I don’t live in a great area. I spend over $3k a year on gasoline. Of course, some of that’s choice (i could work closer) and another $2k on car insurance. Of course, we choose to have 2 cars.

$67k doesn’t get you that far in Los Angeles. You could not live on $16k here without assistance or a free place to stay.

By: Kevin M

Kevin M — Thu, 02 Oct 2008 17:29:28 +0000

Nope, Dave is on to nothing here. It’s not common sense, it’s nonsense. With the possible exception of the elimination of capital gains taxes, this proposal is the same bad bailout bill that the House rejected just a few days ago.

- Ramsey I: Insure subprime loans/mortgages
- Bailout 102: Insurance of Troubled Assets

- R1b1: Help mortgagees in trouble
- B109: Foreclosure Mitigation Efforts
- B110: Assistance to Homeowners
- B124: Hope for Homeowners Amendments

- R1b2: Cancel golden parachutes
- B111: Executive Compensation and Corporate Governance

- R2: Eliminate mark to market
- B132: Authority to Suspend Mark-to-Market Accounting

- R3: Eliminate Capital Gains Tax
- Bailout: Has tax provisions that affect institutions being bailed out, but apparently nothing about total elimination of capital gains tax

Additional thoughts:
1. Dave proposes insuring bad debt. These mortgages most likely already have PMI. And even if the govt insures these bad debts, why would that make it more attractive to investors? It most likely won’t. Bad debt is bad debt, insurance or not.
2. Insuring these bad debts will cost nothing if the banks are required to pay the premiums. Otherwise it will cost the taxpayer more than 50 billion.
3. Dave proposes canceling prepayment penalties and other actions. These people can’t refinance or sell because there is too much supply and no demand. Prepayment penalties have nothing to do with this. Refinancing at good terms won’t help those people who can’t pay because of job loss or other reasons.
4. Keeping the paper value of bad debt inflated by suspending mark to market won’t change the fact that it is still bad debt.
5. Capital gains tax. Dave claims that if the government says I don’t have to pay taxes on a capital gain, then I will sell good investments for big gains and then use the money to buy toxic debt. Sorry, wrong! I may sell for a big gain, but no way I’m buying bad debt with that gain.

By: Lisa

Lisa — Thu, 02 Oct 2008 11:44:44 +0000

Hi! This is the first time I’ve come across your blog, but I had to laugh. Who couldn’t make it on nearly 67,200?Why couldn’t someone save with that amount coming in?W e are a family of 3 & live on $16,500 per year bring home.We are not on government assistance either.What you make just seems so large an amount, according to most all families I know.I plan on reading your blog beginning to now .Lisa

By: NCN

NCN — Thu, 02 Oct 2008 02:10:59 +0000

I think some are missing the point…
Instead of a $700 billion dollar bailout that we will ALL pay for, Dave is looking for some type of compromise – one that would help those who are close to defaulting, cost us all a little money, but will not cost anywhere near $700 billion… I’m not sure if this is the solution, but anything looks better than the current bailout bill…
NCN