What do you think?
I touched the search button on my car radio the other day and landed on “The Dave Ramsey Show”. The caller had this story to tell:
“I am the owner of two houses that are in Florida, one is worth $250,000 and the other $350,000. I have paid for both of them.”
“I own a transmission shop, the whole is worth $400,000 but we only owe $70,000 dollars on it.
“I also own our current home which has a value of $350,000 and I owe $120,000 on it.
“My wife works and brings home $90,000 after taxes and I work at my shop but have not been able to bring home any salary due to the economic downturn for the past 6 months.”
“Due to the economic downturn, I have been trying to float expenses at the shop, and I have incurred $90,000”
“My wife does not want to sell our homes in Florida because by the time we paid listing and seller fees we would have lost over 45%.”
“What is there, that we can do?”
Dave began ranting and raving about the wife of this man being so impracticable in this critical situation and then he recommended that this fellow should sell one of his Florida homes to get out of debt! This recommendation is disastrous for many reasons. Here are some:
By mocking the wife, it assumes this fellow values money over her advice and concern.
It assumes he can sell his property(s) in a very depressed market.
It also assumes that if he pays of his debt he will not incur any further debt in his business.
The next assumption is that the financial crisis is over.
It goes against common sense by assuming that getting out of debt produces financial freedom.
Now we will study the facts:
Suppose this gentleman could sell his house for 55% of what he has in it. He will receive the utmost ($190,000) on the $350,000 home, and ($137,000) which is even less, on his $250,000 home. He can then pay off his debt and then he will have $47,500 left over. If he keeps spending money at the same rate, in his business, this money will last him about 3 months. He will then find himself at the same place he started only this time worse. He will have no equity that he can liquidate, to save himself, therefore he will go back into debt. Strike one Dave!
Secondly, it is only an allusion to be debt free in the society of today. The only debt free people that I have seen are the people that are holding signs in parking lots and on the street corners. We really should just face the fact that nobody can be debt free unless they own absolutely nothing. If you own anything, than you face taxes, service fees, utilities etc. Guess What? This means that you have to live in debt. Strike two Dave. No one wants to be a homeless hobo.
Thirdly, Dave, you ignored the fact that this caller obviously has some financial acumen. Just consider his entrepreneurial endeavors. Your hack attack was totally uncalled for and totally off base. The old attorney trick, if you cannot find fault with the deed attack the person behind the deed was employed here by you Dave. So, strike three Dave, you are out!
If you will consider this fellows situation it will become apparent that he has made some very sound financial decisions, otherwise where would the asset accumulation come from? And I would seriously doubt that his wife was just an onlooker in this financial expansion. For Dave to insult her, and mock her was totally wrong. But what can you expect if you call a group entertainer for financial council?
So besides prolonging bankruptcy as a result of selling his houses, what would be a good alternative?
Let us start with a little known, but nevertheless a true fact. Equity that is invested in real estate has no rate of return associated with it! The wealthy having known this for centuries have acted accordingly. This is the reason that the Infinite Banking Concept can be so beneficial to you. By Becoming Your Own banker you can have your money in a liquid form and secure place, still use the asset(s) which your money purchased and use the money that bought the asset(s) without penalization. Fact is, if you use the money for financing current needs and capital ventures… you will end up with even more money and assets with only one little caveat…you will not have to work any harder or longer to make that extra money because your money will be working too.
Even thought Ramsey rants and raves against it, participating whole life insurance is a very powerful tool available for anybody who is spending money today. Do not get fooled by the entertaining gurus who tell you differently. Who pays all of those entertainers? Bingo! It is the ones who are making money off you, by using your money, instead of you using your own money to work for you.
Tom McFie PhDis a professional financial coach and is nationaly known for helping people recover the money they currentley spend. Don’t Make another payment until you have viewed his Infinite Banking Video Then Contact him he can help you