Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Gunslinger on January 03, 2004, 12:52:13 PM
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Just wondering if anyone has read this guys book or caught him on his radio show.
If not for those of you like me that have debt problems I HIGHLY recomend this book for you. Basically throughout the book he tells you that America has been brainwashed into thinking debt is a tool that you can use to create wealth. He also talks about a VERY GOOD plan to become completly debt free through hard work and determination and stay that way. I love this quote "the barrower is servant to the lender"
or: (i'm paraphrasing)
"most people pay on average $398 a month for a car. Once that car is paid off they more than likely trade it in for a new car and again make payments on it. If you invested $378 per month from age 25 to 65, a normal working lifetime, in the average mutual fund averaging 12% (the 70 year stock market average), you would have $4,447,084.01 at age 65. I hope you like the new car!"
I havnt heard his radio show but his book is really good and highly recomended.
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And if you die at age 64 you get jack ****. I hope you like the nice numbers on your bank statements. :D
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well funked its way better to leave big money to your children that leave them big depts
isnt it ?
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12%!!!! Id love to see a mutual holding at 12% for 40 years!
Calculate more like 5-7%.
Is the cost of living taken into account for this %?
I invest alot and if I break $750,000, I'll be lucky!
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Originally posted by Swager
12%!!!! Id love to see a mutual holding at 12% for 40 years!
Calculate more like 5-7%.
Is the cost of living taken into account for this %?
I invest alot and if I break $750,000, I'll be lucky!
Even at 7% your looking at $1,146,544.55
Your still missing the point. Maybe this perspective is better
Would you consitantly take out a 60 month loan at 6% to buy a stock at 25 only to sell it at 12 at the end of the loan. Isnt that comparable to buying a new car?
Point being that New Cars are a BAD investment! But this is just one example in the book.
And funked I'd rather leave my children wealth verses debt any day
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Originally posted by Gunslinger
love this quote "the barrower is servant to the lender"
By the way, this quote is also found in the Bible. Just another piece of wisdom in the Bible that's as true today as it was then.
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in whitch chapter of Bible can i find it ?
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Proverbs 22:7: "The rich rule over the poor and the borrower is servant to the lender."
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Yea he quotes the bible alot in his book, but not from a faith standpoint but from a wisdom/teachings standpoint. In other words he's not pushing religion down your throat just qouting some of the bibles good teachings.
"A good man leaves an inheritance to his children's children" Prov. 13:22 NKJV
I'm still curious if anyone has heard this guy on the air?
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Since my wife is about to get her orders, we are in the process of selling the house which clears our truck and car payments. I don't have any other debt than that. I already have a job lined up as soon as we get to AZ. So I guess I'll be sitting pretty soon :)
What's the title of the book?
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I don't have children, don't plan on it any time soon. I doubt I'll see 60. I'll save some money but not much.
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Originally posted by Dingbat
Since my wife is about to get her orders, we are in the process of selling the house which clears our truck and car payments. I don't have any other debt than that. I already have a job lined up as soon as we get to AZ. So I guess I'll be sitting pretty soon :)
What's the title of the book?
Sounds like u are doing well then. Is your wife in the service? If so what base ya'll going to? The title of the book is listed in the post but I guess your just being smart *** :lol
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My apologies for dredging up a two week old post. I just finished reading the first couple chapters of Ramsey's latest book and figured I would search the BBS' and see what other people were saying about it.
Dave's radio show is based out of Nashville, where I am, so I definitely get the opportunity to listen to his shows. They play them on the radio and also have a live TV feed on one of the digital cable networks. In the show he basically gives the same info that he gave in his books (he has a few others out as well that are great reads) but you get a chance to hear how his advice gets put to use. Hearing the real life situations of the callers and seeing how the strategies apply has been helpful for me in applying it to my own situation. If he's not on in your area you can listen from his website at http://www.daveramsey.com
Some of his stuff is pretty radical and has to be taken with a grain of salt. But the foundation for his advice is rock solid. It's mostly common sense stuff, but a very unique approach to it. My wife and I have been trying hard to get through our debt using his approach and it's been great. It's a good feeling to have the weight of debt lifted off your shoulders and being able to pay cash for anything you buy.
Cougar <------will never see another credit card/car payment for the rest of my life :)
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Originally posted by Gunslinger
Sounds like u are doing well then. Is your wife in the service? If so what base ya'll going to? The title of the book is listed in the post but I guess your just being smart *** :lol
Doh! I should have guessed that was the title :) I work 13 hour shifts on the weekend, I was probably a little fuzzy in my first reply...
Yep my wife is an E4 in the US Army pending citizenship. Once that's taken care of she'll be off to OCS.
We should be heading to Ft. Huachuca in Arizona sometime mid to late april.
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Originally posted by Gunslinger
Basically throughout the book he tells you that America has been brainwashed into thinking debt is a tool that you can use to create wealth.
I have a couple of friends who feel the same way. Recently they had a decision to make...sell a piece of property and use the money to finnish a 2 apt unit they own, or borrow the money needed, finnish the property and therefore retain their asset.
They decided to sell, because they hated the idea of paying (compounded) interest on a loan and they didn't want the debt. They also decided to do the work themselves to save cash.
The thing is...they only needed $50,000...they got $300,000 for the land.
Now...they sold their asset, the work is still not complete, and they are earning virtually nothing on the excess cash they are holding.
Under my plan they would have hired a crew, had the place finnished and rented and they would be almost 2 years into a five year loan that is paying for itself (interest and principle). Three years later they would have paid off the loan, enjoyed the use of the bank's money at a very low rate of interest, begun to bank the rental income and they would STILL HAVE the land they have now sold.
Debt "is" a tool to create wealth...you just need to be smart about it.
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I don't agree Curval. Why hold on to a $300,000 piece of property and borrow $50,000 to finish the apartment? What is so special about being able to hold on to the property? I think where your friends went wrong was letting the remaining $250,000 from the sale just sit around. With that kind of cash they could've set out a 6 month emergency fund and then invested the rest.
To me it just doesn't make sense to go into debt when it just takes a little financial maneuvering to pay cash for something.
Cougar
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Just where are you suggesting the money be invested? Interest rates are incredibly low at present. Don't forget that 5-7% returns on mutual funds can easily turn into 10-20% losses with a down-turn in the markets. The banks are paying less than 1% on balances up to five million dollars here.
6 month emergency fund? Sorry, I am not understanding the purpose of this...where is this fund investing its cash?
Why hold the property? It will increase in value, probably returning (effectively) at least 15% over each of the five years we are talking about.
What manouvering are you talking about? They sold a solid, valuable asset that could be developed by using more of the banks money and using the rental income from the apartments to service the debt.
When all is said and done they would still have the original asset, their loans are all covered and they would then have rental income from the developed piece of land AND the two apartments once the debts are paid.
Also, you need to look at the opportunity cost of their actions. Almost two years have passed while these guys have worked and struggled to do the renovations on the apartments themselves at night and on weekends. Every single month that passes they lose the potential rental income on those units.
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I gotta agree with Curval because of the nature of the asset - you can always get a 210-240k loan on a 300k piece of real estate. Finishing the apartment opens up a new income stream and becomes an asset.
The truly smart way would be to pay of the loan early and avoid the interest, if possible. Thay way you have leveraged your investment to the max.
That all being said, the originial point is also correct - we carry far to much personal debt. Tax benefits for mortgage interest notwithstanding, the person who has his house paid off and no consumer debt is in the drivers seat as far as creating wealth is concerned.
This guy reminds me of the wise words of Ben Franklin, who also made the comment that debt is a form of slavery or servitude. Read his words of wisdom here - The Way to Wealth - just as true today as it ever was
http://itech.fgcu.edu/faculty/wohlpart/alra/franklin.htm
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I'm not denying that there are ways to get the most out of borrowing money. My point is that I would rather pay cash and earn interest on my money than paying interest to someone else for using theirs.
It's two different schools of thought that just aren't compatable. My way of thinking has changed over the last several years to where I believe that going into debt is something that should be avoided at absolutely all costs. Even if it means delivering pizzas to make some extra cash. Your school of thought has you leveraging to pay as little interest as possible when you do borrow money. If that works for you, cool. But for me, I'd just rather not have the note hanging over my head.
Cougar
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cougar that's pretty much the whole point of the book. Ifs funny how everyone in here seems to be knocking the ideas w/o reading the book but the simple fact is most americans are in debt. If your not great...disreguard the post. When you are in debt you are a slave to the creditor!
Here's another example from the book....A woman who has to deal with the death of her mother decides at 35 she's gonna buy a prepaid funeral for $3500. That's all that money buys is a funeral BUT if she invested it and earmarked it in her will and she survived a long fruitfull life the people who burry her are going to have ALOT more money to work with.
Hope your enjoying the book I havnt finished it yet and I'm doin pretty well at educating my wife and reducing our debt at the same time.
I'm not sure what's wrong with the rest of the poeple on this board but there is still plenty of good long term investments that work. My stocks and funds took a beating in 2001/2 and I ended up selling for a loss cause I lost my job (HELLO EMERGANCY FUND!) Wish I had one then cause I'd be up about 18% right now.
In addition I love his veiws on new cars. I've been saying to my friends for years that a new car is the worst thing to spend your money on PERIOD. They loose at least 10% of value the second you drive them off the lot. If you financed it now you are officially upside down on your loan if you didnt put much money down. Now when the car is actually paid off your vehicle that you paid all that intrest on is usually only worth maybe a 1/3rd of its orriginal value.....now that's a loss if i've ever seen one and people keep doing this there whole lives
anyway this book has changed my life and I am going to be completly debt free in 18 months with at least 2 paychecks in the back for emerganies. If you have debt I'd check it out!
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My only debt is the mortgage. Since '95 the property value has almost doubled.
I agree, new car is a poor purchase, but they are fun! If I have the need for a new car, then I would use a Home equity line of credit to pay "cash" for it. The one gets to deduct the interest.
When you deal for the car, let the salesman think you intend to finance. He can then offer you a lower price based on what he gets for commision on the sale and finance. Then, we you get the price quote you want, drop the bomb and write him a check.
Not too fair, but what the heck.
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Cars are big toys not an investment. Why else would people pay 400 bucks a month for something they can barely afford to fill up with gas.
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Originally posted by Frogm4n
Cars are big toys not an investment. Why else would people pay 400 bucks a month for something they can barely afford to fill up with gas.
not to mention over the next 4 years that new car smell is gonna wear off and it's going to depreciate in value by as much if not more than 50%.
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wait till gas prices hit 3dollars+ a gallon. And see how good the resell value on SUV or low gas milage car is.
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Originally posted by Gunslinger
....... Basically throughout the book he tells you that America has been brainwashed into thinking debt is a tool that you can use to create wealth.....
He's correct insomuch as it applies to individuals with average incomes. On a personal level, live as debt free as you can, however, the odd splurge to make life a little interesting won't hurt anybody as long as it doesn’t become a normal way of living. The bonus to not living under the burden of a personal high debt load is a healthier, more stress free life.
He's incorrect for equity funds or other such firms, who use debt to accomplish leveraged buyouts. We consistently return 25-30% IRR's year over year buying companies with bank leverage (sometimes up to 3-1), then operating the company for 5-7 years paying down the debt (de-levering it), ultimately selling it though an exit strategy that benefits all of the shareholders.
Regards,
Badger
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somebody shoot that guy?
what does he think is driving the economy if it isn't credit cards?
I'd like to see what balances the average joe here on this board is running monthly on his cards. what if anything they pay over the minimum each month towards ending that debt
I truely do not believe I will ever buy a new car again, they are the biggest rip off. drop $40k on a car, drive it off the lot and you lose $5k in 5 seconds - retarded
cars cost as much or more than my parents paid for their house. run that out, our kids will be paying over $120,000 for a new (average) car in their lifetime - like I said, retarded
back to the credit card bubble - when it pops - it'll make the dot com bubble look like nothing
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I use Discover for all my purchases. What the heck, I pay (OK the wife pays) the balance every month. Then the cashback from them is free money. Average ballance per month, 1500 to 2200. We never carry a balance. Always pay off in full.