Information on the life insurance industry…

1) No baby step #1 ($1,000 in the bank as an emergency fund, to avoid future debt) - “they have NO emergency capacity, other than credit on their cards”. $1k is intentionally small (I’ve heard him say) to keep you from being comfortable - that is, motivated to kill those debts.

2) “Debt snowball” was not being followed (i.e., debt should be paid smallest to largest, not highest interest rate to lowest interest rate). That $5k credit card should be wiped out in the first month or two. The idea is to replace the depression with excitement over knocking out the first debt, while freeing its minimum payment to attack the second smallest debt.

3) The $11,000 debt should probably be retired by selling the car and buying a “beater” until the debts are cleared and baby step #3 (3-6 months income in an emergency fund) is done. Dave’s usual analysis goes something like, “Would you go *buy* an $11,000 car when you’re already over-extended?” Of course not, so don’t keep it.

4) As you noted, the budget was not minimized (e.g., cable TV is not a necessity, utilities too high, etc.). As I understand Dave’s plan, you pay only the basics - “beans and rice” food, mortgage, utilities, and such, but every other penny you can scrounge attacks those stinking debts.

5) An extra job or two should be taken in the evenings with “gazelle intensity” until the debt is retired. It’s just for a year or so - then you’re free of debt, and can “live like no one else”.

You friend has $47k in debt with over a $100k base income. It should take less than two years to wipe that out. But your friend can’t live until the debt is gone - and all the savings in the world won’t change that.

I personally believe your plan is extraordinarily dangerous, because by investing in precious metals, her principal is at risk. Would you really borrow $50,000 on a credit card to buy gold? That is the precise equivalent of what you are advising her to do.

And more importantly, would you take financial advice from someone with no training, finance degrees, or track record???

I think your friend is incredibly foolish, but that’s just my opinion. I wish her (and you) the best anyway.