Business owners : Dave Ramsey

So question for y'all business folk who are pretty successful. Any of y'all happen to have followed Dave Ramsey's teachings ? I get reccomended him alot . Watch a good bit of his stuff ,but as I self educate and talk to people may age who been successful with there small business.......wellllll.... But I just curious.
And before someone says it, no I'm not saying he's wrong ,yes I know he's helped many many people there's juat stuff he preaches ( and I don't mean to say preach in any bad means) that just doesn't seem feasible after a certain point.
Thanks

Never really listened to Dave Ramsey but ill say there is no big secret to being successful.

Don't hook up with crazy, that cost me 400,000 in a divorce that I walked away with almost nothing from.

Keep up on paper work and taxes, falling behind is fatal to business.

Income is rarely steady, make a budget and do not go spend a pile just because you made it.

I cash flowed my business as Ramsey suggests. It takes a little more time to get started but there's not near the amount of stress that debt carries.

Which part (s) dont seem feasible? Just curious

It absolutely works. In all aspects of life. It is very hard to follow sometimes ,especially when you need something. The big plus side is that you won't end up in dept.

Debt free living ...his program works

No debt good or bad = no credit which has royally been tossing monkey wrenches. And the more I study successful people and their businesses they all utilize debt and credit proper and extremely precisely. Just looking at him and the probably four or five hours of stuff I've listened to of his stuff, he's selling a risk free deal,and that just.....eh. cash cash cash is great till your like me or some of my friends and need a loan ASAP and the bank looks at you nonexistent credit. Honestly the more and more I look into this stuff I don't think debt is truly as bad as most people think. I mean most very wealthy people utilize debt to make more money soooo.

.....I'm coming the the conclusion though.....is that really the best thing though ? Again the more I look at wealthly people like legit wealthy people debt is a tool for them

I have listened to him some. He has certainly made a lot of money by preaching. There are a few evangelists who do the same. I think his preaching is good for his audience which is lower and mid middle class. Most do not know how to manage money. For a small start up business I would not recommend very much debt because most startups fail. Then you could be stuck with no way to pay it back. Having dept in business is ok when you get to a point where you can see a future in what you are doing. If you have no excess funds to start with you need to figure out how you can get that. Maybe two jobs. One for day to day living and the other for saving.

Wolfie, those folks are just using the old OPM method to advance themselves (other people's money). Debt is nearly impossible to avoid sans lotto winning. Mortgage on a home being the one BIG one. Debt is no longer a good thing when you just keep buying , buying, buying and have accumulated no personal wealth. Debt Free should always be your goal, and you should get there asap. Using a credit card is one good example. Most these days can't control themselves and rack up big debt with a CC. If you can use them as if they were cash (buying only what you can afford if you were carrying cash, then ALWAYS paying the card off EVERY month.....you can make money using them via "points" earned, etc.

only *IF* that money makes them more than the interest they're being charged.

like opening up a new factory, or upgrading equipment that increases productivity, etc.

if you're using debt to finance a lifestyle you can't afford, it'll catch up to you, in a not-so-good way.

My dad always preached against getting in debt. He had suffered a lot from some bad business deals and the debt and stress that followed. One of my brothers didn't pay any attention to the advice though and bought a fixer upper house and added some rooms, increased it's value and then sold it. Then he had enough cash that he put down money on two more bank financed fixer uppers... and long story short he just now (at age 76) has sold most of his 40 houses that he had as rentals over the last 20-30 years and is certainly not stressing about money these days.

The point being, he used debt to accumulate quite a fortune. But it also meant he had a plan and put in a lot of work to make it all happen.

None of the wealthiest people I know have ever had a car payment. And none of these people started out wealthy.
One of the worst things you can do financially is to borrow money to buy something that starts to lose value the second after you buy it.

Exactly debt can be either a tool or a burden, most wealthy people understand the difference most regularly people don’t, though I have known some people that started out wealthy and ended up loosing it all after they inherited it IE such as a business that made good solid income, often with a yearly net in the multi millions, because the did not understand that principle, going into debt to fund things that burned through their wealth till it was gone and often left them with just the debt

So debt that funds something that is loosing you money is a burden, while debt that increases your income is a tool.

I know a lot of people that appear well off because they have all the nice things, new car, fancy boat, atv ect but it’s all financed and month to month they are trickling money out and not putting any by for a rainy day, many of these people live paycheck to paycheck and if they miss even one day of work unpaid it becomes a financial crisis if they miss a week it is one of epic proportions

I have owned several businesses. Some successful, some not. I own two now that are doing pretty well. I've been in debt and not been in debt. I wouldn't go into debt again.

If you already have money, debt can be manageable because you have the resources to cover payments when unexpected things happen. And, unexpected things always happen so they really aren't unexpected at all. If you're broke and need to borrow to start a business, I think it's not going to go well. If you already have $100,000 in investments and you don't want to pull that money out to operate your business, you can handle a $50,000 loan. When a disaster happens (and it will), you can cover the unexpected because you have an emergency fund.

With any new business, you'll start out just barely covering the business' expenses and maybe enough for groceries - if you're one of the lucky ones. At some point, some disaster will happen that costs money. Which do you stop paying when that happens? The loan payments or groceries? Debt might make it easier to get everything you need in the beginning and start off strong but when that unexpected expense happens, you're much worse off. Now you owe yourself groceries and somebody else a loan payment.

Also consider that most new businesses fail in the first 5 years. I know it won't happen you you. You work too hard, and you're too smart, and you're idea is too good. All of my ideas were good too, and I'm smart, and hard working. I only have two profitable business left out of probably 2 dozen I started over the last 35 years. Smart, hard working people with good ideas have most of their businesses fail. If you started out with no debt and lose everything you're at zero. Zero isn't too bad. If you lose everything and you started out in debt, you're in a hole that you need to climb out of before you can even get to zero. It can take years to climb out of that hole.

Once you have an established business, there are things you can do to protect your personal finances from a business disaster. But in the beginning, everyone you deal with assumes you're going to fail - because most do. You will need to sign a personal guarantee for any loan or any credit account. That means when the business goes south, your personal finances go with it.

I've been in some sort of small business in a wide range of different industries, for 3 decades. I've been in debt and not been in debt. Unless I had a corporate structure that was bullet proof to protect my personal finances, I would never go into a business with borrowed money.

But...my dad always told me that other people can learn from the experiences of others but I'm so stubborn that I always have to pee on the electric fence for myself. If you're as stubborn as me, you'll do what I did and go into debt. 30 years from now you'll be posting on the internet warning somebody else not to make the mistakes you made.

Dave Ramsey's advice is solid both in business and personal finances. It's mostly common sense which is not very common and certainly not what the world around you is pushing.

A good book to read is called the Millionaire next door. It's an older book, but full of good info about advancing your finances, it examines the habits of successful people.

Excellent post MG.

Dave Ramsay's story and plan is about creating wealth without debt . Debt is one of the main reasons our country is loosing ist libertys so quickly, it's part of our moral dekey. The borrower is slave to the lender . If you own a big fancy home , and lots of nice things, and have a very lucrative business but you're making mayments on them all with interest. Are you wealthy or are you working for others so you can have alot of stuff. Chew on that a little.

My parents brought me up on Dave Ramsey's stuff. I think for the average person working a steady job for someone else his strategy is a good plan that offers a more stress free and wise path in life.

For a business owner or someone who wants to build more wealth I think Dave's strategy has its limits.

I personally do not follow Dave's methods. I've borrowed heavily to get my education and start my business. If I worked a $50k a year job, lived lean, and then saved to pay cash for my education and business, it would take me 50 years just to be able to get the doors of my business open. By borrowing money for capital and goods I am able to produce more services (and make more money) now and reap the rewards over my lifetime.

In all investment there is risk. You have to have a solid business plan and know your market whatever your business is.

There's a big difference between consumer debt and business debt. When you are taking on debt to invest in appreciating, cash flowing assets, that's when wealth can really start to grow. Debt can allow you to leverage your existing wealth in order to grow it. You should be looking at fixed loans over a set amount of time. Like a 10 year business loan with a fixed interest rate. Similar to a 30 year fixed home loan. You can get paid several different ways through business loans: 1) cash flow brought in by the business, 2) tax benefits, depending on circumstances you can often write off business expenses and even interest from the loan, 3) inflation hedging - by borrowing a fixed amount you allow inflation to erode that debt. Say you borrowed $10k for a welding set up. In 10 years $10k won't buy the same amount of equipment because of inflation. However, you have locked in your price with a fixed interest rate.

Borrowing money does require a firm plan and introduces risks. My life isn't as simple or stress free as it used to be. I am making a play to introduce wealth into my family though and live with a greater degree of abundance rather than scarcity. Time will tell if that was wise or not but like you, most of the well to do people I know have taken on some debt to achieve greater things.

If you're an entrepreneur, why did you need to spend lots of money on education? Honest question. I know people that just jumped into their business with no expensive college and did great.

Dave Ramsey has some really good ideas that apply to personal and business finances. Most of it is common sense but good nonetheless.

Thank you for that , your second paragraph is alot of what im looking at

Not what I'm talking about though.

Fair question. I didn't start out knowing that I wanted to be an entrepreneur/own my own business. It wasn't until after school that I became disillusioned with my field of work and choices and realized I wanted to do/accomplish more. That led me into entrepreneurialism and wanting to build my own business. I did however open a business that I couldn't have opened without my degree. So I am still using my degree. That said, knowing what I know now I do feel that I wasted a lot of years in school when I could have opened a business right out of high school. Then again, without all that school and debt maybe the fire never would have been lit under me?

We've always told our children that you don't spend more than you make and get rid of debt as soon as possible unless you're making more in your investments than what your being charged for loan interest. Pretty simple strategy for those not running a business but working for others.

Robert kiyosaki says it best “Poor people follow Suzi Orman and middle class follows Dave Ramsey and rich and successful people don’t do anything that either of them say”

If you want to have a business that basically just gives a job and some simple tax right offs you can run it like Ramsey wants. But if you want Growth and true wealth his advice is terrible. Particularly when interest rates are low or you are in a capital intensive biz.

I own machine shop. And my accountant likes to say it’s better to pay interest instead of taxes. I can give you a an example how his advise is absolutely horrible.


So say you gross a million bucks in your company and you profit 200k.

With his advise you would save the money and/or pay down debt. But of course you have to pay taxes on your 200k profit. So after taxes you maybe you have 120 or 135k left.

Say you take a debt is good model. Like I do.

You profit 200k

You finance a new piece of equipment for 200k +

You depreciate 100% under section 179 of the tax code.

So at the end you have all 200k instead of the 120-135k

And you have another piece of equipment that you can generate more revenue with.

So you end up with 70K MORE in cash and the ability to earn a bunch more money.

Not a business owner buy my wife and I have lived by his principals for many years and are debt free. We turned our son in law onto him when he was dating our daughter and he went and got a job working for him. He’s been with Ramsey for 9 years now. May not be for everyone in all situations but it has helped me sleep good.

WannaBe.....I wonder what your definition of 'rich and successful' people is?

We got in a really bad spot early in our marriage and I got ahold of one of his books. I thought there’s no way I can do this with a wife and kids.
It was rough. Saved that first thousand and started paying off what we could pay off. We learned we didn’t “need” new vehicles every other year. We started saving our money separately from my 401K. Soon one thousand turned into $2K. $2K turned into $10K and it became a game so to speak. I honestly don’t know how much cash we have in the house, last count was a years salary…gross not net.
We live modestly, but we do whatever the heck we want. My trapping money pays for my out of state turkey trips and if any is leftover after Christmas gifts I normally “give” it away. The wife is a cruiseaholic and has elite status with two different cruise lines.
I drive a 2000 F150. We paid cash for the wife’s “new” car (Always have one good car for traveling purposes.)
The only payment we have is house and we have way more than enough to pay it off if we wanted to.
I’m not saying any of this to brag, but if you read and follow his teachings you can really eliminate debt or never get into it in the first place.
It’s nice to have cash on hand when you run across those deals that are too good to pass up, lol.

Wolfdog- you really should take some time and read what people have posted for you. Read the posts 3 or 4 times and then get back with us what you think about what was posted. Several people here have invested time and effort to help you with good advice. My post may have been a little harder to understand but it said the same as some others but in a different way.

Wolfdog, I don't know whether or not Ramsey would suggest borrowing to buy a vehicle or not. I'm just saying that people who I know who have built wealth from nothing all seem to have the same mindset. If you can key in on that mindset/attitude you will do well. Whether it's Ramsey's way or a variation, all these people seem to have the same general approach to both life and creating wealth. I think it all starts with self discipline.

It takes money to make money.
Money is the cheapest tool you can buy.

Look up some of Robert Kiyosaki's videos and it will give you another perspective to debt.

Your using debt and legitimately wealthy in the same sentence. the only one legitimately wealthly in this case would be the banksters.

You are correct. One thing to think about is are you an established or a growing business or are you just starting up. Taking on debt is a choice and if your just getting started it might bite you if your business doesn't take off.

Ramsey’s advice for ridding yourself of consumer debt is solid. His system will work for 99% of the people out there. His system for investing is…not that great. Much easier and more successful ways to do. Read “A Random Walk Down Wall Street” if you want more details.

The conversation of debt, taxes and generating revenue is always interesting. Wannabe-trapper’s advice of paying interest instead of taxes is interesting and relies (in that particular scenario) on one particular provision in the tax code. Which could disappear next week. Sure, use it if available and it allows your business to grow in the direction you want it but how many 1-ton trucks are purchased every year just because of that tax break? At some point it is a shell game that puts money into the wrong coffers.

I fully agree with Ramsey that if you want to reduce your tax burden then you need to have a charitable giving plan. It also relies on a provision in the tax code but one that would be much more difficult to foul up than the previously mentioned.

Finally, if you want an example of a business that grew debt-free, look up the history of Ruger. WBR was burned once and then went on a debt-free strategy for decades. Is that the exception to the rule? Yes.

I agree with Waggler. Self-discipline is the most important thing in the world. There's things you need and there's things you want.

I read most of the posts in here a few times, the only reason I have responded in full to all of them if because I'm pretty sure id come off rude. I appreciate everyone's input though

Hi net worth individuals. Say 3-5 million in assets. Depending on where you live.

For some people Wolfdog, and for some reason, things have happened way beyond the ability of the person doing.
David Green, a self-made billionaire who founded Hobby Lobby, and who grew up in small town Oklahoma, is a prime example of that and I highly recommend reading anything he or Steven Green have written. Their common man's perspective is humble, powerful, and true and has helped countless people in very real ways, both in business and personal lives.

I am of that same camp.

His method continues to be a lifestyle of generosity in a land that promotes otherwise.
This is one of my fav reads, especially when it comes to leaving a legacy.




Blessings,
Mark

Wolfdog, if you listen to some of Dave Ramsey's call in shows it doesn't take long to understand that these folks have no concept of sound financial management and think if you have 50,000 dollars of available credit you need to spend 50,000 dollars ASAP. Dave Ramsey's formula works on the concept of the lowest common denominator and if people will truly follow his advice they will soon be on much firmer financial footing.

Now with that said if used wisely some credit is a very powerful tool in business, if you can operate on the other guys money for 60 days at no cost to you that is a good thing. The thing to watch out for is don't over extend yourself or you will be one of those folks calling in, the tides of a lot of businesses change quickly, there are several people who I know who's business was profitable and on solid financial footing pre-covid that are struggling to get their feet back under them now because the were shut down for several months as "non-essential" and then when they were allowed to open back up they struggled to get product to sell. While they were shut down a lot of their expenses continued, ie utilities, insurance, rent etc. If they were overextended when this hit they would not have survived, and may not yet so the thing is credit is a tool just like a table saw, when used wisely it can help you make beautiful things when not used wisely it can cut off your hand.

What he just said.

I own a plastic injection molding facility. Same scenario as WANNABE. Last several years took full advantage of a 2 million dollar line of credit. Today line paid down to nothing and I have a bunch of assets and capacity/capability I did not before. Never heard Ramsey. Live life by taking time to evaluate risk versus reward of each choice made. Will say there was a time that I would have signed every thing I owned up for a loan. Now all personnel assets are in wife's name and my personnel guarantee to the bank is based on manufacturing company value only. Of course you have to have a lot of faith in your marriage for that!

Debt/credit can be a very useful tool. But can also be a double edged sword if used poorly!

Wolfdog-I was not saying you should respond to every post that would be rude like you said. I was wondering if you had any other questions about what was written and what your take was overall on what people posted. Keep in mind these people that posted on your thread have 100's of years of combined business experience.

Have owned my own business for 23 years. Never heard of the guy.