Dave’s Top Teaching Moments | Dave Ramsey's Greatest Hits

[Music] hey guys I'm your host Rachel Cruz and welcome to the last episode in this series Dave Ramsey's Greatest Hits where we're looking back at the best moments from the last 10 years of the Ramsey Show on video and for this final episode we're highlighting Dave's top teaching moments and I'm talking about everything from paying off debt to building a home to buying a car all the classics I promised you're going to get some wisdom you didn't need even know you need it right now so check it out this is the show where we talk

about money in a way everyone can understand it and in a way that applies to everyone the danger of these simple Concepts is those of you that view yourself as intellectuals those of you that view yourself as sophisticated sometimes you look at something that's simple and you don't understand how profound it is like the the borrower is slave to the lender oh but I use credit cards to get my miles you actually think you're going to take on a multi-billion dollar company who studies your behavior more than you study your behavior and come out on

the right end of this stick that doesn't make you sophisticated that makes you blatantly stupid think about it did you know the credit card is the most aggressively marketed product in the history of humankind nothing has been sold to anyone in any culture in any kind of a volume close to the credit card no product line or service has had anywhere near as much money spent on marketing and sophistication to sell it to you hundreds of millions of dollars a year is spent to sell you this product and then you're so stupid that you think

you're going to get away with using it for free if you do it's going to be a shortterm thing or if you think you do you left out some of the variables example when you spend your using cash it activates the pain centers of your brain you have an ouchie moment when you hand over Uncle Benjamin Franklin dad come I just bought dinner when you lay Uncle Benjamin Franklin in that black plastic tray known as his coffin cuz he's going away and he's not coming back you put him inside that little Visa or American Express

fold over Vine fin thing that the server brings you and you lay Uncle Benjamin Franklin in there you have a moment with Uncle Ben Uncle Ben I'll sit never see you again you know this is happening when you pay with plastic and I interview you 24 hours later you don't know what the total was on the bill you can't tell me what you spent you don't know what you spent at the gas pump cuz you stuck a card in it you pumped the gas and you walked away you can't tell me what your gas bill

was in the days that we used to walk into the market and lay money down on the counter and then they would give you change because you didn't round it off when you were putting your gas in we knew exactly what we spent on gas in those days today you don't even know what your gas is you don't know I use a debit card I can't tell you what mine was cannot tell you what it cost to fill up my truck the other day I don't know I didn't notice just stuck the cardart in put

the gas in drove away I'm just like you cash activates the pain centers of the brain there's two or three things that activate memory memory is activated primarily by pain fear heavy emotion of some kind positive pleasurable emotion will activate memory that's why you smell something and you remember a girl you dated in high school smell activates that memory that's what happens and so it it's that that's the process so so here's the thing if you can't remember it it means the pain centers of your vein brain were not activated and when we do surveys

with what you spend on that meal as you walk out of the door of the restaurant you can't tell me what the total was I was around $25 around $52 I don't know 56 54 I don't know I don't even remember I think I left the tip I left a big tip cuz I've been drinking you know now you really can't remember anything right so this is how people handle their money and yet you tell me you're going to beat the credit card company you spend 12 to 18% more on average when you use plastic

than when you use cash that's what all the studies show us because you don't feel the pain and the world's worst place is the grocery store they are the best marketers on the planet the best merchandisers on the planet is a grocery store man they know how to put the food at the right place oldfashioned example the easiest example is the bread and the milks at the back right cuz everybody that walks in a grocery store is buying bread or milk and they have to go through the full length of the store and have every

opportunity to impulse on some kind of jar of peanut butter and jelly mixed together premixed for you I don't know what you're impulsing on but there's something getting your attention it must be those new peach Cheerios I heard about today and guess what all the stuff is at the eye level that get your your attention and they pay for the Shelf position as you walk to the back to get your bread and milk and you can't walk out without spending money it's the the the aisles are designed for you to buy stuff and when you

use plastic at the grocery store you have no idea what your grocery bill is and you spend more you spend more on clothing oh yeah throw in that accessory oh yeah you'll pick pick up other people's tab at the restaurant I'll buy your dinner tonight not thinking anything about it just drop 50 bucks never think a thing about it now I'm not saying you shouldn't be generous I'm not sure saying you shouldn't accessorize and I'm not saying you shouldn't enjoy some purchases at the grocery store I'm just saying you ought to do it on purpose

and if you think get credit card use even if you're paying it off every month cost you zero then you are a very naive individual that has been influenced by an industry that has spent more to influence you than any other industry in the history of the world that should give you pause that should give you pause if anybody else was selling you that hard on anything you would your Shields would go up but for some reason when it's credit cards were like oh no Dave I have this figured out I'm 26 and I've got

this figured out I'm 26 years old I make $42,000 a year but I I'm going to beat up on old Discover card they they don't know anything I've got them beat I'm getting those discover points not costing me a thing you know how stupid that makes you sound when you say stuff like that I'm making all my money on my airline miles you know I've met with thousands of millionaires I've never met a millionaire said Dave you know I made all my money on my airline miles Dave my breakthrough was my Discover points I pay

mine off every month Dave I'm beating up on the credit card company I'm getting the use of their money wink wink millionaires just don't say stuff like that now some of them use a credit card they do pay it off every month but I got to tell you their lifestyles are so conservative besid you know when I set them up next to you middle class people are spending everything you make and trying to convince me that I'm a trog because I don't use credit cards well I'm not broke anymore this is a multi-millionaire trogley you're

listening to why because I start understanding that behavior affects your ability to build wealth more than all your little math tricks you think you see all the variables on the borrower is slave to the lender it doesn't say accept airline miles the borrower is slave to the lender it doesn't say except discover points the borrower is slave to the lender it doesn't say except I got 0% interest on my new car which lost $7,000 when I drove it off the lot so it's not really 0% is it how stupid are we I mean you're you're

going to you're going to hand me me a nickel in front of me while you're picking a $100 bill out of my back pocket and call me smart think people think so as you know most of you that listen regularly we've been on the air now for a little over 255 years even before I was on the air I was teaching people about money when I first started this stuff I'm a math nerd I've got a degree in finance I had all the letters and licenses after my name and all the different things and you

know I was real concerned about the math really concerned about the math and I would sit down with people and show them how to get out of debt and they would go home and promptly not do it it was really frustrating I and I started figuring out that hope has more to do with you winning with money than math does because hope gives you you well it's fuel on the fire it gives you a reason to make changes a reason to do something you've never done before and and really what we're saying here is is

that personal finances about 80% Behavior it's only about 20% head knowledge and math the problem with your money is not your math problem with your money is a person in your mirror they're screwing up everything if I can get the guy in my mirror to behave he'd be skinny and Rich right that's what I figured out so I quit telling people to get out of debt paying off the highest interest rate first I started teaching people what we started calling the we started calling we started calling the debt snowball and um that's a real you

know real tough metaphor to grasp you list your debts smallest to largest you pay minimum payments on everything but the little one you attack the little one with a v scorched Earth lifestyle sell so much stuff the kids think they're next take 16 extra jobs name the dog eBay and put him there put the cat on Craigs List we're getting out of debt we're getting out of debt and you pay everything you stop all investing temporarily and completely Focus all your emotional spiritual Financial Rel relational energy on that smallest debt everything goes on that when

that one's gone you take the payment that used to be there and any other money we can squeeze out of our budget and we throw it at number two and when that one's gone we take the payments from one and two the snowball rolls over again it picks up more snow and you attack number three the average person for the past 25 years that has done that with great focused intensity intentionality gone crazy to the point they broke friends and relatives thought they needed counseling they shave their head they drink the Kool-Aid they get out

of debt in about 18 to 24 months everything but their house that's the average now some of you got a lot of debt it takes you 5 years some of you get out of debt in four months but the average is between 18 and 24 months it works Millions tens of millions of people have gotten out of debt debt-free screams alone on the air here last year were $ 49.8 million that's kind of like 50 ion dollar and that was just the ones that screamed on the air other people just stood in their backyard and

screamed and that worked too you know you don't have to come on the air for it to count you're out of debt shut up Dave yata Dave Ramsey I saw a guy on Twitter Dave Ramsey doesn't teach the most Optimum way to get out of debt the most Optimum way to get out of debt is to list and pay it off highest interest rate first says the on Twitter I I used to be that I tried that the problem is it doesn't work so let me explain to you what Optimum means Optimum is the one

that works not the one that's mathematically correct honey if we were doing math we wouldn't have credit card debt to start with this is not a math problem this is a you problem it's personal finance it's more Behavior it your success with your Finance has more to do with you getting along with your spouse and being on the same page than it does mathematics you can be a freaking math genius and you and your spouse aren't on the same page and all of our data tells us you will not win with money you will not

build wealth you cannot build wealth in spite of a princess or in spite of a prince who spends money like they're in Congress you can't do it you can't make enough money to outspend stupidity or out earn stupidity I tried it not my wife I was the stupid one I always thought if I just made a little more it'd be okay no I had to learn to control what I had so we started teaching people a class called Financial Peace University class is about 25 years old started teaching it with an overhead projector and a

bad suit was $569 to go through the class four people came the first night three of them bought $569 the class was 26 weeks long come every 13 L come every other week for six freaking months guy stopped by here the other day that was in that very first class good to see him I hadn't seen him in a long time we got to be friends his wife and he and I and he's a multi-millionaire now by the way why because I gave him money I didn't give him any money I just showed him how

to do it he did it he followed the steps that we teach in fin fincial Peace University not only the baby steps not only the debt snowball but also start investing in good mutual funds over a long period of time that's 25 years you should be a multi-millionaire you do this stuff it works that's what Optimum is morons you people that are calling me out and it's not Optimum let me just tell you Optimum is what works that's what's Optimum not what's mathematically correct I understand the de snowball is not mathematically correct and I don't

really care my math nerd down inside of me cringes but I don't really care what matters is what works how allows you to change your life Dave I'm thinking about building a house any suggestions absolutely definitely got suggestions when you're thinking about building a house there's three and maybe four things you must do if if you're going to build a house maybe five but I'll I'll walk you through here's what we do okay there's some sub pieces so three maybe four the maybe four is if you've already picked out the property and bought it and

you've already got your Builder and you're doing kind of an independent Standalone type of a deal then we will pass on number one but number one is if you haven't then I would get a good buyer agent re buor at dve ramsey.com click on ELP for Real Estate ELP and get them to represent you through the whole transaction with the builder help you navigate with the builder if you haven't already selected it so if you're going in where somebody's building houses or Builder's got a subdivision going and they're doing a whole bunch of deals and

they got houses popping up everywhere and you're going to run down there go I want that one on that lot and you haven't done that yet and yeah I'd get a realtor in your corner a buyer agent in your corner cuz they'll work as your liaison during the construction C process and they're going to work their butts off for their commission I promise you now number the the other three are with everybody okay there are three things that run a building job a building job is simply a project it's project management it's all it is

if we're doing a project here developing a product how do you do that well projects all need basically three things need a blueprint which is how the project is going to be built what's the house going to be you need a detailed blueprint that you and the Builder are in agreement on if you don't already have that while you're drawing it involve your Builder with the architect so the two of them are working together to develop the plan so the architect's not drawing something stupid that's that's ridiculous to be built or super expensive because they

went to art class and don't know anything about building okay so you got to have the balance in there but if you've already got your blueprint you got your blueprint that's thing one this is one of the three pieces of paper that manages a building bu job the second piece of paper is do not engage in a building project without a detailed schedule a schedule when we built the homes that we built we had a spreadsheet and before we broke ground we knew the week the trim Carpenter was going to show up we knew the

week the painter was going to show up we knew the week the roofer was going to show up we knew the week the grading was going to be done on this or that all you know with bushes are going in on this date we're going to get the CO the the certificate of occupancy on this date and so you've got you begin with the end in mind on the schedule you got your blueprint you got the schedule that we're going to build it then you could tell if the Builder's off track cuz he's building something

that's not on the blueprint or he's off schedule because weather's been bad or he hadn't done a good job of keeping the sub scheduled in but if you start a house in October and you know March the 4th the trim Carpenter is supposed to be there you can already schedule the trim Carpenter and so you don't end up without a dad gum trim Carpenter when you're supposed to and right now there's a shortage of Labor in the building business and if you don't have your subs lined up all the way out you're going to get

messed over on your schedule so a schedule and a blueprint the third piece of paper is a budget need a budget which we're building to and when they come in go well we're you know we can't we can't do this on budget what do you mean you can't do it on budget this is the budget this is what we said and it keeps you from doing stupid stuff we're building a house and The Decorator came in and picked out expensive carpet for the down stairs nobody goes downstairs much and she's blowing our whole carpet budget

our flooring Budget on this stupid downstairs carpet cuz decorator being a decorator right I'm like no you're this is Dave Ramsey building this house kiddo so put the cheaper carpet downstairs nobody goes down there anyway and get your dead gum flooring budget back into because we're not going a bazillion dollars over our flooring budget and so you can build a house on budget on schedule and then every Friday we met with the Builder and we looked at the blueprint the schedule and the budget and made sure everything that was done that week was lining up

with all of that the blueprint the schedule and the budget the blueprint the schedule and the budget every Friday morning and of course we had the money lined up so we paid them every Friday morning and they were able to pay their subs everybody's happy everything stays on track we finished the houses early and under budget the last two houses we built can you imagine that can you imagine building a house for me how big a pain in the butt that is but you know what we didn't change 60 three things during the way if

you the more change orders you do the more you're going to lose your butt it's hard on the Builder it's hard on the subs hard on the schedule it's hard on the budget so make your mind up and stick with it we did two three change orders on both houses I mean almost no change orders we had some big stuff we got in there no this isn't right we got to change this and we SP and and it was on us and then if it's on me and then mixed in this is you as the

person building the stinking house have to do your job and that is stay ahead of them on the selections when you don't go pick out the carpet you don't go pick out the light fixtures you don't go pick out the the faucets you don't go pick out the plumbing fixtures months and months and months ahead of when you need to then you're slowing the whole thing down and then you go I had a bad experience building cuz you were so freaking indecisive you were impossible to work with every time I give this talk Builders all

go God I wish I could get all my people to do this I'm like you you need to demand it because that you stay mad at your Builder and it's your fault now sometimes Builders are are are you know doofuses too like any other business but if you've got a quality realtor helping you lead your way through this and you'll do the budget the blueprint and the schedule the budget the blueprint and the schedule manage to that and you stay ahead of them don't you be the problem you make your decisions and a friend of

mine took him an extra year to build his house cuz he couldn't get his wife to go pick out the crap I mean I'm having a fit and she couldn't make up her mind I'm going to kill her what you talking about she can't make up mind a year you know well we enjoy the process I don't enjoy process I want to get it done I'm like why am I building the house so because it's a game no I'm building it to move into it so you stay ahead of them you you don't stop them

from anything you don't cause you don't get in the way you don't be a problem child and don't you go over on the site start telling sub stuff's wrong you're not running the job the general contractors run the job if you're going to go around the site the only thing you do is take food smile and tell everybody how wonderful they are and if you got a problem you call your Builder you call your general contractor don't you go tell them the electrician of plugs in the wrong place they get confused who the boss is

then stay out stay in the chain of command keep stuff picked out be a pleasant experience and you will have a pleasant experience but manage it like it's a project I mean people people wander around the Barn Building these houses and it takes you forever to get them done I've got some friends that build houses here in the area and they refuse to build houses for people they build them a specs and when they're done you can move in them you can buy them but they won't they won't they won't let you be involved cuz

cuz people drive the Builder Crazy by being indecisive and you know changing stuff halfway through a country music girl in our area was building a house and you know she and her decorator changed everything it took them an extra year and they spent an extra $4 million on an8 million was supposed to be a $4 million House end up being $8 million and took him an extra year to build it all because she changed everything she built a stupid house twice as she was going up just change change change change change change change change change

the whole house is change orders I mean it's ridiculous no that's that's a dumb way to build a house it drives everybody crazy and makes The Decorator money makes the Builder money makes the Builder crazy and makes you the customer crazy and broke figure out what you're going to do and do it have a clear path to building a house and you'll have a great experience if you do that I have had great experiences now nothing h no project of that size happens without glitches and without you having to have some discussions from time to

time like get your button gear kind of discussion but that's true of managing any project you got to line the the the labor sources up and get moving like dude you guys are two weeks behind how you going to make it up I don't know it's been raining well make it up I mean what I come over here you ain't working it's 2:00 in the afternoon where the flip are you folks if um you listen to this long enough you hear the show long enough and you listen to the debt free screams long enough you

find there's two types of people with money well there's a lot of types of people but people fall largely into two buckets there's the bucket of people who are doing their debt-free scream or someone like the young lady we interviewed in our lobby just a few minutes ago they are happening to their money the other bucket of people is the people the money happens to them Dr Steven cvy used to say in his book The Seven Habits of Highly Effective People the number one habit of highly effective people is they are proactive they happen two

things everything doesn't happen to them you make the assumption that we can't control all the external variables in our life but we are largely in charge of Our Own Destiny or we stand back and Shake our head and wonder why everything bad happens to us you either tell your money what to do or you wonder where it went money flows those from people who do not manage it to the people who do manage it if you take someone who manages money well and as a result has become wealthy and they lose everything they will become

wealthy again because the things that made them wealthy that did not leave when the money left and when you take someone who does not manage money well and they're given a pile of money have you ever noticed they end up with nothing because they don't happen to their money their money happens to them case in point Lotto winners someone wins the lottery the bankruptcy rate is fourfold the national average four times as likely to file bankruptcy if you win the lottery as not isn't that weird the vast majority of Lotto winners a decade later have

nothing because because the very thing that caused them to play the lotto in the first place is gives you an indication that you're going to lose it why some athletes when they get money end up with nothing because they had the only skill they've got is athletic skill they had no character no ability to manage the money no ability to say no no ability to have good relationships and boundaries those are the things that lead you to build wealth and so wealth is an intentional act now bad stuff can happen to people and sometimes people

are poor because people are oppressing them I understand that I'm not picking on the poor that's not what I'm doing but what I am saying is is that sometimes you're where you are because of a series of decisions you've made as a matter of fact usually you're where you are and you can make new decisions you don't have to well my family the way I grew up in my neighborhood my people those are how sentences start when people are going to explain why they're losing and it's not their fault the little man can't get ahead

people like me you don't understand about the isms that are out there yeah I do isms are real they're real but I meet people every day who overcome their isms sexism racism people overcome their isms all the time hard work hustle smarts looking forward controlling the destiny is can everybody do it apparently everybody can do it but most people choose not to they choose not to control the variables in their life and so it comes down to something as simple in in personal finance as doing a budget when you do a budget it is you

exercising the fact that you believe you control your destiny if you're if you are a victim of Destiny why would you ever do a budget if you're if you're going to be controlled by an ism if you're going to be controlled by the way you grew up if you're going to be controlled by people in my family people of my Heritage people of my ethnic background people of you fill in the blank if you're going to be controlled by that I I grew up on the other side of the tracks Dave most millionaires did by

the way the vast majority of millionaires grew up on the other side of the tracks the only difference in them and the next door neighbor that's still on the other side of the tracks as they decided they didn't want to live there so they picked their butt up and they moved to the other side of the tracks they lived like no one else so that later they could live and give like no one else consequently we see things like the 5 million families that have been through Financial Peace University you know what the number one

data point between them being successful are the ones that are successful going through that getting out of debt and the ones that aren't the number one data point is to do a budget we can predict your success in Financial Peace University by the second class it's nine classes when you go through nine lessons the second lesson we can tell if you're going to be successful did you come in with your zerob based budget done in every dollar the way we teach you no I'm got my own version of Dave Ramsey I've got my own version

of smart I'm is I'm Dave Ramsey is I'm going to do Financial Peace University is you're not going to make it we could our data I mean when 5 million people do something you got good data okay we got good data we know exactly who's going to make it and who's not we can study your behavior and tell you if you keep on this path you are going to fail and you've already started down the wrong path so you got to turn around and go back and start again the people that do their every dollar

budget complete the class they typically go to all nine lessons they stay in the membership for a year continuing to watch online they download the podcast they watch the debt free screams on YouTube to stay inspired to stay on their budget how interesting they were sick and tired of being sick and tired they said I'm not going to be those people anymore I am going to control these variables I'm going to control my destiny do sometimes their transmission go out does sometimes there a car wreck is sometimes somebody get cancer does sometimes somebody die yes

sometimes tragedy happens yes sometimes I get laid off yes but guess what they get up and do it again sometimes they get knocked on their butt and they get back up and they do it again and you get back up and you do it again when you have a plan and when you believe you're in control of your destiny if you fall off your budget you mess up you get back up and you do it again you don't take the every dollar app off your phone by the way it's fairly easy to put back on

cuz it's free and you said down there and you do your budget the correlating statistic between people that win at anything and people that lose are those that are intentional people that win are intentional you don't accidentally win the freaking Super Bowl they never interview the guys at the end of the Super Bowl and go how'd you do that I don't know man I just got off the bus and I just want I have no idea no it's an intentional Act of a decade plus two decades usually of of practice and skill development that brought

them to that 10,000 hours of practice brought them to that you don't accidentally play a guitar like Brad Paisley it's not an accident it's an intentional act now some of you got drunk and woke up married but most people getting married is an intentional act you date you Court you're very focused you do everything right you smile at the right time and you shave and take a bath and it causes cording to work can you get married as we've been doing this millionaire research one of the pieces of data that we've discovered is by studying

10,000 millionaires that the average millionaire drives a 4-year-old car with 41,000 mil on it and of course it's paid for and they haven't had car payments in decades which is how they became a millionaire because the average car payment now is over $500 about $54 a month over 84 months if you invest $54 $4 from age 30 to age 70 you'll have somewhere around $5 million in your Roth IRA I hope you like your car Our advice knowing that cars lose 60 to 70% of their value in the first four years is to buy a

quality used car unless you have a net worth and excess of a million dollars then if you want to buy a new car you can afford to take the loss on it but the worst car accidents do happen on the showroom floor well Dave I'm always worried about buying a used car well what are you driving if you're driving a car that you bought two months ago it's now a used car if you buy driving a car you bought 5 years ago it's a used car what are you driving listen the vehicle quality is so

high now that you we get two 300,000 miles mil out of a car most of these cars run and run and run and run and run if you have take care of them so don't buy a new car unless you've got a net worth an excess of a million dollars now how do you negotiate the best deal on your car well the same way you do a lot of things there's a couple of keys to negotiating one is he with the most knowledge wins so study learn about that car go on trader.com go on Kelly

Bluebook and edmunds.com and look up stuff about the car Google the car read articles about the car look at different versions of the car different packages that are on the car the luxury package the standard package the twodo the four-door the different engines that are in that particular car learn all about a Honda Civic if you're going to buy a Honda Civic learn people impulse a big purchase like a car that makes you stupid you don't impulse that you study that and then pay cash of course now most of the time paying cash means that

you are doing a bank transfer but sometimes you can walk in with the cash and just lay it on the table it's not that much money I mean $7,000 $10,000 $15,000 whatever it kind of blows a dealer dealer's mind but certainly if you're buying from an individual when you put cash on the table it says we have a deal it doesn't say oh I need to check with my banker you ever sold a car on Greg's list I need to check with my banker and then you never hear from them again I'll take it but

I my banker will do it and never hear from them again but when you letay cash on the table there's no I need to check with my banker in there it's a done deal baby it's locked in right and listen don't just don't get married to one car be prepared to walk away listen when you bought something emotionally even the most inep seller recognizes the body language changes I mean you guys know when somebody's bought something right even though they haven't done the deal the negotiation is over once they know you're married I'm married I

have to have this car so just be quiet let them talk the seller that is tell them you know you've looked this car up You' studied a lot this seems a little high then be quiet let them talk you can negotiate online there's a lot of ways you can do it you can have the car inspected and a good thing to do too is check with one of our endorsed local providers on the insurance side and find out what it costs to insure that car you might be looking at $17,000 car that's almost twice as

much to ensure as another $77,000 car all right you guys that's a wrap on this limited series Dave Ramsey's Greatest Hits I loved looking back at the last 10 years of the ramsy show on video reliving some of the best moments and honestly seeing how consistent Dave has been over time it really is a testament to the Timeless money principles that we still teach on the ramsy show and yes some things have changed the studio has gotten a makeover Dave's fashion choices may or may not have gotten a makeover and now we have a whole

team of personalities instead of just Dave but despite all these changes the advice we teach has stayed the same it's still works and if you follow our money principles you will build wealth good news you can keep up with our life-changing content every weekday on the Ramsey Show just make sure that you're subscribed to the Ramsey Show Channel and as always thank you so much for joining me for Dave Ramsey's greatest hits