The Total Money Makeover by Dave Ramsey


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  • #1
I am proud to say that I've recently purchased Dave Ramsey's book titled The Complete Money Makeover. Since earning and analyzing how to make and keep money is one of my life's greatest pleasures, I'll be discussing what I learn from Dave down below. According to him, nothing should be groundbreaking to anyone. It's all common sense. We'll see about that.

Warren Buffett's Advice On Skinny Dipping

The Skinny Dipping chapter in Dave Ramsey's book titled, The Total Money Makeover is excellent. It's right up my alley. I love financial talk when it's hard hitting. For some reason, I love it most when it tells people to stop acting like children and begin being responsible. So much of our country is totally out of control when it comes to money. For example, I was just reading through a few posts on a pet forum. One person contacted another person about buying a puppy. The buyer asked the seller if they could lower the price of the dog. If not, perhaps the buyer could pay $50 up front and then owe the rest of the money. It'll be paid at a later date. Do you see anything wrong with this picture? I see a few things. I don't think I need to explain what they are.

Warren Buffett says, "When the tide goes out, you can tell who was skinny-dipping." This can mean a few things, but I'll tell you what I think it means. It means that people can do a lot of things with their money, but only some of those people are doing things that are durable and long lasting. If the entire stock market is rising and some investors are making risky purchases, when the market falls again, those people are going to lose a lot of money. The prudent investors will perhaps lose money, but not nearly as much as the risky betters will. I remember many years ago when I first began investing. I bought some mutual funds from a company in Rye, New York. They were totally stupid investment. I paid way too much in broker fees, but I had no idea what I was doing. Anyway, when I spoke to another company a year later about making some different purchases, the sales guy from the company made a few suggestions. I said something to the effect of, "Well, actually I'd rather choose what I buy. I've made some good money over the past year with my recent picks." Do you want to know what the guy I was talking to said to me as a reply? He said, "I'm sure you did. Everyone did well last year." A rising tide lift all boats, or something like that. Basically, my investments were rising with almost all other investments. I had no idea if they were sound investments or not. If they were, then good, I'd be fine. But if they weren't, I'd be in for a world of hurt during a downturn.

Dave's big on having a solid foundation from which to manage money. He says that it's like a marriage. If you build a relationship on hopes and dreams as opposed to sound judgement and good sense, it's bound to fail. How many times have you seen newlyweds profess their love for one another? Almost all of them do. It's strange that just about half of them get divorced. If all of these newlyweds were so in love, what happened? I'll tell you what happened. The ones who got divorced didn't use their heads when they should have. People rush into things. They do what makes them feel good at the time. They become emotional. The problem with all of these things is that while they're rewarding and fun, they're only so for the short term. When reality kicks in and you watch as your husband leaves his smelly laundry piled up in the corner of the bedroom or your wife scream at the neighbors from across the front lawn, you wonder why you didn't use a bit more prudence with one of the biggest decisions of your life.

Managing money is similar to managing relationships. It shouldn't be done with emotion. It shouldn't give you a high. It shouldn't make you feel as if you're going to win. Everyone has heard of a hot stock pick along the lines somewhere. Heck, two weeks ago GameStop (GME) was trading at close to $350. Today, it's $50. A few weeks before its peak, it was trading at $20. I am embarrassed to mention how many friends called me asking what they should do. Each one of them had a handful of money to throw around. The problem was, each person who called me, did so when the stock's price was $350. They all wanted to "get in" at the peak. Classic human behavior. Of course I gave each one of them a virtual slap across the face because of their stupidity. My negativity makes me feel bad at times, but my friends worked for their money. I didn't want to see them waste it like that. Hunting around for the big win is no way to manage finances.

Dave says that if you've got a bad map, you're going to miss the party. That is so true. I can't even tell you how many friends I have who have no idea what they're doing with their earnings. If it weren't for their retirement accounts, they've have no savings at all. People out in this world talk about freedom a lot. I hate to say it, but given the freedom to manage one's own retirement, we'd see a lot of very broke retirees out there. It takes a strong person with the right amount of fortitude to manage their own investments successfully. Doing so is actually easier than you would think. If someone were to simply put their savings into Vanguard's S&P ETF (VOO), they'd earn a 12% return, on average, year over year, over the span of their life. It's really not difficult to make money in this world. The problem is, managing the money someone makes so there's actually money to manage. To put it simply, people have a real tough time with saving their money.

Overspending that doesn't feel like overspending because things are going well is still overspending. What a great line. Here are two examples of what this means: let's say someone got a raise at their job, so they decide to take their entire family out to dinner at an expensive restaurant. While there, they buy the entire bar full of people a round of drinks. Question: was this foolish behavior? What it overspending? Yes and yes. Just because the individual in question could count on making more money in the future, that doesn't mean they should haphazardly throw their current money away. Here's another example. It has to do with the GameStop stock situation. Earlier in the year, a rational market had valued the stock at $20 per share. This is what the company was deemed to be worth. Because of some shenanigans on the internet, the stock price was driven up to $350 per share over the span of a few days. There was no basis for this stock price increase, yet thousands of investors flocked to the stock to make purchases. Obviously, since the stock is only priced at $50 per share today, a lot of people lost a lot of money. The question is, why in the world did they buy any in the first place? How did they justify their purchases? Did they think the stock price was actually based on earnings and assets or were their purchases based completely on emotion? This is what Warren Buffett was referring to with his skinny dipping statement. The tide had gone out on GameStop and those investors who made foolish investments were caught skinny dipping.

The world is full of good investment advice. The problem is, it's also full of bad advice. And to compound that problem, human nature makes it very difficult to make sound decisions when it comes to money. For some of us, the word "no" doesn't exist. People want it all these days. They feel that if they can't have it all, they must be doing something wrong. They feel as though they need to work harder or somehow scheme certain things into existence. While it's good to work hard and to show ambition, those things can be detrimental under the wrong circumstances. In some ways, our society is lacking restraint, temperance, self-control - you name it. It's lacking and it's lacking bad.

Ask yourself this question: if you were laid off today, would you be okay with that? How long would your money and your lifestyle last? If you wanted to, could you retire today? If not, why not? If you suddenly had no income, how would your life change?

I've got a friend who has done an extraordinary job with managing his finances through the years. I strive to merely act as if I emulate him. My friend isn't wealthy by any means, but he is secure. He's made it one of his life missions to be the way he is. Part of the reason he's so careful and prudent is that he doesn't like being owned by anyone or anything. He doesn't want his job to control him. He doesn't want the fact that next month's bills are coming in to control him. He enjoys making his own choices. He doesn't like doing certain things and he's made sure that he'll never have to do them. My friend is someone I look up to. Through the years, he's built up assets that pay him a steady income. His assets are secure and built upon true value. They're not pie in the sky ideas or half baked fads. He does well no matter if times are good or bad. The markets don't bother him. They can go either way, he still gets paid. I think he learned how to live from his parents. They were of the depression generation. They've seen things not even they enjoy recalling. I've spoken to these people and trust me when I say, they know where to put their money. They've been their though the lies our world has fed them. They don't get swept up with enthusiasm. They understand how wealth can evaporate overnight when invested even under ideal conditions. These people are savvy.

In later posts, I'll be delving into different methods for using intelligence, patience, and skill when it comes to investing and managing money. Anyone can do what I'll be writing about. All it takes is some discipline and common sense. And restraint. Don't forget around restraint.

Do you have any stories about financial mismanagement you'd like to share? If so, please do down below. The more we learn about what not to do, the more we learn what to do, so don't be shy about talking about your experiences or the experiences of those you know. Also, if you've got any stories of successes, please share them below too. I'd love to read them.

The Total Money Makeover Challenge

This is the first real section of Dave Ramsey's book called The Total Money Makeover. I'll be covering this entire section in this thread, post after post. But before I do that, I'd like to briefly discuss how much I can identify with the intro to this section. Dave starts off by talking about how "there was too much month left at the end of the money." About how he felt the crushing sense of responsibility for his wife and children. And about how he still felt like a little boy who was terrified of his new mortgage payments, utility bills, and prospects for saving for his children's college educations and his own retirement. I can totally get all this because I've felt somewhat like he felt. Every guy has. Well, every guy who has found himself in a relationship with a house to pay for. Stuff gets real, real fast.

I remember about a week after I bought my first house. It was back in the early 2000s. I had never had to pay a mortgage, homeowner's insurance, and property/school taxes before. I was mowing the lawn and when I stopped to take a break, I stood in the shade looking at the front of the house. As I did this, a strange overwhelming fear crept over me. Owning and paying for a house was completely different than renting. While renting, you always have the opportunity to run away and hide. If you went broke, you'd walk away and leave your landlord in the lurch. That's not too terrible. He'd have to find a new tenant and that's that. If you stop paying for your mortgage and taxes, all sorts of bad things happen. That type of thing follows a guy around for a good long time. As I stood there in my front lawn looking at my new house, I began to sweat. And the sweat wasn't because I was working outside. It was because I firmly realized that if something bad happened and I couldn't pay for the house anymore, my wife and I would become homeless. That's a lot to realize. That sort of thing will change you, that's for sure.

I have to tell you though, had I been single standing there in front of my house, I wouldn't have cared about not paying for it in the least. The reason I was overcome was because I had realized that I was responsible for another person's well being. I can't even imagine how I would have felt if I had both a wife and children inside of that house. I can't even imagine how I would have felt if I had come inside after mowing the lawn to see them playing in the living room or cooking together in the kitchen. While most people think that sort of thing is a wonderful scene, to many men, it can be utterly dreadful. Yes, it's nice to see people you love having fun and doing things together, but the pressure it puts on a provider to keep it going is immeasurable. The weight of the world truly feels like it's on a provider's shoulders. Many men don't talk about this and I'm not sure they should. It's just a fact of life. The trick is to stay clear of the things that can take you down. That, and prepare for the worst like crazy.

I know a lot of men who are single and who live alone in cabins in the woods. Some of them don't even have electricity in their cabins. Yes, it's true. More people than you think live like this. When a person is single, they have very little responsibility. Lots of these guys are perfectly happy. It's only when they decide to get married that playing the game begins. Things need to be a certain way. Kids have to go to the right schools. Spouses are to be kept happy. These things can cost an extraordinary amount of money. And if people aren't kept happy, fights begin and divorce happens, which costs even more money. So keeping everyone happy is a goal, if you want to stay sane and maintain a semi-decent balance in your bank account.

I actually don't want to get too far ahead of myself because Dave begins talking about what I alluded to in his next section. I'll read what he's got to say and then continue on down below. I'm looking forward to it!


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  • #2
What's a (Financially) Normal American Family?

Have you ever asked yourself what financial "normalcy" is? If you were to ask yourself that question today, what would you say? Let's go through a few areas of personal finance right now. I think this'll be enlightening. To complete this exercise, I'll pose some questions and then answer them directly afterward. I'll think of the average 40 year old American married couple as I ask and answer the following questions.

1. Do they own a house? Yes.
2. Do they owe on a mortgage? Yes.
3. Have they purchased brand new cars? Yes.
4. Did they take loans to buy those cars? Yes.
5. Do they have children? Yes.
6. Do they hope for their children to attend college? Yes.
7. Are they saving for the children's college educations? Yes.
8. Are they hoping their children get married? Yes.
9. Are they saving to pay for those weddings? Yes.
10. Does each child have his/her own bedroom? Yes.
11. Does their house have more than one bathroom? Yes.
12. Do they own credit cards? Yes.
13. Do those credit cards have a revolving balance? Yes.
14. Do they own smartphones? Yes.
15. Before purchasing their house, did they research school systems? Yes.
16. Have they ever felt they had too much debt? Yes.
17. Have they ever felt they have too little savings? Yes.
18. Have they ever wanted to quit their jobs? Yes.
19. Do they experience financial stress? Yes.
20. Have they ever fought with one another about money? Yes.
21. Have they ever felt that they don't earn enough pay? Yes.
22. Have they ever felt overwhelmed by their finances? Yes.

Well, there you have it. The average American couple, no matter if they live in San Diego, New York City, or Tallahassee. It's always the same thing. I've talked to countless adults about their finances through the years and it really is like listening to a broken record. I stopped giving advice in this regard about ten years ago. It's useless. The common theme wasn't that any of these people wanted to own fewer and smaller things to fix their stressful lives, it was that they wanted more money to buy more things and experience less stress doing it. Not one person I've ever spoken to has told me that they plan on giving up any of their belongings or changing their way of living. It's been remarkable. The American mind is a strange thing. It's thinking is a strange phenomenon. From what I've gathered through the years, the average American can't stand being a slave to their government, their banker, or even their own self, but apparently that aversion isn't strong enough to initiate any consequential change.

To continue on with this exercise, let's now ask the same questions to a single man who lives alone in a cabin in the woods of Kentucky. If you picture this man who isn't married and has no children, how many questions do you think he'd answer yes to? Personally, I think he'd own a house, perhaps have a mortgage or some sort of a loan on it, maybe doesn't have enough savings, and has wanted to quit his job. That sounds about right. Those things are common among us.

Here's my question: do you think all the financial agony the average American feels every single day and night is worth it for the life he or she lives? If you say yes, it is worth it, why do so many of these people want to change? Why are millions of financial self-help books sold annually? Why are so many people stressed out when it comes to money? What's the problem when it comes to changing their behavior? Why do so many people seem to be stuck?

I'll tell you why. One word describes all of this and that word is desire. Did you know that when it comes to getting in trouble with personal finance, the trouble begins not by spending on needs, but by spending on wants? These people didn't need a brand new car, they wanted one. And that want forced them into a loan. They didn't need extra bedrooms for their children, they wanted them. And that want forced them into a larger mortgage than they would have had otherwise. They don't need their children to get married, they don't need their children to go to college, they don't even need their children. They want all of these things, which pushes many of them right into a financial hole. And this financial hole makes them do irrational things, such as buy big mortgages in high tax towns with splendid school systems, set up savings accounts for colleges and weddings, and lease cell phones to make their lives more fun. It's insane how much money the average American spends every month today as compared to just 20 or 30 years ago. I'm shocked every time someone tells me about their bills.

Did you know that back in the 1960s, 1970s, and 1980s, every child didn't have his or her own bedroom? It's true, there were these things called bunk beds, which enabled multiple children to live among one another. And because parents purchased homes with fewer bedrooms, they didn't need to spend lavishly on the home itself. Also, back during this time, there were very few brand new cars on the road. I remember driving alongside clunker after clunker as an adult. In today's world, recent high school graduates are driving nicer cars than any I've ever driven in my life. There was also a time when everyone in the world wasn't able to communicate with one another at any time of day from anywhere on earth. This actually wasn't very long ago at all. Today though, to obtain this privilege, one needs to either pay hundreds of dollars for a smart phone or lease one from one of the cell phone companies. On top of that monthly payment, they also have to pay for service, which is quite the chunk of change. Whether it be weddings, college educations, big mortgages, car loans, vacations, fast food, cable TV, whatever, I honestly don't see any way out for many people. They simply want too much.

If you ask anyone who has ever been to college what classes they took as a freshman and sophomore, they'll likely tell you they attended math, English, social studies, science, history, foreign language, and some others. Basically, they took general education courses that are available at any two year or four year college across the nation. These course are all the same. Psych 101 is Psych 101, no matter if it's taken in North Carolina or North Dakota. The same for Algebra and English Lit. Actually, these course are so generic, you, as a student, can play them on DVD and get the same thing out of them as if you were sitting in a classroom. Trust me, I've taken my fair share of these types of classes. So if all these courses are the same no matter where you take them, why in the world are parents and students paying four year prices for two year requirements? I'll tell you why. Because the kids want it. They want to go away to school and hang out with their friends. They want to hunt down future husbands and wives. They want to drink. They want to smoke. They have to have the "college experience." An experience, mind you, that was just invented a few decades ago. It's not like this experience was described in the Bible or anything. The same is true for home ownership. The American dream of white picket fences was invented during the last 100 years, after World War Two. It's not like this is some sort of thing that Aristotle contemplated with his students. This is Americanism at its finest and so many of us are falling for it. Falling right into our very own financial misery.

It happens though. I get it. What was once simple has become much more complex. Once upon a time, people simply got married. Today, people get pre-engaged and throw a party to memorialize the event. And then they do the same for their engagement, but this time, they hire a photographer. Then they get married - more parties and photographers. They have honeymoons, pre and post. They throw anniversary parties, bridal showers, baby showers, bachelor and bachelorette parties, birthday parties, bridesmaid luncheons, rehearsal dinners, holy communions, cub scout graduations, eighth grade graduations - the list goes on. Do you think any of these parties makes anyone any happier? I can tell you from experience that some of the most depressing and miserable people on earth throw the most parties.

Let's get back to the guy who's living in his cabin in Kentucky - alone - for a moment. Yes, he may not be as fulfilled as the average American is, but I can guess that he's much more at peace with himself. He probably makes a bit of money and pays his meager bills with it. He doesn't have a large cabin, but he's happy with what he's got. He most likely isn't in love with his job, but that doesn't matter. He'll keep his eyes peeled until he finds something better. To him, he's living exactly the life he's thinks he's supposed to live. He hasn't been infected with the virus of desire. You know the one - the one that keeps us at the mall or on, shopping for the next fix.

The greatest difference between the guy who's living in the cabin and the average American is that he's sitting there with a beer in one hand and a tobacco pipe in the other, laughing at the rest of the world. The world that's indebted, unhappy, and divorced.


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  • #3
The Financial Conflict of Youth & Ambition

This isn't true in all cases, but it's true for a lot of them. And believe me, it's not limited to the youth because I've seen far too many older folks who should know better, mess up their finances. What I'm talking about here is the uncanny ability for those in their 20s to royally screw themselves when it comes to money. I've always wondered what in the world gives these people the confidence to handle large loans when they know absolutely nothing about them. It really is remarkable.

If I had to guess, I'd say the three biggest things that get people into trouble are home loans, car loans, and business loans. Home loans are a given. I can't count how many real estate shows I've watched where two twenty somethings were in search of their first house. Over 20 years ago, I was watching one of these shows and a very young couple that was right out of college told the host that their budget was $400,000. When I heard this, my jaw nearly hit the floor. There I was, trying to pay one month's worth of rent, which was $800, and there they were, trying to pay thousands of dollars in not only mortgage payments, but homeowner's insurance, property and school taxes, and most likely, PMI. The audacity of those two. I couldn't believe my eyes. If I had a crystal ball, I bet I'd see those two living in much more modest quarters today. Just a hunch.

When we're young, we're invincible. I sure know I was. I could do anything. I remember searching for my first home and when I found a piece of junk, I thought I could fix it up. When I found something that was too expensive, I thought I'd figure out a way to pay for it. "If I could just get someone to loan me the money, I know I'll somehow find a way to pay them back. I just know it!" I was foolish back then. I didn't have the wisdom to understand certain limitations. These days I'm a bit older and I recognize that there are only so many work hours in a week. There are only so many avenues to acquire the funds we all seek. These days, I understand reality a lot more than I used to. Back then, there was no stopping me. Shopping was far too fun. And when my partner was on board, that was all the better. Not only one, but two fools doing stupid things.

After many twenty somethings land their first, second, third stable jobs, they become confident in themselves and the economy at large. I believe they actually become somewhat bored with their finances and begin to become reckless. Buying a new car is reckless. If you aren't going to drive that car very much and if you plan on keeping it forever, then yes, it may be worth it. But for the rest of us, buying a used vehicle that's in good shape is a much better value. Everyone knows this. But for the young, they want new. The only problem is, they fail to do the math. The car payment, loan interest, higher insurance cost, and much higher yearly personal property taxes, combined with their fancy new mortgage, insurance, taxes, and PMI, young folks can easily become overwhelmed. Things are fine for a while, but when reality bites a little down the road, it bites hard. It's too easy to get in over your head these days. Especially when there's a sales guy on every corner trying to be your best friend. Terrible finances don't generally hit you over the head. They creep up on you and it's only when you slowly realize what you've done do you crave change. Hopefully.

Think about it. Think about how many couples today are living in houses that cost more than $400,000. And out of those couples, think about how many of them drive brand new cars, or, should I say, cars that were brand new when they were first purchased. Have you seen the prices of new cars recently? A decent Toyota Camry will cost you around $30,000. That's a lot. And really, it's not even the principle costs with the house and the car that will set you back. It's the add-ons that I already mentioned. The taxes and the interest. Those things are killers that hardly anyone takes into account.

Boy, there sure are a lot of small businesses out there these days. I know that small and medium sized businesses are the backbone of this country, but I didn't know that so many of them would ultimately take the form of coffee houses, breweries, and food trucks. What is it with young people and these types of businesses anyway? Don't they know how to do anything else? I used to know people who started businesses because they liked to patronize certain ones. They'd copy them. Disk Jockeys love to open up nightclubs. Foodies love to open up restaurants, and readers love to open up bookstores. That's just the way it is. I guess things are changing today because all I see out there and across the country are coffee, beer, and food. And included in the food category are wraps and smoothies. It's nauseating.

There's nothing wrong with opening a business. I actually love the idea. But opening one that's been opened dozens of times already in the same town is just silly. Whether it be the competition or the lack of general interest in another similar business, it's bound to fail. And what's worse, if a loan was taken out to beautify a store front or other type of space, buy equipment, or stock inventory, that loan doesn't just disappear if the business closes.

I just looked up the failure rate for restaurants. It's about 60% in the first year. Can you imagine how much it costs to make a space look restaurant worthy? And how much all the necessary kitchen equipment costs? I can't even begin to imagine how many people have spent their life savings on this type of thing, only to be selling everything they purchased just a year earlier at fire sale prices. It's crazy, yet restaurant owners are like moths to a flame. On top of the normal failure rate, global pandemics can make things even worse. I don't even want to think about it.

The point of this post is one of respect. I implore the youth of today to respect the experience and wisdom of those who have already screwed up. When an old man says, "Don't do it son. Don't even look at it," listen to him. When an old woman says, "He'll break your heart sweetheart. Stay away," listen to her. These people know. They know you shouldn't buy that huge five bedroom house. They know your choice in cars is poor. They know your business idea is stupid. They're merely trying to help you when they tell you these things. Listen to them and save yourself tons of misery and heartache. Borrowing money today is far too easy. Just because they'll loan it to you doesn't mean you should take it. Wisen up and get serious about your finances. Read books. Learn about money. Talk to people about their failures and their regrets. These things may help you tremendously in life.


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  • #4
Why Are Some of the Smartest People So Poor?

I once attended a trade school for a few years where the instructor, on the very first day, attempted to proclaim how wonderful and high paying the field of construction electricity is and can be. He said, "You guys have no idea of the success you are in for. The income in this field is limitless! I have friends who are earning hundreds of thousands of dollars per year! If you stick with it and launch your own company, you could be making millions!" He was jumping around in an overly excited state. He continued and went on and on. I understood what he was trying to do; motivate and inspire a bunch of near drop-out kids who ended up in trade school as opposed to English class. It was only when he calmed down did someone nearby ask the instructor, "If you can make so much money as an electrician, why aren't you out there making it? Why are you in here teaching us?" "Uh...umm...well, you see, I have such a love for construction electricity that I feel the need to teach you the art." he replied. Yeah, sure. Whatever.

To this day, I don't know why our instructor wasn't doing what he claimed he loved to do so much. My hunch is that being an electrician isn't so great after all. It's probably a lot easier being a teacher, so that's what he decided to do.

A few years later, I worked at a health club where we held events each weekend. During one of these events, a member, who was also a local psychiatrist, set up a booth to advertise her counseling and mental health services. Since I was only a clean-up boy (a young janitor), I didn't get involved with the actual event too much. I merely cleaned up people's messes as they made them. Throughout the day, I began noticing something strange about the psychiatrist. As she discussed people's problems on a couch set off to the side, she became more and more intimate with each person. At one point, I noticed her flat out hitting on another member. She did this with almost every man who stopped by to talk to her. I couldn't believe my eyes. By the time the day had ended, I had concluded that she was absolutely nuts. I didn't come to this conclusion only because of how she treated the men, but because of a few other weird things she did. She was an odd duck.

From that point on, I kept my eye on psychiatrists. Whenever I'd see one in person, I'd closely watch how they acted. What I began noticing is that many people who call themselves psychiatrists and psychologists have some serious issues. I'm not sure if they'd be classified as real-life mental illnesses or not, but some of them certainly hike off the beaten path. And after I attended a university where I took a few psychology classes, I again noticed a trend. This time, it was among the students who took the classes with me. I witnessed a very strange string of occurrences. Let's just say that at one point, our professor had to make an announcement telling us that she would, in no way, accept any meeting with any student who wanted to discuss their perceived mental illnesses. She said that every semester she's inundated with requests for advisement and counseling and that if a student felt as though they truly had an issue, they should seek professional help. There I was, sitting by myself, looking around at the world's future medical professionals - many of whom were off kilter themselves.

I was watching a financial video yesterday where the man in the video was discussing how he turned zero dollars into $255,000 over ten years. He told his story and gave some very simple advice. I liked the guy because of his straightforwardness and resistance to getting into the nuts and bolts of investing. As it happens, investing these days isn't difficult at all. What you need to do is buy one fund and continue to throw any extra money you have in it. That's it. And that's pretty much what he said to do.

As I was reading through the comments like I normally do, I noticed one that asked the following question:

"Everybody here always say 'start investing,' but nobody ever explains how. It's like the doctor telling you 'you have cancer, you need to start removing it now.' How? Some people aren't afraid. They just need some info on where and how."

I thought that was a decent comment, given the content of the video. I'm sure there was a follow up video that this commenter had yet to watch. What really struck me though was the sheer volume of replies to his comment. There were over 132 of them. After I clicked the link to read more, I fully expected to see one that said:

"Open a free brokerage account at Charles Schwab. Buy an ETF called VYM. There will be no commission fees to purchase this fund. Put any money you have into it. Continue to do this forever. That's it."

After all, that would have been my advice. Did I see this sort of thing? Oh hell no. Here's an example of what I actually saw:

"Are you seeking ways to invest in bitcoin or trade on the FX market? Do you wish to learn basic FX trading strategies and risk management from professionals and also earn from the market as you learn, practically? This platform offers you 90% accuracy in trading signals from professional traders worldwide, one on one interaction with your mentor and with a precise understanding of the basic risk management in FX. Add me as a contact on WhatsApp to get you started on a two weeks course that will change and enhance your trading experience in a short period of time."

For those of you who aren't familiar, FX stands for foreign exchange. But seriously? Foreign exchange and Bitcoin trading for someone who has absolutely no experience? Obviously, this was a sales related comment from a trading hustler, but what a jerk. And the best he could do is troll YouTube comments to pitch his services? Yeah, I'm sure he's the one to trust as far as investing and making money goes. I dig the WhatsApp contact as well. From my own personal experience, dudes from Asia and Africa love to use this as a method of communicating and from my own personal experience, 100% of these people are internet scammers.

So here it is...

What's the moral of these stories? I'll tell you. Some people have no business giving others advice. Especially those who claim to be experts, but who are actually hacks. Have you ever noticed how many people on earth love to tell others "how to do it," but are lousy at doing it themselves? It's like asking the guy down at the welfare office for financial advice. Or the guy at the obesity clinic for diet advice. Or the guy who's getting CPR on the beach how to swim. It makes no difference if someone is good or bad at something; apparently they still just love telling people what to do.

The reason all this comes to mind is because I was just reading a section of Dave Ramsey's book titled The Complete Money Makeover. He was discussing all the hate mail he's received through the years about his methods. Folks out there have said that he's overly simplistic and that he's a one-trick pony. He's actually received emails from broke finance professors telling him that he's doing it all wrong. His best comeback went something like this: "If you've got a better solution, let's hear it. I've become a millionaire twice, so I think I like the way I make money more than the way you don't." I loved that. It was brilliant.

Why do people feel the need to spout what they know nothing about? Why is it the people who have the least feel the impulse to tell the rest of us how to gain the most? Through the years, I've made it a habit of only watching how people act as opposed to listening to what they say. I could care less about what you have to say. If I see you're a success, I watch your actions. You may be a liar or a terrible communicator. But if you're a billionaire, I've got you covered.

What have your experiences been with people regarding financial advice? Do you experience the same thing I do? Have you come across the types of people I've described above? I'd love to hear about it.


Well-Known Member
  • #5
Dave Ramsey says that medical doctors, by far, are the worst with money. He says he's been helping people with their finances for over 30 years and he's constantly surprised at how bad they are with their money. He says that since they're doctors and hold that title, they feel obligated to play golf at country clubs and live in nice neighborhoods. Since they don't actually make the money everything thinks they make, or they pretend they make, they end up in massive debt. I think a lot of people end up like this. It's the ego thing. Apparently, it's also because doctors perceive themselves as being highly intelligent, which, apparently, they're not when it comes to personal finance.


Well-Known Member
  • #6
Total Money Makeover Motto

What a great chapter. I really like Dave Ramsey. Do you want to know what I'm sick of? Excuses. I really don't like people who make excuses for things. And when it comes to finances, people are terrible with their excuses and justifications. "I needed that pair of sneakers." "My car wasn't any good anymore, so I needed that brand new one." It's all a bunch of BS and everyone knows it. The real problem is that there's far too much stuff out there to buy and far too many people have an addiction to spending. People are also extremely lazy and complacent. They get themselves into financial trouble and then beg everyone around them to clean up the messes they make. I have listened to far too many of Dave Ramsey's callers and I know how irresponsible they can be. And honestly, I don't think they want to change. It's only when they hit rock bottom do they crawl to the surface to ask for help.

But Dave Ramsey is the best. He doesn't let his callers get away with their excuses. He calls them out on them and politely informs them of what they'll need to sell, stop doing, or do. As an example, a woman rang into his show the other day. She was recently divorced and had been home schooling her three children throughout her marriage. Apparently, she also had no income. She was calling to ask Dave if there was a way for her to continue her lazy lifestyle without earning anything, while she continued to home school her children. From what I gathered, she obtained a lump sum from the divorce, so according to her, "She had a lot of money." That equaled $50,000. Dave told her that her lump sum would last a few months and, get this, she needed to get a job. There were crickets on the other end of the line when she heard this. I could so tell that this was not what she called in for. Dave's was probably exactly the type of advice she was trying to avoid. Too funny. I love it when lazy people are forced to face reality.

What's Dave's money makeover motto?

If you will live like no one else, later you can live like no one else.

I'm sure you can figure out what this means. If not, I'll explain it to you. Basically, he's saying that if you'll forego the pleasures of today that the rest of the world is enjoying, later on, you'll enjoy a life that very few are able to enjoy. It's all about sacrifice. Getting out of debt and fixing up your finances won't be easy, but it'll be very much worth it in the end.

From what I've gathered about Dave so far, I'd say that two ideas will remain throughout his entire book. The book called The Complete Money Makeover. The two ideas are this; avoid debt at all costs. Save up beforehand and never pay a banker anything you don't need to, not even interest on a mortgage. No credit cards, no mortgages, no car loans - nothing. If you can afford to pay it back, you can afford to save up for it and save yourself a lot of stress and heartache later on in life. Not to mention save you money on fees and interest. Bankers aren't your friends. They're out to get you. Yes, they will be very kind when you're walking away from their office with their cash in your hand, but they can be your worst enemy when you can't afford to pay them back. Avoid, avoid, avoid. It won't be easy because the American way to to buy today and pay tomorrow, but if you can get over your desires and alleged status in society, you'll own what you buy outright and be a better person for it.

The second idea fits like a hand in a glove with the first. It's called delayed gratification. I know, this is a tough one to swallow. American society doesn't like delayed gratification at all. We see something we want, check to see how much money we have in our bank accounts to buy it and if there isn't enough, we beg, borrow, and steal to get it anyway. We have trouble saying no. We lie to ourselves and feel as though whatever it is we want, we need it today or else. We focus more on timing than whether we can afford something. No money? No problem. We'll just borrow at 21% interest to get it, so when all is said and done, we'll have paid many times more for whatever it is we purchased than the item was or is worth. Not smart. Sacrifice the high of buying today for a more secure future. It's almost like we never grew up from childhood. A child screams, "I want it!" A parent doesn't need to scream anything. They just go buy it when they make up their mind to do so.

So what's the ultimate goal of personal finance? It's to stop the debt interest bleeding and to begin saving and getting paid. Banks hide their interest fees from their customers very well. They're crafty folks. Many customers don't even consider interest payments when taking loans, but lose tons of money each year to those payments. Paying banks interest on top of the principle amount of their loans stands right in the way of saving money and investing that money. Imagine getting paid interest and dividends instead of having to pay someone else the same amount? That's the goal. To turn the ship around and to become an earner instead of a payer. Paying on debt is for losers and earning from investments is for winners. If you stick with Dave Ramsey's money makeover motto, you'll reap these kinds of rewards for yourself.


Well-Known Member
  • #7
2 - Denial: I'm Not That Out of Shape

A few days ago, I was reading through a few web forums that had to do with tax returns from the IRS. I am expecting a refund and, for some reason or another, my return has been hung up in some sort of errors department. I have no idea why this is, because I use an accountant to do my taxes and there are never errors. Anyway, that's not important right now. I'll show you what is important below. Please take a moment to read through these forum entries I found on the site. This is a tiny sampling from the entire forum thread. Apparently, many people are going through the same issue I am. The thing is, these people have got much bigger problems than having a delayed tax refund. By the way, I had to clean up the below grammar substantially. Their entries were barely readable.

Jeremy Green says:
Sunday at 4:45 pm
Same, my refund and my 2nd stimulus are together and I just checked; they don't have any info on my 3rd stimulus now. They also stopped my unemployment on top of that. I'm sitting here with literally no income about to be homeless because the IRS and job and family seem to think I'm not who i say i am. I even submitted all the documents two or three days ago and there has been no change. I'm packing my belongings into my vehicle now, but still cant go anywhere because I don't have any gas!!!!. Thanks IRS and ODJFS!!!!

David Ortiz says:
Sunday at 5:28 pm
I still haven’t received my refund and I called and went online nothing and it passed 21 day’s and nothing. I’m about to get kicked out my apartment and they don’t care.

Jeremy Green says:
Monday at 8:00 am
Same here, gonna be kicked out. They still have my refund, 2nd stimulus, and are now holding my 3rd stimulus. I owe nothing; no child support and I owe no taxes. The website says same thing; being processed. The IRS phone keeps saying call volume too high and it hangs up. They owe me $3200 between the stimulus and refund and I'm gonna be homeless?!?!?

David Ortiz says:
Monday at 11:38 am
Why is we the people not getting their money? I filed on 02/13/2021 and got accepted on 02/13/2021 and it's like 23 days later March 8th and I still don’t have nothing. I hope they are going to pay me when I get kicked out my apartment and car insurance, etc... That’s is crazy.

I don't even know what to say about these comments. I guess I can say that blaming the IRS and government for you getting kicked out of your apartment is a pretty lame excuse for your own failings. Counting on a tax return to pay your expenses? Going to get kicked out of your apartment? Becoming homeless? Not being able to pay your car insurance or for gasoline? Saying that because you haven't received a free money handout from the government (called a stimulus) you're going to be homeless is pathetic. What if it wasn't tax season? What if there was no stimulus? Who would these people blame then? I encourage them to look in the mirror if they want to find the problem.

This section in Dave Ramsey's book was written by Mark and Kelley, two people who shared a quick story about their own financial situation. A great line from their entry goes like this: "My dad used to say that 90% of solving a problem is realizing there is one." That's pretty awesome. This is why I said the folks above should look in the mirror if they want to find the source of their woes. I hardly think that some department inside of the federal government is causing them to have horrible lives.

I'm sure that if I had the opportunity to meet these two guys (from the forum) and have a chat with them explaining that it's their own habits and lack of self control that has caused them to be broke, they wouldn't believe me. They'd argue and scream. Kick and yell. I know these types. They're never at fault. It's someone else's fault that while they're able to afford smart phones to do their online research and write on IRS related forums, they're unable to pay their rent. There's a word for this type of thinking: denial. They're in denial of how bad their lives are, all because of themselves.

The story in this section has to do with how Mark and Kelley realized that their consumer spending was out of control and how, once admitted to, they kicked butt to get out from under the debt hammer. I love stories like this. We all make mistakes as we begin earning and getting paid more money through the years. Our confidence grows and we buy things we can't afford. It's not long before what we owe outweighs our own savings. It takes some mighty reflection to admit there's a problem, but once that problem is admitted to, a plan of action can be created. People are good at getting results once they put their minds to it, but if they never accept the fact that they're in trouble, nothing will ever change. Actually, things will most likely get a lot worse.

In Mark and Kelley's case, they cut back on all unnecessary spending and lived below their means. Within ten months, they had their car loans, credit cards, and second mortgage paid off and were in the process of saving their money, as opposed to spending it on paying interest to the banks. This is what you have to do. Dave likes to say that if you're in debt, to get out of it, you'll need to eat rice and beans until that happens. What a true statement. There's no way someone is going to live the life they're used to and pay off all their bills simultaneously. No way at all.


Well-Known Member
  • #8
Don't Wait to Have Denial Knocked Out of You

I'm the type of person who is always waiting for the other shoe to drop. I don't like surprises. Security, especially financial security, is of the utmost importance to me. I would never in a million years extend myself financially to the point of becoming bankrupt if something in my life changed. My rainy day fund could last the rest of my life, if need be. I've planned it this way. I'm extraordinarily frugal, which has put me in a stellar position when it comes to money. I don't concern myself with how much I've got because I've got plenty of it and I spend hardly any of it. This is all by design. It's become such a way of life for me that I hardly even think of it anymore. It's because of all this that I'm floored every time I hear a story (which is quite often) about how an individual or a couple are thrust into the throes of bankruptcy, foreclosure, or repossession. I mean seriously, who gets their house foreclosed on or car repossessed? Doesn't anyone do math anymore. Doesn't anyone own a calculator? Windows 10 comes with a calculator built right into the operating system. You'd think that before someone makes the most likely largest purchase of their life, they'd pull that calculator out to add up how much it's going to cost them. And you'd also think that before a person extended themself so far, they'd do a bit of financial figuring to see how bad things would be if they lost their income. I thought this type of thinking was par for the course. I guess not because there are thousands upon thousands or foreclosures and repossessions every single day. It's really too bad.

I remember the time before I bought my first house. I was so cautious that I went into my boss's office to ask if my job was secure. I explained that I was about to buy a house and I wanted to be extra careful about my income. She affirmed that I was in good hands, which put me at ease. Right after I bought the house, she was fired. That one shook me. It hasn't taken many of these types of experiences to force me into my current ways of thinking. I've cut it close far too many times. I don't enjoy the feeling.

This section of Dave's book talks about a couple who went out on a financial limb too far. Apparently, they were in denial about their circumstances. The female, Sara, had two kids from a previous marriage. She married a male named Dave and both were very comfortable with their finances. Sara made $45,000 per year and Dave made $30,000. They had student loans, car loans, and $5,000 on their credit card. Because they were so comfortable, they decided to have a brand new house built. When the house was finished, the couple took on a big mortgage, which was no big deal because they felt that they made enough money to pay for it. Just as luck would have it though, right after the family moved into their new home, Sara was fired from her job. Now, they were down to only $30,000 per year. They couldn't make ends meet and they were facing foreclosure on the house, repossession of the vehicles, and bankruptcy to cover the credit cards. This type of story absolutely astounds me. And it annoys me to no end. I'll explain why next.

I find that people who inflict harm upon themselves oftentimes seek out understanding and sympathetic souls to confide in. Their goal is to dampen the blows of reality. The reality of their own bad choices. All too often, these souls are found and the people who are confided in attempt to sooth the feelings of or help those who have harmed themselves. On the surface, this seems like a noble endeavor. Sure, we all like to help those who are down and out, but the question is, should we? I say we shouldn't, which may be an unpopular view.

I believe in allowing others to hit rock bottom and then allow them to find a way to crawl out of the hole they dug - all by themselves. After all, it was them who put themselves there. Plus, we mustn't forget that the very people who need financial help were those very people who enjoyed all the benefits of their own spending. So let me get this right; I'm supposed to feel bad for and help a couple who bought a big beautiful house they couldn't afford, drove brand new cars, swam in a pool every weekend, and had friends over for BBQs in their back yard, all while I was sitting alone in my small house, working my fingers to the bone in an effort to save money to live the rest of my life in some semblance of comfort?

Dave's word of the day in this section of his book was denial. I'd say he's onto something.

Let's translate this into something that's being discussed in the political spectrum right now. I'm supposed to feel bad for someone who's got tens or hundreds of thousands of dollars worth of college debt - someone who enjoyed all the perks of a four-year private college in a beautiful town, who ate the wonderful food at the dining hall (that was cooked for them, mind you), enjoyed the "college experience" in a dormitory, hung out with friends, had the times of their life, went out to bars, and earned a degree, all while I was in my lousy broken down car attending a local community college while living with my parents? I don't think so. I'm simply not into rewarding someone who has enjoyed the benefits of their own frivolous financial escapades. Don't come crying after the house of cards has fallen. This is why I say people need to hit rock bottom. If there's a safety net for a kid who went to college on someone else's dime, they'll certainly morph into an adult who will be just as irresponsible. We don't need anymore irresponsible adults, which is why I'm into tough love. You borrowed? You can't pay it back? You fail. If you're a college kid who borrowed too much money to have an awesome time at a great college, too bad. Spend the rest of your life suffering and in debt. If you're a couple who posted pictures of your big brand new house that you couldn't afford on Facebook and then were foreclosed on the minute you hit a bump in the road, too bad. You fail. I guess you're living in a motel. I think the motel living will even out the high life you enjoyed for too long. It'll also teach you a lesson about finance. One you should have thought about after enjoying the rush of signing those mortgage papers.

I know this may sound harsh to some who are reading this. You know what though? It's called being an adult. Adults don't look for handouts and help climbing up and out of a mess they created out of irresponsibility and thoughtlessness. Do you want to know what adults do? They plan and calculate and prepare. They're cautious. They have integrity and decency. They don't go on vacation after one of the two parents gets laid off of his or her job, just because "the stress of the situation is too much". They don't go on vacation, period. Do you know when the family goes on vacation? When there's enough money in the bank to carry them for the next ten years. What a novel idea.


Well-Known Member
  • #9
A friend of mine shared a quote by Dave Ramsey on Facebook this morning. I think someone commented on the post to bring it back up to the surface. The quote was actually from a post written in 2010, but since the comment was written recently, others began commenting again today. And boy did a fight ensue. Here's the comment:

The saying 'the rich get richer and the poor get poorer' is true! Because the rich keep doing what rich people do and the poor people keep doing what what poor people do. - Dave Ramsey

One woman in particular took rabid offense to this quote. She claimed, basically, that people have absolutely no control over their lives and whatever happens to them, the rest of us should be sympathetic to their plight and support them. A man took offense to her argument and presented an argument of his own. He said that poor people consistently make bad decisions and it's their fault they're poor. That the United States of America offers the most opportunity when compared to anyplace on the globe. And that with hard work and frugal spending, anyone can make a better life for themself.

I'll leave it up to you to decide who's right and who's wrong. I'm sure there's a lot of grey area in between these two arguments. The conversation did get me thinking about human nature though and I thought up a short quote of my own. Here goes:

There are two types of people in this world; those who plan and those who react. Those who react do most of the complaining about not having any money. You don't really hear from those who plan. They're doing well and don't need to complain.

I think that about sums it up. Really though, if someone is an avid planner, it's rare they get caught off guard. Especially if they're also a bit paranoid. It's those who like to have a good time who are constantly surprised by events in their lives. What's the story? The Ant and the Grasshopper?

Anyway, I thought I'd share that. Now, onto the next section in Dave Ramsey's book called The Total Money Makeover.

Mmm...Frog Legs

The first part of this section talks about how mediocrity is the greatest enemy of worth in one's life. It's not a tragic event that brings people down in regards to their health, relationships, and finances, most of the time, but a slow degradation of quality and standards. It's sort of like when someone dates someone for a long time or gets married to them and lives with them for years. Once they start wearing sweatpants too often and not showing everyday, things change. And not for the better. The same is true when it comes to skipping visits to the gym and buying things that aren't necessary. It's a "just good enough" attitude that catches people off guard in the end. The author of this section compared this type of thing to a frog slowly being boiled in a pot.

I find it incredible how many people out there are in denial about their finances. We've created a society that thinks debt is normal. Can you imagine if our great grandparents came back to life to see what we've done with ourselves? They'd see the houses we live in and the cars we drive and they'd be so proud! Until, of course, we told them that none of it was actually ours and that we'd be working the rest of our lives to pay for it. And that we'd likely die, not with money in the bank, but money that's owed to the bank. They'd probably die all over again after hearing this. Not to say that they were any better of people. I'm sure they'd take the same exact type of debt if they were living today. We're all the same, pretty much.

Debt and spending can be an addiction that needs to be dealt with. I think I read somewhere that when a spending addict spends, they get a shot of some sort of chemical in their brain. Here, I just did a Google search for "spending addiction serotonin" and this article came up:

Mind you, not all shoppers do their shopping at the mall. It often takes place online, at Home Depot, auto parts stores, Ebay, wherever. It's the urge to buy a product to deal with something in a person's brain that's the problem. Oftentimes, a person needs to seek therapy to get over this type of addiction. They can't do it themselves. Without help, they'll spend and spend and spend. And then, when they hit bottom, they'll complain that it was society's fault. I've seen it a number of times. It's always someone else's fault. They either don't make enough money to live or someone has taken the money they have made. Personally, I think our entire nation has a bit of a spending addiction. Just look around at some of the newer neighborhoods we've got across the country. Since when has it honestly taken someone 30 years to pay back the loan on their house? Think about that. For 30 years, people pay off their house. If it actually does take this long and if people actually have trouble making the payments, perhaps they borrowed too much. It shouldn't take 30 years to pay off anything. Cities have been born and have fallen in less time. Boy, people do like to live close to the edge, don't they?

This section was written by Tony E. Newman, a 26 year old financial analyst. He told the story of how he was in debt $23,000 by the time he was in his mid-twenties and about how he had little motivation to change that. Part of the reason he didn't see the problem was that he had a spending addiction, like the ones I described above. In his case though, his spending addiction revolved around gambling, so it was especially lethal. Every time he tried to pay down his debt, he fell back into his addiction and made it worse. It wasn't until he joined a church group called Celebrate Recovery that he began to heal. He eventually began working through the Baby Steps and developed a budget, which helped a lot. He even moved back in with his parents to save money to pay down his debt. It's such a shame that someone had to go through all of this, simply because they either haven't been taught how to deal with their finances, were allowed to take out loans, and/or had to deal with some sort of mental disorder like the one described in Tony's story. A shame indeed.

Well, that's about it for today. If you've ever dealt with a spending addiction, I'd appreciate you sharing your story down below. I'd also like to learn about where you are today. Have you gotten over it? Are you on the straight and narrow? What's going on in your life?