Never Buy an Investment This Way

Summary

Podcast Summary: The Ramsey Show Highlights – "Never Buy an Investment This Way"

Episode Information:

• Title: Never Buy an Investment This Way
• Host/Author: Ramsey Network
• Release Date: February 14, 2025

Introduction

In the February 14, 2025 episode of The Ramsey Show Highlights titled "Never Buy an Investment This Way," listeners are guided through a thoughtful discussion on investment strategies, financial growth, and the psychological motivations behind financial decisions. Hosted by the Ramsey Network, the episode features renowned financial experts Dave Ramsey and Rachel Cruze, who provide insightful advice to a caller grappling with investment dilemmas.

Caller Profile: Kel's Financial Journey

At 00:21, Kel introduces herself as a devoted listener and follower of Dave Ramsey’s teachings. She shares her appreciation for the advice and the positive impact it has had on her financial well-being. Kel, a social worker earning approximately $88,000 annually, supplements her income with $4,200 monthly from five fully-owned single-family rental properties in Alabama.

Kel reveals that her financial discipline, though yielding a substantial nest egg of $175,000 in savings, stems from past financial insecurities—a journey of healing that now allows her to consider investing more freely and indulging in leisure activities.

Investment Aspirations and Concerns

Kel's primary question revolves around expanding her real estate portfolio from single-family homes to multi-unit properties. She contemplates financing options such as leveraging a Home Equity Line of Credit (HELOC) against her personal residence or utilizing her savings to acquire multi-unit complexes. Her current savings include $100,000 allocated for rental expenses and $30,000 in regular savings accounts, which she mentions are yielding minimal returns.

At 02:33, Rachel Cruze seeks clarification on Kel’s assets, confirming her impressive financial standing despite the properties being modestly valued in Alabama. Kel expresses some regret over not investing earlier when property prices were lower, attributing her hesitation to fear and uncertainty.

Expert Advice: Rachel Cruze’s Perspective

Rachel Cruze commends Kel’s financial accomplishments, emphasizing that she is in an enviable position. At 03:38, Cruze advises against taking on additional debt to purchase multi-unit properties, highlighting the potential risks of disrupting Kel’s well-established, stress-free financial life. She warns that increased leverage could introduce anxiety and instability, detracting from Kel's current peace of mind.

Rachel encourages Kel to consider alternative growth strategies that align with her financial capacity, such as upgrading to properties in more desirable neighborhoods to command higher rents without incurring additional debt. She underscores the importance of measured, sustainable growth over aggressive expansion.

Expert Advice: Dave Ramsey’s Insights

Dave Ramsey echoes Rachel’s sentiments, delving deeper into Kel’s underlying motivations. At 05:57, Ramsey identifies a psychological component driving Kel’s desire for increased investment—rooted in past financial insecurities and a desire to overcome generational poverty. He advises Kel to recognize and address these emotional drivers to prevent them from adversely affecting her financial decisions.

Ramsey advocates for enjoying the fruits of her disciplined financial management. He suggests that Kel spend some of her earnings on personal enjoyment, such as taking a vacation or making generous community contributions. This, he believes, will help Kel appreciate her achievements and provide emotional fulfillment beyond financial growth.

Final Recommendations and Conclusion

Rachel Cruze reinforces the need for pure motivation behind Kel’s investment decisions, cautioning against actions driven by fear or scarcity. She advises maintaining autonomy over financial choices, avoiding external pressures that could lead to imprudent investments. At 08:38, Rachel reiterates the importance of contentment and peace in financial planning, supporting a balanced approach to growth.

Dave Ramsey concurs, urging Kel to experience the joy of her hard-earned success. He recommends taking a vacation or blessing others financially, fostering a sense of accomplishment and encouraging a shift away from perpetual financial striving.

Notable Quotes

• Dave Ramsey [07:22]: "Identify today that the same thing that's not allowing you to go spend some of that cash and live some of your life and enjoy the fruits of being disciplined is the same thing that's making you question, should I add more to my portfolio."

• Rachel Cruze [05:57]: "If the motivation is out of a lack of fear or scarcity or, oh, gosh, if I don't do this, what's going to happen... You have to maintain a level of contentment in your soul."

• Dave Ramsey [07:22]: "I want you to enjoy some of your money for a bit. Stop thinking about adding your portfolio right now, and why don't we just take a really great vacation."

Key Takeaways

1. Sustainable Growth Over Aggressive Expansion: Kel’s situation underscores the importance of expanding investments within one’s financial means, avoiding excessive debt that could jeopardize established financial stability.

2. Emotional Drivers in Financial Decisions: Recognizing and addressing underlying fears and insecurities is crucial to making sound investment choices that align with long-term well-being.

3. Balancing Financial Discipline with Enjoyment: Financial success should not come at the expense of personal happiness. Allocating resources for personal enjoyment and community support can enhance overall life satisfaction.

4. Autonomy in Financial Management: Maintaining control over financial decisions, free from external pressures, ensures that investments are aligned with personal values and goals.

Conclusion

In "Never Buy an Investment This Way," The Ramsey Show Highlights delivers a compelling narrative on the delicate balance between financial growth and personal well-being. Through Kel’s inquiry and the expert guidance of Dave Ramsey and Rachel Cruze, listeners gain valuable insights into making informed, emotionally balanced investment decisions. The episode emphasizes that true financial success encompasses not only monetary gains but also personal peace and fulfillment.

Transcript

[Dave Ramsey]

Brought to you by Y Refi Refinance your defaulted private student loans [e-mail] Ramsey.

[Kel]

I sent an email because I didn't think I could get on but then I called and got on.

[Dave Ramsey]

There you go, Kel.

[Rachel Cruze]

Looky there.

[Dave Ramsey]

You're live right now. This is exciting.

[Kel]

I have a two part question about investment in this second part is about beneficiary.

[Rachel Cruze]

Okay. All right, what's your first question?

[Kel]

I started watching Dave Ramsey heavily last year. I love his advice. All of you, all your perspectives on life and your sense of humor, it's just amazing. But thank you.

[Dave Ramsey]

I feel like she's talking about me there. So I really appreciate that. Tell thank you.

[Kel]

I've always been doing well financially, like pretty decent. But there is definitely room for growth and improvement and this show has really helped me. So as a social worker, I make about 88 annually and I get about 4200amonth for my rental properties. I own the rental properties outright. I manage them myself. So there's not a whole lot of overhead. There was this one episode Dave talked about being able to charge low rent, give grace and et cetera due to circumstances. And that just really resonated with me. But also I have quite a nest egg in savings and that comes from financial insecurity that I once had that I'm now healing. So now I'm open to spending some, you know, leisure, having fun and just investing more.

[Dave Ramsey]

There we go.

[Kel]

I've always wanted to. The properties that I have, they're all single family homes and so I've always the long term go. I was like, hey, I'm done with that. I want to do multi unit and I think I'm ready. But I'm really not sure about the best way to go about doing that. And some of my ideas just don't align with your principles. I know, but I'm just going to save them anyway. So I'm not sure if I should finance the multi unit. Get a HELOC on my personal residence where I owe 101 and it's worth about 300. My Nest bag is 175 cash. That's not quite enough to purchase outright and the prices are just rising. And sometimes I feel bad for not doing this a couple years ago when the prices went lower. But I was scared and all those things.

[Rachel Cruze]

Okay, let me, let me interrupt you real quick. Okay, let me ask this. So you make 88,000 a year. You bring in 4,200 in rental properties that you own outright. How many homes is that five. Five. And how much are they worth?

[Kel]

They're not worth a lot of money. They're in Alabama. They're not worth.

[Rachel Cruze]

Okay, no, it's fine. That's fine. No, I mean still fantastic. And then you have $175,000 in just savings, is that what you said?

[Kel]

Just different savings accounts. One is an account where I put all the money from the rentals. That's about 100. Okay, just pay insurance. I just do the repairs. And then the other ones is just regular savings. But recently one account has 30, 000 in it and I was just looking and it was gaining like 25 cent a month. And just listening to you all, I listened to the mutual say, the mutual trust, I believe and I went with LPL Financial and I invested there just to see where that goes with. That's new. I was, you know, nervous. But like I said, I'm trying to be more open and.

[Rachel Cruze]

Yes, totally. No, I hear you. Well, Kel, you've been. Let me just tell you, I mean it's very impressive what you've done. I mean you, you are in an incredible spot financially. So you call the Ramsey show. Yes. Any of the examples or options that you gave to purchase a multi unit we would not go for because they all pret much involved debt. So I'm not going to go down that route with you. But what I would encourage you in is, you know, I, I so appreciate your willingness and urgency to continue to grow. Right. You want your money to grow and you're like, what's the next thing? And I think that that is fantastic. But what happens so easily is that emotion and that motivation sometimes crosses a line of risk. And then people take on debt and then take on risk and they take this beautiful peaceful life that you have where you're just not. I mean you're making 4200amonth on rental properties. I'm like, I'm like, you have this incredible life set up and then they go and kind of mess with it and suddenly now you have a bank in your life, you're worried about tenants and suddenly this peaceful life has now brought on a level of anxiety and work and risk and you know, it takes a part of your, about a part of your mindset away from you and away from the peace that you have. So I want you to grow financially. I'm. We are all about that on this show. I think that that's fantastic. I just want you to do it in a slower, wiser way that's going to ultimately for you Kel set you up as a whole person, not just the financial piece of your life, but every. Every element of your life to still continue this piece that you have. So what I would do is either continue to do. Because you can't. I mean, from our regards, you don't. You can't afford a. To go buy a multi unit, you know, complex. So what I would say is either continue to do what you're doing, maybe save up and go buy, you know, you said our homes aren't worth a lot. You know, maybe you go and step up in rental and go buy in a nicer neighborhood, somewhere that's more expensive. You can get more rent that way. Right. Growing in these ways that it is more within your means when it comes to cash. Because right now you're on baby step seven. I mean, you're, you're.

[Dave Ramsey]

Yeah. I'm sensing, Kel, that you, you gave us a real window into what's really going on here. And I think you need to be okay with how well you've done. I think Rachel nailed that. And there's the same thing that you identified at the start of the call where you have some financial insecurity and you've saved all this money up and you're just afraid to spend it. That's also driving this question, which is, I feel like I need more and more and more, and I'm willing to be risky and go into debt to fill this hole in your soul. And the hole in your soul here is whatever you come from that you've conquered, by the way, but you still have that fear. And by the way, we all have those. So you're not abnormal. Rachel's right. You've crushed it. I think you need to identify today that the same thing that's not allowing you to go spend some of that cash and live some of your life and enjoy the fruits of being disciplined is the same thing that's making you question, should I add more to my portfolio? Do exactly what Rachel said. When you can upgrade in cash, right. To better investment properties. Do that. But don't have this burning in your soul that I've got to do more to break some generational poverty or whatever you've come from. And I sense that that's probably true with you. Am I right?

[Kel]

Yeah.

[Dave Ramsey]

Okay, so Rachel's already giving you great advice. I say amen to what Rachel said. I add one other little thing. I want you to enjoy some of your money for a bit. Stop thinking about adding your portfolio right now, and why don't we Just take a really great vacation. Why don't we bless some people in your community with some nice, generous financial gift. That's easy for you, but you begin to see the value of what you've done and allow you to soak in that, that, hey, I've earned this. I've broken this generational poverty. I'm never going back. I'm the future. I'm the model. So let's model the way. I think that's my encouragement for you today.

[Rachel Cruze]

And I would say, Kel, too, jumping off what Ken was saying, and I think he is so spot on, is that, you know, growing your portfolio again. It's not, that's not wrong. But we want it to come from a right motivation. And if the motivation is out of a lack of fear or scarcity or, oh, gosh, if I don't do this, what's going to happen is you're going to get the complex and then the finish line moves again and then it's like, well, I probably shouldn't have gotten one over there, so maybe I should. You're going to keep, keep going, going, going, going. There has to be a level of contentment in your soul, a level of peace.

[Kel]

Well, and then it's been about six years since I invested in anything, so I have, I was content, you know, and this was a long term goal. And I just, you know, starting to feel like, okay, I think I'm ready.

[Rachel Cruze]

Yeah, that's fair. Yeah. Yeah. So then maybe your motivation is pure, but I would just do it then. Yeah. From a tactical sense, in the right, wisest way, which we would say is not with debt. It is to continue to be autonomous when it comes to your money and not have other people telling you what you have to do. Because then you make totally different decisions with your life and money. When other people are involved, you are in a state of autonomy. And that's where I would stay. Kel, continue to grow. You've crushed it and you're doing great. And go take a vacation.

[Dave Ramsey]

Yes. Spend some money on you go.

[Rachel Cruze]

Enjoy. Thanks for the call. Why refi Refinances delinquent private student loans for struggling borrowers. Learn more at Y r e f y.com Ramsey.