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Clearly those people have to be small thinkers and not understand real estate at least. Try building $40-100 million buildings with no debt. It’s called leverage, and every wealthy entrepreneur uses it.
Big difference between business debt and personal debt.
Years ago the logic was farmers should not retire with debt.
A neighbor, who was a risk taker said,........." If my neighbor is debt free and has a net worth of $500,000, is he better off than me who still has debts of $500,000 but my total worth is $1,500,000."?
Farmers can have a string of bad years and lose the family farm. When you have a home/business where you can lose your home after a few unfortunate years of bad weather, you get pretty conservative with debt management.
When I was 30, if something bad happened with my job, I could walk across the street and find a better one for more money. At age 50, my industry mostly vaporized to Asia and I started bumping into job instability issues compounded by age discrimination. Leverage is fine if you have a secure income stream. That $1.5 million net worth isn't real until you turn it into green pieces of paper. Stock markets correct. Real estate markets correct. Jobs don't last forever. "Life happens" things like health events and divorce are bumps in the road everyone experiences. If bad things happen when you're 30, you have time to recover and catch back up. I'm 60. I don't have that time. It's the same logic as a farmer not retiring with debt. Debt is fine at age 30. You're risking catastrophe if you're highly leveraged and reliant on an income stream and assets holding their value at age 60.
Big difference between business debt and personal debt.
Not... really. I mean when you’re starting out you’re not going to be lucky enough for your business debt to be non-recourse loans. They’re going to be recourse loans so it is personal debt, i.e. they’ll go after you if you don’t repay it.
And ultimately money is money, so why would a wealthy businessman who makes a lot of money be so stupid as to buy or build a $5 million house and pay in all cash?! He could at least pull out $2-3M and reinvest into far better, income-generating assets. So even on a personal level if you don’t understand debt then you don’t have access to good investments. I’d rather have a mortgage on my house at 4.5% because I have investments available that are 10-20% or higher returns expected. It would be financially irresponsible not to take the banks free money and use it to generate better returns. The absolute worst any money is going to make is 6% for me.
What the hell cars are they buying that cost 1100/month and 400/month to insure??
lol, I was thinking the same thing. one thing I love about the c-d economy board everyone knows some one who can't afford the luxury car and everyone lives in a mcmansion except them.
Sorry if this has been said (wasn't going to read through all 51 pages)
I've never been very impressed with the Dave Ramsey disciples. Most only care about being debt free without realizing that your net worth is more important. I don't buy for a 2nd that all debt is bad debt. If I'm in debt and paying 3% and have an opportunity to make more (with a minimum of risk), I'll have no problem being in debt. It has served me well over the years versus people that were so overly conservative that they basically took no risk and got little in return.
That's me JJOnes,
I am more interested in growing my net worth. I am in no big hurry to pay off my mortgage and plan on happily retiring with a mortgage.
Right now my investments are yielding around the 10-11% return. my mortgage is 3.75%.
Now generally I put about 35k miles on my car, courtesy of working 50 miles each way and driving on most of the family vacations. I've brought new cars usually because I wait and get 0% interest deal. My current car I brought new, a 2012 infiniti g37. I put down 50% got 0% financing from the dealer for 24 months. I'll keep it for maybe 4 more years, turn it in and decide if I get new again. I currently have about 160K miles on it.
needless to say I am not a Dave fan or follower. I have a hard time understanding how people will let a perfect stranger dictate their financial life but that's just me.
Not... really. I mean when you’re starting out you’re not going to be lucky enough for your business debt to be non-recourse loans. They’re going to be recourse loans so it is personal debt, i.e. they’ll go after you if you don’t repay it.
And ultimately money is money, so why would a wealthy businessman who makes a lot of money be so stupid as to buy or build a $5 million house and pay in all cash?! He could at least pull out $2-3M and reinvest into far better, income-generating assets. So even on a personal level if you don’t understand debt then you don’t have access to good investments. I’d rather have a mortgage on my house at 4.5% because I have investments available that are 10-20% or higher returns expected. It would be financially irresponsible not to take the banks free money and use it to generate better returns. The absolute worst any money is going to make is 6% for me.
Quote:
Originally Posted by eliza61nyc
That's me JJOnes,
I am more interested in growing my net worth. I am in no big hurry to pay off my mortgage and plan on happily retiring with a mortgage.
Right now my investments are yielding around the 10-11% return. my mortgage is 3.75%.
Now generally I put about 35k miles on my car, courtesy of working 50 miles each way and driving on most of the family vacations. I've brought new cars usually because I wait and get 0% interest deal. My current car I brought new, a 2012 infiniti g37. I put down 50% got 0% financing from the dealer for 24 months. I'll keep it for maybe 4 more years, turn it in and decide if I get new again. I currently have about 160K miles on it.
needless to say I am not a Dave fan or follower. I have a hard time understanding how people will let a perfect stranger dictate their financial life but that's just me.
Uh huh, and unless those companies go belly up, most people with a diversified portfolio make back everything (just like the last recession which was considered one of the worst). Same holds true with home prices. Most people that I know that take even a modest amount of risk fare better than these "debt free" wonders.
needless to say I am not a Dave fan or follower. I have a hard time understanding how people will let a perfect stranger dictate their financial life but that's just me.
The thing is, you're an intelligent and motivated person who uses their brain. At any given time, nearly 70% of Americans are either living payday to payday and/or are going further in debt (survey of 5000 households that Jean Chatzky had done specifically for her book "The Difference". I doubt the numbers have changed much since the book was published). Some of that 70% will not be chronically broke or in debt their whole lives, but a lot will be.
Dave Ramsey's plan is for the majority of people who cannot / will not manage their money. It's definitely flawed, but it's the simplest plan out there that works. In short, it's for the majority of people who tend to be ignorant, unmotivated, not very smart, or all of the above. Many of the 30% of the population that isn't living payday to payday has a hard time comprehending how anyone would need Dave Ramsey's advice. When you figure something else out on your own, you think everyone else should be able to do so as well, but it often doesn't work that way.
Heck I know people that buy $50,000 trucks when they make $35,000 per year. I paid $18000 cash for my camry V6 with 23K miles.
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