The Dave Ramsey Dilemma

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The Dave Ramsey Dilemma

Chad Tate
Grapevine, TX · Member since 2016 · 19 posts · 8 votes

As a newbie with limited capital from which to begin investing, and a Dave Ramsey fan, I'm struggling with how to justify REI knowing he teaches to do everything with cash, including REI. In fact, it would seem that any strategy I'd have to consider to get started would be 180 degrees from what he teaches (I'm liking BRRRR). He went from millions to bankrupt with REI so it's hard to disregard his experience and concerns.

Any help with thinking this through is greatly appreciated!

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Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
10y
Chad Tate there are plenty of threads on this topic of you do a search. The bottom line is everyone needs to find their balance of risk tolerance and need for fast returns. Debt is not uniformly evil but for the audience Dave reaches no debt is probably the right message. If you are an alcoholic zero alcohol is a good policy. But if you can drink responsibly social drinking is fine and even beneficial. Same with debt. If you are smart and Use Debt wisely and carefully it can be a good tool to grow wealth. If you leverage every last penny with no reserves a bad cycle will bankrupt you. You need to find your own balance rather than blindly follow any books or even this site. Good luck
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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

     Id suggest ignoring Dave Ramsey, who lost lots of money on real estate, and try reading The Millionaire Next Door or something to that effect.  

    The consensus is that Mutual Funds, which Ramsey pushes are generally terrible investments due to the fees involved. But Dave makes money off of pushing people to his financial adviser network, who then sell them on mutual funds.  Dave makes money on mutual funds and not on real estate, which is why he pushes them. Dave also likes to quote unrealistic returns for the stock market.  He regularly quotes an average that is several points higher than the historical average, because it fits his narrative. 

    Without question, the easiest wealth creation device in the world is owning a piece of leveraged real estate in a high demand market.  Owning just a few properties in places like Boston, San Francisco, DC, in the high demand locations of those markets,  will make you a millionaire or multimillionaire far quicker than just about any other way. (Well maybe being a seed investor in a big tech company, but lets face it, thats for Peter Thiel and not the average every day Joe)

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  • Account Closed
    kelowna · Member since 2019 · 19 posts · 3 votes
    6y

    i was kind of getting that vibe after chewing on a few of his podcasts. i have read that book as well as probably 20 others that all kind of backed up your opinion on real estate however DR was just a different voice i recently came across and i generally try to see if there is merrit in different options. thank you for your time. 

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    Ramsey is unrealistic and cant match adequately for REI. I like Rick Edleman much better from a financial perspective but he's not what I deem a real estate investor.

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  • Adam Christopher Zaleski
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    6y

    Dave Ramsey gives great advice for the typical American who is really bad with money. Dave does not recommend credit cards because the typical person carries a balance and pays a ton of interest. I have never paid one cent of credit card interest in my lifetime. However, I have received 10K+ in free plane tickets. About 99% successful people in business are going to carrying some sort of healthy business debt. 

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  • Ezra Vaoifi
    Wholesaler · Queen Creek, AZ · Member since 2020 · 2 posts · 0 votes
    6y

    @Chad Tate for us, debt free real estate is the way to go. (If you have the patience for it.) “Live like no one else, so later you can live like no one else” was a Dave Ramsey quote that has helped my wife and I tremendously. We plan on going the all cash, debt free real estate route for the rest of our lives. No stress, no mortgage, and you actually OWN the place. 95% of people with rentals OWE more than they OWN, and once something like COVID-19 or something else crazy happens, it’s better to actually own something. Intense discipline eliminates the stresses.

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