Posted on 12/28/2024 1:11:54 PM PST by Responsibility2nd
In a podcast, personal finance guru Dave Ramsey boldly declared that even if offered $1 billion at 0% interest for 10 years, he wouldn't take it. That's right, not even a billion dollars with no interest could tempt Ramsey to break his cardinal rule of never borrowing money.
……
"Mathematically, it might make sense," he admitted. "But I built a career and financial success on avoiding debt and I'm not about to change that now. Borrowing money is an unnecessary risk and I'm not interested in playing that game."
(Excerpt) Read more at finance.yahoo.com ...
All debt requires one to personally sign. Even non recourse debt.
“Actually I get it. Ramsey’s core audience is financially stupid people. So he has to spout financially stupid advice.”
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I’m not offended that you consider me to be financially stupid, taking stupid advice from a stupid person.
Stupid as I am, we are debt free, mortgage paid off early (in 12 years) and are saving +50% of our income for retirement. We have two years worth of expenses in a HYSA. Both of us maxed out our 401Ks this year (and last year) at the +50 provision. We fund a taxable brokerage account and stack metals. Will be purchasing a new car probably Q3 or Q4 2025 paying cash. Retirement is about 2 years away with a +7 figures invested. We did this following the stupid Ramsey Baby Steps.
Not too bad for us being stupid-no?
“He is talking to his audience, mostly people who struggle to control their spending and fall deeply into debt ... If they took out a $1 billion loan with 0% interest ...”
Yep. No one is going to loan someone $1B with 0% interest anyway. I think he performs a good service for those who can’t manage their finances. Bless him.
I charge on average $5000 on credit cards every month. But always pay off full balance every month. And I get 2 to 3% cash rebates every month for using the plastic card.
It’s called hyperbole to make a point.
Borrowers are beholden to others.
I met a couple who had a restaurant during Covid-19. Business was bad and they used up all their retirement savings to keep it open.
That was a bad decision. Should have just shut it down and gotten jobs until the Covid-19 problems solved. Could have kept their retirement assets and jobs would have payed their personal expenses.
It depends. For example, I added solar to my house. I don't think it saves the world or any of that warmageddon religious cult stuff. I like being more energy self-reliant so the Dims' stupid energy policies have less impact on my budget. My lender's rep had to ask his manager if I could. I told him that if he says "no" then I'm paying off the mortgage tomorrow and they can quit getting interest from me. (In some areas solar isn't popular and the fear is that it can reduce the value of the home.)
To date I have more than enough investments to retire, but not enough on top of that if for whatever reason I have to use part of my investments to pay off the mortgage immediately. When my investments reach that level I'll have the best of both worlds.
To those who say why pay off a 3.3% rate mortgage when my mutual funds grow way faster than that (about half of it tax free in Roths), I say that I'm in agreement and I'm not paying off my mortgage unless necessary. I'm keeping that money invested.
To those who say that the borrower is slave to the lender and being debt free removes that control someone has over you, I say that I'm in agreement and I won't count myself well enough off to retire unless I'm in a position to pay off the mortgage immediately if there's ever a disagreement between the lender and me.
It depends. For example, I added solar to my house. I don't think it saves the world or any of that warmageddon religious cult stuff. I like being more energy self-reliant so the Dims' stupid energy policies have less impact on my budget. My lender's rep had to ask his manager if I could. I told him that if he says "no" then I'm paying off the mortgage tomorrow and they can quit getting interest from me. (In some areas solar isn't popular and the fear is that it can reduce the value of the home.)
To date I have more than enough investments to retire, but not enough on top of that if for whatever reason I have to use part of my investments to pay off the mortgage immediately. When my investments reach that level I'll have the best of both worlds.
To those who say why pay off a 3.3% rate mortgage when my mutual funds grow way faster than that (about half of it tax free in Roths), I say that I'm in agreement and I'm not paying off my mortgage unless necessary. I'm keeping that money invested.
To those who say that the borrower is slave to the lender and being debt free removes that control someone has over you, I say that I'm in agreement and I won't count myself well enough off to retire unless I'm in a position to pay off the mortgage immediately if there's ever a disagreement between the lender and me.
You’re taking offense when none was intended to you.
But let me ask you. Would you borrow $5,000 and invest it to earn $10,000?
Of course you would. Unless you are in fact stupid as you say you are.
So I made up material, with modifications based on questions people have asked over the years, and some tips others have suggested that I hadn't thought of. In many ways the material is the result of a collaboration of the people who've attended.
I think Dave Ramsey’s show is based on normal people, many of whom are deeply in debt for the wrong reasons - so he needs to keep his image and his message untainted
For ZERO risk, you could take $1 billion at 0%, buy completely risk-free 10 year US Treasury bonds, collect at least $43 million a year in interest, and pay back the $1 billion when the bonds matured.
In fact, that’s a very simple version of how the Federal Reserve bails-out its member banks with QE
“But let me ask you. Would you borrow $5,000 and invest it to earn $10,000?”
I will answer that by telling you that our last debt was a truck $32K financed at 1.9% for 60 months. We paid that off in 26 months.
While i personally don’t care what you do with your money I (we) dug ourselves out of a rather deep pit lined with debt some of it low interest debt. On that day when we could say that everything we own, we actually own not co-own with a bank, was one of the best days of my life and the beginning of financial independence for us. One lesson I learned was that the banks are in business to make themselves money not to make you wealthy. If you disagree that is your right and privilege. If you borrow $450,000 to buy a home on a 30 year mortgage and 29 years 11 months 29 days later have a one dollar balance, that one dollar gives the mortgage lender the legal right to take your home from you.
Have a nice day!
Contrary to what a number of people have posted on this thread, US bonds are not “risk free.” Extremely low risk, maybe, but not risk free.
Debt is a tool. Like margin investing. He sounds like a Great Depression survivor.
Cool!
I’m starting a program next month to help at risk high school kids.
I want to show them there is hope in their futures and that they can be homeowners.
I’m putting some material together right now.
Stepping into the deep water!
In this case they are - the durations are matched. 10 years on your loan and 10 years on your Govt bond "asset."
Besides very low probably risk that the US Government collapses in a revolution or war, defaults on bonds, or changes its currency from Dollars to some other currency - are there other risks you perceive?
They might never see their money again though.
So you financed a truck? You ignored Ramsey‘s advice ? Good for you.
But you took money that could easily earn more 5 percent to pay off a 1.9% loan?
No offense again, but that’s stupid. As stupid as your $1.00 mortgage comment
Yeah. Keep following Dave Ramsey. He has made millions off of people like you.
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