"You're Good At Losing Money"

Summary

Podcast Summary: The Ramsey Show Highlights – "You're Good At Losing Money"

Episode Overview

In the episode titled "You're Good At Losing Money," released on July 8, 2025, Dave Ramsey and George Kamel dive deep into the pitfalls of high-leverage, high-risk financial strategies, particularly in real estate. Through a real-life caller's predicament, they illustrate the dangers of deviating from proven financial principles and underscore the importance of disciplined debt repayment.

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Caller’s Financial Predicament

The episode begins with a caller who has experienced a significant income surge over the past two years, reaching an annual earnings of approximately $250,000. Influenced by peers in the sales industry, he adopted a high-leverage, high-debt strategy to accelerate wealth growth. His financial ventures include:

• Primary Residence: Purchased with a mortgage of $600,000.
• Rental Property: Acquired with a $300,000 loan, currently valued at around $350,000, resulting in negative cash flow of approximately $400 monthly.
• New Car: Fully paid off, eliminating that debt.

Additionally, the caller maintains a $1,000 credit card balance, which he diligently pays off each month.

Notable Quote:

Caller [00:06]: "I've been pretty good with my money... I just kind of want to get out of the debt life."

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Dave Ramsey’s Analysis and Recommendations

Dave Ramsey identifies the caller's strategy as antithetical to his financial teachings. He emphasizes the importance of living within one's means and eliminating debt systematically.

Key Recommendations:

1. Prioritize Debt Repayment:

   • Pay Off the Rental Property First: Given its lower principal, Ramsey suggests eliminating this debt within the next 1.5 years.
   • Subsequent Focus on the Primary Residence: Once the rental is cleared, attention should shift to the primary mortgage.

2. Adopt a Frugal Lifestyle:

   • Ramsey advises adopting an austere budget ("beans and rice") to free up funds for debt repayment.

3. Eliminate High-Risk Investments:

   • Selling the unprofitable rental property is recommended to stop further financial hemorrhage.

Notable Quotes:

Dave Ramsey [01:01]: "You were working a plan that's the polar opposite of what we teach people to do, and now you want to change direction and go back the other way."

Dave Ramsey [03:26]: "I think you need a new CPA. He's an idiot."

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George Kamel’s Insights on Real Estate and Wealth Building

George Kamel concurs with Ramsey’s assessment, delving into the broader implications of high-leverage strategies in real estate.

Key Points:

1. Profitability Concerns:

   • Highlighting that the rental property is not generating positive cash flow, making its continued hold financially detrimental.

2. Critique of High-Risk Strategies:

   • High leverage and high risk are portrayed as flawed methods that do not align with the strategies employed by truly wealthy individuals.

3. Skepticism Towards Modern Wealth Advice:

   • George critiques the proliferation of high-risk investment advice on platforms like TikTok, labeling it as misguided and financially damaging.

Notable Quotes:

George Kamel [05:54]: "This rental is an impediment. I don't think it's a blessing."

George Kamel [08:04]: "It's less exciting, doesn't get as many clicks."

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The Dangers of High-Leverage, High-Risk Strategies

Ramsey and Kamel elaborate on why high-leverage, high-risk strategies are detrimental:

1. Sunk Cost Fallacy:

   • The caller is emotionally attached to his rental property despite its financial drains, making it harder to sever ties.

2. Misaligned Wealth Building:

   • Contrary to popular belief propagated by some financial influencers, true wealth accumulation is achieved through low-risk, disciplined financial management.

3. Psychological Pitfalls:

   • The allure of quick wealth can lead individuals to overlook fundamental financial principles, resulting in long-term instability.

Notable Quotes:

Dave Ramsey [05:57]: "High leverage, high risk, wealth building plan. Which is interesting because when you actually study the wealthy, which we have done for decades, they don't do that."

Dave Ramsey [06:20]: "Wealth building plan should not be in the same sentence with high leverage, high risk because the data says otherwise."

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Conclusion: Embracing the Slow and Steady Approach

The episode concludes with an affirmation of Ramsey and Kamel's commitment to their financial philosophies. They reiterate that building wealth is a marathon, not a sprint, and that disciplined debt repayment and low-risk investments lay the foundation for true financial freedom.

Final Notable Quotes:

Dave Ramsey [07:02]: "I can't outrun it, it's just, it'll get you."

George Kamel [09:30]: "Didn't work. Just saying."

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Key Takeaways:

• Debt Over Income: Regardless of income level, unmanaged debt can cripple financial stability.
• Avoid High-Risk Investments: Prioritize investments that offer stability over those promising quick, high returns.
• Discipline and Planning: Adhering to a structured financial plan ensures long-term wealth accumulation.
• Critical Evaluation of Financial Advice: Scrutinize the sources and viability of financial strategies, especially those promising rapid wealth.

This episode serves as a cautionary tale against succumbing to high-risk financial temptations and reinforces the timeless wisdom of disciplined money management.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Caller]

So I've been in the sales industry for a long time, and I've been pretty much. I've been pretty good with my money. And about two years ago, my income noticeably jumped up quite a bit. And a bunch of my employees kind of in the sales industry just had the high leverage, high debt to grow your wealth kind of mindset. And long story short, I ended up getting my primary residence and then a year later bought a rental property, and then I got a new car. And I'm just kind of figuring out what the best way to pay all that off is because I'm a recent fan of yours, kind of started listening, like, summer of last year, and just kind of want to get out of the debt life.

[Dave Ramsey]

Okay, so you were working a plan that's the polar opposite of what we teach people to do, and now you. Now you want to change direction and go back the other way.

[Caller]

Correct.

[Dave Ramsey]

Okay, so the way you got into this was buying a bunch of crap you couldn't afford once you sell it.

[Caller]

So the. I bought. Well, I paid off my car, so the car is completely paid off. And then I just have my primary residence and then just my rental property and my. My rental properties rented out. And I'm just curious because what do you owe them? The rental property is 300,000, and then my primary residence is 600.

[Dave Ramsey]

And what are you making?

[Caller]

Making around 250,000 a year.

[Dave Ramsey]

Okay, so you can. You're making good money. So you have any debt other than these two items?

[Caller]

No, I have just like a thousand on credit card, but I pay it off every month.

[Dave Ramsey]

Okay, all right. Well, I mean, I would get on a. Are you married?

[Caller]

Yes, with two kids.

[Dave Ramsey]

Okay, good, good. Okay, well, I. I mean, what we. What George and I would teach you is just to. Let's live on beans and rice and let's pay off the. Pay off your rental property and pay off your home.

[Caller]

So do you pay off the rental property first?

[Dave Ramsey]

Yeah, it's smaller. You can knock it out. You probably knock it out in a couple years, couldn't you?

[Caller]

Yeah, my goal is to have it paid off within the next year and a half or so.

[Dave Ramsey]

Yeah, that'd be cool. And then if you got all that cash flow, plus you're making 250, maybe even then. Maybe even your income goes up, then you just start working on paying off the house and making sure you have an emergency fund in place and cut up the credit card and quit using that crap. But that's just going to help you with your efficiency on the money.

[George Kamel]

How profitable is the rental?

[Caller]

It's not profitable because I bought the house when it was high interest rate, so it's currently about minus 400. It was my initial primary resident.

[Dave Ramsey]

What do you, what's it worth?

[Caller]

It's currently worth around 350.

[Dave Ramsey]

Why don't you just sell it?

[Caller]

Well, so our thought process is.

[Dave Ramsey]

My thought process is you're not making any money. The idea of owning real estate is to make money on it. And this thing sucks.

[Caller]

Right. Well, if I were to refinance where the interest rate was a bit lower.

[Dave Ramsey]

Then you still wouldn't be making any money. You only got $50,000 in equity. You're not making any money on this.

[Caller]

Right. My cpa, he advised me just if we got it to where it's just breaking even, it's mainly just helping for tax write off purposes.

[Dave Ramsey]

I think you need a new cpa. He's an idiot.

[Caller]

Right.

[Dave Ramsey]

I'm serious. You know where you get a tax write off from losing money, Right. And you're good at that. So yeah, you need to. I would sell it. I would sell it.

[George Kamel]

Yeah, I don't, we don't do anything for the tax write off. And especially when you're losing money on this property, you're going to continue bleeding out. There's going to be sunk cost fallacy. It's going to hurt to sell it. There's going to be a stupid tax, but it'll be even stupider to hang on to it.

[Dave Ramsey]

He's going to get out of it. Skin. Yeah, he's got, he's got. Owes 300.

[George Kamel]

Are you still bleeding money every month?

[Caller]

Yeah, yeah. I think combined after the rental, I'm about like 35% of both of my mortgages, my income.

[Dave Ramsey]

Yeah, but that's not relevant. The point is that you would never buy, you would never take a risk of this level to make no money. And you're making no money. You're actually feeding it. And if you refinance it, you're still not going to be making any money. Making enough to buy a biscuit or something. And all in the name of a tax write off. That's just bull crap. This is. Somebody doesn't understand risk analysis and you're just, you have made a mess here and you know it. And that's why you're, that's why you put the car in reverse and stepped on the gas because you knew you're about to run over the cliff and you stopped Everything you figured out, your friends that were giving you advice were morons and you just decided I'm not going to go that way, I'm going to go the other way. And so good, that's good. And you paid off the car, that's good. But I would just sell the rental. And then you're sitting there with a $600,000 mortgage, which is very reasonable, making 250, you're going to be very wealthy in about five years.

[George Kamel]

Knock that out in a few years.

[Dave Ramsey]

You'll be knocking that out in a few years and be sitting there with a paid for house and be stacking cash. And now you're going to really build some wealth. That's the direction you're going. But I think this rental is an impediment. I don't think it's a blessing. And I love real estate, but I mean there's nothing worse than a bad piece of real estate. And this thing sucks. So guys, here's. This is the end of the TikTok story part. You don't see high leverage wealth building. Did you hear the phrase? Yeah, you know where that comes from? TikTok, yeah. Or other moronic.

[George Kamel]

Well, they say, well this is what wealthy people do. Therefore if I do this high leverage, high risk thing, I will also become wealthy.

[Dave Ramsey]

High leverage, high risk, wealth building plan. Which is interesting because when you actually study the wealthy, which we have done for decades, they don't do that.

[George Kamel]

And the ones that do that, it.

[Dave Ramsey]

Isn'T how they built wealth. And they certainly don't do that after they get wealth like oh, let's go deeply in debt now that we're wealthy. It's not a plan of the wealthy. This is the dumbest thing that people say.

[George Kamel]

They get wealthier pitching this stuff because they have a course to teach you how to do it. That's how they're actually building wealth is creating a product to sell to people on TikTok who want to get into it.

[Dave Ramsey]

Yeah, it's.

[George Kamel]

But don't you think in the sales world, real estate world, the risk meter tends to be broken with many of them they get starry eyed in order to very cash poor.

[Dave Ramsey]

And here's the thing, I'm a salesman. That's how I grew up too. And I suffered from this especially in my 20s because one thing about if you can sell and you, you can make a good living, you make good money, number one. Number two, if you can sell, you have an abundance mentality. And then the toxic version of that is what I fell into And a lot of people do, which is you think you can out earn your stupidity and stupid will catch you from behind. You can't outrun it, it's just, it'll get you. And so I thought for years, because I just thought I could just go make some more money. I'll just go make some more money.

[George Kamel]

Anytime you run into a problem and.

[Dave Ramsey]

I can't, I've always been able to go make more money. It was the keeping it that was the problem, you know, in the early days. And so that, you know, an abundance mentality when you get out of control is I think I can outearn my stupidity. So because I have the ability to go make money and I can do stupid things and get away with it, like the rules don't apply. And that kind of mentality will cause you to stay broke your whole life. And it'll be really sad because you will have made a lot of money and have none. But that's the. So what he fell into is very normal. He's not a bad guy, he's a smart guy. Yeah. I mean he's really doing well. Congratulations. Making 250k, I mean that's wonderful. Quarter million dollars, that's a nice income. I don't care what you say. So that it's, it's great. And so it's really hard for people like that are wired like me and him to commit to the slow and steady wins the race. The tortoise always wins.

[George Kamel]

It's less exciting, doesn't get as many clicks.

[Dave Ramsey]

We always, we, we're the hair. I mean we're the flashy flash and dash. Yeah.

[George Kamel]

Well, they think speed equals sophistication.

[Dave Ramsey]

Yeah. And high risk, high leverage, wealth building plan. These are, this is a, this is an oxymoronic sentence. The words don't even go together. Wealth building plan should not be in the same sentence with high leverage, high risk because the data says otherwise. I mean the actual data, when you actually study people who have a million dollar to ten million dollar net worth, they did not do it that way. They simply didn't do it. And so I was in a. There was a guy named Robert Allen back in those days, 30 years ago that wrote a book 35 years ago that wrote a book called Nothing Down. Oh yeah, he's the og he's famous. Yeah, he's the OG and so, and he'd go, he was famous. He'd go into a city and just never been there. And by the end of the week had bought three houses, nothing down. He could figure out complete leverage, high leverage, wealth building plan. And he set up these real estate clubs all over America. And I was in one of them. All the guys in those clubs are no longer in real estate business.

[George Kamel]

Oh boy.

[Dave Ramsey]

Except the ones that paid off their debts. The rest reverse course like he was doing. Like this last guy's doing. So the rest of them are out of the real estate business. They didn't make it. And Robert Allen filed Chapter 11 bankruptcy.

[Caller]

Oh boy.

[Dave Ramsey]

Didn't work. Just saying. The OG create your free every dollar budget today. The simplest way to budget for your life.