Debt Distortion: Why Dave Ramsey and Robert Kiyosaki are BOTH Right

Imagine a world where everything you perceive to be true about finance, family, fitness, food, etc… is not what millions of other humans perceive to be true. Not only that – people attempt to bring you down for your beliefs, or talk quietly amongst themselves about how stupid you are for doing the things you do. To be fair, you don’t think that highly of them either. You’re experiencing selective distortion – welcome to planet Earth. A Tale of Two Titans Let’s take a look at two highly successful, well-respected financial gurus and their respective stances on debt: Robert Kiyosaki, author of Rich Dad, Poor Dad, says that there is such a thing as good debt – or debt used to buy money-generating assets like rental properties and business equipment.   Dave Ramsey, radio personality and author of The Total Money Makeover, teaches followers to avoid debt altogether, often quoting Proverbs 22:7 – “The rich rule over the poor, and the borrower is slave to the lender.” Both agree that  debt carried on credit cards and cars is to be avoided, because these things only make us poorer. Kiyosaki is not against using credit cards persay, but teaches that balances should be paid in full every month. While some see Ramsey’s stance on not using credit at all as extreme, the fact that the Federal Reserve estimates that almost half of U.S. households are unable to pay their credit card bills in full each month, and that these households owe more than $800 billion in card debt …

Mortgage or No Mortgage: Why Your Personal Financial Plan Is Crucial

Whether or not to pay off your mortgage is a very individual decision that is based on a number of factors. My sister and I were having a conversation not too long ago about mortgages as she and her spouse were refinancing their home in Northern California. I was throwing ideas out to her about keeping the original first mortgage they had in place and blasting away the second using a debt elimination tool like Shred My Mortgage. The first mortgage had a healthy balance but a relatively low interest rate and the second mortgage was hovering around $40,000 with a higher than market rate. I was trying to convince her that by creating income efficiency through leveraging a Home Equity Line Of Credit as a checkbook, she could knock out the 40k in a matter of a few months and be left with just the first lien (which could be paid back in about 7-10 years using this system). Then she asked me, “what if I don’t ever want to pay off my house?” That question got me thinking about their unique situation versus my unique situation. And to that extent everyone’s unique situation. My situation I’m a serial entrepreneur having not held a “real job” (as my in-laws have described it) for over 12 years. There is no pension plan waiting for me, no guaranteed health benefits down the road from a past employer, no 401k match (that’s not provided by yours truly), no paid time-off. So naturally, …

Love Your Kids? Let Them Struggle.

**Originally published on The Huffington Post – February 7, 2017** “What do you do when your girls are texting you to put money in their account?” This was the first question asked by a group of parents at a college parent night where I had been invited to speak. The look on this particular dad’s face suggested it wasn’t a hypothetical situation but something that was happening occasionally. So I turned the question back on him, “What do you do when your girls are texting you to put money in their account?” “I usually put some in there for them, but it never lasts as long as it should.” He replied. “And why do you put money in their account?” (I had a good feeling about what the answer was going to be before asking, but had to make sure…) After thinking about his answer for a long 20 seconds, this dad replied, “I love my girls and I don’t want them to struggle.” At that point I looked around the room at all of the parents and asked four or five of them point blank, “Did YOU struggle when you were 20? Did YOU struggle when you were 20? Did YOU struggle when you were 20?” All of them, it seemed, had struggled financially while in college. And while I understand the desire to make things better for your children than perhaps the way you experienced life, why have we made struggle and love mutually exclusive for this generation …

Paying Off Debt: Why, Ultimately, It’s All About “Me”

Should I focus on paying off debt by paying extra on my student loan and mortgage debts, or should I just pay the monthly amount due and put extra into my investments? I’ve been asked “Should I be focused on paying off debt or investing?” more times than I can now specifically recall. My old answer was: “Are you nuts?! Pay off the debt as fast as possible!” Where I come from, debt is bad. The entire thought of it gives me the heebie-jeebies. My soul hurts when I remember the days of living under my debtor over-lords. I took a staunch, all-or-nothing, debt-free or bust mentality. The problem with that solution? Everybody’s not me, and for some people “bust” might be a more likely outcome of focusing solely on debt elimination. So what’s my answer now? “It depends.” When faced with paying off debt or not, there are some factors to consider. We’ll get to what it depends on in a minute, but just like everything else – what’s right for someone else may not be right for another. A personalized financial game plan will include a written debt elimination strategy, but that strategy will be largely dictated by where we fall on the Math-Emotion (ME) Spectrum. The Math-Emotion Spectrum I call this the Math-Emotion Spectrum because, well – most people don’t live 100% at either end. Although we may feel like we’re absolutely at one end or the other, some soul-searching would probably result in us finding that we …

Is The Scholarship System Legit?

With the high (and ever-rising) cost of college, many people turn to scholarships to help fund their higher education. Hear how one debt-free graduate did it and turned her knowledge of scholarships into a business. And you’ll finally get the answer to the question – Is The Scholarship System Legit? Student loans are predicted to push past the $3.3T mark by the year 2024 which should have parents, students and Universities quaking in fear. Parents because they’ll be on the hook for a chunk of those loans, students because they’ll be paying off the loans for the next 20+ years, and Universities because at some point society will begin to question whether or not higher education is worth the price of admission. No matter which group you fall into, know this: There are ways to minimize what you have to pay in tuition if you look hard enough. People are figuring out ways to take advantage of you to “help” you navigate this process. Scholarships Are Part Of The Answer While the estimated numbers vary, suffice it to say there are billions of dollars worth of scholarships that go unclaimed every year for a variety of reasons. When I’ve asked high school and college students why they don’t apply for more scholarships they give me answers such as: “I’m too lazy” “Don’t know where/how to look” “My grades aren’t good enough” and “I hate writing essays”. All of which are valid (and very honest) reasons. But none are GOOD reasons. …

Sizzling Tulips- Why You Shouldn’t Try To Time The Market

What follows is a cautionary tale that perfectly illustrates why – when it comes to investing – we should all avoid trying to time the market. In essence, avoid the sizzle. The year is 1634. The place – Holland. Tulips made their way to the Dutch from Turkey and, being a new flower, were pretty pricey. People were paying a pretty penny for the pretty flower, but the tulip’s hay-day was still yet to come. After the flowers contracted a unique virus that presented itself as a flame-looking pattern on their petals, the craze began. As the variations continued to expand and prices continued to rise, “tulip-speculators” emerged as a real class of investor. People lost their minds. They traded in their homes to buy these things, liquidated life savings, cashed out on large assets, and probably the family dog too. The tulip bubble was intense. Tulip mania was real. At the height of the craze, a tulip would go for an entire estate. At the bottom, really – just the actual price of a flower (go figure). Guess what happened? Yup – high-volume holders of tulips began to sell, which created a domino effect and the market for this fine flower came tumbling down. The following depression was devastating, even for those that profited from the original sale of their flowers. The bottom line? When everyone’s piling on, that’s a great signal to stay away. Sizzling is really only awesome when it’s associated with a steak at Applebees being put in …

Your Financial Survival Guide

With the Dow Jones still above 20,000, most people aren’t giving a second thought to a stock market collapse, a massive devaluation of the dollar, or an attack on our banking system. That being said, now is THE BEST TIME to prepare yourself in the event of a financial armageddon. The problem with high flying economies like ours is they create a false sense of security. Seeing the DOW break 20,000 had some people celebrating the end of the recession, the next goal of 30,000, and rosy futures for all investors. The flip side of this coin is every high has a low, we’re still pumping up our economy based on rampant printing of money and governmental debt will reach unprecedented highs under the new administration. (It can’t NOT rise with the sheer amount of debt and level of interest paid on the debt. Take a look for yourself at www.USDebtClock.org to see real-time updates.) Candidly, the motivation for writing this article came from my Christmas grab bag gift for men at my in-laws extended family party last year: A sweet Bear Grylls survival tool. What came with it was a miniature instruction book of how to survive the great outdoors with only your know-how and this incredible device. It got me thinking about how people would survive if the stock market collapsed, their credit & debit cards stopped working, and prices ballooned to epic proportions. To comprehend where this begins, you first must know that as of February 2017 …

The 5 Things You Must Do When Having A Child

Granted all you want to do is stare lovingly at the magical being you and your partner created, there are five things that you MUST do when having a child for the first time. I heard Jim Gaffigan once describe life before kids as almost perfect — you get to sleep in on the weekends, get to do whatever you want at night, eat at great restaurants, have extra money for the things you like, have a clean house all the time… and then you get to thinking, “you know what would make this even better? Let’s have A KID!” My wife and I had that very discussion back in 2002 which led to the birth of our daughter in 2003. I remember coming home from the hospital with our little pink bundle, Piper, thinking, “surely I have to get someone to sign off on my ability as a parent?!” Yet, everyday, millions of new moms and dads take their little bundles of joy home and spend hours upon hours just staring at them, totally unaware of the fact that life as they once knew it, is over. The new life — the one with kids in the picture — changes what needs to be done almost overnight, yet there is no operator’s manual, no instruction guide. Most new parents rely on the guidance of their own, or at the very least their friends who are in the know, when making first baby moves. Here are the 5 things you …