I often talk about Dave Ramsey's plan to become debt free, but I also think that another guy's program is really pretty good. John Cummuta has a plan that has gone by several different names over the past 15 years (currently it is called "Transforming Debt into Wealth")Update: Now calling it the Debt Free Bible.
I actually enjoy listening to Cummuta's audio book more than I do Ramsey's. I guess I follow a hybrid of both of their programs and have changed a few things that fit my situation a little better. Both Ramsey & Cummuta have VERY similar backgrounds, stories, and books. Below are some highlights of each and some differences:
Dave Ramsey's Baby Steps:
1) $1000 in Savings - Mini Emergency Fund
2) Pay Off All Debt (except the mortgage) using the debt snowball
3) Save for Fully Funded Emergency Fund (3-6 months of expenses)
4) invest 15% into 401k or Roth IRA
5) College Savings (529 accounts)
6) Pay off home early
7) Build Wealth & Give
John Cummuta's Transform Debt into Wealth:
Stage 1: Stop Using Credit - Operate 100% on cash
Debt is not a useful tool in building a successful life, credit makes things cost more, so why would you want to use it?
Stage 2: Pay off ALL your debts, including Mortgages.
Simultaneously with a cash-based lifestyle, we'll begin eliminating your debts. The first step in that process is the creation of what Cummuta calls your Accelerator Margin (TM). This is an amount of money that will help you accelerate your debt-elimination.
Stage 3: Focus All available cash on wealth-building
After your debt is paid off, it's time to start the first step of the wealth building phase. That first step is create an emergency savings fund.
Some differences are that Dave Ramsey says to create an emergency fund first where Cummuta says to pay off all debt before saving an emergency fund. . Another difference is that Ramsey separates the mortgage from the rest of the debts and says to pay that off at a later time, while Cummuta says it's all debt so it all needs to be eliminated.
I enjoy listening to Dave Ramsey's podcasts from his daily radio show. He is much more accessible than Cummuta and seems to be more on the up and up. Cummuta has a good program but has very questionable marketing tactics and many people think he is a borderline scam artist. I have never purchased anything from him (the program was a gift) so I really can't confirm or deny his practices. I would highly recommend starting either one of these programs asap. Both will get you the desired results...DEBT FREE...but only if you stick with it and persevere. Is John Cummuda a scam? No, Commuta is legit, but the plan is not much different that Ramsey's. Can you pay off house in 2 years? Not likely. Who is better, Dave Ramsey or "John Cummuta"? Both have value. What is best way to eliminate debt? Don't acquire any more, pay off the existing. Is the Debt Free Bible a scam? "Debt Free Bible" is Cummuta's newest name for his program. Oh yea, what about Suze Orman....I don't know-sorry. Is she a lesbian? Who cares.
Why Dave Ramsey? Is John Cummuta a Scam? Where's Suze Orman?
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2 comments:
Good post. Everyday I click on your link in my favorites hoping to see something new and voila 3 days in a row. Keep it up. I am looking forward to more. I actually bought John Cummuta I reviewed it and sent it back. Nothing new, so I did not think it was worth it. Like you said he recommends eliminating all debt including mortgage and says it will take 7 years. Not so, more like 10 years, taking into consideration interest. But he says you can still fall back on credit cards if there is an emergency. I also don't agree with him on the retirement planning since this should also be started after the mortgage is paid off and you will have loads of cash. Ehh, not sure, what about starting early and taking advantage of compound interest. That I also have a problem with.
Thanks for reading! I agree that Cummuta has nothing new (maybe his WAS new 15 yrs ago) but it is not as stringent as Dave Ramsey's plan. Dave says "my way or the highway". I enjoy both and am looking like I will be totally debt free (inc. mortgage) by Dec. 2012 (total of 4.5 years). Killing the credit cards is always step #1.
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