Dave Ramsey being asked how to get rich

[Kal-El1998]

Yeah, I don't trust ramseys advice as much. It works for him now that he has money...but the advice he gives didn't make him rich.

 

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[Kevin88660]

Like, how does he make his money? What does he do for revenue? How did he get started? How did he go bankrupt? I will answer them if anyone cares.

I am interested to know.

 

[Lyinx]

What does he do for revenue?

I'd like to know your thoughts on this...

 

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[daivey]

This is my 5th business cycle so I have a different point of view on the RE market. I already posted most of this once. But, I put this out again...

A history lesson

To set the stage -- In 1990 I was putting my life back together after my husband had recently discarded me -- he was an executive-level consultant for an oil company, and I had been his trophy wife for a number of years. Professionally, I'd was a broker, investor, and a commercial RE appraiser -- way before appraisers were licensed. So, I saw the RE crash from the corporate perspective as well as from my RE career.

The first cracks in the commercial RE market came from my ex's company. They had been occupying all 48 floors in one of their twin towers. Their "test" convenience store and other shopping facilities were under the building. They sold those high-rise office buildings to a Japanese investment company in what seemed to be an overnight move. They bought land on the "wrong" side of the freeway and built a new building. This didn't make business sense to me. They had gone from a prime location to a much less desirable area of the city. I knew the players in that company and I was floored. Then, when they moved in, they only occupied 2 floors versus their previous 48 floors, plus retail space. How did they do that? They fired the whole army of secretaries, receptionists, and admin assistants. All remaining employees were given laptop computers (a new invention at the time) and a voice mail account. They were told to make an appointment for office space-time. The party was over.

And that was just the beginning. This trend cascaded throughout the office markets. It hit the A market first, and then the B & C markets. We had droves of "see-through" buildings -- high rises with no tenants. No office building tenants meant no one to shop in the retail stores and live in the downtown condos & flats. Downtown was a ghost town. (Are you listening to this, New York City?)

In the meantime, the Japanese stock market crashed. Those investors had taken out full-page ads to brag about their penetration into the Los Angeles RE market. They dumped their properties for whatever they could get in order to meet their stock margin calls at home.

And then it hit the warehouse RE market. Normal was to have 60 days of goods on hand for distribution. With computerization and new transportation systems (Fed Ex, UPS, etc), they now had on-time deliveries -- 2 to 5 days of goods on hand. The warehouse districts emptied out.

The 1980s had been a go-go time for RE -- lots of inflation. Everyone was living on OPM (other people's money) and most RE investors were highly leveraged. The early 1990s was the wall that they hit head-on. Friends lost everything. They ended up in bankruptcy court with their hats in the hands.

This time it didn't recover quickly. We had all that excess RE inventory to absorb. We, in the RE business, had a mantra. "Stay alive 'til 95." 1995 came and went. Nothing changed. We were still in the toilet in the business. No one could believe how low the prices went during those days.

And, I was hired by RTC, on some of their audit teams, to go in and take over the Savings & Loan and Thrifts that were holding all that bad paper. They fell like flies. The entire industry failed. Wall Street and the secondary housing market took over financing RE.

The recovery took the entire decade. I got a wild hair and I went to law school at night and on the weekends during the first half of that period of time. And I began my expert witness work and litigation support business in RE, using my degree. It was a horrible time for all of us in the RE business. I only survived because I was a fighter who was willing to meet the changes head-on.

So, that brings us to now. The commercial RE market is falling apart before our eyes. It's not just one sector -- it's everything. The housing market is in a bubble. People are moving, now that they have proved that they can work remotely. New York and other cities are ghost towns. RE prices and rents are falling. The rioters have burned down huge areas of many of our cities. Will they be rebuilt? And how? With whose money? What land uses will they have in those areas when they are done? Residential rentals are head-to-head with homeownership under the last tax relief bill due to the standard deduction. That creates a whole new market of single-family rentals. How will that affect appreciation in the housing market? And this time Wall Street and the bond markets are on the hook.

You see, I have more questions than answers.

house prices only go up!

 

[James Klymus]

How he continues to believe that all debt is irredeemable is beyond me.

I know so so so many multimillionaires that couldn't have done a half as well as they have without debt. I use it to carry large purchase orders routinely. I don't want to be limited in how much I can carry for a customer. That is what allows me to play with big a$$ customers.

With no debt, I would have started out selling a 50-100k at a time. With debt, I can sell this stuff by the traincar as often as the customer request.

Years ago, we also sold industrial capacitors for power factor leveling to companies running big electric motors. They would save them money in about 2-3 years... They would last about 20... Slam dunk right? Nope, not one customer until I found a bank to underwrite these capicators. Spread out over a 15 year payment plan they saved money in the first month and also improved the lifespan of their equipment. I only ever sold those with a payment plan. Never for cash.

Debt is awesome as far as I'm concerned. Especially with interest rates as low as they are and the dollar on the way down. Just use it wisely and don't personally consume anything you can't easily afford.

I'm shocked he hasn't admitted the gaping holes in the "zero debt ever" thing. Every big company in the world has payables on their books.

I agree with you, but his audience is average Americans. The idea of entrepreneurship is hard to sell, but the idea of putting you money in the magical mutual funds and IRAs is a much more appealing idea to the masses. Let others do the work with my money. It's also the reason why people stay stuck where they are, or worse, lose it all during a crash.

I think Dave has a lot of good advice, but I also understand who his audience is, and you and I arent in it.

 

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[Kid]

This thread got serious.
So to lighten it up a bit i'll say:
- I have problem with my money- how to invest them?
- Don't. Give em all to me - Problem solved!

 

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[daniel_m]

Nobody is right 100% of the time. Dave also thinks BTC and crypto is B.S. and that there is absolutely no situation in which using a credit card is acceptable. Most of us disagree with those points.

In general his advice is doing far more good than harm. That's why he is where he is today.

 

[WJK]

This makes me not want to read any of his books. Yikes.

What part of what he said put you off? Is it the part that wealth takes time and the deliberate act of creating a good character? Was it because he pointed out that you must live counter to most other people around you. Tell me -- what caused your "Yikes" comment?

 

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[MitchC]

Instagram

www.instagram.com

Here we have a video of a kid getting rich being told by Dave Ramsey to stop getting rich and go to college

 

[door123]

Dave Ramsey Takes a Deep Discount, Sells Franklin, TN, Home for $10.2M

The personal finance whiz Dave Ramsey has sold his estate in Franklin, TN, for $10.2 million, over $5 million less than he had initially asked.

www.realtor.com

Teach enough people to just survive financially in mediocrity, and you will thrive fantastically in luxury.

If I was a 9-5er, I would definitely listen to dave. He's a breath of fresh air for the 9-5er audience.

 

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[WJK]

Not everything he has to say is bad, I am not going to disregard that. In my own personal preference, I have decided to follow people who practice what they preach. Just a personal opinion. So sorry if have offended you WJK.

I don't think adopting different ideas from different people is bad either. I just want to focus on one author and their ideas for now. If I read and adopt too many ideas, I will definitely get into information overload or not practice all of the ideas I have read or have yet to adopt.

You didn't offend me. I listen to a whole host of different ideas all the time. I even learn from the guy down the block who does it all wrong. I don't believe I'll be overtaken by "overload". And I don't try to practice ALL the ideas I come across. I believe I am smart and old enough to pick and choose which one I can use to my benefit. Sometimes I morph a couple of ideas into a new solution or business idea -- like the business I'm starting this coming spring. Sometimes I think of ideas I ran across years ago and I put them into my current life. I was trying to say to open your mind and your heart. You have an unlimited capacity to vet new ideas.

 

[Black_Dragon43]

This is not a scam. It is simply the way that the banking system works.

So you mean that the Three Stooges have rigged the game so that they always win?

 

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[Guest-5ty5s4]

Daddy is paying for it. So why bother to listen to Dave.

Yeah, no, even if your dad is rich, the funds are not unlimited. Everybody's gotta learn this lesson sooner or later: even Jeff Bezos can go broke.

 

[Envious]

I don't see the point of this thread to be honest

 

[DeletedUser84644]

Like Dave Ramsey, I see acquiring debt as very dangerous. It's easy to get into and very painful to get out of. Yes, it takes a lot of capital to build a business or buy real estate. But, it becomes a quick-sand quagmire that takes on a life of its own. You need money to grow your business -- then the business is financially stressed when the payments come due. So, you must borrow more -- in order to do more business -- which heaps on an additional burden of payments.

I don't understand why you're saying that when I've established before that debt only becomes bad when you use too much leverage and use it to consume wealth and not produce it. Look at Grapham Stephan for example. He got rich using debt to buy properties to rent. He has his debts properly managed and not over leveraged. Although his debt is long term he has the income to continue their payments should his tenants default. He made a video on this:

View: https://youtu.be/FbuiPcgLyt4

 

[Kevin88660]

I didn't work his specific program, but I did like his message. And I agree. Being debt-free is empowering and a very strong position. I'm RE. I was part of a local landlord's association (before the virus made us stop meeting) and they totally disagreed. They were into leverage, OPM (other people's money), and RRRR. I've been in the business a lot longer than any of the other members, so I have experience with different market conditions. I've tried a few times to tell them about that history. They wouldn't listen to me. They told me I was stupid -- I just didn't know anything. So, I shrugged my shoulders, shut up, and continued to prepare for the next RE crash. I hope they make it through these next few months and years. A repeat of the 1990s would be very painful.

There are a lot of people investing into multiple real estates these days.

The narrative is simple. Low downpayment and hence high leverage, with good rental yield. The rent is enough to cover the mortgage payment and as time pass you will own the property while someone else pays it for you.

What do you think are the pitfalls of such investment thesis in today’s environment?

 

[sfarieri]

Here in this video we see an average Joe asking Dave Ramsey how to get rich and his response:

View: https://youtu.be/8gu7ZsOH3x0


Clearly not what made him rich in the first place.

This makes me not want to read any of his books. Yikes.

 

[davidv9kids]

Dave Ramsey Takes a Deep Discount, Sells Franklin, TN, Home for $10.2M

The personal finance whiz Dave Ramsey has sold his estate in Franklin, TN, for $10.2 million, over $5 million less than he had initially asked.

www.realtor.com

Teach enough people to just survive financially in mediocrity, and you will thrive fantastically in luxury.

It's good for some isn't it. 5m hit and still smiling

 

[Ivan Koretskyy]

I hate the vague talk that people eat this shit up.

“Live a life but be wise about it"
“Do what you’re doing now, gather knowledge”
“Be very intentional with your money”
“That will lead you to generosity”

Oh for real? I knew this shit when I was 18 years old how is this ground breaking?

And that muscle analogy for get rich quick? Yikes.

 

[hellolin]

I think that's where his don't use debt mentality came from. He used too much leverage on properties, resulting in him becoming bankrupt. I disagree with his stance on debt. Debt is good if it creates wealth and pays for itself with time. It's bad if used for consumption. But I find it very ironic that he makes using debt for a house an exception. So it's ok to use debt for an asset that's practically being used for consumption yet everything else is bad? All because "It's your biggest asset". Since when did someone's personal residence ever made someone a millionaire / billionaire? It wouldn't make any sense to call it your biggest asset when the 1%'s biggest asset is their business.

"He used too much leverage on properties when it was not cool to do so unlike right before 2008, resulting in him becoming bankrupt. "

Fixed for ya, nowadays that's what everyone is doing and no one ended up like him. "Back then when bailouts ain't the flavor of the month".

 

[WJK]

"He used too much leverage on properties when it was not cool to do so unlike right before 2008, resulting in him becoming bankrupt. "

Fixed for ya, nowadays that's what everyone is doing and no one ended up like him. "Back then when bailouts ain't the flavor of the month".

I don't know. I've seen the RE market meltdown more than once over the years. And it's a cycle that happens regularly. I'm seeing people doing what they did during the end of the 1970s, again the 1980s, and then again prior to 2007/2008. It all makes me head shy.

 

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[PureA]

So not Dave, clearly.

What characters are a good source of financial advice?

 

[Guest-5ty5s4]

I don't know. I've seen the RE market meltdown more than once over the years. And it's a cycle that happens regularly. I'm seeing people doing what they did during the end of the 1970s, again the 1980s, and then again prior to 2007/2008. It all makes me head shy.

All of the problems seem to be when people leverage up on properties they intend to sell, instead of getting long term debt on properties that produce cash flow.

Notes that are due, the need to sell by a date, balloon payments, those are all things that screw investors.

If you avoid those you have way less risk, it would seem.

Investing > speculation

 

[WJK]

All of the problems seem to be when people leverage up on properties they intend to sell, instead of getting long term debt on properties that produce cash flow.

Notes that are due, the need to sell by a date, balloon payments, those are all things that screw investors.

If you avoid those you have way less risk, it would seem.

Investing > speculation

Even those who thought they were being smart went down too in the past. The market went sideways in a heartbeat. A bunch of my friends ended up in bankruptcy court with their hats in their hands. And then they started over again when the market started to come back.

Apartment buildings & commercial loans can have "loan calls" when the market value of the property falls. I know this personally. I consulted for banks during some of those dark days. I helped them with their compliance issues for their major asset portfolios.

 

[ZackerySprague]

I'd rather listen to MJ DeMarco and his books than to listen to someone who doesn't actually preach what he teaches.

Actually had a conversation with a high school friend of mine and his dad was talking about Dave Ramsey... I completely ignored what he said.

 

[Guest-5ty5s4]

Even those who thought they were being smart went down too in the past. The market went sideways in a heartbeat. A bunch of my friends ended up in bankruptcy court with their hats in their hands. And then they started over again when the market started to come back.

Apartment buildings & commercial loans can have "loan calls" when the market value of the property falls. I know this personally. I consulted for banks during some of those dark days. I helped them with their compliance issues for their major asset portfolios.

Yeah I don’t understand this! Is it possible to get a loan without that? Doesn’t make any sense - because if you are making your payments on time, why does the “value” of the property matter?

Seems like a scam by the bank. They take your property at the bottom of the market.

They do the same thing with commercial business loans - they call them “covenants” and will actually control how much revenue you must earn and how profitable you must be. Kind of insane when you’ve made every payment on time for 15 years but they want to call your loan when the whole country is in a recession... that’s when you leave them. Usually some very drawn out explanation is all they want though.

 

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[WJK]

Yeah I don’t understand this! Is it possible to get a loan without that? Doesn’t make any sense - because if you are making your payments on time, why does the “value” of the property matter?

Seems like a scam by the bank. They take your property at the bottom of the market.

They do the same thing with commercial business loans - they call them “covenants” and will actually control how much revenue you must earn and how profitable you must be. Kind of insane when you’ve made every payment on time for 15 years but they want to call your loan when the whole country is in a recession... that’s when you leave them. Usually some very drawn out explanation is all they want though.

It works like this:

Say you buy a property for $100,000 and you obtain an 80% loan.

The market value of the property falls to $80,000.

The bank will do an internal appraisal of your property on a regular basis. They are only allowed to have an 80% loan on that property under the Federal banking rules. They must either get you to pay down the loan to $64,000 or they must put up reserves for that difference. So, they send you a letter demanding that you pay that loan down to $64,000 which totals $16,000 in pay down money on the loan. If you fail to make that payment, then they foreclose on your property.

Single-family loans and small units, 2-4 units, have different rules. They are not triggered by the same rules.

This is not a scam. It is simply the way that the banking system works.

 

[ZackerySprague]

Not everything he has to say is bad, I am not going to disregard that. In my own personal preference, I have decided to follow people who practice what they preach. Just a personal opinion. So sorry if have offended you WJK.

I don't think adopting different ideas from different people is bad either. I just want to focus on one author and their ideas for now. If I read and adopt too many ideas, I will definitely get into information overload or not practice all of the ideas I have read or have yet to adopt.

 

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[ZackerySprague]

Definitely will, Thanks WJK!

 

[Kevin88660]

there's really nothing new to learn from him unless you're so sidewalk that you're basically sitting on the ground.

There's a certain type of person who needs to listen to Dave Ramsey, but most of them won't be on this forum.

There's a girl I know who's 30 years old, has been in college for about a decade, changing majors, getting advanced degrees, switching masters programs, etc. She just told my friends and I that she had to take a $1000 loan to pay her rent on her luxury hi rise apartment in downtown. No joke.

Dave Ramsey is for her. But she will never listen to him!

Daddy is paying for it. So why bother to listen to Dave.