Dave Ramsey | The Caleb Barney Collection

Discipline, forward-thinking, and your success

Do what you need to do now, even if you don’t want to, so you can set yourself up for success and reap the rewards later. — “I hated every minute of training, but I said, ‘Don’t quit. Suffer now and live the rest of your life as a champion.’” – Muhammad Ali

Do what you need to do now, even if you don’t feel like it, so you can set yourself up for success and reap the rewards later.

Does a farmer plant seeds only when he feels like it? No, because then when he needs to harvest his crop, it won’t be there!

Success takes time, it takes hard work, and it takes consistent action. If you work out once, you’re not going to have six pack abs. If you save money to invest one month, you’re not going to be able to retire off of it. But if you do those things consistently over time, you’ll eventually achieve things that most people aren’t disciplined enough to do.

“Suffer” now. “Sacrifice” now. Live below your means, take care of your mind, body, and spirit now. Do these things consistently and continued take massive actions daily, weekly, and monthly towards your goals, and you will achieve success. Think about your future self, not just about what you feel like doing right now.

Using cash or using debt?

Are you a “cash” only person (like Dave Ramsey) or do you prefer to utilize debt on your behalf?

Honestly, I see the pros and cons to both sides. Being more financially risk averse/conservative, I get the appeal of only using “cash” (or, even if I’m putting it on a debit/credit card, only buying what I can afford to pay at that very moment). It’s a safer position from the standpoint that you aren’t going to get yourself into massive debt. This strategy makes a ton of sense for those trying to minimize spending on things they don’t need (mostly consumer products that contribute to lifestyle creep).

But if you leverage debt to buy assets (like real estate), where someone else is paying the loan down for you, you can scale much more quickly.

Imagine wanting to buy a rental property. Let’s say you’re looking to buy a single family home for $120,000. If you have to pay cash for it, it will take you a long time to save up $120k. Even if you’re investing it, unless it’s in a self-directed IRA, when you pull your money out to purchase the property you’ll get hit with taxes. But if you only had to save up $30k (for a 25% down payment on an investment property) or even $4,200 (for a 3.5% FHA loan, where you have to live in the property for at least one year), you can get started much sooner.

Leverage works both ways. It can help propel you to success or drive you into the ground. But as long as you’re taking on appropriate risks (preferably starting small unless you have a ton of experience and expertise in what you’re investing in), you can build wealth at a greater pace by leveraging debt as opposed to paying all “cash” for everything.

What are your thoughts/how do you prefer to invest?

How to be financially prepared when things go sideways

The difference between an emergency fund and a sinking fund, as illustrated by The FI Guy.

Most financial experts recommend having at least 3-6 months of expenses set aside as an emergency fund. This is used for true emergencies/things that you weren’t expecting (like a job loss or car accident). Hopefully these things never happen, but if they do, at least you’ll be covered. If you have to dip into your emergency fund, re-supply it as soon as you can to get it back to where it needs to be.

The “sinking fund” is something not as many people know or talk about. This is for known future expenses. For example, if you’re a 1099 self-employed individual, you better be setting aside money for taxes, because the tax man comes around every year to collect. And guess what? The car you drive? It will need an oil change and new tires every so often. Christmas and birthdays? They come at the same time every year, so if you plan on giving gifts, you should put money away in a sinking fund to cover those expenses.

Using the fulfillment triangle when deciding on your career

When you’re at a crossroads and looking to find a new career, take into consideration Ken Coleman’s fulfillment triangle. He describes this as a place where your passion meets your talent and opportunity.

What do you love doing? What are you interested in? What do you find yourself constantly researching or talking about with your friends? Looking at these things can help you figure out what you’re truly passionate about.

What are you good at doing? Has anybody told you that you are a natural at completing a particular kind of task? What do you feel like comes easily to you? When you do things that you are good at, you are usually in a flow state. This is your talent and ability. (By the way, you don’t need to have the ability to do something right now, but if you are capable, that will suffice.)

Who do you know that might be able to introduce you to whatever it is you like and are good at doing? If you’re unsure about this, put the question out on social media. Go on Facebook, LinkedIn, etc. and clearly lay out what it is you’re interested in doing. You never know who might have a connection and get you an “in” with a company. This is your opportunity.

Fulfillment triangle from Ken Coleman on the Dave Ramsey Team.

The importance of being in a position of financial strength

Are you in a position of financial strength?

Always aim to set yourself up to not have debt so that you minimize your risk of making stupid financial decisions. When you’re desperate, you feel you have to take drastic actions. Most of the time, those drastic actions are long shots to actually pay off (a most like playing the lottery). You get blinded by “the opportunity” and gamble with your money, hoping for the big payoff. But in reality, you would be far better served making small, rapid improvements with your money habits.

So how do you set yourself up for success? First, go back and look and your bank statements for the past 3 months. Print them out. Figure out where you’re spending your money…you’ll have necessary expenses (housing, food, transportation, insurance, etc) and unnecessary expenses (“fun money”). What can you cut out to bring your spending down and your savings rate up? And out of your necessary expenses, what is really necessary? Yes you need a place to live, but are you living in a place that is making you house poor? Did you purchase a car with expensive payments? Are you going out to eat every night instead of making a healthy (and cheap) dinner at home? When you complete this exercise, you’ll see just how much extra you’re draining from your bank account. From there, it’s up to you to make a change.