Dave Ramsey: Stop Spending Money Like You’re a Child If You Want To Become Wealthy
Adults devise and follow a plan, while children do what feels good.
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According to Dave Ramsey, the equation is simple.
It requires self-control.
And a focus on spending less than what you earn.
When Ramsey speaks, it’s all from experience. In the 80s, the banks called for their loans back which nuked his property portfolio to smithereens.
His property investments relied heavily on short-term, high-interest loans to fund his ventures. It was a risky approach that ultimately led to bankruptcy and left him with a staggering debt of nearly $1 million by the age of 28.
The experience was a turning point in his life.
Dave decided to educate himself about personal finance and learn how to avoid making the same mistakes again, so he began to study various financial principles and strategies.
He now has an estimated net worth of $200 Million and, more importantly, has helped tens of thousands of people out of debt.
Dave Ramsay — Source
“Personal finance is 80 per cent behaviour and 20 per cent head knowledge.
The mathematics of becoming a multi-millionaire are learned by the sixth grade.
Spend less than you make.
The problem is the guy in my mirror. If you can control that goober, I’ll be skinny and rich. (talking in first person)
The bad news is I’m the problem. The great news is I’m the solution.
It’s a decision.
You must decide to do something different because you already know what to do. I can give you the fine-tuning, but we don’t sell magic beans here.
You have to do the work. There’s no easy button to push on this. If you want to experience change, you must change your habits.
That’s how it works.”
Ramsay says people think you need debt to succeed, and it’s making the idea of spending less than you earn a counter-cultural concept and even old-fashioned.
It’s a belief that can lead to financial problems when interest rates increase, leading to significant monthly payments and, in Dave’s case, even bankruptcy.
Instead, try living within your means, saving for the future, and avoiding unnecessary debt.
According to Ramsey, it’s an approach that helps you build a solid financial foundation, letting you reach your goals without being weighed down by debt.
You’ll enjoy greater financial security, be prepared for emergencies, and be free to follow your passions. You’ll learn to value experiences and relationships over material things, leading to a more fulfilling life.
Dave Ramsay — Source
“The data and our 30-plus years of experience, which has led more people to millionaire status than anyone else, tell us that the proper way to do this is to get out of debt.
Your most powerful wealth-building tool is your income. So, you’ve got to pay the price to win; you’ve got to live like no one else so that later, you can live and give like no one else.
There’s a price to be paid to get out of the mess that you made, even if it’s counter-cultural.”
Dave Ramsey says the key to wealth is simple: spend less than you make, get out of debt, and control your behaviours.
Adults must devise and follow a plan, while children do what feels good. No matter your age, if you only follow your feelings, you act like a child.
To change your financial situation, you must change your habits, work with your partner, create a budget, and be willing to give up short-term pleasures for long-term goals.
Remember, you control how you spend your money and your decisions. It’s crucial to grow up and take responsibility for your financial life.
Dave Ramsay —Source
“Whether you’re 25 or 55, growing up is essential. One definition of maturity is the ability to delay pleasure.
Adults devise and follow a plan, while children do what feels good.
No matter your age, if all you do is act on your feelings, then you’re still a child.
You have to say, “There’s a destination over here. What needs to be true that isn’t true today so that I become that person instead of the person I am right now?”
No Expert Is Without Their Critics.
In contrast to Dave Ramsey’s view on debt, Robert Kiyosaki, the author of “Rich Dad Poor Dad,” says debt is not all bad.
According to Kiyosaki, there is good debt and bad debt.
Good debt helps you generate income and increase your net worth, while lousy debt can lead to financial problems and restrict growth.
Robert Kiyosaki — Source
“Good debt is a powerful tool to help you make more money, grow your net worth, and live a better life.
Bad debt, on the other hand, can ruin your financial life.
The difference between the two types of debt is simple: good debt helps you generate income and increase your net worth, while bad debt costs you money and decreases your net worth.”
Kiyosaki believes that leveraging good debt, such as taking on loans to invest in real estate or businesses, can be a crucial factor in building wealth.
It’s a different approach from Dave Ramsey, who encourages people to avoid debt and live within their means.
Robert Kiyosaki — Source
“The rich use debt to leverage investments and grow cash flow. The poor and middle class use debt to buy things that make rich people richer.”
Final Thoughts.
I fall in the Ramsey camp of finance strategy mainly because I’ve lost count of how many times Kiyosaki has gone bankrupt.
Being in debt is like being stuck in quicksand.
Once you step into it, it’s tough to get out. And the more you struggle, the deeper you sink.
You should apply the best strategy that works for you, but from me, it comes down to financial peace.
Show some self-control.
Delay gratification.
And stay out of debt.