Why is that?
Just because you pay cash doesn't mean it sits in a sock drawer until then.
It's not designed for people who don't know how to do math. It's designed for people who need to get organized and change their mentality/ behavior.
Dave Ramsey Millionaire Study
- Thread starter HDRider
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Just because you pay cash doesn't mean it sits in a sock drawer until then.
It's not designed for people who don't know how to do math. It's designed for people who need to get organized and change their mentality/ behavior.
Dave
Well-known member
One of the habits my millionaire friend has is he never carries bill smaller than $50. He says if he had smaller bills he might stop at a convenience store and buy a bag of chip or a soda. He says it is one thing to spend a 5 or 10 dollars. It is another to break a 50 or 100 to do it. He rightly says if you are spending several hundred or thousand dollars you will think seriously. Those expenses will rarely cost you because they are thought out. But the nickle dime spending which you pay no attention to will add up to a lot over time. And as I said he is a very hard worker. He goes at a run all the time. He packs a very large lunch which he packed at home for much less than convenience store prices. He works hard and also plays hard. He is not afraid to spend money on doing what he enjoys.
Named'em Tamed'em
Well-known member
I'm far from rich, my pension is what I've saved and continue to save. But I do know a couple ridiculously rich people as friends.
1 owns a brush shed shipping evergreens all over the country, 78 and still works didn't finish HS. If you didn't know him you wouldn't know except he's the first to buy a round.
2 Dresses worse than me, shorts and old T's but drives BMW`s with a Jack Russell Co pilot . His company has $56.6 million annual revenue , other than the cars you wouldn't know.
3 went to school with him, 2nd generation $$ just finished a 256 yard stamped driveway for him. $2.5 million house and he looks like it. You just never know my wife says I dress like I'm homeless. Some people need less to get by.
1 owns a brush shed shipping evergreens all over the country, 78 and still works didn't finish HS. If you didn't know him you wouldn't know except he's the first to buy a round.
2 Dresses worse than me, shorts and old T's but drives BMW`s with a Jack Russell Co pilot . His company has $56.6 million annual revenue , other than the cars you wouldn't know.
3 went to school with him, 2nd generation $$ just finished a 256 yard stamped driveway for him. $2.5 million house and he looks like it. You just never know my wife says I dress like I'm homeless. Some people need less to get by.
BFE
Well-known member
My home place, which I started on in 2000 with a six acre purchase, added 51 more in '04, built a house, machine shed, small cattle barn, and a grain bin shortly after, less than $200K not counting interest. Paid for in a little under 20 years. Conservatively worth 450-500K in today's market, all bought with loans. By the time I could've saved the 200K, it would've been worth much more.
Also, farm real estate will generally sell once in a lifetime, sometimes less. The original 6 was deeded to the Woods family by the state of Illinois in 1818. I was the first owner outside the family. When opportunity knocks, you have to answer the door.
We farmed for old widows who passed on, I could've bought a few hundred acres at 1-1400 per from 20-30 but was scared of the debt load. 46 now, if I took that chance it would be paid for as well and there's a consistent retirement income, $100-150 cash rent on 250- 300 acres is not bad money.
It's personal spending that gets you in trouble. I agree with Dave there. Buy things that make you money, not cost you money.
Ebenezer
Well-known member
The killer on saved money is current interest rates if you are depending on a bank account or a bank linked investment to let your IRA or whatever grow. The super low interest rates are great for borrowing but a chill for folks trying to live off of what they saved. So do they retired up their risks in types of investments, try to balance or what?
Just as creating high prices for gas and crude oil is done to enhance the perceived returns on green energy, the hurting of folks with money saved is a means to increase the dependency on the government in the future when inflation is rampant. Now the push to know what you have in the bank and every time you spend $600. Soon it will be $600 for a hamburger. Give him and his cronies another six months and Joe will make Jimmy look like a brain surgeon.
Just as creating high prices for gas and crude oil is done to enhance the perceived returns on green energy, the hurting of folks with money saved is a means to increase the dependency on the government in the future when inflation is rampant. Now the push to know what you have in the bank and every time you spend $600. Soon it will be $600 for a hamburger. Give him and his cronies another six months and Joe will make Jimmy look like a brain surgeon.
Stocker Steve
Well-known member
Getting "wealthy" is pretty easy. You just have to move to where others have less than you.
He lays out a plan to mortgage homes. He does not say you have to pay cash for your home.
You have to look at the big picture he is trying to teach. No consumer debt, savings, and not using debt as a crutch for every little thing.
If you have no debt other than your house/ land payment, have money going in to savings and retirement you are good.
Most people just don't want to make the sacrifices in the now to save cash. That's a mentality they have to break. The spend along until the want or need some thing and just get a loan and figure out where to get the money from after.
Again, he is teaching to people who are in trouble so he can't give any slack. It's like telling an alcoholic... just have one beer in the evening... it won't work. If you do what he says, get organized with budgets and plans, understand why, then when you get in good shape you can vary a little from the line with buying assets or a single stock or some thing.
D2Cat
Well-known member
What Dave teaches boils down to discipline. Whether it's financial, physical, spiritual....many folks have had life too easy to know what it is, and change is difficult.
For example he opposes credit cards. Nothing wrong with CC if your disciplined, but without discipline it causes a wreck!
He tells people to pay off the smallest debt first. Logically one should pay off the largest interest rate first. His purpose is to get some momentum in managing their dept and paying off the smallest generates a more positive outlook. Then take the funds paying off the first dept and applying that to the second (along with the regular payment) to get the process going faster.
Many people get into financial trouble because they make decisions based on emotions. He's trying to take the emotions out of the decision and use logic. Understand a college degree leaving a student loan the can not be serviced with a job in the degreed field, buying vehicles that consume 1/3 of one's income, homes costing more then can be afforded. He's just trying to help those folks.
For example he opposes credit cards. Nothing wrong with CC if your disciplined, but without discipline it causes a wreck!
He tells people to pay off the smallest debt first. Logically one should pay off the largest interest rate first. His purpose is to get some momentum in managing their dept and paying off the smallest generates a more positive outlook. Then take the funds paying off the first dept and applying that to the second (along with the regular payment) to get the process going faster.
Many people get into financial trouble because they make decisions based on emotions. He's trying to take the emotions out of the decision and use logic. Understand a college degree leaving a student loan the can not be serviced with a job in the degreed field, buying vehicles that consume 1/3 of one's income, homes costing more then can be afforded. He's just trying to help those folks.
Lee VanRoss
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Four new houses in the neighborhood in the past year. Stocker, I hope you feel better now.
greybeard
Well-known member
Keeping Up With the Cowdadians...
Stocker Steve
Well-known member
I would have to move if I was in a neighborhood like that.
Lee VanRoss
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You are. Your neighbors are just polite.
Nesikep
Well-known member
While it's certainly true that a lot of people spend recklessly, there's also a diminishing middle class and for good reason.. you cannot save money these days (I mean save value).. If interest rates stay where they are, it's a great time to have debt for an asset that double in price every 5 years, but who's to say it'll stay that way? We've been going from one financial crisis to another as an excuse to keep printing money, what's to say early 1980's interest rates won't be seen again?
Discretionary income.. that thing many people don't have anymore! Did you know that in 2008, people were spending a greater percentage of their after-tax income to service their mortgage (at 2% or whatever) than they did in 1984 when interest rates were 18%?
A millionaire nowadays is nothing to be exceptionally proud of, a complete idiot that doesn't spend much only needs to have a union job to do it.. a million doesn't buy you a modest house in most cities these days.
It doesn't help that it's more expensive to be poor, you can't afford a new vehicle so you get screwed with an old vehicle that needs repairs, and now even old vehicles are not easy to repair anymore..
Discretionary income.. that thing many people don't have anymore! Did you know that in 2008, people were spending a greater percentage of their after-tax income to service their mortgage (at 2% or whatever) than they did in 1984 when interest rates were 18%?
A millionaire nowadays is nothing to be exceptionally proud of, a complete idiot that doesn't spend much only needs to have a union job to do it.. a million doesn't buy you a modest house in most cities these days.
It doesn't help that it's more expensive to be poor, you can't afford a new vehicle so you get screwed with an old vehicle that needs repairs, and now even old vehicles are not easy to repair anymore..
OP
OP
HDRider
Well-known member
There seems to be a lot of frustration in your post. That is understandable, but I am not sure what it is directed at. Is it income disparity, or inflation, or the high cost of living, lack of wage growth. Help me better understand. Those are all legitimate grips. Is it all of them combined?
With rising inflation we should expect high interest rates. That is the only tool the Fed has to curb inflation. High interest rates will kill our economies. Credit will dry up. Spending with stop in crucial sectors like housing.
It sucks, but makes prefect sense. Houses have gone up while wages have stayed relatively flat.
The median annual earnings in the US is almost $35K. It would be quite a hill to climb to save a million dollars earning even twice that. Less than 12% of the US workforce is unionized.
Nesikep
Well-known member
it's all of them combined... Corporate interests writing their own rules, tax loopholes for those that can afford a team of accountants and lawyers on retainer
Just one example is Amazon and Ebay... why is it cheaper for me to buy something from China than the postage alone for me to mail it to my next door neighbor?
Amazon gets deep postal discounts, which makes it uncompetitive for anyone else, not only that, but they now have their own delivery service in populated areas (read: areas where you can make a profit).. so they use USPS just for the money-losing packages.. not only for their own goods, but they're a courier now as well, taking profitable packages away from USPS which is legally obliged to deliver to all areas
The list goes on
faster horses
Well-known member
Friend bought a house in 2006. They had money in the stock market and bank interest was less than what they were making in the stock market. They were advised to take out a mortgage and leave the money they had invested in the stock market alone. This goes against Dave Ramsay's teaching and I mentioned that to them. They took the mortgage from the bank and left their investments alone. We all know what happened in 2007. They lost a lot of $$$ and owed on their house. Dave Ramsay gave good advice and they would have been much better off to have followed it. But, who knew...
Rafter S
Well-known member
I think @HDRider missed one. It's almost always less expensive to make repairs to a used vehicle than it is to make payments on a new one, and in any case, buying a vehicle new is rarely a good financial decision. The value drops too much as soon as you leave the dealership with it.
Yup. As I've heard him say many times, keeping money in investments while borrowing money adds to risk, which too many people (like your friend) don't take into consideration. If they had taken the money out of the stock market to buy the house, then started putting the equivalent of a house payment back into investments every month they would have been much better off.
We don't fit into Daves target audience. He gives allot of good advice and is enjoyable to listen to though. It's hard to find a single "advisor" for our situation so I listen to several and use what works best for us.
People try to over think think this stuff. It's real simple. Pay your bills and go to work or put your money to work. No one gets wealthy on credit card points or the difference between their stock market money and their home mortgage rate. Quit playing with that nonsense and go out earn it some where.
