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Dave Ramsey Ticks Me Off

Established Contributor

Re: Dave Ramsey Ticks Me Off

Lets see.
I took out a loan to get an education...paid that off.
Used my education to get a job...needed transportation (auto loan)...paid that off.
Saved up what I could over the course of several years while paying off the above mentioned debt.
Now paying off a mortgage and watching my equity grow.

Where would I be if i prescribed to Ramseys philosophy? Probably underemployed driving a beater still living with mom and dad.

The mans nothing more than a hypocrite ambulance chaser. Criticizing the banks for taking money from the foolish while he sells them books.
I have always joked I would become a millionaire by writing a book about how to write a "how to get rich book". That's where this man stands IMO. I don't think this man truly cares about anyone's financial well being, short of how it benefits himself.
Message 11 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


OpenG wrote:
Lets see.
I took out a loan to get an education...paid that off.
Used my education to get a job...needed transportation (auto loan)...paid that off.
Saved up what I could over the course of several years while paying off the above mentioned debt.
Now paying off a mortgage and watching my equity grow.

Where would I be if i prescribed to Ramseys philosophy? Probably underemployed driving a beater still living with mom and dad.

The mans nothing more than a hypocrite ambulance chaser. Criticizing the banks for taking money from the foolish while he sells them books.
I have always joked I would become a millionaire by writing a book about how to write a "how to get rich book". That's where this man stands IMO. I don't think this man truly cares about anyone's financial well being, short of how it benefits himself.

I paid for school by working my way though.

Bought my first car with cash. Fixed it myself when it broke.

Saved a lot.

Took a lateral career step, made some great (read: lucky) investments in both the stock and real estate market.

Bought a house with cash. Flipped it, made a lot.

Bought a house with that cash. Flipped it, made more.

Made an even better private equity investment with cash on hand. Made even more.

Etc. Etc. Etc.

 

Maybe you would be in the gutter if you didn't borrow early in life, but it is possible to get ahead without borrowing.


Gardening from 10/1/2017 to 4/1/2018.
Message 12 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off

Climbfire, when did you go to school? 

Message 13 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


tydawg wrote:

 

I think it is important for people in the younger age group to buy an AFFORDABLE home as soon as possible. I feel that too many would rather rent and save for their dream home rather than getting a cheaper starter home from the get go. If you did this you could pay off your starter house, and rent it out prior to moving into your dream house. Its a great way to building real estte wealth while not throwing money down on rent. Too many make the mistake of buying the most expensive house they can afford and then not being to enjoy the other things in life.

While rent may work in some situations, ie you are staying in town for a limited time. Most people would benefit more from purchasing.


Hey ty, great points. I breezed past this option for a few reasons.

 

1) You can grow wealth while paying rent. You need to invest in different markets, not just real estate.

2) Most real estate investors are under diversified. The person in your scenario would be overleveraged and under diversified.

3) I agree that homes need to be affordable, but affordable rent is no different. Even though I've made a lot of money in real estate, I don't expect that meteoric rise to continue. Buying in at the bottom and waiting for things to stabilize is fine, but it won't continue at this pace forever.

4) Being a landlord is a lot harder and just as risky as owning stock/bonds for little to no more real return.

 

No reason not to consider this option, but the rent vs. buy calculator can be used in conjunction with other tools to help you find the optimum projected return. If my wife didn't just like owning homes we would rent and save ourselves the maintenance trouble and unpredictability.

 

You're right about affordability, but I think you can change your perspective on the necessity of growing wealth through home ownership to be a little more clear headed. IIRC, you're pretty young. A few more resources will allow you to stay on the path of making all your decisions fully informed.


Gardening from 10/1/2017 to 4/1/2018.
Message 14 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


tydawg wrote:

Climbfire, when did you go to school? 


I'm 31 and worked before. I graduated in 2010.


Gardening from 10/1/2017 to 4/1/2018.
Message 15 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off


climbfire wrote:

OpenG wrote:
Lets see.
I took out a loan to get an education...paid that off.
Used my education to get a job...needed transportation (auto loan)...paid that off.
Saved up what I could over the course of several years while paying off the above mentioned debt.
Now paying off a mortgage and watching my equity grow.

Where would I be if i prescribed to Ramseys philosophy? Probably underemployed driving a beater still living with mom and dad.

The mans nothing more than a hypocrite ambulance chaser. Criticizing the banks for taking money from the foolish while he sells them books.
I have always joked I would become a millionaire by writing a book about how to write a "how to get rich book". That's where this man stands IMO. I don't think this man truly cares about anyone's financial well being, short of how it benefits himself.

I paid for school by working my way though.

Bought my first car with cash. Fixed it myself when it broke.

Saved a lot.

Took a lateral career step, made some great (read: lucky) investments in both the stock and real estate market.

Bought a house with cash. Flipped it, made a lot.

Bought a house with that cash. Flipped it, made more.

Made an even better private equity investment with cash on hand. Made even more.

Etc. Etc. Etc.

 

Maybe you would be in the gutter if you didn't borrow early in life, but it is possible to get ahead without borrowing.


Almost a mirror of my life..

 

Except I borrowed to get through school.

My dad helped me with first car. Had to pay someone elose to fix it when broke.

Didn't save a dime.

I also took a lateral career step, from one bad job to another.

 

On 2nd thought, nevermind.

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Message 16 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


mitchblue wrote:


Almost a mirror of my life..

 

Except I borrowed to get through school.

My dad helped me with first car. Had to pay someone elose to fix it when broke.

Didn't save a dime.

I also took a lateral career step, from one bad job to another.

 

On 2nd thought, nevermind.



I wish I could say that things turned out the way they did because I did something special, but that isn't true. I took some risks, and they worked out. Sure, things were calculated, but most people told me it was stupid to drop out of school, stupid to get out of my job as a contract DBA to go back to school, stupid to risk everything on a series of unlikely bets, etc. I wouldn't actually recommend anyone make the choices I made, but I'm glad I got lucky.

 

I know that fewer than 1% of people that make the same choices would end up with the same result, which makes life (in general) kind of crappy. I do sincerely hope that things get better for you, even if just with the bad job.


Gardening from 10/1/2017 to 4/1/2018.
Message 17 of 41
Valued Contributor

Re: Dave Ramsey Ticks Me Off


climbfire wrote:

mitchblue wrote:


Almost a mirror of my life..

 

Except I borrowed to get through school.

My dad helped me with first car. Had to pay someone elose to fix it when broke.

Didn't save a dime.

I also took a lateral career step, from one bad job to another.

 

On 2nd thought, nevermind.



I wish I could say that things turned out the way they did because I did something special, but that isn't true. I took some risks, and they worked out. Sure, things were calculated, but most people told me it was stupid to drop out of school, stupid to get out of my job as a contract DBA to go back to school, stupid to risk everything on a series of unlikely bets, etc. I wouldn't actually recommend anyone make the choices I made, but I'm glad I got lucky.

 

I know that fewer than 1% of people that make the same choices would end up with the same result, which makes life (in general) kind of crappy. I do sincerely hope that things get better for you, even if just with the bad job.


Thanks. But I gratuated HS in 1983 so all that was a long time ago. And to me borrowing was worth it getting a degree. Best thing ever. Tip: Don't ever become a vacuum salesman, it's not fun ;-)

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FICO® 8 Scores 790+
Message 18 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


climbfire wrote:

I don't ascribe to the Ramsey system, but I think there are some concepts worth discussing. For reference, I'm in my early 30's.

 

Regarding the inability to get a mortgage: consider renting instead of borrowing to own a home. My primary home is in a middle class neighborhood. Most of my neighbors can't afford to pay their mortgage and keep their home in reasonable condition. Structural damage, major roof leaks, animal intrusion, and general disrepair are all very common. A frugal young doctor next door and a wealthy retiree seem to be the only people not treading water. The NYT rent vs. buy calculator is a good tool if you're concerned about real wealth as compared to fulfilling desires. 

 

You can also save up and buy a house cash in hand. We did this, but we're very high earners for our region and bought a house that cost less than half of our annual take home pay. Most would have to wait much longer to make a purchase this way, but it isn't a bad thing to delay gratification.

 

This brings me to my next point: those with solid financial footing or the very wealthy benefit the most from the credit system. Yes, Dave Ramsey is super rich. He also borrows money. Whether we're discussing a margin account or a mortgage, no one benefits more from the time value of money than someone that has money invested. We took a loan on our second home despite having somewhere around 50x the cash needed to buy it. The cost of borrowing is lower than the earning potential of the money in our brokerage account. We will also occasionally smooth cash flow out by borrowing (on margin) from our brokerage to avoid a sale of an appreciated asset. You pay tax on the sale of an asset, but not on a loan against its value. The tax implications of selling appreciated positions are high for people in the top income tax bracket, so it is to be avoided while you're still earning income. Why not sell positions at a loss? We're already harvesting losses to reduce tax liability. Sometimes these losses get used for cash flow purposes, but are usually re-invested to save more in the long run. The losses used this way reduce more tax than we would pay in interest to borrow.

 

If you're not wealthy, credit can be a boon or a trap. Using it to your advantage means that you need to understand clearly the cost of borrowing, ownership, and the future value of the money you're borrowing compared to an alternative purchase or service. I strongly encourage people to take a close look at the actual cost of owning a home. It is a heck of a lot more than your mortgage payment would suggest to maintain and pay off your own place. Buying at the top end of affordability metrics means you'll have no room for the unexpected repair or unrelated financial crisis. Driving a car appropriately priced for your earnings sucks, as does only buying the things you can afford. It sucks a lot less than finding yourself in an untenable financial situation because you go over budget every month.

 

Knowing what I know now, I could have taken things easier, borrowed some money to live a nicer lifestyle, not worked through college, and been more than fine by this point. I wouldn't even notice the difference... However, I continue to live below my means even if I have the ability to live it up a little. Buying things I can't (or can barely) afford is still possible (we could buy a beach house, ski lodge, trade our single Lexus for two Porsche's, etc.) but we prefer to live within a budget, save the bulk of our income and not count on future growth of our earnings. We could retire today and live a nicer lifestyle than we do now, but we're probably going to wait until after the next financial dowturn to reasses our lifestyle.

 

The point tydawg made about paying a little more for a car that will be cheaper to maintain is a very good point, and I ascribe to the belief that if you can't do your own work you should follow this path. Total cost of ownership (or use) is what should be considered for both housing and cars. Regarding Irish's point about a 12% real return on investment: this is exactly why I think Dave Ramsey is wrong and leading people down a dangerous path. Counting on 12% either before or after inflation is hopelessy optimistic.

 

TLDR: I should have just left this whole comment as: check out the NYT rent vs. buy calculator before you decide you MUST own a home and try to realize that the whole credit system is functionally designed to help the wealthy at the expense of the poor. Saving, however, works well for everyone.


I really enjoyed your commentary... Smiley Happy

 

 

Sep 13, 2017
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Message 19 of 41
Regular Contributor

Re: Dave Ramsey Ticks Me Off


mitchblue wrote:

 

Thanks. But I gratuated HS in 1983 so all that was a long time ago. And to me borrowing was worth it getting a degree. Best thing ever. Tip: Don't ever become a vacuum salesman, it's not fun ;-)


 

I'm on a bit of a tangent, but I do agree. If I could go back, I'd take out student loans and get a mortgage (or rent) rather than pay cash for some of those early purchases. It would have left even more money on the table to invest. Assuming nothing else changed, I'd be in a better position now if I had rented, taken student loans, and taken the same risks I took. I'd be in a slightly better position if I had a mortgage on my residential investments and rented another place (especially since I could have worked on the homes faster.) A mortgage on my primary home still would have done better than a cash purchase, but renting comes out ahead in my personal situation.


Gardening from 10/1/2017 to 4/1/2018.
Message 20 of 41