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5 Reasons why Dave Ramsey is wrong about MBA school

5 Reasons why Dave Ramsey is wrong about MBA school

Dave Ramsey and Credit Cards

Dear Dave,

You are a pretty good guy, and I definitely agree with a lot of what you preach. However, sometimes you are just wrong. When you said that an MBA was unnecessary and basically a waste of money, well, that was pretty bad tunnel vision.

Just because you don’t require an MBA to hire someone, doesn’t mean that an MBA is pointless. Let me give you some reasons why I believe an MBA may be a smart decision for some people.

Career change

For many MBA students, school is the opportunity to change careers. I’m not talking about just a job change but a career change. For example, I may be working as an assembly line superviser but what I really want to do is be a brand manager. An MBA is a way to leave my current job, learn new skills, and be offered opportunities that wouldn’t have otherwise been afforded me.

So an MBA is an exit strategy for some people. I expect that you’ll now make the debt argument and tell me that there are other ways to change careers. Earning a good MBA doesn’t always mean paying $100k. There are good, inexpensive schools as well as financial assistance. So yes, I’ll incur some debt, but the years of higher pay afterwords certainly overcompensate for the debt.

As per other options for changing careers, you are right. There are other options. What I recommend people considering graduate school do is create a list on the left side of a paper outlining each goal they hope to accomplish by going to graduate school. On the right hand side, make a list of ways you can accomplish the same goals without attending graduate school. At the end of this exercise, you may find that graduate school isn’t the right option. Though, you may find that it is still the right path.

The point is, an MBA is sometimes the best way to get out of a bad or dead-end situation.

Job requirement

Certain jobs or positions require having a graduate degree. You may not like it or agree with it, but that’s just the world we live in. For example, to get past mid-level management in many large corporations, you simply have to have an MBA.

One of the jobs that I am interested in pursuing requires an MBA to get in. What you have to understand with a good MBA degree is that it combines work experience with knowledge. This combination is what a lot of employers look for in job applicants.

And I really don’t care whether you think the job I want is worth having or not, because I want it – and that means getting an MBA.

Better pay

I already alluded to better pay earlier. Nothing is a sure thing in life and you therefore aren’t guaranteed better pay by obtaining an MBA. However, the odds are in your favor. Statistically, people with MBAs make more money. If you have reached a salary cap, then an MBA can help you get a raise with your current employer or switch to a different firm that will pay more.

There isn’t much more to say about this point.

Unemployment rate

A lot of people are very concerned about the current unemployment rate in the US, as well they should be. However, the unemployment issue does not evenly affect all sectors of society. If you look at the 2010 data from the Bureau of Labor Statistics, you’ll find that the unemployment rate is noticeable lower for the more educated.

Unemployment Rates for 2010

So not only do you earn more money, but you are much more likely to be employed. If you want to get into more specific detail, then you can check out the numbers by clicking here.

The point is, Dave, that getting a graduate degree pays in more way than one, including job security.

More sex

This last point may be the most important for some people, despite me putting it last on the list. Studies have shown that your IQ will increase with each year of graduate school. It has also been proven that people with higher IQs have more sex. So if you feel that your love life is lacking, then grad school may be a good investment.

Though, it will be a delayed benefit since another study showed that frequency of intercourse drops during grad school (probably due to work load). So this benefit, like the others, comes after you graduate.

Closing thought

What I’m saying is that you can’t make a blanket statement opposing grad school. Earning an MBA makes a lot of sense for some people and no sense for others. So be a little more open minded.

Still a fan,

Adam Williams

Posted in Reviews, Careers, FeaturedComments (9)

3 Reasons Dave Ramsey is wrong about Credit Cards

3 Reasons Dave Ramsey is wrong about Credit Cards

Let me start by saying, I like Dave Ramsey. I am a Dave Ramsey fan. I’ve completed his Financial Peace University. I am prepared to “Live like no one else, so I can LIVE like no one else.” But I have to disagree with him on at least one account – no credit cards at all.

Dave Ramsey Cutting Credit CardsI advocate that you don’t use credit cards. My wife and I switched from putting everything on a credit card and paying the balance off each month to using a debit card. We closed 14 different credit and department store cards. It was one of the best financial decisions we’ve ever made. However, I still have one open credit card and one open department store card.

I have been asked if and when using credit cards makes sense. As a general rule, I tell people to never use a credit card. Mainly because many people don’t have sufficient self-control to manage credit cards. So don’t even put yourself in the situation to be tempted. However, if you can exhibit self-control, then there are three reasons I use a credit card.

My three reasons for using a credit card

  1. Avoid multiple withdraws or overdraws from bank errors
    I don’t like someone having direct access and authorization to withdraw funds from my checking account. For example, I only put my electric, cell phone, and gas bills on my credit card. That’s it. I don’t use it for anything else. My reason is that I have known a number of individuals who had a bank or merchant, in error, make a withdraw several times or withdraw the wrong amount from their checking account. In 99.9% of the cases, you will get your money back. However, that mistake can be costly until it’s resolved. Maybe you won’t be able to buy food or you end up with overdraft fees.
  2. True emergencies
    I really hesitate to even mention this reason since it can be too easy to call something an “emergency”. The purpose of an emergency fund is so you can cover emergencies and not have to rely on credit. However, you can’t always get to the funds in time. Let me give you a recent experience. A little over a month ago, I received a call at 1AM with news of a death in the family. Just 24 hours later, my family was on an airplane. We were gone for more than a week. Since we needed to book plane tickets, a rental car, hotel rooms, etc. in such a short timeframe, I relied on my credit card. Having said that, I paid off the total amount of the trip from our emergency fund within one week of returning home. But again, make sure it’s an actual emergency. As an aid, here’s a list of 49 non-emergencies.
  3. Discounts or money back
    So I’ve explained why we have one credit card. I want to now briefly explain why we have one department store card – Kohl’s. We love shopping at Kohl’s. I actually interned a few years back at the corporate office and gained a real appreciate for the organization as a whole. As a result, we do a lot of shopping at Kohl’s and receive coupons each month for great discounts. The only requirement to get the discount – use your Kohl’s card. Since we’d be shopping there either way, we might as well get the 20-30% discount. Just make sure that coupons don’t end up costing you more money because you spent more than you would have normally.

If you use a credit card, do so sparingly and pay it off monthly

I really can’t stress this point enough. As I mentioned before, I usually just make the blanket statement that you should never own or use a credit card. But I’m a realist and recognize that there are situations when credit cards can make sense.

What other sound reasons might cause you to keep a credit card just in case?

Posted in Credit Cards, FeaturedComments (22)

Dear Dave Ramsey, I sold my car, but the golf clubs stay

Dear Dave Ramsey, I sold my car, but the golf clubs stay

I wrote a mock letter to Dave Ramsey several months ago lamenting the need to sell my car. Well, the deed is done. My baby is gone. And here’s why I’m better for it.

Freedom from DebtFirst, we were able to drastically reduce our monthly car payment.

Our car payment is 40.9% of what it was before. The extra money is going to pay off medical debt and the remaining car debt.

I love sleeping at night again.

Second, our car insurance went down.

But not for the reasons you think. We purchased an older car that is actually more expensive to insure at the same coverage level. However, since I didn’t like the prospect of higher insurance premiums (which reduced our cost savings), I spoke with a lot of insurers.

I had decided on American Family as it had the lowest rate, though still more expensive. Fortunately before signing up though, I remembered that Bear River Mutual (a local insurance company) supposedly had highly competitive rates. Come to find out, by switching my car and home owner’s insurance to Bear River, I saved about $20 a month over what I had before.

So if you haven’t checked in awhile, I recommend running some price comparisons on your auto and home owner’s insurance.

Third, we developed a bit more self-discipline through sacrifice.

I’ll be honest. I miss my SUV. I mean I really miss my SUV.

My lip trembles when other ones drive by.

But we made the responsible decision to forgo a car we really like for a less expensive car that we like, but still meets our needs. Making financially responsible decisions is difficult at times, but the rewards, both financially and emotionally, are tremendous.

Each time you make the “right” decision, the next time is easier. So what’s holding you back?

So Dave, what now?

Dave Ramsey teaches that to get out of debt you should sell so much stuff that the kids and dog think they are next. Here’s the list of items we’ve sold so far:

  1. Hyundai Santa Fe
  2. 32 inch LCD TV
  3. Hard wood TV stand
  4. DVD player
  5. Printer
  6. Palm Pilot

We’ve also donated a fair amount of clothing and other items that we didn’t want to sell but still let us de-clutter. Here’s a few more items on our list of things to sell:

  1. Desktop computer (don’t worry, I still have a laptop)
  2. Computer desk
  3. Mini love sac
  4. Possibly the house

To my wife’s chagrin, my golf clubs are not on the “to sell” list.

So what have you sold to get of debt or are not willing to sell? Let me know in the comments.

Posted in Debt, FeaturedComments (2)

Review: Dave Ramsey’s “Financial Peace Revisited”

Review: Dave Ramsey’s “Financial Peace Revisited”

I decided to take Dave Ramsey’s Financial Peace University. My work was offering to pay for the course and I’m always anxious to learn something new about financial planning. As part of the class materials, I received Dave’s book Financial Peace Revisited. Having now read the book, I’d like to offer my observations.


First, if you are unfamiliar with many financial planning techniques or why you should be budgeting, saving, or getting out of debt in the first place, then this is an excellent guide. The range of topics covered are not exhaustive but an excellent start to cleaning your financial house. If you are already budgeting and investing, then consider this book a re-motivator or a little “pick me up.” I was able to find several areas where my wife and I are improving our financial situation as a result of this book.

Second, I’m a Christian and I appreciated the religious tone that Dave uses. I personally believe that we will be held accountable for our money management and Dave uses scripture frequently to illustrate his points. If you are not a Christian, don’t be scared off. He keeps the religious comments to a minimum.


First, the book was originally written in the 1990s and updated and released again in 2003. The concepts and principles that Dave teaches are certainly timeless. However, I believe that some of the techniques that he teaches are outdated. For example, all of the budgeting is completed by hand on paper. Fortunately, his book comes with convenient forms to use. However, this is 2009 and budgeting software packages are readily available and inexpensive. I can understand that many people didn’t have computers in the 1990s and that budget software wasn’t that advanced. But Quicken and are both excellent options. Or heck, you can even use Microsoft Excel pretty effectively if you don’t mind updating your spreadsheet manually. Either way, some of the information and approaches could and should be updated.

Financial Peace RevisitedAlso, there are two chapters that in conjunction raise an issue that I have with the book. The chapters titled “Only Buy Big, Big Bargains” and “Career Choice” are good chapters touching on important points. However, they both suggest that you need to find a career where you can make lots of money and then go buy lots of nice, potentially expensive stuff with cash. I don’t think there is anything wrong with nice stuff, especially if you are paying cash and not going into debt for it. But Dave suggests that that path is the right and only one. I disagree and here is why. My wife and I are considering several graduate school options. One route would land me in a lower paying job that provides much higher satisfaction while the other option we are considering offers much more money but may be less satisfying. According to Dave, picking the satisfying career (so the first option) will generate more money. In my case, that’s just not true. Further, just because I can afford a $100k car, doesn’t mean I should buy one despite how good of a deal I get on it. I think Dave still has a focus on a lot of material things. Fortunately, he teaches you how to pay cash for those things.

Last, Dave gives a basic overview of the mechanics and fees of mutual funds. I was surprised that he didn’t cover passively managed index funds or how to construct a simple, diversified portfolio (which he could write a whole book on). Also, I personally believe that the average investor never needs to purchase a fund that has a load (fee to purchase it). Dave suggests that there are certain load bearing funds worth owning but never describes the criteria for knowing when a load bearing fund is worth owning. Again, I believe that unless you have a reasonable understanding of the market, mutual funds, and how to construct a strong portfolio, then stick with no load funds. In fact, stick to index funds from companies like Vanguard or Fidelity.


All and all, the book is a good, an easy read, and offers practical suggestions. Even though it appears that I had more negative than positive to say, my negative points are minor issues. On a scale of 1 to 5, I’d give it a solid 3.5. If you’d like to see additional reviews and comments or to purchase the book, check it out on

Posted in Reviews, FeaturedComments (4)

Dave Ramsey said to sell my stuff and payoff debt

Dave Ramsey said to sell my stuff and payoff debt

Dave RamseyI decided to write this post in the form of a letter to Dave Ramsey:

Hey Dave,

My company decided to offer your Financial Peace University course to any employees interested. Always hoping to learn more and better my financial situation, I signed up. In your latest lesson, you spoke about dumping debt and specifically advised people to sell stuff.

Well Dave, I’ve started to sell my stuff. For example, my wife and I aren’t big TV watchers. In fact, the only TV show we regularly watch is Fox’s Dollhouse and we almost always watch it on So we sold the TV…the TV Dave. I’m not sure what all the ramifications are yet of that decision, but I’m hoping that my family will be better off with less digital garbage coming in. One thing you didn’t talk about though was getting a good deal for all the stuff I’m out selling. In my haste and desire to cleanse my home and earn some extra cash, I completely undersold the TV. A nice, young college student and his roommates are now enjoying my TV at a hefty discount. I loved getting the subsequent five phone calls that day asking about the TV. Each person willing to pay more than what I sold it for. So you might want to tell your viewers/readers that they should get excited about selling stuff, but don’t get stupid about it. Do you know anyone that wants a nice, solid wood TV stand from IKEA?

While we are on the subject Dave, I’m not sure where the selling stops. For example, I preempted my wife this week by telling her that “the golf clubs stay!” So what if I’ve only used them once in the last two years. Doesn’t that just make me an average golfer? Actually, I would golf more if my wife weren’t so bad at it that she refuses to go. The one time I used them last year was when she went to her brother’s wedding out East. I went golfing twice that week – it was a good week. So my point is, you told me to sell, sell, sell. But do you offer any guidelines? I would sell anything that I owe money on to pay it off, but that’s only my car and my house – and the house stays.

SantaFeSo Dave, that leaves my car. I’ve only had my car for six months, and I love my car. I drive a 2008 Hyundai Santa Fe. I haven’t driven an SUV for years and I’m not sure that I’m ready to make the mini-van commitment. My kids don’t play soccer yet, so what does driving a mini-van say about me? Of course, I sure wouldn’t mind a reduced car payment. It’s not that I can’t afford it, but I sure could do other things with that money. So I did a little research online and I’m pretty sure I can get more than what I owe on my car. But the problem now is finding a cheaper car that is big enough for my family and double stroller. I found a 2005 Town & Country for sale but it has 98k miles on it. Come on Dave, 98000 miles! And that’s the best deal I’ve found so far in a price range that makes selling my car and getting another one worth it. So do you have any advice to go along with your simplified statement of “sell the car”?

What I’m saying Dave is that we are trying. We are filling Craigslist with more stuff for people to buy (which doesn’t that encourage this problem for other people?). However, I would appreciate it if you could answer three questions: (1) Am I being a good guy and helping someone out if I undersell my stuff, or should I get every penny for it that I can since I’m using it to pay off my debt? (2) Do you have any guidelines on what I should and should not sell? At what point have I sold my life? Notice I didn’t say “lifestyle.” (3) You said in your video not to get a clunker, but you were adamant about selling the car. So where’s the happy medium? I can find a cheap commuter car no problem, but a quality, cheap family vehicle is harder to find.

Dave, I like you. And I like your course, even if I don’t agree with everything. I also think we could all do with a little less stuff in our lives and homes and on our credit accounts. I’ll let you know how it all turns out once the selling spree ends.


Adam “I’m keeping the clubs” Williams


If you’ve taken Dave’s courses or have read his books, what are your experiences with selling stuff? Any good answers for my questions? Let us know in the comments.

Posted in Debt, FeaturedComments (15)

3 Guides to better personal financial success

3 Guides to better personal financial success

My wife and I have been teaching a Family Relations class at church that includes a section on money management. Writing all of these posts on finances has come in handy as I have a lot of material on the topic of money.

I want to share some of the principles and take-aways from our last lesson which focused on the basics or foundation to good money management.

Live on less than you earn

If you aren’t familiar with it already, that video clip is a duplication of an old Saturday Night Live sketch with Steve Martin.

Hopefully, you already know that you should live on less than you earn. But actually doing it can be pretty hard sometimes.

“I have discovered that there is no way that you can ever earn more than you can spend. I am convinced that it is not the amount of money an individual earns that brings peace of mind as much as it is having control of his money.”

N. Eldon Tanner

Read the first line of that quote again if you need to – I did. The message is simple – there are always things to buy and ways to spend money regardless of how much money you make.

The key to happiness is to avoid the bondage that comes with debt. Money and interest can be a very cruel taskmaster when used improperly.

Owe no man anything

A hundred years ago, having a mortgage would have been considered filthy or immoral. If you wanted to own land or a home, then you worked and saved for it.

Most families built their own home.

And yet, debt financing a home today is the standard. Saving enough money to buy a home seems unfathomable to so many.

Banks and lenders have done a great job teaching us that we need their money. It’s a lie. A complete and total lie.

That lie created the collapse in the housing market over the last several years. Consumers believed that we had to won a home – it’s the American dream. Banks believed that we’d never foreclose on the American dream and that home prices would always go up.

Unfortunately, inflated home prices caught up with too many and the bottom fell out.

So how do you avoid having a mortgage?

Dave Ramsey tells a story that I love. He describes a young couple that make a combined $80k a year. They rented a small place and lived on $30k and saved $50k every year. After four years, they had $200k in the bank. They found a modest home for $150k and then spent the other $50k furnishing it however they wanted to.


I’m sure you are thinking, “Yeah, well, I don’t make $80k a year,” or, “I have more expenses and kids and blah blah blah.”

If you are thinking anything like that then you need to change your paradigm. You need to change how you think about money.

It might take you longer than four years but you can do it. You can own a home without a mortgage. You can own a car without a car payment. You can have what you time.

Learn to be patient.

If decide that you just have to get a mortgage, then at least save enough to secure a 15 year mortgage. You will pay substantially less.

Tips for spending less than you make

Saving that much money takes a lot of discipline and time. Let me give you some pointers.

  • Setup auto-savings – Determine how much you are going to save each paycheck – let’s say 20%. Use direct deposit or automatic transfers to put that money into a separate account that is not easily accessed or spent. Basically, make the money disappear and forget it’s even there. Don’t rely on yourself to make the decision every paycheck to save the money.
  • Develop and live within a budget – One of the most crucial factors in your success will be how well you live by a budget. Just to be clear, budgeting is not tracking how much you spend. Budgeting is setting limits to how much you spend and then living by those budgets. Some more bugeting tips.
  • Cut up your credit cards – Just be done with them. If you have an issue with overspending, then take away your ability to overspend. I don’t care about the rewards – they are just gimmicks designed to take your money. Studies have shown that people who use credit cards spend more than those without. Fact.
  • Use cash only – If you find that even with just a debit card you find yourself racking up overage charges or going onto an overdraft credit line, then move to a cash only system. Only use cash. If the cash is gone, then you are done spending. That simple.

 I may not have said too much in this post that you haven’t already heard or read. However, I do hope that you’ll walk away better motivated to make needed changes.

Take a look at your life today, target some specific areas for improvement and then go for it. But go all out and make it happen!

Posted in Budgeting, Saving MoneyComments (1)

4 Tips to good (or better) budgeting

4 Tips to good (or better) budgeting

True story: On graduation day, Alice tells her dad that they need to quickly stop by the Tuition Office before going to the graduation ceremony. Once they arrive at the office, her unsuspecting father is told that Alice has an outstanding balance of over $2000 and won’t be allowed to graduate unless it’s paid in full on the spot.

Man FrowningBegrudgingly, her dad pays the bill. Frustrated, he asks her why she hadn’t managed her money better and paid the bill.

Alice remarks, “I don’t know how this happend. I kept a perfect budget all four years and I can tell you where every penny went.”

Her dad responds, “That’s not budgeting. That’s accounting.”

So what’s the difference between accounting and budgeting?

The distinction may be subtle, but is very important.

  • Accounting is keeping a record of everything you’ve earned and spent.
  • Budgeting is setting limits and keeping to those limits.

Budgeting is a very proactive activity. Budgeting is taking the time to decide in advance how you are going to spend your money and how you are not going to spend your money. A good budgeter will rarely end up in bankruptcy. A good accountant can still end up in bankruptcy because accounting focuses on the past instead of the future. Accounting just tells you what you did instead of planning for what you are going to do.

Have I made my point clear? I hope so.

Now, let’s talk about a couple of basic tips for good budgeting.

#1: Start with a budget of how you are currently spending money, then tweak

A common pitfall is to create a budget that is completely unrealistic. So your first draft should just document how much money you currently earn and where you are spending your money. With that outline as a base, start making changes and tweaks. For example, here’s a real basic first draft just writing down what I’m currently spending:

  • Income after taxes: $2500
  • Mortgage: $900
  • Groceries: $700
  • Gas: $100
  • Cable/Internet: $100
  • Utilities: $125
  • Credit Card Payment: $75
  • Dining Out: $200
  • Cell Phone: $150
  • Clothing: $200
  • Other: $50

If you add all of that up, you’ll find that I’m spending $100 more each month than I bring home. No wonder, my credit card balance keeps climbing. Now, here’s a revised budget based on that first draft (with the changes highlighted).

  • Income after taxes: $2500
  • Mortgage: $900
  • Groceries: $500
  • Gas: $100
  • Cable/Internet: $100
  • Utilities: $125
  • Credit Card Payment: $375
  • Dining Out: $100
  • Cell Phone: $150
  • Clothing: $100
  • Other: $50

Just by controlling how much I’m spending on food and clothes, I am able to put another $300 each month towards paying off the credit card! What’s really cool is that as soon as the credit card is paid off, that’s $375 a month ($4500 a year) towards savings. That’s almost a fully funded Roth IRA.

#2: Simplify your budgeting by using a tool (I like online tools)

Creating a budget and then tracking just how well you keep to your budget can be a time consuming task. So make your life easier by using some type of tool. Here’s a list of options.

  • Microsoft Excel provides a real basic way of tracking your spending. But requires you to enter all of your transactions and can be very manual. If you are interested in Excel, you can download some budget templates on Microsoft’s website.
  • Intuit’s is probably the most popular online tool. You can create budgets and sync your bank accounts so that Mint automatically updates your budget. You will have to “teach” Mint how to categorize your spending. But that’s pretty simple. For more info, check out this review of Or visit, which is free.
  • PocketSmith is another online tool that features cash flow forecasting. Basically, they guess how much money you’ll have for the next 6-12 months based on your budgets. PocketSmith’s big thing is that they are calendar based. The basic plan is free with options to upgrade for either $5 or $12 a month. Visit
  • Your bank may have a budgeting tool. For example, offers budgeting for its members through its online site.

I’ve outlined just four options. Though, there are lots of tools out there. So do some research and find a solution that works for you.

#3: Only use cash if you need extra control

Okay, so this tip really could go on the prior point of using a tool, but I think it warrants its very own section. There is a very old school method of budgeting, that Dave Ramsey advocates, called envelopes. Basically, after each paycheck, you divide your money up into envelopes marked Groceries, Mortgage, Clothes, Gas, etc. You then carry those envelopes around and only spend the money in the envelopes.

For example, if I have $50 in my Dining Out envelope, then I can’t spend more than $50. Once the money is gone, I’m done spending money. The concept of not spending money that you already have is becoming, unfortunately, a foreign concept in today’s world of easy consumer credit.

So if you know that you have a problem with overspending, then use this simple system to get it under control.

#4: Have a Blow Money category

Let’s all just be honest and acknowledge that you are not perfect and will probably buy something you shouldn’t have. The thing is, it’s not a mistake if you plan for it. Give yourself a small allowance of discretionary money. Meaning, money that you can just blow on whatever you want.

If you are just starting out, then your Blow Money category may only be $20. As you remove debt and increase your savings, then you can increase your discretionary or blow money.

If you have any tips that have helped you budget, then please let us know in the comments. Also, follow Rabbit Funds on Twitter if you haven’t already.

Posted in Budgeting, Cash Management, FeaturedComments (5)

“How much do babies cost?” A dialog with a friend

“How much do babies cost?” A dialog with a friend

Earlier this week, I wrote a post titled Losing your second income? 4 Ways to prepare, which is about some dear friends who are expecting a baby soon. They happened to read the post and notice that I was talking about them. So a discussion about the cost of babies and preparing ensued.

Piggy BankI though that the conversation would be beneficial to other parents who are expecting. So with permission and with the names changed to protect the innocent, I’ve copied and pasted part of our conversation below. I’ve also tried to break the conversation up into parts to make it easier to read.

Also, please leave your comments with advice on financially preparing for a baby. Thanks!

You aren’t the only one whose budget changes in unexpected ways

Sarah: So your article just came up in my twitter feed and I’m like “HEY! That’s perfect for us right now.” Lol. And then I started reading and it really is for us! :D Thanks!
Adam: LOL. You had mentioned months ago about a piece like that and I decided that it was finally time considering the circumstances.
Sarah: Agreed. It was time. And we’re doing pretty well on all of the tips, which I find comforting.
Adam: That’s good. It’s a big change.
Sarah: It’s that “reduce monthly expenses through good budgeting” that’s the trouble right now. I keep sending Jeff to the store to purchase the one thing that sounds edible at the moment, effectively throwing our meal plan and grocery store budgets out the window. But that will pass, right?
Adam: Yes, yes it will.

Take advantage of financial courses like Financial Peace University and 8 Pillars

Sarah: Right now Jeff’s taking advantage of a free class his work is putting on about finances. I’d originally planned on going but it turns out that my nausea hates me going pretty much anywhere, so he goes and updates me when he gets home.
Adam: That’s cool. Is it Dave Ramsey’s course by chance?
Sarah: It’s not. It’s called 8 Pillars. I like Dave Ramsey’s ideas, but I refuse to cut up my credit cards because we pay ours off every month and they feel like a form of short-term insurance if necessary. We’ve also maxed out our HSA accounts and retirement. We use Mint to track our spending.
Sarah: 8 Pillars is also good from what I hear. I haven’t taken it but I know several people in the finance industry that endorse it. I love Mint.

How to alleviate the expenses of a newborn baby

Sarah: We refinanced our condo to cut our monthly house payments by a lot (our interest rate dropped from 6.something to 4.125%, which saves a lot month-to-month) That’s been the biggest peace of mind thing we’ve done. I feel like the savings we’re getting will pay for diapers and all the other surprise baby expenses
Adam: One thing that I tell everyone that is expecting is to start buying and storing baby stuff like diapers, wipes, formula, food, baby wash, shampoo, etc. I recommend buying one thing on every grocery trip. That way you don’t have a large outlay when the baby first comes.
Sarah: That’s a great idea.
Adam: We did it with both Kennedy and Anya and then didn’t have to buy anything for the first several months.
Sarah: I’ll talk to Jeff about it.

Your grocery bill and clothing expenses will be largely impacted

Sarah: Adam, how much do babies cost? That’s our biggest question.
Adam: A lot ;)
Sarah: Like we can figure out how much diapers cost, but how many diapers do babies use? How much of our budget will they eat in a month? (And don’t say each kid is different, there’s got to be a ballpark)
Adam: I’ll give you some details of our finances.

  • When Erina and I were first married, we spent around $100-150 a month on groceries. Our budget is now $600 a month, which is only obtainable because Erina is fantastic at coupons. Caveats: we eat better than we did when we first got married and food costs have risen over the last four years.
  • Newborns go through diapers like you wouldn’t believe. That decreases as they get older. Anya goes through 2-4 in a day now. Breast feeding saves a lot of money (about $25 a week) and is better for the baby anyways.
  • Babies grow quickly so you will go through clothes very quickly. So buy a lot of cheap, basic clothing and have fewer nice outfits. Also, grandmas usually take care of this anyways.

You are better off over-estimating costs and getting a Costco membership

Sarah: Holy smokes, Adam. I think we were underestimating how expensive babies are. Lol. $600 on groceries per month?! And more than 4 diapers a day? Thank you for the insights, though, even if they are overwhelming
Adam: At first, babies can go through 6-10 diapers a day. Though it does vary by baby ;)
Sarah: OH my. That means that we’re going to have to change 70 diapers per week at first?
Adam: That is a possibility.
Adam: If you don’t have a Costco membership, you may want to consider one.
Sarah: We do have one, luckily.

Posted in Budgeting, FeaturedComments Off on “How much do babies cost?” A dialog with a friend

Rabbit Funds: The Best of 2010 and What it Says About Readers

Rabbit Funds: The Best of 2010 and What it Says About Readers

As we begin 2011, I find myself still reflecting on 2010 and what I’ve accomplished. Seth Godin recommends making a list of what we’ve “shipped” or completed this year. As part of my reflection, I’ve analyzed the traffic to Rabbit Funds to see what you, the reader, like.

Rabbit Funds LogoFirst, thank you. Without you and your readership, this site would not exist.

As I looked at the stats, I was a little surprised to be honest. Some posts that I took great pride in faired okay while other posts that I thought were average were really well received. Apparently, my crystal ball is broken.

I thought you might like to see some of the stats. So I’ve outlined below the 10 Most Viewed Posts and the 3 Most Commented Posts and added some thoughts from me about the stats indicate about readers. Let me know what you think in the comments.

The Top 10 Most Viewed Posts

  1. Money Hacks Carnival #104: Have you ever? – A lot of traffic actually comes from searches for Jack Nicholson as the Joker, which was featured in this post. I should therefore devote more time to celebrity gossip ;)
  2. 3 Reasons Dave Ramsey is wrong about Credit Cards – Not everyone thinks that every word that drips from Dave’s mouth is manna from heaven.
  3. 49 Expenses that are not emergencies – People like lists.
  4. 6 More ways to stop overspending and save money – With tough economic times, you are looking to change or improve your financial situation. Keep it up!
  5. REVIEW: and the new Goals feature – If you are still looking for reviews on, then stop it and sign-up today.
  6. HOW TO: Dejunk your home, sell stuff, and be happier – Wanting extra cash, you are looking for tips/advice on selling stuff in your home.
  7. Why Hubspot fails at social marketing –  Ranting and raving usually seems to get some attention.
  8. Dave Ramsey said to sell my stuff and payoff debt – Some more Dave love.
  9. 5 Ways too stop overspending – Debt isn’t fun and you are looking for ways to rid yourself of spending habits.
  10. INTERVIEW: Seth Risenmay, Founder of –  You are looking for and researching budgeting tools. Yeah!

The Top 3 Most Commented Posts

  1. Money Hacks Carnival #104: Have you ever? – Most of the comments are from other bloggers. So this post almost doesn’t count. But it does show that finance bloggers are grateful.
  2. 3 Reasons Dave Ramsey is wrong about Credit Cards – Again, it seems that folks want to have their say if it’s a controversial topic.
  3. 6 More ways to stop overspending and save money – It’s interesting that the top commented posts are also three of the most visited posts. I’m happy to see that you are looking at and engaging in discussions about saving money.

The Coming Year

Thank you again for helping to make 2010 a great year for Rabbit Funds and the personal finance community in general. As for 2011, I will work hard to continue providing great content and look forward to interacting with you. As always, your comments, suggestions, and feedback are always welcome.

To stay up-to-date with the coming posts about saving money, budgeting, and financial planning in general, subscribe to the Rabbit Funds RSS Feed or Follow us on Twitter. Good luck and good investing!

P.S. Rabbit Funds was recently selected as an Editor’s Pick in the 288th Carnival of Personal Finance hosted at If you are looking for some great articles to read, then go check out the line-up.

Posted in Weekly RecapComments Off on Rabbit Funds: The Best of 2010 and What it Says About Readers

Getting divorced? Financially preparing for what’s to come

Getting divorced? Financially preparing for what’s to come

As I prepared to write this post, I wasn’t sure of the tone that I should take since I feel that I should offer my condolences to half of you while congratulating the other half. And although I believe that divorce is sometimes the right choice, I rarely try to advocate it. So I have to wonder if I am enabling divorce by creating a how-to list. Either way, if you are getting divorced, then you need to financially prepare for what is to come.

Sitting by a pondIf at any point you feel that my tone is not appropriate considering the emotional turmoil that accompanies divorce, then simply understand that my purpose in writing this post is to help you with financial decisions. I am not a therapist or a shoulder to cry on. Please take no offense if I am to the point with my comments.

Complete and accurate financial records

Unfortunately, many divorce cases are fraught with deception. Further, it is not uncommon for the wage earner to have been hiding funds for years in secret accounts. Tax filings and W-2s help to establish how much money is coming in. Buy a banker’s box, hanging folders, and file folders (for organization) and make copies of everything. Hopefully, you and your spouse have been maintaining good financial records and all you’ll need to do is go to Kinko’s and start making copies. If you don’t have good financial records, then start going through old boxes or contacting employers, banks, etc.

Recording expenses during the divorce proceedings

You need to demonstrate what level of income is necessary to continue your normal lifestyle. This is very important if you are not the wage earner. For example, if you regularly buy gifts for family or enjoy eating out, then you need to establish a record showing that that is your lifestyle. If you go into the courtroom and just say, “I want $5000 a month,” without receipts that show that’s how much you normal spend, then you will have a difficult time getting that number.

Open new bank accounts and credit cards

As soon as the decision is made to get a divorce, then you need to open your own bank accounts and credit cards. This task may be especially daunting if you’ve never been very involved in your finances. As a side note, please always be involved in your finances. I’ve compiled a list of good articles and posts to read about banks and credit cards.

Bank Accounts

Credit Cards

One last note about your financial accounts. Make sure that you have designated primary and contingent beneficiaries on your investment accounts and where possible, have a someone else on your bank accounts. If you were to suddenly pass away without adding beneficiaries and co-owners, then your money may find itself stuck in probate for a very long time.


During the divorce and afterwards, you will be solely responsible for handling your finances. Budgeting entails categorizing the areas where you spend your money and then setting a specific amount of money that you are allowed to spend each month within the various categories. Do not mistake accounting, which is just keeping a record of where you spent money, with budgeting. Budgeting is an active process where you limit your spending, thus requiring discipline.

There are a variety of online and desktop applications that help you create a budget and then track your expenses. I do not intend to list them all here since there really are quite a few options. However, let me strongly recommend using, which is free. Mint is owned by Intuit and is therefore, well-funded and supported. For more info, read my review of

If you want to evaluate more options, then please read Budgeting Software: 13 Free Alternatives.

Your credit score and credit monitoring

In order to secure new credit accounts or a home, you will need to have a good credit score. Unfortunately, many Americans are unaware of what their credit score even is. First, a credit score and credit report are different. A credit report shows your credit history and a credit score is an indicator of how well you are able to manage debt or credit. You will need to review both.

Once a year, you are entitled to a free credit report from each of the three major credit bureaus. To obtain your report, simply visit Pull all three reports and make sure that everything is correct. Checking for errors is very important since your spouse’s bad habits may be credited to you.

If you have a particularly vindictive ex-spouse, then strongly consider signing up for a credit monitoring service that alerts you when something changes on one of your credit reports.

To obtain your credit score, create an account at You can check your credit score as often as you like. For more information about Credit Karma, read Review of Credit Karma – 3 Essential Questions Answered.

Should you Rent or Buy?

If you are able to stay in your current home, then you can probably skip this section.

Many divorcees are forced to sell their home and relocate as part of the divorce settlement. If you are forced to move, then you will face the age old question – Should I rent or buy? The answer depends on a lot of factors, such as how much of a down payment do you have? do you have good credit? do you have a steady and stable income? how long do you plan to be in this location?

For some help navigating this tough decision, you can use the resources below (all three include a financial calculator).


Divorce is miserable. I don’t care if you are the one leaving or not. Divorce is just not pleasant. That’s not to say that you may not be better off, but anything that involves lawyers is bound to keep you up at night. Therefore, it is essential that you take care to financially prepare yourself for what’s to come and not spend additional sleepless nights worrying about areas of your finances over which you have control.

Posted in Budgeting, Planning, FeaturedComments (1)

Dear Santa, I want a fully funded 401k please

Dear Santa, I want a fully funded 401k please

Dear Santa Claus,

First, let me say that I’m a big fan. Ever since seeing Tim Allen and Martin Short duel for your position, I’ve felt a renewed vigor and belief. So I thought I would drop you a line this year and make a few requests.

1) A fully funded 401(k)

Santa ClausI’ve tried to be a good boy. Before my company was spun off in the 2nd quarter, I diligently contributed to the company 401(k), despite the terrible array of investment options. But since the spin-off, we haven’t had a 401(k). In fact, Prudential is now sending me letters telling me to roll my 401(k) over to someone else. Apparently, I don’t have enough money for them. So I would have kept contributing if I could have. So will you please fully fund my 401(k) please? Don’t worry about the company match.

2) A Roth IRA for the wife

Once our 401(k) disappeared, I started making contributions to my Roth IRA. Unfortunately, my wife still does not have a Roth IRA. Having a shiny new Roth IRA at, let’s say, Vanguard with a couple of index funds would be great. Just something to get her going. She’s running her own business though, so maybe a SIMPLE IRA would be better. I’ll let you decide. I mean, you seem like you are pretty financially savvy. You’d have to be to finance the production of million of toys each year.

3) Better health insurance

Since I’m talking about my job, our health insurance isn’t that great either. I know that I should just be grateful that we have health insurance, but can you really call a $5000 deductible insurance? For example, my wife has scoliosis and had started going to the chiropractor regularly since the pain was increasing. She was just making progress when I had to tell her that she needed to stop going for at least a couple of months. We simply have no way of paying for her to go twice a week. I’m willing to do my part to earn some extra money, but a better health insurance plan would go a long way.

4) An emergency fund

As I’m sure you are aware, I’m currently studying to take the GMAT this Saturday. Realizing that I needed some extra help, I signed up for the Kaplan Advanced GMAT prep course, which I highly recommend to any of the elves looking to change careers. Paying for the GMAT, the prep course, two new tires, and medical bills has depleted our emergency fund. So maybe I’m pushing my luck, but a replenished emergency fund would make sleeping at night easier. Think of the children.

5) Dems to sign-off on tax cuts

I was planning to ask for extended tax cuts as well, but it seems that President Obama and the GOP have decided to give us an early Christmas present. I was just hoping for the extension, so the Social Security tax cut, the equivalent of a 2% pay raise, was a very pleasant surprise. Though, the Democrats need some persuading. So maybe you can threaten them with some coal.

6) Maybe an up-swing in the housing market

Last, but certainly not least, is there anything you can do about this housing market? Our home is two years old and we are underwater. Hoping that we were just a little underwater, we had an appraisal to find out what our home is currently worth. I think I was better off not knowing. What’s really frustrating is that we are responsible and our irresponsible neighbors who bought a home they couldn’t afford have caused home prices to drop. So maybe you could just leave Dave Ramsey’s Financial Peace University under everyone’s Christmas tree this year.

As you can see, we have a number of financial goals and challenges that we are facing as 2011 draws near. And although I’m gainfully employed, my pay just doesn’t quite cut the mustard.

Anywho, I’ve rambled enough.

Thanks Kris (can I call you Kris?)


P.S. A couple shares of Berkshire Hathaway would be cool too, but whatever.

Posted in Investing, Featured, RetirementComments (5)

REVIEW: Get Financially Naked by Thakor and Kedar

REVIEW: Get Financially Naked by Thakor and Kedar

Guys, do you remember that feeling you had about 50 pages into Twilight? That sudden realization that you were reading a chick book? Long before 40 year old women were passing out in theaters over Taylor Lautner, I decided to see what the Twilight rage was all about. I was thinking Bram Stoker’s Dracula. Instead I found myself reading Ann Brashares’ The Sisterhood of the Traveling Pants.

Get Financially NakedThat’s pretty much how I felt about 10 pages into Get Financially Naked. It’s a chick book! The two female authors are writing specifically TO women. It felt slightly awkward at times due to the sensation that I had stepped into Jane Austen’s world and Mr. Darcy was no where to be found. Or like that time my wife made me do prenatal yoga (I don’t want to talk about it).

What I liked about Get Financially Naked

Though, I do need to give the authors, Manisha Thakor and Sharon Kedar, some credit. The book was straightforward and certainly applicable to men as well. Here are a few highlights.

  1. It’s really a workbook. What really impressed me was that Thakor and Kedar asked you to complete written exercises within the pages of the book. Meaning, if you completed the tasks, you would have a clearer picture of your financial situation, attitudes towards money management, and a plan of action.
  2. It’s in plain English. Meaning, if you are not already financially literate, then don’t worry. You are not going to have to worry about calculating the alpha or beta for a mutual fund.
  3. It addresses your fundamental attitudes. The reason the book is titled Get Financially Naked is because it is about digging in, finding what your attitudes, where those attitudes came from, and how spouses can talk about money topics and get stuff done. Think of this book as a how-to guide for baring your financial soul. Changing a behavior is easier when you know the root source. Here’s a quote from the book that illustrates this point.

“Your current financial beliefs are like a series of short recordings in your head that influence your every interaction with money – for better or for worse.”

What I did not like about Get Financially Naked

In case you missed my satirical comments above – it’s a chick book! So if you are a female, then this is actually a big plus. But if you have a Y chromosome like me, then be prepared. A couple of other thoughts.

  1. I prefer a bit more depth. So I’m about to contradict myself. I prefer a book with a bit more technical detail and how-to info. So although plain English is good, if you like a little Greek in the mix, then this may not be the right book for you.
  2. Not enough commentary from the author’s husbands. Throughout the book, the authors’ offer personal commentary. Occasionally, they add a comment from their husbands. For a book about relationships, I feel that it lacks a balanced commentary. Understanding the attitudes that men have can greatly help women (the target audience).
  3. More of the same. If you’ve been involved in financial planning or reading books from authors such as Suze Orman and Dave Ramsey, then you’ve heard most of what’s written in this book. Though referring to point #1 of the reasons I like this book, Thakor and Kedar have more of a workbook approach than other authors.

Honey, we need to talk…

Honestly, where is this relationship going? When will we buy a house? Should we buy a house? What are we going to teach the kids? Authors Thakor and Kedar resonate well with many Americans by asking, “When did talking about money become more intimate than sex?” As couples, we need to learn to be more open and Get Financially Naked can be a great starting point for open and earnest discussion in your relationship. So if you are a woman looking for financial advice, especially as it relates to your husband, then I recommend this book.

Posted in Reviews, FeaturedComments (1)