Should you be listening to Dave Rasmey? - March 2024 (#10)

Hello dear reader! Back at it with issue number 10!!! Been a fun trip so far, thanks being along for the ride :) I was chatting with a buddy the other day and out of the blue he asked me, ‘What’s your take on Dave Ramsey?’ I’ve gotten this question so many times I figured I’d better put it to rest. Your dude Brent has some strong opinions here… fair warning…

Motivation

Farmers direct waters, fletchers fashion arrows, as carpenters shape their timber the wise mold themselves.

-Dhammapada verse 145

Money

Alright, so Dave freakin’ Ramsey… For those of you who’ve successfully avoided this man thus far in life, he’s a financial guru who preaches (and yes that word is appropriate here) some fairly extreme things. There are a few things he preaches I agree with. HOWEVER, there are several tenants to his philosophy that drive me bonkers. Let me list out some examples that bother me the most:

• Buy your house cash

• There is no such thing as passive income in Real Estate

• Credit cards are EVIL

• Don’t invest in individual stocks, buy mutual funds

Now before I go through and demolish each of these, let me say who I think Dave Ramsey is for. IF the following describe you, go ahead and listen to Dave Ramsey if:

• You cannot follow a budget to save your life

• Your credit is a disaster because you don’t pay your bills

• You think buying a new car is a right not a privilege

• You have a negative net worth

If these describe you then Dave Ramsey is your guy. Now if your someone that CAN follow a budget, is thrifty, and IS willing to put in a little work, here are my counterarguments to why some of his main points are ludicrous.

• Buy your house cash

  Ok, so lets do some math here. The average American makes about 59k a year. The average house costs 417k. Even if you could, by some miracle, sock away 20k a year (which would be incredible), it would take you over 20 years to buy a house cash! All that time you’ll be paying off someone else’s mortgage instead of your own. Also, historically it’s VERY possible your home’s value could have DOUBLED by then!

• There is no such thing as passive income in Real Estate

  So, I think he makes a good point here that at least initially when you get started as a Real Estate Investor it can be VERY hands on. However, I think that’s GOOD. It will help you learn the business and push you to actually make it passive. And while Real Estate will never be a ‘do nothing and make money’ business it can get dang close. I’m partnered on multiple, multi million dollar properties that pay me each month and require virtually zero of my time. Why? We have phenomenal property managers who take care of the work for us. And THAT is what makes Real Estate Investing passive, having great people.

• Credit cards are EVIL

  I use credit cards AS MUCH AS POSSIBLE!!! Why? POINTS BABY!!! In my family credit card points pay for our Christmas gifts and many of our vacations. We are very careful and tactical about the cards we use and are always trying to figure out how to get the best deals. We pay for what we can with credit cards and that give us points. I’m never worried about paying off my card for two reasons. 1. I NEVER put more on my card than I have cash to pay it off 2. I have my cards set up so that the balance is paid off each month AUTOMATICALLY. If your credit card won’t allow you to do this, get a new one that will! Credit cards are not evil. They are a tool. A technology. Neither can ever be evil, its all simply how they are used. And I use them to get free stuff! lol

• Don’t invest in individual stocks, buy mutual funds

  This one probably infuriates me the most. It’s downright irresponsible. Over 90% of mutual funds DO NOT beat an S&P 500 index fund. NINETY FREAKIN PERCENT. Mutual funds are what financial advisors sell for one reason alone… they make THEM money, NOT you. Get yourself an index fund or an ETF that tracks them and you’ll be MUCH better off. A quick google search reveals that, so it blows my mind that Dave Ramsey spouts of such garbage. MUTUAL FUNDS ARE STUPID!!! Even if you get yourself the ‘best ones’ as he claims. Just get yourself something that tracks an index fund and you’ll be much better off in the long run.

Ok, so at the end of the day I’m sure Dave Ramsey has helped a lot of people get their finances in order. If your someone who’s financial house is a complete disaster he’s probably your guy. This newsletter is for people who have a grip on their finances and want to grow their net worth, while having some fun along the way.

FINAL MEMES

That’s all folks!

Copyright (C) 2024 Ann Royal Advisors All rights reserved.
The information contained on this Newsletter and any resources available for download through this newsletter are not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, CPA, or financial advisor, nor am I holding myself out to be, and the information contained on this newsletter is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. Make your own choices and don’t sue me please.


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mmapada verse 145