Was Taking Out A $100,000 Loan To Buy Cattle A Bad Idea?

Summary

Podcast Summary: The Ramsey Show Highlights

Episode Title: Was Taking Out A $100,000 Loan To Buy Cattle A Bad Idea?
Date: September 25, 2025
Host: Dave Ramsey
Guests/Co-hosts: Financial Expert (unidentified co-host)
Caller: Young Rancher (20-year-old business student and aspiring cattle rancher)
Duration: ~7 minutes of main content

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Overview

In this episode, Dave Ramsey and his co-host respond to a young caller's question: was it wise to take out a $100,000 loan (collateralized by a Certificate of Deposit, or CD) to start a cattle business? The conversation delves into the risks of investing in commodities, the pitfalls of using borrowed money, and the critical lessons young entrepreneurs should heed before leveraging debt, especially in volatile markets.

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Key Discussion Points & Insights

1. Caller’s Background & The Loan Details

• [00:06] Young Rancher, a 20-year-old business student, shares that he is $100,000 in vehicle loan debt and recently took out another $100,000 from a local credit union (Education Credit) to buy cattle, while also owning a $100,000 CD from profits made on a prior cattle partnership.
  • "I was about a hundred thousand dollars in debt on vehicle loans and then I just recently took out a hundred thousand dollars to... start a cattle business." – Caller, [00:23]
• The arrangement essentially means he borrowed against his own CD to fund the new venture.
  • Dave observes: "So they didn’t give you a loan, you borrowed your own money?" – Dave Ramsey, [01:31]
  • "Pretty much, yes, sir." – Caller, [01:34]

2. The Nature of the Investment

• The caller now has 25 head of cattle, all aged three to six years and soon expecting calves.
• He insists he’s invested in an area he knows ("Yes, I grew up in it"), but is unsure if the debt-backed expansion was smart.

3. Ramsey’s Foundational Money Principle

• Dave is known for strictly opposing debt for investment, something the caller is aware of.
  • "Have you ever heard me tell anyone to borrow money for any ever?" – Dave Ramsey, [02:43]
  • "No, sir." – Caller, [02:48]
  • “You kind of know you walked into the lion’s den, right.” – Dave Ramsey, [02:51]

4. Risks of Commodities & Market Timing

• The co-host notes current beef prices are historically high due to droughts, but warns that relying on high commodity prices is perilous.
  • "Beef is at an all time high because there's been drought... and then in 18 months or 24 months when everyone’s got back into new cows... beef prices are going to plummet and you're going to be up a creek." – Co-host, [03:03]
• Caller believes he can pay off the note in three years if the market holds.
  • "As long as the market doesn't go 50% less than what it is right now, I should be able to get it done in three years." – Caller, [04:01]
• Co-hosts push back, advising urgency and skepticism:
  • "I would get it down in one year. And here's why. The only reason Dave and I have a job is because people like you say, if this scheme I'm running just hangs on for three more years, I'm gonna be all right. And it doesn't." – Co-host, [04:09]

5. The Dangers of Debt-Fueled Speculation

• Ramsey underscores that the real gamble is using debt, not the business itself:
  • "If you’re gonna play, make a play like this, you should do it with real money, not borrowed money." – Dave Ramsey, [04:37]
• The bank is protected; the only real risk is to the caller’s money (the collateralized CD).
  • "Your CD is what you lost. The bank hasn’t got any risk." – Dave Ramsey, [03:31]
• The cycle of escalating risk: Success in this gamble could lead to even riskier, bigger bets, which could eventually wipe him out.

6. The Nature of Commodities: Economics Lesson

• Ramsey explains beef—as with all commodities—is driven strictly by supply and demand, not predictable business metrics.
  • "There’s one thing that drives beef prices. Supply and demand. That’s all." – Dave Ramsey, [04:59]
  • "Anybody that’s playing commodities, 100% of the time, you’re guessing about what the future is going to do... your math was a wild guess." – Dave Ramsey, [05:02–05:14]
• He draws a parallel to oil markets to illustrate volatility:
  • "Look at the barrel of oil and see what it’s done... It’s up and down, up and down, up and down... Based on guess what? Whether the Middle East turns the spigot on or off..." – Dave Ramsey, [05:51–06:15]
• The illusion of expertise: Just knowing cattle doesn’t make someone immune to market swings.
  • "You have talked yourself into believing that you can predict a commodity’s price. That is unbelievably dangerous. And it will end in your failure eventually if you keep doing this." – Dave Ramsey, [06:16]

7. Advice to Young Entrepreneurs

• If you must speculate in commodities, use your own money only, not debt or leverage.
  • "If you’re going to play this game, play it with cash, son. But I wouldn’t play it. I wouldn’t play it at the level you’re playing it. I wouldn’t do it at 20 years old, period." – Dave Ramsey, [07:15]
• Encouragement to study commodity volatility and economics as part of his business education going forward.

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Notable Quotes & Memorable Moments

• "Are you punking me?" – Dave Ramsey, [00:41] (expressing disbelief that any bank would make such a loan)
• "Who made the loan? What's the company's name? I want to make sure all of America hears who's stupid out there?" – Dave Ramsey, [00:55] (mixing humor and exasperation)
• "The only reason Dave and I have a job is because people like you say, if this scheme I'm running just hangs on for three more years, I'm gonna be all right. And it doesn’t." – Co-host, [04:09]
• "You have talked yourself into believing that you can predict a commodity’s price. That is unbelievably dangerous." – Dave Ramsey, [06:16]
• "If you’re going to play this game, play it with cash, son." – Dave Ramsey, [07:18]

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Important Timestamps

• [00:23] — Caller’s full debt and business background
• [01:28–01:41] — Explanation of CD as loan collateral
• [02:43–02:48] — Dave’s philosophy against borrowing
• [03:03–03:31] — Co-host outlines specific market risks for beef
• [04:09–04:24] — Urgency to get out of debt, warning against waiting on luck
• [04:59–06:16] — Dave’s economics lesson on commodity markets
• [07:15–07:18] — Final, emphatic advice to caller

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Final Thoughts

This episode is a vivid, cautionary tale about the dangers of jumping into leveraged investments, even in fields you know well. Dave Ramsey and his team drive home the point that using debt to speculate on unpredictable markets sets a dangerous precedent—especially for young entrepreneurs. Their advice: if you can’t do the deal with cash, don’t do it at all, and never mistake experience in an industry for immunity to its market risks.

Transcript

[Dave Ramsey]

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[Dave Ramsey Show Announcer]

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[Caller (Young Rancher)]

I'm 20 years old and I'm full time student and full time working outside of school.

[Dave Ramsey]

And what are you studying?

[Caller (Young Rancher)]

Business.

[Dave Ramsey]

Good.

[Co-host or Producer]

Okay.

[Financial Expert or Co-host]

Are you out there at wt?

[Caller (Young Rancher, same as C)]

Yes.

[Financial Expert or Co-host]

Good for you.

[Caller (Young Rancher)]

And then I was curious. So I'm in the farm and ranch industry and I'm about. Oh, I was about a hundred thousand dollars in debt on vehicle loans and then I just recently took out a hundred thousand dollars to like start a cattle business.

[Dave Ramsey]

Are you punking me?

[Dave Ramsey Show Announcer]

Who gave a 20 year old a.

[Dave Ramsey]

Hundred thousand dollar cow loan?

[Caller (Young Rancher)]

I know who? I don't know.

[Dave Ramsey Show Announcer]

No. Yeah, you know, if you. Did you really do it or not? Are you punking us?

[Caller (Young Rancher, same as C)]

Yes, I did.

[Caller (Young Rancher)]

No, I really did it.

[Dave Ramsey]

Yeah.

[Dave Ramsey Show Announcer]

You're kidding me. Who made the loan? What's the company's name? I want to make sure all of America hears who's stupid out there?

[Caller (Young Rancher)]

It's a local bank here.

[Dave Ramsey Show Announcer]

What's the name of the local stupid bank? The name of the bank?

[Caller (Young Rancher, same as C)]

Education.

[Dave Ramsey Show Announcer]

Education is the name of a bank?

[Caller (Young Rancher, same as C)]

Yeah. Education Credit.

[Dave Ramsey]

Education Credit.

[Financial Expert or Co-host]

You pay for it with a student loan.

[Dave Ramsey]

Education.

[Dave Ramsey Show Announcer]

They gave a 20 year old $100,000.

[Dave Ramsey]

Loan to buy cattle?

[Caller (Young Rancher, same as C)]

Yes.

[Caller (Young Rancher)]

And I have a CD also.

[Dave Ramsey Show Announcer]

How big is your CD?

[Caller (Young Rancher)]

A hundred thousand.

[Dave Ramsey]

Oh, so they didn't give you a loan, you borrowed your own money?

[Caller (Young Rancher)]

Pretty much, yes, sir.

[Dave Ramsey Show Announcer]

Where'd you get a hundred thousand dollars in a cd?

[Caller (Young Rancher)]

It was a partnership between me and a family member on some cattle that we've had for about 10 years and only sold those.

[Dave Ramsey]

So you made a profit and now you pledge the whole profit into another herd?

[Caller (Young Rancher, same as C)]

Yes.

[Co-host or Producer]

All right.

[Financial Expert or Co-host]

What size cows currently? What size cat? What size?

[Caller (Young Rancher)]

What size?

[Dave Ramsey]

How many head?

[Caller (Young Rancher)]

I got 25 head.

[Financial Expert or Co-host]

And then how big are they?

[Caller (Young Rancher)]

They are three to six years old and they're gonna be having calves in about two to three months.

[Financial Expert or Co-host]

Do you know how to calve babies?

[Caller (Young Rancher, same as C)]

Yes.

[Dave Ramsey]

He's grew up on. He grew up in it. The family member was his father probably. All right, honey, you called the wrong show. I'm sorry. How can we try to help you?

[Caller (Young Rancher)]

I'm just trying to figure out really like what I can do and if I'd like made a good decision on trying to like take this loan out to.

[Dave Ramsey]

How long have you listened to the show?

[Caller (Young Rancher)]

About two years probably.

[Dave Ramsey]

Have you ever heard me tell anyone to borrow money for any ever?

[Caller (Young Rancher)]

No, sir.

[Co-host or Producer]

Okay.

[Financial Expert or Co-host]

And here's what. Here's what? I'm afraid so.

[Dave Ramsey]

You kind of know you walked into the lion's den, Right.

[Caller (Young Rancher, same as C)]

Yes.

[Financial Expert or Co-host]

Well, and here's what I'm afraid you're about to do. Those cows right now, beef is at an all time high because there's been drought, right?

[Caller (Young Rancher, same as C)]

Yes.

[Financial Expert or Co-host]

And you're going to have babies and you might, maybe you might be able to get away with this one. And then you're going to go do it again and you're going to. You're going to put more down on it and you're going to take out a bigger loan. And then in 18 months or 24 months when everyone's got back into new cows because there's been some rain, the beef prices are going to plummet and you're going to be up a creek. You're going to have lost it all.

[Dave Ramsey]

Your CD is what you lost. The bank hasn't got any risk.

[Dave Ramsey Show Announcer]

Well, I'm thinking back.

[Dave Ramsey]

He's going to banks, not stupid at all. They're begging for you to not pay this. They're just going to scarf your cd.

[Financial Expert or Co-host]

He's. I think you're going to make your money on this one. I think you're going to. It's the, it's the $250,000 loan. You take after this one.

[Caller (Young Rancher)]

I think based on my math and everything, the market looks like it's going to stay where it's at for at least two years. And I'm planning on being able to pay this note off the third year.

[Financial Expert or Co-host]

I think there's no chance.

[Caller (Young Rancher)]

As long as the market doesn't go 50% less than what it is right now, I should be able to get it done in three years.

[Co-host or Producer]

Okay.

[Financial Expert or Co-host]

I would get it down in one year. And here's why. The. The only reason Dave and I have a job is because people like you say, if this is. If this scheme I'm running just hangs on for three more years, I'm gonna be all right. And it doesn't.

[Caller (Young Rancher)]

Right.

[Financial Expert or Co-host]

That's the problem.

[Co-host or Producer]

All right, so.

[Dave Ramsey]

Would you have done this if you just cashed out your CD and used your money?

[Caller (Young Rancher)]

Yes, I believe so.

[Co-host or Producer]

Okay.

[Dave Ramsey]

If you're gonna play, make a play like this, you should do it with real money, not borrowed money.

[Co-host or Producer]

Okay.

[Dave Ramsey]

Number one. Number two, what year in business school are you? First, second, Third?

[Caller (Young Rancher)]

I will be a. Between my sophomore and junior year.

[Co-host or Producer]

Okay.

[Dave Ramsey]

I want you to start doing some reading on commodities because beef is a commodity.

[Co-host or Producer]

Okay.

[Dave Ramsey]

And there's one thing that drives beef prices. Supply and demand. That's all. And if there's a shortage of beef, prices run up. If there's an oversupply versus the demand, the prices go down. So your math was a wild guess. That's what your math was. Anybody that's playing commodities, 100% of the time, you're guessing about what the future is going to do, the track record, the history of it. On beef, like a lot of commodities has gone up, but another commodity that you could study the volatility of. If you want to test my. My basic theory of economics here is oil. Look at the barrel of oil and see what it's done.

[Co-host or Producer]

Okay?

[Dave Ramsey]

It's up and down, up and down, up and down. Best based on guess what? Whether the Middle east turns the spigot on or off. Whether the local domestic policy for drill baby drill turns the spigot on or off. If the spigots are off, oil prices go through the roof, and then so does the gas pump. After that, if the spigots are wide open, oil prices drop through the floor.

[Co-host or Producer]

Okay?

[Dave Ramsey]

Has nothing to do with the inherent value of oil. It's the shortage or the oversupply versus demand. And that's the game you're playing. Meaning that from a business perspective or a investment perspective, you are gambling. You are rolling the dice. Because you are in the world of beef, because you grew up in it, because you know something about the actual cattle. You have talked yourself into believing that you can predict a commodity's price. That is unbelievably dangerous. And it will end in your failure eventually if you keep doing this. So the next time you get ready to make a gamble and you're going to put $100,000 on red or $100,000 on black, make sure it's your money so when you lose it, at least it's just your money that's gone. If it goes up, it was your money that went up. If you're going to play this game, play it with cash, son. But I wouldn't play it. I wouldn't play it at the level you're playing it. I wouldn't do it at 20 years old, period.

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[Dave Ramsey]

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