Should I listen to Dave Ramsey?

[James Charles]

I've been listen to Dave Ramsey the past months. I've learned alot from him. He's very knowledgable about Real Estate and having financial freedom. But he also don't agree with financing. He constantly stress get rid of debt n buy everything with cash. I respect that and I agree. The thing is in my situation before I get lets say $150k to $250k in cash it will take me a fews years to start investing according to him. I really want to start my journey in about a year after I clear up some debt. So my question to BP is should I wait until I pay of my house thats Iike $130k left on it and take 5/6 years or should I purchase another one through financing and have the rental pay off my primary and start my portfolio from there. Need some expertise advise on my situation thanks.

[Chris Mason]

Dave Ramsey is awesome. 

But, like all things dogmatic or biblical, it needs to be subject to common sense and the realities we actually live in. The biblical value of Pi is wrong, the world wasn't created in 7 days, evolution happened, and a few car loans for the fleet of vehicles needed to support the rapid growth of your plumbing business, because you just signed 3 new property management corporate accounts, are not crazy or stupid.

The dogma may very well be that car loans are bad (and in general I agree with this!), but the reality is that the management of the apartment building with a sewage emergency isn't going to wait for you to save up to buy another vehicle to add to your fleet all cash ("sorry tenants, you need to live with the sewage because Dave Ramsey told our plumber he wasn't allowed to get a car loan"). They need that fixed ASAP, so you had better have a vehicle and crew ready to show up to fix it when it happens, or they are calling another plumber and POOF you lost the account for failure to perform.

I differ from him on mortgage stuff too. Having no FICO score is going to trash your interest rate (no Mr. Ramsey, "manual underwrite" isn't a magic word, and virtually everyone offers what that particular company you refer people to offers), and thus cashflow, and further it's challenging to be cashflow positive on 15YF (but good on ya if you can find those deals!) no matter the interest rate. My understanding that his personal RE empire imploded and almost financially ruined him, in part due to him being aggressive with the mortgages, so it makes sense why he would take this perspective. 

I agree with him more than I disagree with him. Like I said, I think he's absolutely awesome for what he does. For his typical callers, they NEED that dogma because the imperfect dogma is WAY better than the plan that his callers often presently have in place (which is to say, NO plan, NO goals, NO hope, NO retirement, and taking on more consumer debt is all they are actually good at). For those people, Dave Ramsey is the right tool for the right job. For the rest of us, it's a perspective to keep in mind - "what would Dave Ramsey say?" - but not a dogma to 100% live our entire financial lives by.