Apparently Dave Ramsey is a financial guru, I find that hilarious. I just read a book review on his book called Total Money Makeover and the topics he represents is financially illiterate, if anything.
Let me preface this post by saying there are really two types of people when it comes to what we were taught growing up. I won't say there's a right side and a wrong side, because both sides are needed. I'll just call it the left side and the right side.
THE LEFT SIDE
If you're anything like me, you grew up around and were taught from the perspective of the left side.
Let me explain.
Growing up I was taught to get good grades in high school and graduate so I could GET A JOB. So we'd get a job and work whatever the shifts call for at whatever hourly wage or salary we were offered.
At the beginning of the year we would receive a W-2 from our employer, so we can file for taxes and for the most part we would get a refund because the government would charge us too much on our income.
So we're working along, maybe going from job to job doing the same thing until eventually we have to take the next step. That's GET A DEGREE. I hope we're still on the same page. The situation with the job is that we need more money and I was taught in order to make more money I would have to go to college and get a degree.
While we're working or going to college or both, the next thing I was told from everyone around me was that I needed to SAVE MY MONEY. Work, go to school, save money, sound familiar?
On top of saving our money, we were constantly told to STAY OUT OF DEBT.
Now, before I knew about the right side, I thought getting a job, going to school, saving money, and staying out of debt was what everyone had to do. I thought that was just how life worked.
And that's exactly what Dave Ramsey teaches. He teaches you to stay out of debt and kill your credit cards. He teaches you to pay off your mortgage, as well as encourages you to buy a house (ridiculous), as if that classifies as an investment. He wants you to do things like save for your children's college tuition, invest in your companies 401K, all this complete crap. That is only taught on the left side.
I read a lot of business and entrepreneur books and if I hadn't, I would have never discovered this right side. This right side is where rich people are created.
THE RIGHT SIDE
When you think of the right side, you can guess the sequence if you just think the opposite of the left side. However, for some it may not be that simple, so I will spell it out.
Starting with the opposite of getting a job as your route to making money, what would your only other option be? START A BUSINESS. I don't necessarily mean you have to go get an LLC made and sort out a bunch of legalities either. I mean solving a problem in the marketplace with a skill that you have. Many successful entrepreneurs have humble beginnings. Gary Vaynerchuk for instance sold baseball cards. Tai Lopez sold tomatoes. Many start off with lemonade stand and evolve into something greater.
Moving on though, when you start a business, you don't receive a W-2 because you don't have an employer. You are an ENTREPRENEUR, which opens up the doors to tremendous tax write-offs. If there was any talk of saving your money, it would be how could we pay less in taxes every year. For instance, I don't pay taxes every month like most employees do (by the way, as an employee you should be using all of your exemptions). Instead, the IRS sends me a bill of how much I owe and I knock that bill down to 0$ by writing off things like my rent, office, furniture, clothes, everything I need for my business to run. If I'm running a eBay store and work from home I can write those kind of expenses off. Something an employee cannot do, which is why they remain the most taxed of the population (employees can write-off their gas mileage - YES!).
This next one might surprise you, think: Steve Jobs, Richard Branson, Michael Dell, Bill Gates etc. None of them went to college. Instead they did the opposite, they got a FINANCIAL EDUCATION. Most of these big names were self-taught, getting a financial education could simply mean reading the top books on finance. The point is you have to know about money. You would think going to school for an accounting degree, you might learn a thing or two about money, wrong! I take business and accounting classes before I dropped out of college and neither taught me about business or money.
While we're running our business as an entrepreneur and learning about money so we can make more of it, we're not saving our money. We're INVESTING OUR MONEY.
I don't mean investing it in the traditional sense like in the stock market or buying a house or even putting it into an IRA. I mean investing it in yourself. That means buying books, courses, classes, things that can make you a better person and sharpen your skills. You can save money all you want, it's going to get spent. If you invest money into knowledge, that knowledge will never go away and you'll be "rich" forever. There's a title out there called, "2-Time Millionaire," I mostly heard it after the 2008 crash, where people were millionaires, lost it all, then made it back to millionaire status.
It's not because they were saving, it's because they had the knowledge of making millions and knew they could do it again. They'd already made those investments in themselves.
The final piece is a killer to those on the left side and the main reason why I'm so disgusted with Dave Ramsey's message.
Now, I've read some of Donald Trump's books and I think he is a great example of the right side. Unlike Dave Ramsey, Trump doesn't encourage you to stay out of debt. In fact, he does the opposite, which is LEVERAGE DEBT. That's right, take on some debt. I love debt. I'm always willing to go deeper into debt, I love it ugh. Don't get it confused though, I mean good debt.
Not all debt is good debt and not all debt is bad debt.
What's good debt?
Anything that can create cashflow. Purchasing books, courses, classes, etc. that are going to give you the skills to make more money is good debt. Using credit cards for business expenses is good debt. The things that can potentially get you a return on your investment, I say take on the debt for it.
What's bad debt?
A credit card for Neiman Marcus is bad debt. The things you buy at Neiman Marcus does not have the potential to make you money. The only exception would be if you needed to buy a suit or something for a business meeting, in that sense it would be a write-off. Student loans is bad debt. I mean for Christ's sake, it's unforgivable.
Let's say you took on so much debt in credit cards, loans, etc. and you really messed up and you weren't getting any returns, at least you have the ability to file for bankruptcy and be forgiven. I'm not encouraging you do that but I'm saying, with school loans, you HAVE to pay it back one way or another.
I felt so compelled to write this because Dave Ramsey is a widely known character and I think what he teaches encourages people to stay trapped in the middle class. It's disgusting.
Let's get rich!
Summary
There are two paths people take in life, the left or the right.
LEFT | RIGHT
Get a job | Start a business
W-2 | Entrepreneur
Get a degree | Get a financial education
Save your money | Invest your money
Stay out of debt | Leverage debt
Which side looks better to you?
Think Great,
Aaron
