Dave Ramsey for Real Estate Pros: What Works (and What Doesn't)

0:00Just because you can put 3.5% down or 5% down, almost always means you shouldn't. The other way I think about risk is the minimum down payment isn't the recommended down payment. I think Elon is going to have colonized Mars in the next three planets before the average 24-year-old is going to save $400,000. Cuz that's that's crazy. All the things that he was doing were right before, now we're wrong because he didn't have a clear head because he had financial stress. And so over-leveraged creates stress and it doesn't allow you to make the best decision you possibly can. Welcome back to episode 0009. And what they what they don't tell you at home is that if you make it to 10 episodes, which I don't know that we will, to be very honest with you, but if you make it to 10, you're in the top 1% of all podcasters. I don't even know what that means. It feels like a stat that's made up like, well, and we have applause. That's the kind of things we bring on episode 0009. Um, but seriously, uh, I really think Cole has got a shot at making double digits. I give it good odds, not perfect odds, but good. Vegas would bet on it. Cole, we got to get or we're I'm joined

1:03here by Cole, who we are very close to working on his nickname. Uh, Sea Dogs in the mix. We got some other things. Uh, we got some things, Cole. Cole, what did you think, I know you you have been pitching me on doing a podcast for the entire year you've been here and you've brought it up, I mean, daily. When I say daily, daily. Just kind of plant a seed in your a little bit. Cole, you plant a seed. Cole, what are your thoughts? What are you going through your head as we get ready to film this podcast that's all about Dave and why he may not be the authority if you want to be wealthy. Uh, what's going through your head, Cole? What are what should we get from that that fresh 24-year-old perspective? I'll be honest, I'm just excited to be here. You're excited to be here. Number nine out of 10. I mean, I'm just I'm just excited that Well, it's not number nine out of 10, Cole. It's 0009. We don't even know there is 10 right now. It's a huge cliffhanger. Will there be 10? But in all seriousness, on our last episode, uh, it was actually my favorite episode where I talked about the things I didn't do to be successful. Uh, instead of asking what did I do to be successful, I asked them what didn't I do. There was a variety of things I

2:05didn't do that may give you some insight into what I did to be successful, but others I've seen do similar things to be very, very successful. Uh, if you're looking to make more money, go back to episode three where we talk about how to crush it, how to get rich, Cole. There's a big difference between rich and wealthy and we talk about that on the podcast. And so, today I want to talk about Dave Ramsey and I'll talk about debt and some of his views. And it's not that I am anti-Dave Ramsey. I think he does actually a tremendous service. And I've never got the chance to meet Dave, but if I he was sitting right here, I would say, "If you have credit card debt and you have a spending problem and you can't get a wrangle around your finances." If you're in that spot, you should absolutely go listen to his baby steps. I think he does a tremendous service and I think he's got a lot of great advice to get out of debt and start saving. Cole, that's where it ends. That is where right there. If you get out of debt and you have the ability to save money, which is really just a needs versus wants conversation. All of us have have lots of things that we want. We want, you know, I want a gold Ferrari, Cole,

3:07but it turns out they quit making gold last season. So, I'm going to be stuck with red or something else. But, the point the point of that is there are things I actually need. So, I might want the gold Ferrari, but I need food, right? I need an apartment. I need things that make sense and no matter how much money I make, I've got to find a way to save something. And so, if you've moved past, once you've got out of debt, you've got a savings conversation, you understand you need to save money so that you can invest it, so that you can be wealthy, um, that is where you should leave the Dave Ramsey tunnel and move on. You've graduated. You know he does, he goes like he rings that bell, you should ring that bell and get the hell out of there because the rest of his advice is largely wrong. And because Dave was crushed by debt. And if you go back and look, I've heard that story lots and lots of times, but what Dave doesn't tell you is his debt's bad, you know, you should never take out any debt. But what Dave may not share with you that maybe he was just a dumbass on the debt side of things. Maybe he didn't have all the knowledge, there wasn't a plan, there wasn't a model. He took on too much risk and yes, he got smashed. But that didn't make the debt bad. That debt wasn't the tool, he was using it incorrectly. It's no different than

4:11if you go get a firearm and load it cold and you don't know how to use a gun, you could harm yourself. That is very possible. And money's a lot like that, right? It money in a way is a loaded gun. And if you don't know how to use it, specifically debt, it can harm you and or others. And so, uh when I think about that, I just think I think Dave does a great job, but let's talk about what Dave says. So, number one, no credit cards. No credit cards, cut them up, get rid of it, bad debt. But he assumes that your brain works so poorly that you couldn't see a brand new couch, a Gucci purse, a pair of shoes and be able to look at them and look at your card and go, "Nah, this doesn't make sense." Right? So, again, if you if your only mechanism is that I have money in my account, I'm going to swipe my debit card until that number hits zero and I'm going to do it as fast as I can, then I'm not going to spend any money until it's magically reloaded when I get my new paycheck and then I'm as fast as I can burn it to zero. If that's your methodology, you don't have a credit card problem. You've got a decision-making problem and you got to figure that out or you'll never be wealthy, right? It's a discipline issue. And anytime you're spending money on something you don't

5:13need, you're stealing from your future self. So, Cole, if you go out and you and you literally need to buy a car to get from A to B and you could accomplish that for say $15,000 and you which you could have a payment of, let's call it two or $300 and you choose to buy the brand new Range Rover and have a $2,500 a month lease, you are going to arrive at your wealth destination a lot later than the person with the car, right? Because at the end of the day, the amount of money that you have to invest on the period of time that you have to invest on the rate of return that you invested at is what determines your wealth, right? Best plant time to plant a tree, 20 years ago. The second best time is actually today. And so, Dave says no credit cards. I don't believe that. Number one, I think credit cards are a tool like anything used correctly. Uh also, I can tell you that if you done right, the points game in credit cards is real. Shout out for my points coach JJ Todd over at Travel Wealth. We'll drop his link. Uh I just love that dude. Um I thought I was a master of the points rewards game, but he really shows you how to maximize your business spend. And

6:16then also, you can use those points for really great experiences. So, what I do is I take my entire corporate spend, I do it the way he tells me to, use this card for meals, use this card for hotels. And at the end of the year, I get to take all of those points and go do an epic trip with my family in a way that I probably wouldn't have done it. Right? So, part of what I believe in in in wealth is the money part, but part of it's the experience part. And taking those points and flying in a lay-flat seat from here to Dubai was an experience that I wouldn't have paid for. Those tickets were $8,000 each. I got a family of five, that's $40,000, and I did it in I did it for $0. Taxes and fees around 700 bucks, and I did it all with JJ. And so, I say that to say, "Yeah, credit cards are bad, but what if you're paying off every month? And the money would it was just like a debit card in that context." The credit card's not bad, it's the use of the tool that's bad. I also said that all debt's evil. Just debt's just bad, it's the devil. Um I don't think that's true uh at all. And if you really look at it, right? Taking reasonable debt. And what

7:19is reasonable? There is no one-size-fits-all. Like Dave's trying to say that his way is the only way. What I believe is personal finance is personal to you. If you believe you need to pay all cash, absolutely go pay all cash, do your thing. I believe that reasonable debt, which doesn't focus on putting the minimum down, and we'll talk about some of those things. Reasonable debt on assets that go up in value, and that also have cash flow. That's my criteria. Assets that go up in value and / or have cash flow. Um he talks about beans and rice. Just live cheap for cheap sake. You know what? You could live a little better, but don't do it. Don't enjoy anything. Just grind it out for 20, 30 years, and then you can get a you know, a late model BMW. And I just think that's shitty. I think it's a crappy way to live. And I think it's all really all of his training or all of his um his coaching is all around scarcity. There's a lot of fear-based rapping. And if you really dig into Dave's story and look at it, you're going to see you're not seeing an abundant thinker. Right? His new EntreLeadership course is actually fantastic, but his financial coaching and training is all scarcity and fear-based. It's not abundance and

8:22possibility-based. And for me, that just doesn't connect. If you tell me that I've got to live a really crappy life for 30 years, and one day I could kind of live a little, I think that sucks. And so, find a way to live well now, and it may not be living well. Maybe the camping trip instead of you know, instead of going to the mountains at the at the Four Seasons. But you can find a way to create great experiences and happiness now regardless of your budget. And the last big part of Dave Ramsey's is you buy houses all cash. And I think for most people listening to this today, especially with the prices of today, I'm sitting in Maricopa County in an entry-level home, a $400,000 home, which Cole would uh agree with me here, would be hard to find. A $400,000 home and out Cole, how long do you think it would take? I want to I want a really honest answer. Cole, if we take the average 24-year-old, how long do you think it would take them to save $400,000 in cash? I The whole 30 years of the mortgage would be likely. I I think for most of them on the current trajectory, I think it's thousands of years. I think Elon is going to have colonized Mars and the

9:24next three planets before the average 24-year-old is going to save $400,000. Cuz that's that's crazy. But yet Cole, how many of them could get to where they can save 80,000 or 120,000? Like that is a that is a realistic target. Now I know most people are going to push back and I did FHA or or conventional and I got I had a lower down payment. We'll talk about that here in a minute, but buying a house all cash just isn't I don't think it's a strategy. I think reasonable debt. And so again, I think I think Dave's advice you just got to be careful on what it is. If you listen to it, type something in the comments. I want you to to type in there either abundant or scarce. Do you see Dave's advice being wildly abundant or just totally scarce? Because that's what I view it as. And so I want here's another way I want you to think about that. There's no limit on how much you can increase your income. So Cole, if you're out there, you guys are listening to this show and you make $100,000 per year. Cole, is it possible that someone could take their income from 100,000 to 200,000? Is that possible? More than possible. Could they take it from 100,000, I don't know, to 500,000? Harder, but but possible. Possible. Has

10:27someone done it before on Earth? Thousands. Okay. Has someone taken their income over the course of their life? Did they take it from 100,000 to a million? Yeah. Okay. People have done this. Okay. Now let me ask you this, Cole. Has anyone taken their expenses from $100,000 a year to zero? That's a little harder. To zero? That's not How do you going to take your expenses to zero? Well, they might pass away or No, I'm just saying but while they're alive, you got your expenses are $100,000 a year, your mortgage, your car and stuff. Can you ever take it to zero? I'm not the ghost now. Okay. So there's a cap on how much we can save, but there's no cap on how much we can increase our income. And so when I I think when you when you frame everything in Dave's the savings like just this cut it, you know, cut all the fat out and don't have Netflix and, you know, turn the air up and you know, freeze at night and all that's like, okay, but we can only save. You have $100,000 in expenses and you save 20% extra out of your current expenses, right? So you've got an extra $20,000 if it's costing you $100,000 a year in expenses, which would be a crazy number. What are the average expenses?

11:29We should Google that, Cole. Why don't you go find the average person's family of four's average annual expenses? And I'm going to work it off 40,000 while you're finding it, but if it's $40,000 your annual expenses and you save 20% of those, that's eight grand. That's a ton of money. It'd be hard to do. Now, instead of doing that, would it be easier to save more than the 20% or would it be easier to focus on how could you double your income? How could you create side hustles or if you're a business owner, how could I improve my business and double it? That's going to be give First of all, there's no limit cuz you could double it again and again where the savings thing gets way harder every single time. Cole, what's the number? It is $72,967. 72,000. We'll call it 70,000. So, the if you were to try to save 20% 15 grand. And then you got to save another 20% so that to get to 30,000, you save 40%. That would be hard. Think about cutting 40% of your current budget. Just go to look at all the things you're spending money on and say there's 40% less. Okay? And certain things it doesn't work. You can't cut 40% of your house. So, actually the the first By the way,

12:31the first 20% you're cutting, it's every nice part of your life that you have. It's every luxury. It's the Netflix. It's the luxuries and things that are currently providing you lots of enjoyment. And so, why I think that advice sucks is because I'd rather you spend all your time and I want you to listen to podcasts like this. I want you to find other great podcasts. I want you reading books and focused entirely on growing your income because that's where all the opportunity is. Quick reminder, if you want to see what it's like to be in a high-end mastermind, we've got two seats at our next mastermind. That's the week the week of May 6th. We got two seats available for you to shadow and check it out. It is a mastermind that's all for business owners that make money, make great money, and want to learn how to invest that money better. If you want to scale your business and then as you scale it, take that income to create passive income, you might be a fit to check out our mastermind. Click the link in the show notes and we can put you on the phone with one of our team and give you the details on that. It's May 6th here in Phoenix, Arizona. All right. So, if you're in like we talked earlier, if you're in a period of your life where you've got the bad debt

13:33and you you can't save, you've you're not fiscally conscious, you don't know what the right purchase is for you, absolutely go listen to Dave Ramsey's podcast. That's where you should spend your time and you should go listen to what he's saying. Um and you want to make sure you don't build an unhealthy habit with debt. Right, if your financial model and you don't have one, right, that would be a good one if you have debt. Don't get an unhealthy relationship. Any type of debt you want to get out of as soon as you possibly can if it is not attached to a house or a thing that cash flows. You want to make sure that you're focused on their those two areas. And so, the next part I want to talk to you about is how I think about it. So, as I think about debt and I think about the ways to leverage it, the first thing you should always think about how much risk am I taking on by taking on this debt. And so, let's use a house, Cole. And in Arizona, if you're buying a house, we're going to call it a rental property and you're going to pay $400,000 today. Uh you'd probably as a rental in Maricopa County, uh that's probably the range, I guess. So, we'll call it $400,000.

14:36And I'm going to get my calculator out. Let's see if I can see if I can break this thing over here again. So, Cole, I'm going to use the 10BII calculator and by the way, I use this calculator more than anything else. You should absolutely learn how to use it. Uh there's a really cool book that called Invest in Debt. If you get the calculator, use the book. Uh we'll drop that in the show notes and if you can do those calculations, it'll probably help you make a lot more money. It's one of the most used apps on my calculator. So, if I do a 30-year mortgage, uh I'm going to do 6.75%. We're going to assume we got a really great rate, Cole. We bought it for $400,000. We put 80,000 down, so we financed um $320,000 is $2,075 per month. That's um PI, no TI. So, that's principal and interest. So, we're missing tax and insurance. So, we'll call it 2,300 bucks. So, if you went and bought a $2,300 house today, so like I would want to know So, I want to think about risk. So, we're talking about risk. The payment we've got on this house is $2,300 all in principal, interest, tax, and insurance. And so, what's my risk in the property? Well, number one, the values could go

15:38down, right? So, if I put enough money down, I've already built in a cushion. Now, we all know that over the very, very long haul, prices go up. So, prices would go up in value over the long period of time due to appreciation. But, it also houses have dropped. We all know the Great Recession. And in very in Maricopa County, it dropped a lot. Now, I'll remind you, my payment's $2,300. Your risk is the price falling and you end up selling at a time where it's worth lower lower than what you paid and maybe lower than your mortgage. That's how you could lose money. But, in this case, that property today would rent for probably about $2,300, about the same as the payment. Now, you're going to have um you're also going to have repairs. You're going to have vacancy. You're going to have things. So, this property would not cash flow today. But, if call if you were to live there for 5 years, and as rents go up about 3% per year on average, and at some point, the property would be able to cash flow or break even if you had to rent it. So, what's your risk? As long as you plan on being there 5 plus years, this house would likely work for you. And we filmed an entire episode that was totally different about should you think about buying a home in 2024? It's really the framework to ask

16:40yourself, should I buy a home or not? In certain markets, the answer's no. I know real estate agents don't want to hear that, but in certain markets with the prices, it actually does make more sense to rent. And I kind of give you the formula to walk through how I think about it, especially if you're buying your first home, there's a way to think about that. Go check that episode out. We'll drop a link to that in our show notes. And if you made it this far, make sure you subscribe. We want to make sure you know about our new episodes as soon as they come out, and I don't want you to miss out on anything. So, the first thing to think about debt is risk. The other way I think about risk is the minimum down payment isn't the recommended down payment. Just because you can put 3 and 1/2 percent down or 5% down, almost always means you shouldn't. What people don't talk about enough when you put 3 and 1/2 percent down or 5% down, the banks charge PMI, which is private mortgage insurance. And the problem with PMI is it it's basically a tax to you for not having a big enough down payment. Think about that. You know what PMI really, really is? It's just a tax for you not having the right down payment. It doesn't go towards principal. Today it doesn't fall off

17:42unless there's something changed or I call those FHA ones are forever. And so you're paying the average person might be paying $350 per month. Let's think about that if you paid it for 30 years. $350 a month, Cole. $350 * 360 You're paying $126,000 on a $400,000 purchase just because you didn't put the money down. Guess what else they don't tell you, Cole? The interest rate's higher. The interest rate's higher on that because you're putting less money down. Think if you're a bank. The bank's going to loan you money. This is an investment for them. Right? So as the more money you put down, likely the the lower the down payment. Now that doesn't Once you get past 20% that doesn't exactly apply. But if you go to some banks, right? Like a private bank or a smaller bank where they're going to keep that loan in house, if you're putting 50% down, they might give you a lower rate than putting 20% down. It's possible. So you not only have this PMI thing, you've also got this difference in payment thing. And so the Make sure that when you're thinking about debt, the amount of down payment if you're saving money, you're also by

18:43putting more down, you're saving money in interest. You're also reducing your risk and you might save on the rate overall. Hey, if you listen to some of the things we're talking about on the investment side and you're asking, "How do these guys find great deals?" Well, my secret is REI Print Mail. I've been using them for years. I love these guys. They've got a postcard that literally takes a Google street image, takes a Google front image. And full disclosure, when you mail this postcard out, people are going to call and ask, "Did you get up on my front porch and take a picture of my house?" The answer's no, they're using technology to do it. They handle all my mailings. We mail direct to seller and that's where we're finding out the best deals. They give the listeners of the podcast 10% off. You can go to the magicmailers.com, which will take you right to the person I use. They'll give you the campaign I use and show you exactly how I use it. I love your I love, love, love REI Print Mail. The next thing I want to talk about, when I think about debt, over-leverage creates stress. When you are stressed out, you make bad decisions. I had a out of a private client, uh this is years ago, and I always told my

19:45talked to my private clients, you need to have enough cash sitting in Treasury bills or savings account that your head hits the pillow and you have zero stress. And for all of us there's that number. Like, so if you save 12 months of your burn rate, which is what we talk a lot about, if your expenses are $10,000 per month, I would recommend at a minimum you have $120,000 saved. You're not investing that money, you're not doing anything with it. That's just sitting in account, sitting there so you do not have stress. Because you would have 12 months without working before any financial payment would come to you. And so this guy had is much more than that saved. And at one point he And the idea of this money is that you never touch it. Greatest deal in the world comes along for you to invest in, you can't touch your burn rate. And so what did he do? He took a big portion of his burn rate, he grabbed that, he took out some debt, and he went and did this big investment. And along the way the investment started not performing, and there was there was stress in that, and he went through a tremendous amount of financial stress. The thing he started immediately doing, he started immediately making bad decisions in other areas. So now things that were super clear, he started I'm going to maybe sell this asset now, or I don't

20:47want to buy that. I don't want to buy this other investment. So all the things that he was doing were right before, now were wrong because he didn't have a clear head because he had financial stress. And so over-leverage creates stress, and it doesn't allow you to make the best decision you possibly can. So last thing I want to say about stress is done correctly, it's actually a tool to help you become wealthy. So, after the all all the fun in COVID in it was really early January 2022, rates were low and this local bank of mine came out with a 30-year 30-year fixed mortgage for an investor. It was 4.25% with no points. And I looked at that I thought I'm thinking about refinancing. I wonder what I can get the rate down to if I refinance the bulk of my portfolio. This is in January of 20 2022. I wonder I get it if I pay the points. So, I paid a ton of points and I got it down to 3 and 1/2 % fixed on a 30-year. And I actually refinanced my entire portfolio and I had no clue that rates would skyrocket and be where they are today. That wasn't the bet. I just knew that we were at near historic lows of all time. My properties had rapidly appreciated and a ton of equity and I

21:51was getting returns in hard money of 12, 13, and 14%. It made a lot of sense to refinance all those investments and take that money and put into something else. Now, today I look like a genius and and it's funny how time works. It either makes you an idiot or a genius. But at the time I was just placing a bet that was very, very logical. And so, debt has helped me become immensely wealthy. Now, by the way, when I say I refinanced them, I didn't take it to to as high as I could have gone. I think I took my average loan to value around 60% of what it was worth at that time. So, I've still got that cushion baked in. Debt allowed me to take advantage of a lot of other opportunities. And so, the best ways to leverage debt. I want to give you specific things. The best ways. Number one, the right amount down. Make sure you're focused on the right amount down, which is not the minimum, but it's also the right amount for you. If the payment is too high, putting more money down to get that payment where it's palatable for you and make sense and it doesn't cause stress. Next, only think about taking out debt on things that cash flow. If it doesn't appreciate, doesn't have cash flow, I

22:52don't believe in it. So, this includes cars, boats, things that fly. Go all of the things out there you need to avoid. You should not take debt on on a car, on a boat, on toys. I see people all the time that they go buy some razor, which is like a $50,000 thing, and they got debt on it, and they're paying $1,300 a month for a four-wheeler, and it's crazy, right? So, you should not take out debt on toys. Force yourself to raise your income to pay cash for your toys, your cars, your things that don't cash flow. So, another another thing I want to focus on with debt is if you can get if your primary residence is rapidly appreciating, you can put a line of credit, or if you own free and clear real estate. Uh I am the biggest believer of putting a line of credit on that stuff, because there's so many costs you can avoid by using a line of credit as opposed to taking on new debt. I want to give you some examples, because debt is I think the most misunderstood thing out there. People are either against it or for it, and they don't even know why, but if you if you can think about it again, it's a tool. So, if you have a line of credit that could that could buy um your next house as an example, or fund your next

23:56hard money loan. Let's Let's use the house as the example. Let's assume it's a second mortgage on your primary residence as a line of credit, or because it's appreciated, or you've got this rental property that's free and clear, and you have a line of credit. You want to use that money to buy another property. So, when you're buying this other house, Cole, I'm going to ask you a series of questions. If you're buying the other home in all cash, and by the way, once you close on that home, you're going to put a line of credit on it. So, you're going to borrow this, pay it cash, put a line of credit on it. So, now, Cole, if you're buying that home for cash, what are the mortgage fees, points, and all of those things if you're paying cash? How much is it? Way less. I I couldn't tell you an exact. Well, way less, like zero, right? I'm not going to have a mortgage. I'm not going to have any points and fees, because I'm I was going to title. Oh, yeah, okay. Well, I'm going points. I'm just going to your mortgage. I don't have a lender, right? So, they charge you an origination, processing fee, you know, Bank of America, all whatever it is. So, I have zero lender costs, which are usually probably a couple points, right? Two depending on how you're doing it. Now, we go to an appraisal. Do we have an appraisal if we pay cash? No. Well, we don't. So, you know, today is an appraisal what, $600 to $850

24:58depending on what it is. If it's an investment, it could be more. And so, we don't have that. What about title fees? So, I happen to own a title company here in Arizona, so I can tell you that with a loan on it, the fees are about $2,200 in title fees. If you're paying cash, it's about $600. So, there's another pickup there. Again, I'm because I'm paying cash and borrowing money on credit, I'm not having a lender policy the lender would require if they were lending me the money. How about time? Call me able to save time. I know if anyone's got a mortgage recently, but it's not the most simple process ever out there. You're going to spend lots of time going through underwriting and back and forth with paperwork and things. Again, the line of credit's already established. I'm buying it, and then in my free time, I can go add that to a line of credit, which is a really easy transaction. The last thing I want you to think about with debt is, do you think it's possible that I get a better deal because I'm paying cash? Of course. If you took it If I'm a seller of a piece of real estate, and I want to sell something for $300,000. If there's no offers, and someone offers me cash and can close in 2 weeks, am I going to take less than $400,000? Cole,

26:01probably. Now, let's just also say the market's on fire, and it's a $400,000 house, and I've got 13 offers, and one of which is cash. Which one do you think they're more likely to take? Cole, do you think we're going to take, you know what, I hope the guys I hope the guys barely qualifying, and it's going to take 60 days, or I could have cash in 15 days. We saw this in the last run-up. This happened in COVID. People actually went out and created businesses to help people that were financing buy the homes in cash for the exact reasons that we cited. And so, I just want There's There's all these reasons why if you have a line of credit or able to pay cash, you save on all these fees. So, today, I love to buy things for cash, even real estate, then I put a line of credit on it. I'm using the lines of credit to advance my purchases. And so, if you don't have a line of credit, go back and watch episode 3, which is all about driving your income up and how to become rich, and how you could do that. And so, the more income you have helps you buy more assets and help you get to where you have a line of credit. For others that have bought a home if you don't have a line of credit right now, go look at your primary residence right now. If you've got massive equity in there, go to your local bank or where

27:02you bank now and see if they have lines of credit on the second. And if you got free and clear real estate, there's a way to get into that as well. So, I hope this episode provided some clarity that um debt's not entirely bad. You know, Dave's story, if you really he's got I mean we'll put a link to the exact episode where he kind of walks through it. But Dave's story was all around he was buying foreclosures, taking out massive debt. Uh and when you watch the video, I don't think you're going to be inspired by how much he knew about how REO properties worked. And he's all talking about he was buying homes on the wrong side of the tracks and he didn't know what he was buying and those are just never words I've heard really smart people do. Cole, don't even worry about that. That's a timer for a target for an episode length and I've already nailed it and that's why it just automatically rolled off the table because that's how efficient this process really is. And so Dave went out and took he Dave went out and took out all of this debt on things he didn't know what were and then wonders why he lost money. And so you go watch that video and see if it inspires confidence in a model that you want to invest in. And so he took a lot of risk, he had no knowledge, the lack of experience and he got smashed. But just because he got smashed doesn't mean that

28:05debt's bad for everybody else. I think everyone watching this has likely eaten a meal of food at a restaurant in their entire life. I also think Cole lots of our listeners have had a meal at a restaurant that wasn't incredible. And yet they didn't stop eating food for the rest of their entire lives. They did not do that. And so just like the food's not all bad, the debt's not all bad either. And so there's lots of ways to avoid risk. Again, if you're flipping homes, the the front end due diligence is where you eliminate all that risk. Front end due diligence and the debt side is where all the risk can be removed. And so there's lots of ways you can reduce risk with money. We'll cover more of those in a future episode, but today was all about debt. Get out of all of your bad debt. If you have debt, go listen to Dave. Once you get out of debt and you've got a savings process, start listening to us because we're going to show you on this podcast how you can use your money to get free and ultimately go out and be wealthy. Before we wrap up today's episode, we do have questions from our Facebook group. Please go in there. There's a link in the show notes. You can ask any question and we may bring your answer here on the Be Wealthy podcast. So, how did you and

29:09your wife decide the income goal was right to have kids? Really good question. We focused on two things. We focused number one, how much money do we need to have need to have saved so that we would not have financial stress. And so the number usually is going to be a percentage or amount of months of your burn rate. So, the amount of money you naturally spend every single month, I call that your burn rate. So, you've got a mortgage, you might have a car payment, you've got insurance and internet and phone and AC and all those things. Whatever the total of that is, not that you could live cheap, whatever you're actually spending right now, and I'm going to pretend that's $10,000 a month. I would want to get to six months of that number as soon as I could, right? So, 60,000 and really get to 12 months. Once you get to 12 months, you can ask yourself, does your head hit the pillow and you feel great? If so, awesome. Now you're ready to start investing. If not, you can go save more money. And so we had this number out there that was a percentage of our monthly expensive expenses. It was more than 12 months. And once we had that, I knew we were in a position that it would not cause issues. Additionally, we had passive income and we wanted to hit a passive income number that we got to

30:12that we knew that we had that coming in no matter what. So again, we wouldn't have stress. Once I started to spend money, what was my first big purchase? That's a really good question. I would say Cole, um man, be a weird one cuz I but I'll I'll throw it out there. It's my first real big purchase in my mind was the first time I bought a car that I wanted to buy, that I picked out and I and I obviously I bought all my cars, I paid cash for all of them. But I've always bought used cars that were two years old or two to 4-years-old with less than 20,000 miles. That's kind of the sweet spot for used cars and so I always bought a used car. And when the Bronco came out, I ordered in 2020 and I got the most tricked out ridiculous Bronco that they could make. It took forever in COVID to get it, but that was probably the first real big purchase call that I made was a brand new Bronco and since then I bought a a few other cars, but um that would be the one I would think about that comes to mind. Uh there were things before that and I could come up with a smaller one I could think about it later, but that's that's the one I go to. Uh what was uh what was a net worth goal or an age goal

31:17when it came time to start enjoying some of the the work you did? It's a really good question. Um I think there's two parts to that. I think there's a point with your both your income uh it gets to a certain level, but I would really put the pressure on your passive income. For me, once my passive income exceeded my burn rate uh it took all the pressure off. In other words, now I've got passive income coming in that's greater than my expenses. So, if I don't work, everything's paid for. So, once you get to that level, I think um you can really open up more. I don't think you should be crazy cuz I think you should keep driving that number up. And one of my good friends um Mark King came up with a really good measurement stick for for passive income. And what he said was if you take your current burn rate or your current expenses, you have one time that he's like you're you're totally safe, right? You're at that's safe. And the three times is comfort. So, if your monthly expenses are $10,000 and you had $30,000 per month and you had $30,000 per month coming in, you are in comfort, right? Your life is extremely comfortable. You don't even work, you've

32:20got two times what you need coming in every single month, so you can do really cool things, you can further your investments. And the last one we called it 10x. At 10 times your monthly burn rate, 10 times that in passive income, that's wealth. Because if your expenses are $10,000 per month and you've got $100,000 a month coming in, There's really not a lot of things you can't do because you can essentially Cole, you can torch $90,000 a month on jets and Lambos and whatever Cole and guess what next month or over time you get a refill every month. You just refill it back up. And so and by the way Mark Cuban absolutely not like the second part of that but the point was 1X is safe, 3X is comfort and 10X is wealth and I think that that kind of gives you a measurement stick but I would focus on a net worth goal and a cash flow goal to help you guide that decision of when that you can start really enjoying things. And so in wrapping up here my conclusion is that realize that debt's a tool. Get out of bad debt, listen to Dave if you're in debt you need to save, listen to us once you if you want to be wealthy. And and the

33:22other great podcast out there Cole but specifically ours. Um we talked about a lot here. I think that you understand that debt's a tool. You can use it. You can harm yourself if you do it wrong. You can really help yourself if you do it right. Um check out the other podcast we talked about and go watch Dave's link on scarcity versus abundance and see if it connects with you. And if you made it this far make sure you subscribe. We want to make sure you know about our new episodes as soon as they come out and I don't want you to miss out on anything. All right, that's a wrap. Episode 009 that's not bad. Dave Ramsey might not be all right and with that it's a wrap. We'll see you back here next time on the Be Wealthy podcast.