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Dave Ramsey and an RV

Torch76

Member
I know others have mentioned Dave Ramsey before in passing. I'd like this thread to be about how you financed the RV build while doing Dave's plans. Looking for details if you're willing to share i.e. what percentage of your pay did you put towards the RV? How did you make it work with the plan? FWIW, I'm looking at making about $38K, with no debt and an emergency fund already in place.

Looking to hear from someone who has been there with Dave's plan.

Thanks,
John
 
I discovered Dave Ramsey right about the time I started building. I too was out of debt except for my house on a modest income. At the time I was in sales on commission with a base salary. I tought myself to live only on my base and every commission check went toward the plane. I just took one subkit at a time, and could actually build faster than my money could keep up, but would wait until I had the money before moving on. I was able to do this until I got to the engine, at that point I did finance the engine. That bugged me from day one, so I ended up paying off that loan in record time. The project took several years this way, but I get that much more enjoyment out of it everytime I fly knowing it is 100% mine.
 
Similar story here, I started listening to Dave about 2 years before I started building. I committed to building on free cash only, not going into debt for any piece of it, and I'm glad to say I'm sticking with it. I could have been flying by now if I had taken a loan - but I will never borrow money for "fun" or to pay for a toy. Todays job market is not predictable and I won't put my family in a situation where the bank is knocking on my door because of a toy.

Figure out what you can live on, and stick with it. The excess will accumulate slowly, and you can buy pieces/parts when the excess allows. When your done, you'll fly an airplane you own free and clear, and nothing will ever feel as sweet as that.
 
Read Doug's article from the homepage about how to afford an RV. Doesn't take long to realize that most RV builders' bank accounts are limited, they just prioritize differently. Like Doug I live in a modest house, no cable, drive older vehicles maintained by myself, bring my lunch to work and am proud of it.
Can't be 100% on the Ramsey plan and have an airplane till house/retirement/kids college $$ is sitting in the bank. I think the Ramsey plan is for extreme situations but he has sound advice. I have followed his advice and snowballed school/house/car payments over the past 3 years. Only current debt is house loan 15yr and making double payments and a small school loan at 2.3% interest. My reward will be the RV.
Personally I put about $400/month in my airplane account along with any extra money I can scrounge. After 7 years I'm forcing myself to do the finish work on the cowling/wingtips while I save for the firewall foward kit. Airframe and Engine are paid for, and as a reward for finishing the fiberglass in another couple of months I'm going to email the avionics guys about how to build my panel and delay buying the actual boxes. I would like to think I'm 2 years out but money will probably dictate otherwise.
I cannot afford to have a finished RV at this time, $500/month ($150 insurance, $150 taxes, $150 hanger, $50 guestimation error) just to sit in a hanger ready to fly except for empty tanks. But my wife graduates from nursing school next year and the money being spent on school will help fund the RV. Gives me time for more pinhole filling!
 
dave ramsey

I understand what Dave Ramsey is teaching and follow his advice to avoid debt. However, he dumbs it down for those who cannot control money. I think his message is to treat debt like a business and a math problem; and realize when things are bought on the credit cards, the price goes way up. Would you buy a finishing kit if it costs twice as much? I wouldn't either, so no credit card debt. Would you want to lose the house because you couldn't pay off the airplane, I think not, so no home equity loans. Now maybe you forgo paying off the car if you have a cheap rate the dealer gave you and buy the finishing kit instead, or maybe you borrow from your business. This I can see doing. But if you can't find cheap credit, it will cost you dearly; do the math.
 
I can't say I'm a fan of mr Ramsay for reasons that are not relavent here. i was however doing a Dave Ramsey long before I ever heard of him. I guess growing up poor in the East end of London to parents who really couldn't be sure thay had a roof over their heads taught me to be frugal and somewhat risk adverse..One could argue that has cost me over the years.

Of course personal finances are just that personal, but for me I couldn't live with myself if I had any debt before spending so much on which I consider to be a large toy with no real practical value.

In fact the logic panned out a little, lots of my friends tragically lost their houses in the recent crash and of course the price of complete RV's fell to a point where I would never have recouped my money if I had sold it.

So yes, not wishing to sound judgemental but all my debt had to be paid off first. Now if I had a kid heading to college or maybe a spouse with a serous medical condition (Guys back in the UK have no concept of this) then using my method would probably mean I would have never built an RV in the first place.

So is life with debt and an RV better than no debt and no RV..Like I said a very personal choice.
 
Borrowing is ok sometimes

I got a loan to finish my 7A and very glad I did!!
Just don't get upside down. Never owe more than the market value of what you got the loan for.
I've flown my RV 635 hours in 3-1/2 years.
The fun I've had is priceless!!

Saving for years is ok for some people, but as a cancer survivor I know the future holds
no guarantees.

Mark
 
pay with cash as you go, and never obsess over a build deadline/first flight date

if you get frustrated like i did, buy a flying RV and learn from it on what you want on your build, use it's equity when it's engine/finishing time to fast path yourself to being done
 
The plan

I am a huge fan of Dave Ramsey. Fortunately, I had no debt other than my house and follow his advice extensively. It will work with builders.

Somebody hit it on the head. The Dave Ramsey plane is designed for those who have gotten into serious trouble or cannot manage money to begin with.

Unless you have a big pot of disposable income, the average RV builder is going to have to finance the panel and engine stuff. Now, after doing that following the Dave Ramsey plan to get it paid off quickly is critical.

The first 7 was built with "pay as you go." I did however use my home equity credit line to buy the engine. Paid it off in under a year. The 7 that is under construction has been pay as you go also. I had intended to do that for the entire build but a screaming deal arose on an IO390 and I had to use the HECL again. Done and paid off.

So, the bottom line, for those following the Dave Ramsey plan, don't get too wrapped up so you can't finish. Go ahead and finance the big ticket items and pay it off with his "gazelle" mentality. You'll feel good and you'll be flying!!!
 
So, the bottom line, for those following the Dave Ramsey plan, don't get too wrapped up so you can't finish. Go ahead and finance the big ticket items and pay it off with his "gazelle" mentality. You'll feel good and you'll be flying!!!

If every person followed the Dave Ramsey plan to the letter, the economy of the entire western world would collapse into a major depression with rioting in the streets by the hungry and homeless. Credit makes our business world go 'round and 'round, nothing else. Auto sales, home sales, electronic sales, airplanes, etc., you name it, credit makes for more sales AND more jobs.

Credit excesses also cause rioting in the streets. :(

So, "moderation in all things" (Andria, Roman comic dramatist (185 BC - 159 BC) :)
 
If every person followed the Dave Ramsey plan to the letter, the economy of the entire western world would collapse into a major depression with rioting in the streets by the hungry and homeless. Credit makes our business world go 'round and 'round, nothing else. Auto sales, home sales, electronic sales, airplanes, etc., you name it, credit makes for more sales AND more jobs.

Credit excesses also cause rioting in the streets. :(

So, "moderation in all things" (Andria, Roman comic dramatist (185 BC - 159 BC) :)

and then after everything settled down people would slowly be owning their own homes, airplanes, etc and paying more money to themselves than to their credit card companies.

But back to the RV discussion, I also have paid for my kits with cash, and have slowed down now that I have all the kits but no engine.. I must need to sell something else I own :)
 
I have a day job from which I budget the house hold. Fortunately I have enjoyed success with my side business building fence. It has paid for all of my flight training to become a private pilot (cash as I go). I have not started my RV-8 yet but my kits will also be paid for in cash. I will consider other options when it comes time for the engine when I get there. I don?t see much trouble with paying for my panel because it will be steam gauge w/ VOR. The first step to building my RV-8 will be buying my wife a storm shelter for our house...;)

I really look forward to this. This is not my first long term project either so I don't think I am under-estimating the work (money) involved.
 
Greed is good..

was the moto a few years back. "Debt is evil" should be today's creed. Just ask the people of Greece what happens when you try to finance today's quality of life with money you don't have. Eventually the other shoe will drop and its a whole lot more painful than if a modest amount of sacrifice was taken up front.

I love aviation, but its a hobby for me - to be honest its a non-essential luxury, and I suspect most of us building RVs are doing it as a hobby. So, my recreation must be paid for up front, or it needs to be delayed. Not to mention that I sleep better at night knowing that my RV will never be taken away from me, if I was unable to make payments.
 
...i was however doing a Dave Ramsey long before I ever heard of him...

...Of course personal finances are just that personal, but for me I couldn't live with myself if I had any debt before spending so much on which I consider to be a large toy with no real practical value...

I am a big fan of Mr. Ramsey, but as he freely admits, his methods are not anything new or revolutionary. Like frankh, I had already started down that path when I found out about Dave Ramsey. Unfortunately my wife hadn't, but getting her (and her coworker for support) to go through Financial Peace University might be the best couple hundred bucks we've ever spent.

So, "moderation in all things" (Andria, Roman comic dramatist (185 BC - 159 BC) :)

And there you have it, dead on.

I'm certainly not as "gazelle intense" as Dave Ramsey would like, and we definitely treat ourselves every once in a while. Could we afford an extra few hundred dollars a month if we financed a kit? Sure. But as many people are finding out these days, the job you have today might not be around tomorrow, and I personally am not comfortable with that level of risk when it comes to something like an airplane.

As horribly as I timed buying my first house a few years ago, I'm quite confident I could do the same with an airplane if I took out a loan for one of those too. :D
 
I love aviation, but its a hobby for me - to be honest its a non-essential luxury, and I suspect most of us building RVs are doing it as a hobby. So, my recreation must be paid for up front, or it needs to be delayed. My RV will never be taken away from me, if I was unable to make payments.


I feel the same way concerning my pilot's license (currently on hold while resolving some medical issues, may just go sport pilot) and the someday airplane I want. RV-8 :D Debt free but the house. Baby steps, I'll get there eventually; and I'm sure that -8 will fly a whole lot better without dragging that payment book around. :p
 
another note

One think about the D Ramsey plan I dislike. He says no debt, but as others pointed out, its hard to buy a engine or a panel without using credit. I think using a HELOC might be better than raiding the 401K, IRA or mutual funds. And I will probably use a HELOC for the engine and panel, if I had an equivalent amount of cash in a mutual fund or something I could cash in if I got laid off or something. I think giving up a 8 to 12% return on a mutual find, to forgo a 3% HELOC interest is stupid, even if "that's what Dave would do". JMHO
 
If every person followed the Dave Ramsey plan to the letter, the economy of the entire western world would collapse into a major depression with rioting in the streets by the hungry and homeless.

You from Greece?

Credit makes our business world go 'round and 'round, nothing else. Auto sales, home sales, electronic sales, airplanes, etc., you name it, credit makes for more sales AND more jobs.

I couldn't disagree more. If credit was used less, there would be more money available to purchase/do things instead of x% going to interest and finance charges.

The idea that debt is the engine to an economy is false in my opinion. Debt is a tool of the impatient and short sighted.
 
One think about the D Ramsey plan I dislike. He says no debt, but as others pointed out, its hard to buy a engine or a panel without using credit. I think using a HELOC might be better than raiding the 401K, IRA or mutual funds. And I will probably use a HELOC for the engine and panel, if I had an equivalent amount of cash in a mutual fund or something I could cash in if I got laid off or something. I think giving up a 8 to 12% return on a mutual find, to forgo a 3% HELOC interest is stupid, even if "that's what Dave would do". JMHO

I would say it's harder to buy an engine with debt. Because it costs more to do it that way. The easy way is to save up and spend cash on it.

  • There are a lot of people with mortgages and a HELOC under water right now that wish they hadn't borrowed that money.
  • Assuming you are under 59.5 it would be crazy to cash in retirement at your tax rate plus 10% penalty. (Over 40% for some) just to buy something

I am slow building a -10, with cash. My building has slowed down as we have diverted some of our cash to other priorities right now. I am not going to sacrifice my home or my retirement (20+ years away) on a hobby.
 
IMO you can buy EVERYTHING paying cash, I did it. It requires discipline and telling yourself NO once in awhile. My wife and I were in debt and spent a couple tough years not doing a lot cleaning up the mess from me spending like a brat.
 
Just to clarify

My earlier post had some misspellings so let me clarify. What I meant by using the HELOC for a purchase was to use it instead of cashing out a mutual fund. I did not intend to mean you use the HELOC loan without a larger amount of cash readily accessible, if trouble comes' a knocking. I just think it is stupid to give up a good investment return for the thought of "not going into debit". To me its like selling a paid-for house and renting, just to buy a RV10. That is all I meant.
 
IMO you can buy EVERYTHING paying cash, I did it. It requires discipline and telling yourself NO once in awhile. My wife and I were in debt and spent a couple tough years not doing a lot cleaning up the mess from me spending like a brat.

^^^^This x 1000.
 
Cash slows you down, no doubt about it.

As far as saving for an engine and avionics, i took the approach of I'm saving for a new engine and avionics while shopping for a great price on used/rebuilt engine and avionics. Meanwhile I was able to buy an engine for what I think was a great price. Just waiting on the avionics.

Cash offers options, loans gives you a single choice.
 
One think about the D Ramsey plan I dislike. He says no debt, but as others pointed out, its hard to buy a engine or a panel without using credit. I think using a HELOC might be better than raiding the 401K, IRA or mutual funds. And I will probably use a HELOC for the engine and panel, if I had an equivalent amount of cash in a mutual fund or something I could cash in if I got laid off or something. I think giving up a 8 to 12% return on a mutual find, to forgo a 3% HELOC interest is stupid, even if "that's what Dave would do". JMHO

If you were making a purchase that you needed for a business reason, I could see where this might be an option, i.e. by not having the plane now you would be missing out on profit/growth opportunities.

But as long as we're talking about personal finances and experimental aircraft, IMHO there's very rarely a need to finish one now vs. waiting until you have the cash on hand. I'm firmly in the "Cash is King" camp but that's just me. It all comes down to what you can justify to yourself as an acceptable level of risk. I enjoy having the peace of mind that aside from my house, everything I own is paid for and I don't owe anybody a dime. But as always, YMMV.
 
borrowing against your home to buy a toy/hobby, is insane

there is no argument for a HELOC that will hold water in my opinion

There are plenty of ways to get the cash for engine/avionics, and nearly all involve discipline and forgoing. I'm glad to see that those who are borrowing are at least doing it with the best of intentions of erasing the debt as quickly as possible, but I still believe that my plane will fly just a bit smoother without dragging that payment book behind it
 
I agree 100% with paying cash as you go. When cash is limited start looking for used things. I picked up a NICE engine made by Barrett for $12.5k. It also came with almost everything needed to fly. My panel is full of used instruments and cost about $5000 - d-180, radio, transponder and several others. The trick for me was to check barnstormers and vaf classifieds every day and jump on anything that I could use at some point in the build.
 
This is the perfect time of year to mention this. We became debt free several years ago. I had a question for my cpa..will I have to pay more taxes because I do not have a house to itemize? Yes, but not as much as you were paying the financial institution in interest. Many like us thought we were saving on taxes by financing that house until you compare the difference.

We decided to save for the entire kit(oh yes, you now owe taxes on interest earned). We put a big thermometer on the garage wall, numbered 0-100%. Every month we would color it red a little higher. We stuck to a budget almost like when we first married. Once at 100% we orderded entire kit(could have ordered individually but saved $$$$ on shipping and price increases). We started over with an engine/prop/avionics thermometer. By the time we were finished with airframe our thermometer was almost at the top so it worked out great. No work stoppages. Planned the build and did not oohh and ahhh over all the unnecessay gadgets and pretty stuff that we see online and in other planes.

When your finished building keep that same savings account going for hangar rent, taxes, repairs, maintenance and especially those wonderful rv trips. We still stick to a budget, but a little higher now. Patience, hard work and stick with a reasonable family budget...my kids learned alot from watching mom and dad.
 
I had a question for my cpa..will I have to pay more taxes because I do not have a house to itemize? Yes, but not as much as you were paying the financial institution in interest. Many like us thought we were saving on taxes by financing that house until you compare the difference...

....decided to save for the entire kit... put a big thermometer on the garage wall, numbered 0-100%.

Like Dave says, it's insane to give the bank $10,000 a year to avoid giving the government $3,000. Besides, that remaining $7,000 will pay for a whole lot of Saturday morning pancake fly-ins/hamburgers.

Love the thermometer idea, OK if I "borrow" it? :)
 
A little different take on Dave Ramsey and building.

I am a fan of the Ramsey plan.

Yes, I am building with cash, but I download Dave's podcast and listen to them as I work on my RV-10. I really enjoy hearing all the stories and it helps me pass the time on boring parts of the build, like dimpling all the holes in the wing skins!
 
Thanks!

Thanks for all the advice guys. Some good info for sure.

We decided to save for the entire kit(oh yes, you now owe taxes on interest earned). We put a big thermometer on the garage wall, numbered 0-100%. Every month we would color it red a little higher. We stuck to a budget almost like when we first married. Once at 100% we orderded entire kit(could have ordered individually but saved $$$$ on shipping and price increases). We started over with an engine/prop/avionics thermometer. By the time we were finished with airframe our thermometer was almost at the top so it worked out great. No work stoppages.

Wayne's idea is my favorite. Though I suppose I'm biased toward a fellow Ohioan :cool:.
 
Like Dave says, it's insane to give the bank $10,000 a year to avoid giving the government $3,000. Besides, that remaining $7,000 will pay for a whole lot of Saturday morning pancake fly-in.

Spot on Sarge!

I've had my 7 project parked for over a year while finishing my house and cleaning up a little debt. A hard choice, but I feel will be worth it in the long run for the family. I agree with a previous poster that finances are personal and it's interesting and thought provoking to see all the different angles that builders are approaching the financial decisions associated with their projects.

Great thread....
 
Like Dave says, it's insane to give the bank $10,000 a year to avoid giving the government $3,000. Besides, that remaining $7,000 will pay for a whole lot of Saturday morning pancake fly-ins/hamburgers.

Love the thermometer idea, OK if I "borrow" it? :)

I had to reread Daves statement to feel better about not getting back $8K this year on my return, but I didn't pay $26K in interest payments. While it's a win, not getting that tax return doesn't feel like a win! :eek:

Great points all around.
 
RV build

Just pay as you go for a RV build. Dave Ramsey has great info for people that don't have a system to manage their money. We reviewed his system and gave a copy of it to our grown kids so they have a baseline. It is very basic. Using other peoples money at low rates is fine if you can back it up with your own.
 
Just pay as you go for a RV build. Dave Ramsey has great info for people that don't have a system to manage their money. We reviewed his system and gave a copy of it to our grown kids so they have a baseline. It is very basic. Using other peoples money at low rates is fine if you can back it up with your own.

I agree..As long as said money is in my bank account (or other safe investment) earning better interest than the stuff I'm borrowing. Not hoping the income I have today will still be there next week, cus it very well might not be.

But thats just my position.
 
I agree..As long as said money is in my bank account (or other safe investment) earning better interest than the stuff I'm borrowing. Not hoping the income I have today will still be there next week, cus it very well might not be.

But thats just my position.


Well put.
I like how Frank described the issue quoted above and I concur with it.
This will be good advise Frank. I will forward your words to my boys on our next conversation.
 
This is simple

I'm not a huge Dave Ramsey fan, and like others here I was on his plan before hearing of him. Helps growing up needing to work & having great parents. A couple of things I agree with him on: The combined value of everything you own that has a motor attached, should NEVER exceed more than 50% of your after tax "Bring Home" pay. And, if you can't afford to pay cash, you can't afford it.
 
Combined value of how much?..Yeah I'm definately in that bracket..NOT!.. I'm closer though...in the market crash the value of my RV came tumbling down so I feel SO much better...I think?
 
It's very possible to build a plane without going into debt. I have worked a second job for the past seven years in order to save up for my RV-8. The entire build will be paid for in cash. I have only recently found Dave Ramsey, but I am a new fan.
 
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