[Music]
dave ramsey now there are certain things
that i do agree with dave when it comes
to personal finance and paying off your
mortgage but
of course i also disagree with some of
the things that he says
about personal finance and i do
understand that that his advice
isn't for everyone now in this
particular show he talks about whether
you should pay off your mortgage or
invest and why it's important to pay off
your mortgage
now being that our channel is all about
paying off your mortgage as well as
investing in real estate i couldn't pass
this opportunity to comment and react
to what dave has to say about this
situation now before i go press
play be sure to subscribe to our channel
and hit the bell notification icon if
you guys want more information on how to
pay off your mortgage faster
as well as investing in real estate so
let's go and press
play and see what dave has to say now in
regards to the video i'm going to leave
the link down below so that you guys can
watch the original video
it is an older video but i think it's
still relevant to what's going on today
as far as your decision whether you want
to pay off your mortgage faster
or invest with the money all right so
let's go and press play
thank you for having me so um my husband
and i
make 240 a year whoa
collectively well but then again it's
there in california so
the income may skew higher mainly
because a lot of the a lot of the
cost of living is higher so i i meet a
lot of people in california that make
hundred thousand
hundred fifty thousand dollars yet um
they're not living you know
a very luxury lifestyle because a lot of
times the cost of living in california
is a lot higher than some of the other
parts like tennessee where dave is
located so
an engineer and i work in business
management
great thank you
and as far as debt um we
we have credit card debt as far as just
maybe two to three thousand a month
which we pay
every month so it never rolls over and
we also
invest now one thing uh she says that
when she says not rollover is
she she may use two to three thousand
dollars a month on her credit cards but
quickly pay it off down to zero
now depending on how she's doing this
this actually may impact her credit
score
since she's there's not enough there's
no balance activity showing
she actually may have a less less than
favorable
credit score for where she is um just
something i want to point out best 15
in each of our retirement accounts
they're roth 401k
so about a year and a half ago we were
fortunate enough to be able to buy a
house
and we put 20 down now as of today we
have 590
000 left in our principal
we've been able to save on top of paying
our mortgage
about fifty thousand dollars a year so
up to this point
uh we have about just north of a hundred
thousand dollars so the question is
um with that excess income that we have
should we be adding it
beyond the 15 in retirement should we
start investing in looking at
investment properties or should we be
paying off
our principal on the house well what we
teach is
um and what we've proven to be true
is that the shortest distance between
where you are
and wealth is not income
it is to get control of the income that
you have and not give it to other people
in the form of debt
so well and also not only just debt but
you want to control the income in a way
that
it necessarily can't be taken away from
you uh
easily right if you work for a job then
of course
your boss your employer may say hey
sorry you're no longer working here
therefore you lost your income so the
quicker you can actually control income
not from the sense that how much you
keep which is very important i agree
with dave in that matter but
also how strong is that source of income
and where it's coming from so let's
continue listening from dave so
as we studied 10 000 millionaires in a
millionaire study that we did last year
we found that the typical millionaire
out of those 10 000 had paid the average
was they paid off their home in 10.2
years
and they never borrowed money for
anything again that's very interesting
because uh when he says they never
borrowed from
any anyone ever again well we have to
distinguish
are they millionaire by personal wealth
or are the individuals that control
millions of dollars of assets through
business ownership because you see
a lot of times like for me i'll give you
an example i control businesses that
produce
millions of dollars i own a private
equity company not to brag or anything
but
if you were to take a look at my own
personal balance sheet i i own squat
in fact i'm probably the negatives but i
own nothing
so it's really important to distinguish
what type of millionaires are they not
all millionaires are created equal
there are millionaires that by by nature
what they own they
they're millionaires that way but they
all they could also be
they're business owners that produce
millions of dollars of income
and a lot of time this is where i
disagree with dave because
business owners have to have a different
mindset and processes
as far as how to make the business
actually successful uh and i'm i'm
totally cool
and i'm totally okay when it comes to
businesses borrowing money for the sake
of making more money because those are
working capital
you're not you know businesses aren't
just borrowing money to buy
a fridge or car or a boat
which i that aspect i agree with dave
but
i think one thing to distinguish between
what type of millionaire are they are
they just
millionaires by personal assets or
millionaires by
business ownership and they have
businesses that are producing income
so that's really really important to
distinguish because how you distinguish
that your data can be also skewed
it may be very unfair to compare an
individual that owns a business
that's worth a million dollars versus
someone who's got a house or
personal assets worth up to a million
dollars or more
so um so that's one thing that i would
not agree with dave
because you have this tremendous cash
flow in your life when you do that
so based on that and 30 years of
experience that told us that that's what
folks were doing that were actually
building wealth
not discussing it uh not having an
opinion about it over thanksgiving
dinner but actually
doing it um what we found was
that um we developed what we call the
baby steps
baby step two is to be debt-free
everything but your house
and you know and what we teach and what
i personally live is
um i have no credit cards i have debit
cards
and by the way you pay those off every
month too so i don't have a i don't have
the illusion
that i'm somehow using this tool because
you end up spending more when you're
doing that so debit cards is what we use
yeah that's another thing i disagree
with uh dave is
purely using debit card which by the way
if you're using
purely debit cards um as as contrast to
a credit card
if you use credit cards the right way
like this lady is using irene she's
using credit cards and paying it off
right away
she's she's not doing a bad thing mainly
because well one she gets
points she probably has cards that gives
her gives her points or some kind of
cash back rewards
so if she's an individual that uses a
credit card say two to three thousand
dollars for this example
and then pays it right off well she
won't owe any interest
but she she's also gaining points uh any
perks benefits credit card benefits
uh cash back rewards which we also can
add a
tremendous amount of travel perks or
my credit card you can use it towards
amazon shopping i mean it's great so
i'm not a a never credit card person
i like credit cards just make sure you
use it responsibly because
there are ways you can use credit cards
and you fall into a trap
so let's continue we stay debt free then
we have an emergency fund of three to
six months of expenses
in addition to the 100 okay that's
another one i disagree with because
and here's why and i think a lot of
finance experts may also agree with me
is the day and age of
emergency expenses emergency savings
account is over
and the reason why i say that is well
what is your savings account paying you
like
0.5 0.25 right
and this is one of the reasons why
advocate using something like a home
equity line of credit which
if you're not familiar with that we have
a separate video where you can go watch
that
and we're going to show you how to pay
off your mortgage faster using a home
equity line of credit
but the reason why i don't have a six
month or nine months of savings
because savings don't pay you anything
same thing with checking account
you let's say you stick twenty thousand
dollars in your savings account it's
only earning you
25 which isn't a whole lot so instead of
doing that
what i like to prefer to do and i'm
going to switch to the my whiteboard
here i've been taking notes by the way
instead of putting your money let's say
20 000 in your savings account that's
earning you 0.5 percent
annual percentage yield we've instead
used another tool like a heloc where it
may have
debt and this may cost anywhere so he
locked interest rates are
right now anywhere between 2.5
to about 5 depending on which lenders
and what programs you go to
so if we throw that same 20 000 into the
home equity line of credit
it actually lowers our average what's
known as average daily balance
which equals to lowering the principal
balance and also does saving us money on
two to two point five to five percent
interest on average with the same twenty
thousand dollars
now the beauty of the health for those
are not familiar is that you can take
the money out of the heloc whenever you
want
so you can write a check out of the
heloc you can actually deposit take the
money out of the heloc and put in your
checking account
in a matter of seconds just using your
phone app or on your computer
online banking just move the money out
okay now of course
some of you dave ramsey loyalists you
might be shaking your head
right now saying that is a terrible idea
well
well hear me out on it and check out the
other video i made i i think
i think you guys some of you guys may
like what i'm going where i'm going with
here so let's go and continue with this
video and
see what else dave has to say thousand
do you have that emergency fund
uh so the emergency fund for six months
would be around thirty five thousand so
that would be a part of the
100 okay so you would have 65 spare
money above that
yeah 65 000 making zero money for you
0.5 percent
then it baby step four would be next and
that's where you're putting 15
which you said you're doing into
retirement five
is kids college do you have children no
well that's another thing i disagree
well why does it have to be a college
right
yeah i mean you could be repurposed into
business um
if your kids want to start a business or
maybe they want to go to trade school
we got to stop propagating this this
thing where we're
mandating all kids go to go to college
okay
i don't think that works and i can go
down a whole rabbit hole rent on on it
but
uh we i believe personally i think we
need to stop propagating all kids to go
to college not all kids should go i
think some kids do great with trade
schools some kids do great
starting a business uh some do great by
joining the military
right so i think we need to stop
propagating we're implying that a
college education is a
must which is not in our current modern
society
okay then we would skip five for now
and six is pay off the house early
once you've done that then you max out
retirement and other wealth building
tools like
buying investment property with cash and
those kinds of things
but if you get rid of your house payment
it springs
and debt on your home it springboards
you into the future like crazy
irene you guys are making a ton of money
you are doing
really well how old are you guys
30. yeah i thought so i was getting
ready to say 32 okay
and so you just it just felt like it and
you're just you're just
you know you really got a a massive
wonderful start in both of your careers
i would agree and you're killing them
and you're making a quarter of a million
dollars a year that's so
cool i'm proud of you it's incredible
thank you and just
and so what you don't want to have are
some of the stories i've met with in the
last 30 years
where you look back and you say gosh you
know we were making that kind of money i
wish we had
and you don't want to have regret you
know you know and
and so what i would tell you to do is
based on what we've taught all these
years is i would take 65 000 throw it at
your house and
everything above 15 of your income
and and enjoying your life you need to
enjoy your life you make a lot of money
you work really hard
um but anything above that you said 50
000 a year that sounds reasonable out of
what you're doing or maybe a little more
even
towards that house and let's get this
house paid off in about five or six
years
okay yeah i agree with dave about paying
down your house faster but it's the
question of how and also
when this is something that a lot of
financial gurus don't talk about is
when should you do certain things when
should you invest when should you pay
down your house which
when should you peel back and when
should you advance there's timing to all
this and
to me i see investing and also paying
down your house or your general finance
uh almost like a battle right there's a
time for everything as far as when
should you retreat and when should you
advance when should you attack
when should you build your you know
defense structures in terms of your
finance
finances um a lot of times i haven't
heard dave say that maybe i'm wrong
maybe i'm wrong but i haven't heard dave
mention about when should you do certain
certain things
right and i'll talk about some of my
philosophies in that in just one sec but
let's finish this video
and i'll kind of wrap things up and and
you don't you got no house payment by
then you're making 300
you're gonna bank so much money so fast
it's gonna be unbelievable perfect so
then once we pay off the house
that's when we should be able to accrue
enough um
liquid cash for an investment nope i
disagree with that 100 because there
there are ways to invest
without actually touching your money and
i'll i'll cover that in fact
i'm going to make a list of all the
things i should be talking about um that
i think it's going to help you kind of
get around what dave is talking about
you don't have to wait until things are
paid off
to start investing and i'll show you how
so let me put this here
okay you could buy another rental house
couldn't you
think about it because by then i mean
we're talking five years out
you're 35 years old you're probably
making over 300 household income at that
point
i mean or more even i mean i don't know
you're just killing it
but i mean you're making serious bank
and you got not a bill in the world
you have not a single debt i mean you
could really bank some money then
because you're you're you mean your
house payment's 70 thousand dollars a
year right now
yep our so our mortgage is about 2800
with everything included insurance
utilities it comes out to about four
thousand
okay all right so i missed it so it's 48
000
a year okay instead of instead of 60 but
you know still i mean that's another 50
grand a year
or so and plus what you can already do
plus you can plus you're making more
money in my scenario by the time you get
there
so we're talking about 150 200 000 a
year to go toward investment property
at that point okay yeah which is really
really slow way to growth um for those
who don't know my brother in the story
um you might be this might be your first
time watching my video uh which by the
way welcome so
my brother and i uh we bought 75 rental
units meaning we had
75 tenants paying us rent every month
and today we control a private equity
company which means that we're
easily buying thousands of rental units
so here's here's some summaries um
and i think this will kind of
encapsulate everything and i'll explain
some of the things that i talked about
earlier about
when to invest and when to pay to pay
off your mortgage and also you don't
have to wait until you're done paying
off your debt
to start investing this is i think
that's ludicrous um and i
i think there's there's gonna be i think
there's better ways to do that
so first of all i think dave does a
great job again i agree with a lot of
things that dave has to say i don't like
debt either
not a big fan of debt especially it's
not working towards something as far as
creating profit for you
uh and i agree with that but at the same
time i think dave's advice and a lot of
the
a lot of things he discussed mainly goes
to
uh individuals that aren't entrepreneurs
they're not business owners
they're just working their job w-2 um
and
and they're just kind of going along
that path so let's go and discuss the
timing as to when to pay off your
mortgage and when to start investing and
getting a little bit more aggressive
because that's something that i haven't
really heard dave talk about
especially in this video so at least
here in the united states and most
developed countries
we follow a market cycle or economic
cycle
there are times that we do really really
well as an economy and there are times
that we don't do so hot and
you know we may call it a recession or
even down to a depression
so right here this curve that i'm going
to draw so i'm using my white board here
okay
right this is when the economy is doing
really really well job growth
overall wealth and equity is going up uh
stock market is doing really well
home prices are going up economy is
doing really really well so this is
where
the investor confidence is all-time high
but it's also followed by a time where
there's a
cooling off a crash if you will a
depression or
a recession that may come followed by a
massive growth so a good example
is that in this growth period this is
like 2003
to about 2008 right 2008 is when we
started to see this kind of a down
down turn uh into a recession now from
2009
to i say about 2017 is when we kind of
saw this
bouncing back i think 2016 2017
is when we started to see this kind of a
growth happen and i think the strongest
we've ever been was 2018 and 19. so
2003 2008 when the market is doing
really really well okay
the news headlines are all saying hey uh
investor confidence is all-time high
home prices are great
i think this is a great time to start
paying down your debt so this right here
pay down your
debt okay and the reason why i don't say
go invest although
you're gonna find some opportunities i'm
not saying you shouldn't invest at all
there's just going to be less
opportunities in those times of time
because a lot of times the asset prices
are increased you're going to end up
buying homes or buying stocks at a
higher price
whereas you should you should really be
buying down here right when
the prices are really low so this is a
great time to pay down your debt
sell assets if you want to sell any
assets
and i think this is a great time to cut
down your expenses okay
it's going to be very very tempting for
a lot of people when
times are doing really well to go buy
stuff to spend money to waste money to
go to you know to go buy
unnecessary do dance as rich that poor
dad would say
so this is a great time when things are
expanding this is a great time for you
to cut back
okay this is a great exercise of
restraint if you will
now when the times are not doing so hot
okay
just like 2008 market crash 2008
recession
this is a great time to buy and invest
okay because asset prices have come down
things are cheaper
uh you can buy prices i've seen back in
2008
through 2012 you know you were buying
short sales foreclosure properties
pennies on a dollar man i mean it's so
cheap so this is a great time to buy
invest expand
and also you can increase costs to
increase expenses here
but obviously those expenses have to be
for the sake of actually making money
uh you can't just be buying stuff for
the sake of buying stuff my philosophy
is
every dollar that you spend on something
should almost have a return
right i i kind of kind of fall in the
line of what kevin o'leary believes in
every dollar that i spend
needs to come back with more dollars so
i don't just buy stuff like this
microphone i spent like 300 bucks on
this
i expect that this will have a monetary
return of me
being able to create quality youtube
videos or creating
quality course content right so
everything that i do
is an investment no matter what so this
is something that i think dave really
doesn't talk about
mainly because this does require a
little bit more of a
an advanced thinking cap a little bit
more of a macroeconomic thinking
but this is how this is generally how i
follow the market and
economic cycles and this is how i kind
of you know contribute to my behavior so
in 2021 i think we're somewhere and this
is just my hypothesis
just my hypothesis i think we're
somewhere around here
i think we are going to experience some
kind of a downfall or some kind of
cooling off period
where i think in the next two three
years might be a great opportunity to
start buying investing and expanding
whereas you're going to focus less on
paying down things although you still
could
but i think this is a great time to to
expand and buy the other thing that dave
talks about is
waiting till you end up paying down your
debt until you can start
investing which i don't believe that to
be true i think there are other paths
you can take
to start investing while you're working
to pay off your debt which is actually
something a lot of my clients and a lot
of my students are doing right now
so here's how that works and i draw a
two i'm going to draw a line here
a middle line and this right here is pay
off
your mortgage
okay and this is investing
okay now the way that my brother and i
start investing in buying rental
properties
is to not use our own money or credit at
all now i know it sounds
weird fake or that might sound scammy
but there is a way and i'll show you how
that works
so if you are on track of paying off
your mortgage continue to do so
with your own money with your own
finances right because there's a
conflict here right if you want to pay
off your mortgage you should be throwing
more money at it
now dave argues that you can't do both
because you can only use
you know a set of money to towards one
thing where you can only focus on
doing one thing whereas this is a little
bit of a different strategy where you
can do
both and not have any conflict with each
other you can still pay off your
mortgage 100
energy and you can still invest 100
percent there as well
so here's how the investing part works
this is how my brother and i grew our
portfolio
what we've done is we started buying
properties in fact i'm going to next
page
we started buying properties using none
of our own money and
here's how it works uh we got really
good at finding these
amazing opportunities these deals known
as seller financing now what seller
financing is
simply put is that we have here our you
know the seller
okay this is our seller okay that owns
this property
and instead of going to the bank to go
get a bank financing or a mortgage to
buy this property
the seller is going to give us the
financing so the seller essentially is
the bank and what that looks like okay
here we are us the buyer
there we go is what we're doing is we're
paying the seller
monthly payments
in exchange for uh the ownership right
of the property and each monthly payment
contributes to the equity and the
principal of the house
so as we're paying the seller each month
we get the ownership right
of the property so the seller no longer
owns it we own the property and we can
rent it out
rent it out to tenants so obviously the
monthly payment that we paid to the
seller has to be
less than the rent that we are
collecting so give you an example
let's say our monthly payment to the
seller is 600
a month okay that's principal and
interest so generally we pay
the seller uh principal and also
interest so that they have the incentive
to do this arrangement for us right
instead of going to get a
bank loan and uh getting our own
financing now the rent
suppose you know let's say is about 1200
a month so
right there already we may see some
profit potential because our rent is
higher
than what we pay the seller now using
this strategy of seller financing we're
avoiding
the need to use our credit to go get
another bank loan to get in more
quote unquote debt and this allows us to
dodge the bullet of using our credit
now the no money part is very simple
these types of deals are very profitable
we can set these up in a very profitable
way so what we do
is what i like to call the shark tank
method so we go and find
these amazing deals okay very profitable
okay high profit uh potential because we
don't want to use our own money or at
the time when i got started i didn't
have a whole lot of money
so what ended up happening is we brought
in a partner
who did have the money now at this point
the question you might be asking is well
why is
why doesn't this partner do the deal
himself or herself if
he or she has the money well for me i'm
bringing in
the expertise okay i got the expertise
i got and i also have some relationships
with contractors uh realtors property
managers
so for me i'm bringing in time expertise
the knowledge and relationship
of doing these deals successfully and in
fact i may have strategies
that i know that my partner doesn't know
that could really make this deal even
more profitable
than should the partner have done this
deal him or herself
so the partner is also bringing in money
for a piece of the prop
the profit so what that looks like just
like what i alluded to like shark tank
is that um commonly what we have done in
the past is that we create
like an llc uh the partner owns 50
okay and we own also
50 and then the llc is not then going to
go and buy
a property or invest in a real estate
property okay
the deal and all the profit that's
that's coming from this deal is going
back to the llc
and splitting 50 50. so in this type of
arrangement
it does require that you do have some
expertise that you do study up that you
have some education
about how to find deals and how to be
profitable of course our channel helps
with that by providing free content
about real estate investing
but this is a great way to not impede
or interrupt your effort of paying down
your mortgage
but at the same time this is going to
help you build profit and wealth
over time and not use your income and
not use your credit so
in summary okay what we're doing is
essentially not using credit by doing
seller financing because we don't need
to use
bank loans the seller is doing the
financing for us and where we get the
down payment or the funds to do the deal
is from partners that we're working
together to where they're funding the
deal and we're using our expertise and
knowledge to make sure that deal is
profitable now you might be skeptical as
to well who's going to give me money to
do deals well
it happens all the time on shark tank if
you have a great idea you have a
profitable business
or you have a proposal that is sound
well there's people that
want to invest in these types of deals
they want to invest with individuals
like you
who can bring profitable deals as well
as a time and relationship
because you are the crucial factor to
making that deal profitable
so this is why i don't agree with dave
when it comes to oh you got to wait
until you pay off your mortgage or your
debt
to start investing i think it's
completely baloney i think there is a
way of
investing and paying down your debt at
the same time
but yes the drawback is it does require
some research
it does require education and some time
for you to learn but
again if the goal is to pay off your
mortgage at the same time
invest thus bringing down your liability
and increasing your asset
this is the way to do it and this is how
we were able to grow our wealth
how we were able to buy 75 rental doors
while still paying down our debt it's a
workable strategy that has worked for us
and again is it for everybody
no not necessarily i think not everyone
can embark on this strategy
but if your goal is to buy rental
properties and grow your assets and your
income
while paying down your mortgage and your
debt this is a plan that doesn't require
waiting five seven ten years until you
can start investing
right away so friends i hope this video
was helpful to you and
again a lot of times i agree with dave i
respect dave he's he's got a tremendous
amount of experience and i know his
attitude
is hard he wants to help as many people
as possible with their finances
so i agree and respect dave in many ways
but i simply disagree with certain
things like how the debt should be paid
off
what strategies to use as well as
investment philosophies as well
if you guys disagree with me that's
totally fine and i think everyone is
entitled to their own opinion and their
perspective
i'm just sharing my perspective based on
my experience
of having to grow in a rental property
business as well as growing companies
with seven figures
and paying down debt uh if you agree
with me awesome
and share why you agree with me i would
love to hear your comments and feedback
about this video and my reaction to dave
ramsey
so with that being said if you guys felt
like this video was helpful and valuable
do subscribe to our video because we're
all about personal finance
business ownership as well as investing
in real estate i'll see you in the next
video thanks for watching