All Forum Posts by: Mac F.

@Rigoberto Medina, this is just my experience, but when it comes to finance you two are either on the same page or you're not. I blow sales people all the time by saying 'lemme think about it.' A plan where you two agree on what, why, and how will have the greatest chance of success. And if momma ain't happy, ain't nobody happy. 

@Rigoberto Medina, are you married? If you are, and you and your wife aren't on the same page about debt, spending, and what your goals are, your chances of success are low.

One of the dangers of listening to a lot of personal finance advise shows is that you get conflicting advice, the advisor doesn't have experience with the personal issues you are facing (like pregnant wife/girlfriend, child with medical issues, irregular income, job might go on strike, etc...), or they really need to sell you something to pay their bills. Cobbling advise together from different sources didn't work for me.

Consider this-- if credit card balance transfers really worked to eliminate debt, would credit card companies offer them? Finding a program you are comfortable with, and then executing that plan is what works.

I would look for three things in a debt elimination program:

1. A proven track record of at least a decade

2. A support system

3. Address both the psychological and financial aspects of debt and spending.

I used Dave Ramsey's plan. It works. Focusing on DR's plan to the letter until you get through baby step three will get you into a position to invest.

Re debt consolidation, I believe DR recommends against it if you can't pay off the debt in under two years (assuming you really lean into the debt by cutting lifestyle and increasing income), that the savings from the lower interest rate will be largely negligible. I believe he also says that the consolidation gives a false sense of doing something which lessens focus on debt elimination. 

Four of the things I like about DR's recommendations compared to other advice (including a lot of the advice that I find here) is: less survivor bias, a heavy focus on mentioning the risks of various types of debt, the benefits of using cash, and a focus on wise counsel.

Re survivor bias, with real estate podcasts, seminars, and books-- you generally only hear the success stories. That's a poor measure of quality. DR's programs are heavily promoted to evangelical churches. While not a perfect measure, following up with the pastor about the difference in the well being of church members, as well as differences in tithes, are more objective measures of success than we generally get in real estate (or in mutual funds for that matter). In addition, DR faces significant competition in this market from other personal finance gurus that cater to this market and are less popularly well known (Blue, Burkett, Pryor, et al). Also, DR started his path as a guru as a financial counselor. Financial counseling is a significant part of his company's business aside from his radio show and books. That's also a reason I prefer the BP forum to many RE podcasts. On the forum people share mistakes they have made and get advice from more experienced people on how to correct or at least mitigate the damage. They also get advice on mistakes before they make them-- and overwhelmingly, that advice is given either without financial motive or from someone who is known in the BP community and is honest about how they make their money. Also, if the question gets asked a lot, that's a good indication that's it's a common issue.

Second, I find the focus on risk valuable. I have heard from a lot of well meaning RE advisors (including on the BP podcast) talk about taking 401k loans as a way to fund real estate purchases. I have never heard one mention the risks (of the debt in general and of the particular type of risk). I don't believe I've heard one of the more popular experts around here say they got their start in real estate with a 401k loan-- it was generally with a Nickersonesque frugality. DR, on the other hand, loves to point out risks. I want to know the trade offs and prefer to learn from people who've thrived even through downturns. If I just wanted a rosy picture, I'd watch the primaries.

Third, I like his focus on the benefits of using cash and delaying gratification until you have cash. I won't argue against benefits of making necessary business purchases with credit cards and using the points for a vacation. That can be a win, win, win (someone gets your business, the credit card gets interchange income, and you get points). However, those benefits should be weighed against the benefits of using cash: less chance of impulsive purchases, less debt risk, a greater focus on finding sales, and the ability to demand cash discounts. I'd rather have both tools in my belt. 

Fourth, I am a big fan of DR's focus on wise counsel. DR doesn't really tell you what mutual funds to invest in to get 12%, he tells you to use an advisor. This, IMHO is smart. A good advisor will help people understand an investment strategy that looks at their entire mutual fund portfolio (even the portions the advisor doesn't control), help get both people on the same page (if dealing with a married couple), and provide education on a strategy to move forward. If left to their own devices, most people (especially guys) chase last year's returns. Isn't it the same in real estate? Ever try to do tax planning with TurboTax?

He also tells people not to do things they don't understand. Not that that would happen to any of us, we're all awesome.

Finally, @George Gammon, you've been asked by several posters (including me) to let us know what your interest is, and what you're selling. I'm getting a Whitneyesque vibe from your pitches that I'm used to seeing from whole life salespeople. I hope you prove me wrong.

You're also not factoring in the method most people use to invest (dollar cost averaging), which allows the investor to take advantage of the market's volatility.

And you didn't factor in the dividend yield on your Nikkei returns. 

Let's not forget that, if you follow the @George Gammon method, you will also burn bellyfat like a BLOWTORCH. If you order in the next 30 minutes, you will also get his FREE guide GUARANTEEING you become IRRESISTIBLE to any member of the opposite or same sex you identify as being attracted to. Call your credit card provider to raise the limit on your credit card now, then call George. Operators are standing by!

Check out the BP podcast with Michael Becker

https://www.biggerpockets.com/...

In addition, Old Capital (Becker is one of the partners) has a podcast that focuses on multifamily. It might be worth a listen. 

Maybe compare:
--the cost of the carpet v. LVP
--the difference in the rent you expect to collect with each configuration
--the depreciation schedule of each as it applies in your tax situation (as I understand it, carpet is depreciated over five years, and LVP is depreciated over 27.5 years)
--the difference in cleaning costs when you have tenant turnover
--how much you'll need to put aside monthly to replace the carpet in five years v. LVP repair

This should give you a number. If, for example, carpet would bring you $50 a month less in net revenue but you value the improvement in your quality of life from the noise reduction at $100-- it's worth it. 

If we're really going to be fair about discussing risk and reward, and characterize people who follow Ramsey's principles as rubes, shouldn't real estate gurus be held to the same standard?
https://johntreed.com/blogs/john-t-reed-s-self-publishing-blog/65804099-best-selling-real-estate-authors

@John Olsen,  Rex Cauldwell's 'Wiring a House' is very good. 

IMHO DR sometimes overstates reasonable returns from the market-- I'd be more comfortable with 8-10% over the long term. And, full disclosure, I'm a value investor at heart who doesn't understand tech. My mutual fund returns have reflected this. 

However, I can't really disagree with any of his advise up to baby step three. His advice and methods on getting on the same page as your spouse, living on a budget, and having the proper amount and types of insurance are the best I've seen on those subjects-- those should be foundational IMHO.