In the last quarter of 2018, overall consumer debt was approaching $14 trillion. With the average American owing about $38,000 in personal debt, most consumers are struggling with debt. However, not all debt is bad, and it depends on the use to which the borrowed money is put and the manner in which debt is managed. Most people with a huge wealth have mastered the art of using debt to achieve their financial goals and build their wealth. Any consumer who wants to reduce their debt burden should consider taking lessons from such people on financial management. Dave Ramsey preaches daily against the devil that is debt and offers advice on budgeting.
Dave Ramsey is an American radio show host, television personality, investor, financial broadcaster, motivational speaker, and best-selling author. Apart from being famous for wearing so many hats, he is also known for fitting well in a description of a comeback. Ramsey, who at one point in his life filed for personal bankruptcy, rose from the ashes to become the person he is. Today, Dave Ramsey’s net worth is in the neighborhood of $55 million, a fortune that makes him living proof that any consumer can turn a bad financial situation around.
Who Is Dave Ramsey?
David Lawrence Ramsey is a 59-year old businessman who was born and raised in Antioch, Tennessee. In his book Dave Ramsey’s Complete Guide to Money, he reveals that his parents were in the real estate business. This gave him exposure to the world of real estate and led him to develop an interest in the industry. Three weeks after turning 18, Ramsey passed his real estate license exam and started selling property. He used the commissions he earned to pay for his college tuition. In 1982, Ramsey graduated from the University of Tennessee’s College of Business Administration with a degree in Finance and Real Estate.
The journey to building Dave Ramsey’s net worth began when he founded Ramsey Investments Inc. He used his family connections at the local banks to secure the financing he needed for his deals. Through this company, he built a real estate portfolio worth over $4 million in less than four years, with his net worth standing at $ 1 million.
However, his success was short-lived. The bank that was financing his deals was acquired by a large bank that demanded immediate repayment of the entire debt of $1.2 million within 90 days. He was forced to file for personal bankruptcy in September 1988 as he was unable to pay. Not long afterward, another bank called his $800,000 worth of notes. Ramsey was able to reduce the debt, leaving $378,000 outstanding.
One of the reasons why Ramsey’s story is inspiring is the fact that he recovered from his financial problems. He went on to build an empire that has seen him become one of the richest celebrities and earned him a place among high net worth individuals in the world.
How He Made His Fortune
David Ramsey has come a long way since he filed for personal bankruptcy after facing financial problems. His real estate story covers how he made his first million and lost it. Here is how he rebuilt an even larger fortune in the period that followed, with tips for anyone looking for creating wealth to the level of Dave Ramsey’s net worth.
Ramsey says that the household in which he grew up instilled in him a strong work ethic. When he was 12 years old, he approached his father and asked for money to buy a popsicle. According to Ramsey, his father told him that he was old enough to get a job since that is where the money came from. That conversation inspired him to become an entrepreneur. Ramsey printed 500 business cards for his lawn care business the same day. Over the course of his school years, he engaged in various ventures, including selling leather bracelets. These businesses taught him valuable lessons that came in handy later on in life.
Ramsey turned to Christianity after his fall from grace. He learned that God’s word, the Bible, had a lot to say about money. Ramsey says that one day after church, he met a man who was going through financial difficulties. The man asked him how he had survived his financial troubles, and Ramsey agreed to help the man and his wife come up with a financial plan. This was the beginning of a financial counseling career that would present a chance to rebuild Dave Ramsey’s net worth.
Ramsey founded a personal counseling company by the name The Lampo Group. His money management class grew exponentially within a few years of operation. The success of The Lampo Group led Ramsey to start co-hosting a radio show with his friend Roy Matlock, a show that focused on personal finance. During this time, he published his first book “Financial Peace,” leveraging his radio audience to help sell it. Later, Ramsey launched The Dave Ramsey Show, a spin-off radio program where people would call in to ask him different personal finance questions.
How He Invests
As one of the richest celebs, Ramsey shares his investment style freely. He advises people to purchase mutual funds as opposed to investing in individual stocks. According to him, mutual funds have a track record of good performance, putting them in a good position to place young consumers on the right side of wealth statistics on the net worth by age. Ramsey’s equity investments are in different types of mutual funds: growth, growth and income, aggressive growth, and international. He also has a portfolio of rental properties, with his philosophy that is based on acquiring the properties without debt financing.
Awards and Achievements
Apart from Dave Ramsey’s net worth being admirable, the renowned businessman has won numerous awards. He is not only a best-selling author but five of his books are also a best-seller. Ramsey has won a Screen Actors Guild Awards nomination, Radio Ink’s Readers’ Choice Award, NAEA National Awards for Dave Ramsey show among many others.
The Dave Ramsey Budget
Dave Ramsey says that one of the best ways to reduce and eliminate debt is through what he calls the zero-based budget. The formula for doing this is to subtract monthly expenses from monthly income. If there is some money left after listing expenses, you should find a place for it for your bottom line to read zero.
Ramsey takes cognizance of the fact that about 25 percent of Americans have a little too much or far too much debt. While a good number of full-time employed consumers live from paycheck-to-paycheck. If you find that your expenses exceed income, Ramsey advises that you stop wasting money on expenses such as car payments, eating out, groceries, clothing, and utilities. This will make it easy for you to get back to zero within a short time. Having risen from bankruptcy to the league of the rich, it is understandable why Ramsey has plenty of believers.
In the process of building Dave Ramsey’s net worth, the businessman came to understand the importance of writing down total income, listing expenses, subtracting expenses, and tracking spending.
Dave Ramsey’s Seven Baby Steps
Statistics show that the average net worth increases as age advances. However, Dave Ramsey believes that people can pay off debt and build wealth by using his seven baby steps. According to him, these baby steps work every single time.
Save $1,000 for your starter emergency fund to cover any unexpected expenses that you have not planned for
Use the debt snowball method to pay off al debt apart from your mortgage
Once you have paid off your debt, take the money you were throwing at debt to build a fully-funded emergency fund that will cover three to six months of your expenses
Set aside 15 percent of your gross household income and invest it into your retirement
Save for your children’s college fund, making sure you set aside enough money to cover the associated expenses
Since your mortgage will be the only thing between you and complete freedom from debt, any extra money you get should be channeled towards paying off your home early. This will save you a lot of money in interest
Once you are debt-free, keep building wealth and become generous. Remember to leave an inheritance for your kids while at it
There is no doubt that Dave Ramsey’s net worth is the opposite of debt. The good thing is that he uses his knowledge to help people change their financial futures and family trees.
Why These Baby Steps Work
The story of rebuilding Dave Ramsey’s net worth came with great lessons for him. The baby steps he came up with were as a result of his experience. Today, they can help consumers learn how to manage their money better. And encourage them to build momentum with small wins along the way. They empower them to make financial decisions with confidence.
There are many people who would like to build a fortune comparable to Dave Ramsey’s net worth. In order to achieve this, it is important to have a deep understanding of debt, learn how to manage it, and identify ways of using debt to achieve your financial goals. Taking lessons from high net worth individuals will also help since they walked the same path in the past.