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Campfire Ranger
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Campfire Ranger
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The more I read about Dave Ramsey the less credibility I think he is. SOME of his advice is common sense and good. SOME is good for some people and not for others. He was a complete utter failure in finances and ended up in debt up to his eyeballs because of bad choices. His advice is geared toward people heading down that path, or already where he was. People who make good decisions from the beginning might find another path works better.
A home isn't as great a financial asset as many believe. My mom and dad paid $25K for the lot and to have a home built in 1972. After they passed it sold for $103K 41 years later in 2013 for a $78K profit. But in those 41 years they paid insurance and property taxes every year. It was painted twice, re-roofed twice, the HVAC system replaced twice, water heater twice, kitchen appliances replaced, new floors and the driveway was repaved once and finally broken up and new concrete installed. For whatever reason the septic system lasted about a year after we sold it and the new owners replaced it.
When you back out the money spent for taxes, insurance, and upkeep there was very little profit after 41 years. You left out the part where they lived their lives and raised their family in comfort. That's got to balance out the debit column some what, no? BTW, Ramsey never argues with the math whizzes who call into his program. The math may work out in favor of the math genius, but for the vast majority of common Americans . . .they don't do the math, so he just sets down rules based on common sense. Worked for us. We followed his advice 15 years ago and retired debt free and financially free. God bless Dave Ramsey. By the way, I'm not a mathematician. 
"All that the South has ever desired was that the Union, as established by our forefathers, should be preserved, and that the government, as originally organized, should be administered in purity and truth." – Robert E. Lee
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Campfire Tracker
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Lots of good points here. Ramsey has good ideas for people just getting started. He mentioned getting an financial advisor. I had there and they were just awful. The time came when I knew the last one was just terrible. He sold me Non Traded REITS and loaded Franklin funds. It has been 5 yrs now and the Non Traded REIT is stuck there , not able to sell it and went from 25 per share to 17 and 7% dividends to 4%. Five years and still under water. The Franklin funds were sold but I track them and I would likely be up 5%?? after 5yrs. I stayed with him for a little over a year and was gone. Did not even bother to return his call and to make matters worse my sone worked there and they fired him a while later. For what it's worth , there is a Pimco bond fund I have been happy with for about a year. The ticker is PONAX. It pays monthly and comes to a bit over 5% in dividends per year. The share price stays almost the same but goes up and down a bit. I put my temporary money in it like future tax money I saved for property taxes ETC and in a ROTH. I low 5% is not much but it only lost 10% in the crash 10 yrs ago and went back up pretty good. I am way ahead doing my own investments . Here is the catch. I could get rentals and do well. I have been a carpenter for 38 yrs. I could go work on properties for sweat equity , or I could stay at work for $45-50 per hr. I put in two bids on 2 rentals 6 yrs ago. I would have done better had I go those two houses. I went with stocks and some bonds. My income is about $18,000 per yr. Not bad, and almost completely tax free with ROTHS, 401's and qualified dividends that are low taxed, with my Municipal bonds that are tax free on the divies. I have 38 investments from $2,000 in Owens Corning to $100,000 in British Petroleum and everything else in between. Here is one catch though. I studied investing for about 5 yrs now , almost every night . I learned that it is very hard to beat a handful of index funds and a few bond funds. I make almost exactly what the market does but I do it with almost half the volatility. A good way to start is index funds if you are young, but not if you are over 50 or so cause the market is very high, but might go a lot higher. Safe dividend stocks like the Dividend Kings are a good bet. AT&T, Exxon Mobil, Walgreens, AO Smith, Kroger Foods are good companies that have raised their divies an awful long time, even through the crash. I hope to get to about $25,000 in divies in 4 yrs when I turn 60. I should get $1,700 form S.S. but lets say $1,500 and hope for $700 from my Carpenters pension. This gets me $50,000 a yr. I think I can do that forever cause I made only $40,000 last year and saved $18,000. I am cheap , love life on the cheap. Get a kick out of guys with $50,000 boats. My boat is 29 yrs old as of Saturday and I catch more walleyes that almost all of them hot shots. Also, I have no debt and house has been payed for 10 yrs. The Lord with contentment is great gain. very insightful post, your tip on the pimco fund isn't a bad one. 5% isn't a bad gig if you can liquidate it easily. This is an interesting thread. I think it shows different people view retirement and what is enough totally differently. I think this depends on where you live and also what standard of living you want. There is no right or wrong answer. Its you and your own happiness. For me enough is a check for $20k/month in passive income. I don't see how you are going to accomplish that in stocks and "good growth stock mutual funds" The dave ramsey miliionaires aren't coming to the table with that level of passive income. I would also ask that if anyone knows someone that has built a portfolio with stocks that reaches 20k/month and didn't use inheritance or some lucky lump sum to get there I would be highly interested in talking to them. I personally think those people don't exist. I think the dave ramsey millionaires are people that have a paid for house, have 120k in a 401k, colllect $1500 a month in social security. and collect a pension, which probably totals 5-6k in income /month and they are calling themselves retired with that. The problem with dave's strategy on real estate is that its kinda a mediocre investment if you don't use financing to accelerate it. Lets say you have 300k in cash to buy a rental house. Your investment is only appreciating 3% a year, That only keeps pace with inflation. So your cash nest egg investment most likely never gains in net value relative to inflation. Instead if you buy 3, 300k houses. you are getting appreciation on 900k in assets. so instead of 9k/year in appreciation. you are going to be getting 27k in appreciation on the 300k investment, that is 9% right there!!! even if you broke even on rents. Also the other beauty of real estate is you are able to keep rolling up and never pay taxes on the appreciated value. AND there are other things you can do with depreciation, google cost segregation study if you are bored. with stocks you are paying taxes on the gains, with real estate you are deferring those taxes if you do it correctly. with stocks you have no leveraged appreciation. Also in most cases when you invest in the stock market you are depending on appreciation of the stock, Depending on a value increase IMO is gambling. If done correctly you invest for cash flow with real estate. That way you don't depend on appreciation, instead that is the giant cherry on top when you go to sell. Less than 3% of retirees have 1 million or more. You said you need to have 20k a month, and that would be 6 million dollars in a liquid account. General rule is 10-14 times income in retirement, so I guess you make 500-600K per year? how to I plan to reach that? 7 million in gross real estate holdings, 2 million equity posistion, 12% cash on cash return on my 2 million. Its not a cake walk to pull that off but if you study it, are careful its doable even in the insanely priced real estate market I live in. Its going to take me about 10 years to get to this point. the 401k people will never hang with this. Dave ramsey has no answer for this level of income. How far along to the 9 million dollar 10 year projection are you? How far did you come in the last 10 years? I have 7 figures in 401K, where can I get 12% in any market ant any time, like a 12% return in this good market. Thanks.
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Bernie Madoff was paying 12%..........  Sounds optimistic to me.... could be wrong
Originally Posted by Judman
PS, if you think Trump is “good” you’re way stupider than I thought! Haha
Sorry, trump is a no tax payin pile of shiit.
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Campfire Ranger
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Campfire Ranger
Joined: Dec 2013
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The more I read about Dave Ramsey the less credibility I think he is. SOME of his advice is common sense and good. SOME is good for some people and not for others. He was a complete utter failure in finances and ended up in debt up to his eyeballs because of bad choices. His advice is geared toward people heading down that path, or already where he was. People who make good decisions from the beginning might find another path works better.
A home isn't as great a financial asset as many believe. My mom and dad paid $25K for the lot and to have a home built in 1972. After they passed it sold for $103K 41 years later in 2013 for a $78K profit. But in those 41 years they paid insurance and property taxes every year. It was painted twice, re-roofed twice, the HVAC system replaced twice, water heater twice, kitchen appliances replaced, new floors and the driveway was repaved once and finally broken up and new concrete installed. For whatever reason the septic system lasted about a year after we sold it and the new owners replaced it.
When you back out the money spent for taxes, insurance, and upkeep there was very little profit after 41 years. They had to have a place to live, correct? Look at all the taxes, upkeep and maintenance as their rent payment. Also, your area saw WAY less appreciation than ours. Old man built his house in 1972 for less than $10,000. (Did all work himself on the cheap) 1260' ranch on a basement and acre lot. It's worth easily $240,000 today. Whick is 7% appreciation per year so much higher than the 3%-5% average. Your parents home appreciated at 3% per year (low average). Guess it really depends on the area, initial purchase price, location etc.... My uncle bought a farm outside town limits for $37,000 in the seventies. Town spread to the edge of the farm which is now an industrial park. Sold 40 acres for $40,000/Acre for 1.6 mil. That's close 10% appreciation so way beyond average. Wealth building takes good choices and good luck too.
Last edited by jackmountain; 07/30/19.
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Campfire Tracker
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Joined: Nov 2004
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Lots of good points here. Ramsey has good ideas for people just getting started. He mentioned getting an financial advisor. I had there and they were just awful. The time came when I knew the last one was just terrible. He sold me Non Traded REITS and loaded Franklin funds. It has been 5 yrs now and the Non Traded REIT is stuck there , not able to sell it and went from 25 per share to 17 and 7% dividends to 4%. Five years and still under water. The Franklin funds were sold but I track them and I would likely be up 5%?? after 5yrs. I stayed with him for a little over a year and was gone. Did not even bother to return his call and to make matters worse my sone worked there and they fired him a while later. For what it's worth , there is a Pimco bond fund I have been happy with for about a year. The ticker is PONAX. It pays monthly and comes to a bit over 5% in dividends per year. The share price stays almost the same but goes up and down a bit. I put my temporary money in it like future tax money I saved for property taxes ETC and in a ROTH. I low 5% is not much but it only lost 10% in the crash 10 yrs ago and went back up pretty good. I am way ahead doing my own investments . Here is the catch. I could get rentals and do well. I have been a carpenter for 38 yrs. I could go work on properties for sweat equity , or I could stay at work for $45-50 per hr. I put in two bids on 2 rentals 6 yrs ago. I would have done better had I go those two houses. I went with stocks and some bonds. My income is about $18,000 per yr. Not bad, and almost completely tax free with ROTHS, 401's and qualified dividends that are low taxed, with my Municipal bonds that are tax free on the divies. I have 38 investments from $2,000 in Owens Corning to $100,000 in British Petroleum and everything else in between. Here is one catch though. I studied investing for about 5 yrs now , almost every night . I learned that it is very hard to beat a handful of index funds and a few bond funds. I make almost exactly what the market does but I do it with almost half the volatility. A good way to start is index funds if you are young, but not if you are over 50 or so cause the market is very high, but might go a lot higher. Safe dividend stocks like the Dividend Kings are a good bet. AT&T, Exxon Mobil, Walgreens, AO Smith, Kroger Foods are good companies that have raised their divies an awful long time, even through the crash. I hope to get to about $25,000 in divies in 4 yrs when I turn 60. I should get $1,700 form S.S. but lets say $1,500 and hope for $700 from my Carpenters pension. This gets me $50,000 a yr. I think I can do that forever cause I made only $40,000 last year and saved $18,000. I am cheap , love life on the cheap. Get a kick out of guys with $50,000 boats. My boat is 29 yrs old as of Saturday and I catch more walleyes that almost all of them hot shots. Also, I have no debt and house has been payed for 10 yrs. The Lord with contentment is great gain. very insightful post, your tip on the pimco fund isn't a bad one. 5% isn't a bad gig if you can liquidate it easily. This is an interesting thread. I think it shows different people view retirement and what is enough totally differently. I think this depends on where you live and also what standard of living you want. There is no right or wrong answer. Its you and your own happiness. For me enough is a check for $20k/month in passive income. I don't see how you are going to accomplish that in stocks and "good growth stock mutual funds" The dave ramsey miliionaires aren't coming to the table with that level of passive income. I would also ask that if anyone knows someone that has built a portfolio with stocks that reaches 20k/month and didn't use inheritance or some lucky lump sum to get there I would be highly interested in talking to them. I personally think those people don't exist. I think the dave ramsey millionaires are people that have a paid for house, have 120k in a 401k, colllect $1500 a month in social security. and collect a pension, which probably totals 5-6k in income /month and they are calling themselves retired with that. The problem with dave's strategy on real estate is that its kinda a mediocre investment if you don't use financing to accelerate it. Lets say you have 300k in cash to buy a rental house. Your investment is only appreciating 3% a year, That only keeps pace with inflation. So your cash nest egg investment most likely never gains in net value relative to inflation. Instead if you buy 3, 300k houses. you are getting appreciation on 900k in assets. so instead of 9k/year in appreciation. you are going to be getting 27k in appreciation on the 300k investment, that is 9% right there!!! even if you broke even on rents. Also the other beauty of real estate is you are able to keep rolling up and never pay taxes on the appreciated value. AND there are other things you can do with depreciation, google cost segregation study if you are bored. with stocks you are paying taxes on the gains, with real estate you are deferring those taxes if you do it correctly. with stocks you have no leveraged appreciation. Also in most cases when you invest in the stock market you are depending on appreciation of the stock, Depending on a value increase IMO is gambling. If done correctly you invest for cash flow with real estate. That way you don't depend on appreciation, instead that is the giant cherry on top when you go to sell. Less than 3% of retirees have 1 million or more. You said you need to have 20k a month, and that would be 6 million dollars in a liquid account. General rule is 10-14 times income in retirement, so I guess you make 500-600K per year? how to I plan to reach that? 7 million in gross real estate holdings, 2 million equity posistion, 12% cash on cash return on my 2 million. Its not a cake walk to pull that off but if you study it, are careful its doable even in the insanely priced real estate market I live in. Its going to take me about 10 years to get to this point. the 401k people will never hang with this. Dave ramsey has no answer for this level of income. How far along to the 9 million dollar 10 year projection are you? How far did you come in the last 10 years? I have 7 figures in 401K, where can I get 12% in any market ant any time, like a 12% return in this good market. Thanks. how far am I along with it, well this is a pretty personal question that I would only answer privately. 12% isn't all that magic. I have friends that get 20-35% in real estate. OR the real nugget is infinitie return. They have no out of pocket money in the property. I can explain how this is done but it would take me a bit too. They are better than me and do if for a living. They have a network for ways to find deals. There are a couple ways to get to 12%, Buy a house that needs rehab with private lending, AKA cash, do the repairs, Then have the house appraised with the repairs done, This is a concept called forced appreciation. you get a value greater that the cost of the repairs you make, What it normally means is you have 20% equity in the property but it only cost you 10% to get it. your positive cash flow divided into your out of pocket is your cash on cash return. The other way is figure out highest and best use of the property. That could be renting out a mother in law basement to someone else and having 2 renters in the same house. OR it could mean any number of other things done to increase rents. maybe adding bedrooms etc. 12% isn't a hard bar to get to, but its not just everywhere, you need some education to get that in my area. my area has had insane apprecation over the last 6-7 years. Rents have lagged behind values. that means finding deals is harder.
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Campfire Ranger
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Campfire Ranger
Joined: Dec 2013
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I bought a town house in '08 for $53,000, spent $30,000 renovating it. Held it 8 years, cash flowed $4,000/year which paid for the renovation. Sold it for $105,000 in 2016.
Bought a fire damaged house on short sale for $40,000. Spent $35,000 renovating it and sold it for $117,000 3 months later .
Buy the stuff that scares everybody else. Buy a house that was never updated or maintained but is in a nice established neighborhood.
Buy single family homes in R2 zoning, add on and make it a duplex. Don't get attached or renovate like you're gonna live in it. Do bare minimum. I've bought and simply cleared the overgrowth, mowed, pressure washed and cleaned out the interior and sold it to an investor to finish the flip and made $15,000 in a 4 week period. Like Cummins said, every property is different. You have to be creative and think outside the box.
Last edited by jackmountain; 07/30/19.
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Seem like Cumminscowboy has a dividend mentality. He uses rentals instead of stocks. Yes, Cummins cowboy might take a big hit in the value of his properties, but he will likely keep the same amount of rental income. Does it matter if his property values drop 50% ?? No , it does not. Not one bit, , , if he can keep his rental units full and they keep paying rent, and he stated he did during the 2008 crash. Now , those rental properties are worth much more. He stuck it out and was rewarded. I have an investment of stocks and bonds, very carefully selected . No different than how carefully Cummins Cowboy selected buying his rentals. He did not loos one cent in capital cause he did not panic and sell at a bad time. His rentals continued to pay the loan, taxes and him in that time. My plan is much the same. I buy stocks and bonds and am very careful what I buy and when. I buy stocks and most have not cut their dividends in 25 yrs. The first thing I look at is the companies income, what they make, their debt level, their payout ratio ( how much of their funds from operations go to paying dividends) and very importantly , did they cut their dividends during the crash and did they have the money to pay divies without borrowing. I have stocks that have increased dividends for 43 yrs, ( Walgreens, Exxon Mobil, and some others. I believe they will do the same in the next meltdown and I likely will not see reduced dividend income despite the stock value plummeted. If it plummets, I likely will reinvest the divies and buy the shares at much lower prices. much like Cummins cowboy likely did when real estate was very low. Instead of panicking, we see opportunity to buy at a depressed price. Sure , times could get so bad that these companies could crumble and Cummins Cowboy could see empty units. I will cross that bridge if it ever happens and it just might. I buy when there is so much pessimism that everyone else is selling. I did this with land 30 yrs ago. I bought 7 ac. on the S. Fork Flambeau River for $3,000 cash. It is now worth at least $50,000 with a small cabin on it. Taxes hardly count @ 200 bucks a yr. I enjoyed it for 30 yr to boot. Buy what you know, at the right price and time and you will do very well. Also, I bought REITS 1 1/2 yrs ago and am up at least 30% with the divies. Buy what you know. If you know guns, you will see a deal noone else sees. Old cars, Land, lumber, antiques. Heck , there are guys out there buying baby bull Holsteins out there and making good money 14 months later for beef. Why? They know what they are doing. My dad bought 2 houses and fixed them up. One in 2000, one in 2010. We sold the one we bought in 2010 and broke even. Mom sold after my dad died. The renters ruined a lot of that house in 8 yrs so she did not make capital gains but we figure her rental was equal to about 8% in dividends. Not bad but heart breaking to see that house when they moved out.
But the fruits of the spirit is love, joy, peace, patience, kindness, goodness,faithfulness, Gentleness and self control. Against such things there is no law. Galations 5: 22&23
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Joined: Aug 2005
Posts: 28,265 Likes: 7 |
Well said ihookem. I think you hit the proverbial nail on the head.....concentrate on what YOU know and are comfortable with. For me it is oilfield service companies primarily, for cumminsand jackmountgain they obviously understand what they're doing with real estate, and you have a great plan yourself. Like gregintenn said, do something, early in life, and stick to it. You'll be glad you did.
It is irrelevant what you think. What matters is the TRUTH.
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Campfire Ranger
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Campfire Ranger
Joined: Feb 2010
Posts: 16,106 Likes: 2 |
You guys are right that there is good money in real estate. There is also a lot of work and headache in dealing with it. When you rehab a house, do you count your time and labor? Buying mutual funds takes no labor and very little time If you enjoy working on houses, that is great. I do not.
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Campfire Ranger
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Campfire Ranger
Joined: Aug 2009
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Good and interesting thread. Proves there are many ways to skin this cat.
Originally Posted by Judman
PS, if you think Trump is “good” you’re way stupider than I thought! Haha
Sorry, trump is a no tax payin pile of shiit.
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As a side note. If you know anyone who is a renter , and one spouse dies, the cost basis goes up to what the value on the property is at the time of the spouses death. This means if they sell like my mom did after my dad died, the cost basis what a bit more than what she sold it for so she pain no capital gains on that property so you will not pay capital gains on the rental at the time of spouses death. Just saying.
But the fruits of the spirit is love, joy, peace, patience, kindness, goodness,faithfulness, Gentleness and self control. Against such things there is no law. Galations 5: 22&23
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Campfire Ranger
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I build for a living so it only makes sense to invest in what you know. If I was a suit and tie guy driving a sedan, I doubt I would invest in real estate. I spend a lot of Saturdays mowing, painting, doing repairs etc...
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Campfire Ranger
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Campfire Ranger
Joined: Feb 2010
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Devise and adhere to a plan that you are comfortable with.
Live within your means.
DO NOT invest money into anything that you cannot easily explain how it works to someone unfamiliar with it.
Consider risk, return potential, and tax implications before investing.
Do not take investment advice from broke people.
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Posts: 584
Campfire Regular
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DON'T borrow money and you can't go far wrong, for long.
""Mute the Greeniacs. Open the pipeline. Bury the Russians." - JPR - 2022
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Campfire Outfitter
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Campfire Outfitter
Joined: Dec 2008
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Devise and adhere to a plan that you are comfortable with.
Live within your means.
DO NOT invest money into anything that you cannot easily explain how it works to someone unfamiliar with it.
Consider risk, return potential, and tax implications before investing.
Do not take investment advice from broke people. That’s good advice, and that’s exactly why I don’t buy baskets if stocks hoping they will go up. I buy stuff I think I can make money on, buy low, sell high. Don’t be afraid to sit on the sidelines when nothing seems like a deal, patience pays.
"Life is tough, even tougher if your stupid"
John Wayne
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A lot of food for thought here. I understand real estate because a good friend wants me to go in with him. I dont know if I want to devote the time it would take to make a real go of it.
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Campfire Oracle
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Campfire Oracle
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DON'T borrow money and you can't go far wrong, for long. More important than any other advice. If you can't afford to pay cash for it, you can't afford it. And yes..that goes for cars and houses too. You can't believe how cheap you can live when everything is paid for.
"...the left considers you vermin, and they'll kill you given the chance..." Bristoe
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Campfire Ranger
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Campfire Ranger
Joined: Dec 2013
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Devise and adhere to a plan that you are comfortable with.
Live within your means.
DO NOT invest money into anything that you cannot easily explain how it works to someone unfamiliar with it.
Consider risk, return potential, and tax implications before investing.
Do not take investment advice from broke people. Last line. If your financial planner lives in an apartment and drives a Kia, you might need to rethink your choice.
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Joined: May 2004
Posts: 2,818
Campfire Regular
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Campfire Regular
Joined: May 2004
Posts: 2,818 |
Devise and adhere to a plan that you are comfortable with.
Live within your means.
DO NOT invest money into anything that you cannot easily explain how it works to someone unfamiliar with it.
Consider risk, return potential, and tax implications before investing.
Do not take investment advice from broke people. Last line. If your financial planner lives in an apartment and drives a Kia, you might need to rethink your choice. As Dave says “ don’t ask broke people for financial advice “
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Campfire Tracker
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Joined: Nov 2004
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As a side note. If you know anyone who is a renter , and one spouse dies, the cost basis goes up to what the value on the property is at the time of the spouses death. This means if they sell like my mom did after my dad died, the cost basis what a bit more than what she sold it for so she pain no capital gains on that property so you will not pay capital gains on the rental at the time of spouses death. Just saying. yep that is how it works the value basis increases, capital gains can be avoided entirely. The problem I have with stocks are IMO they are run so that the CEO and board members get rich and they are the ones looking out for them. Look at a company like yahoo. marissa mayer runs the company into the ground and basically bankrupts it but walks off the scene with an insane amount of money. I know some people who took a company you may have heard of public 8 or 9 years ago. The best year the company ever had was when they made 10 million 1 year. every other year they broke even and the year before they went public they lost a couple million on paper. Yet the IPO went for $500 million. the investors actually valued the company at a half billion?!?! within 5 years the company was trading at 1/5th the IPO price. The only people that got rich were the founders of the company and the private equity firm that bought part of the company in a private placement. I see insane CEO pay. to that I say why? you have no say in that as a stockholder. The company can issue more stock, ie print money. with real estate the sticks and bricks will always be worth something. The land will always be worth something. It will always cost market rate to replace the house. Stocks well no company lasts forever. a house built in 1940 is probably still there. a company started at that time, what are the chances they are still in business? its just seems to much value is based on hype with the stock market. Not to say that real estate isn't overpriced in my area, it very much is overpriced. I actually want a recession to hit. a recession is when the real money gets made. one thing I look at with real estate is what is new construction costing. new construction in my area has the widest split I have ever seen from existing construction. a 300k existing home with cost over 400k if you were to build it new. Years ago that split was probably less than 15% as opposed to over 30% that says to me existing homes are still a decent investment because you simply can't replace them for close to the purchase price. I say that if you can cash flow your property if the rents had to be reduced to levels seen 10 years ago, during the great recession you shouldn't be too much of a risk, because if you are, everyone is going down if they pull back more than that. it would be a depression instead of a recession. Also with all this, there are laws that can be used to protect your assets. just like trump went bankrupt on his business but never his personal side.
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