20 Money Lessons From Dave Ramsey That Will Change Your Finances

Whether you're looking to save money or start investing, these 20 rules from Dave Ramsey will completely change your finances. The fight club rule. Don't buy things you can't afford with money that you don't have to impress people that you don't like. Now, I'm pretty sure that was also in fight clubs. I don't know who stole it from who, but it is absolutely true. I've done this in the past, as I'm sure most people have, whether you're buying clothes, you're buying drinks for people. Even for me, I bought a car because I thought it was cool. I thought it would kind of boost my status. It didn't, and I ended up selling it because I realized that it added nothing to my life. And trying to seek validation from other people is a surefire way to destroy your life. So in general, even though this is extremely hard to do, don't try to impress people. By the way, I'm also gonna have some bonus rules at the end of this that I completely disagree with, so make sure you stick around for that. The true you rule. Money is not good or evil. It has no morals or intentions of its own. Money reflects the character of the user. We see this all the time with people who win the lottery or get really famous or get a lot of money, and then they leave their family, they become degenerates, they go out, they drink, they party, and then eventually end up being broke or OD'ing or just crazy stuff happens, and you're like, man, money changed that person. It did not change them. It amplified who they are. If they had endless resources, that's who they were in their core. They were selfish in their core. They were prideful. They were whatever. So focusing just on money is not really gonna solve all your problems. You also have to focus on yourself as a person. The $494 rule. Dave has said that if you invest $494 a month from the time that you're 30 to the time that you're 70, you will land with about $5 million, and most Americans have next to nothing saved for retirement. Investing doesn't need to be complex. If you're just consistent over a long period of time, then you are gonna be a millionaire, especially if you invest from the time you're 20 to the time you're 60 or 30 to 70. It's gonna be an insane amount of money, and the method that he talks about is actually gonna be one of the rules that I disagree with at the end. How I like to do it is either gonna be a real estate or a business, but if you're doing stock markets like he kinda recommends, then I would just do the S&P 500, VTI, simple index funds. That's really all I invest in, and if you wanna get started with that, you can get up to 12 free stocks when you open and fund a Webull account. Some free money there. That's what I use to invest, but it only takes less than $500 a month to have 5 million or more once you're 70 if you start early. The Walmart rule. According to Dave Ramsey, a typical millionaire lives in a middle-class home, drives a two-year-old or older paid-off car, and buys blue jeans from Walmart. I think when a lot of people say they wanna be a millionaire, what they actually mean is they wanna spend like a millionaire. They wanna spend a million dollars, and that's not really what most millionaires do. In fact, they live extremely frugally. They do a lot of the stuff that Dave talks about because going back to the Fight Club rule, they aren't trying to impress anybody. Blue jeans from Walmart serve the purpose of jeans, so they don't need to spend $800 on some fancy pair of jeans that doesn't really add anything to their life. Reality TV. The average millionaire can't tell you who was thrown off the island last night. According to a couple of different studies, 76% of rich people watch an hour or less of TV per day compared to only 23% of poor people. Similarly, only 6% of wealthy people watch reality shows compared to 78% of poor. When I used to watch reality TV, it was like an escape for me. It was because my life was not great, and therefore I wanted to watch somebody else who had more of a dumpster fire of a life going on so that I could be like, at least I'm not like that guy. I think as you become more successful, you enjoy what you're doing, you start to have more productive hobbies, you start to really work on yourself, you realize that you don't have to fill your head with like trash TV that is completely wasting your life. Instead, you're doing like what one of my main goals are is to build a life that you don't need an escape from. Have a written plan. Dave talks about this a lot that if you don't know where you're going, you'll have it written out, you're probably not gonna get there. If you don't know how much you're spending, how much you're bringing in, how much you're trying to save, how much you should invest in order to become a millionaire, then you're not just gonna stumble into being a millionaire. And the stats back this up that a lot of wealthy people write things out, they have to-do lists, they have specific goals, and that makes them much more likely to happen. Fire yourself. How are you doing with money right now? Do you have as much as you should? Are you struggling with your finances? If you had somebody who is in charge of your finances and they got you to where you are today, would you fire that person? If the answer is yes, then you need to like fire yourself. You have to have that mental conversation with yourself saying that like, clearly what I am doing is not working, I don't have money, I don't have an investment, I'm not preparing for my retirement, so I need to stop doing everything that I'm doing, reconstruct my finances, write out a plan, follow a book, get a course, whatever it is, and just really make changes and accept responsibility. The car payment rule. I could not agree more with this rule. So many people think, yeah, you know, I can afford that payment, I'm always gonna have a payment, so like, what's the big deal? Just keep trading in my car, I like having a nice car, it makes me happy. It doesn't make any sense. The average new car payment is $716 a month. If you invested $716 a month and earned 8% over 30 years, you would have over a million dollars. So your car payment is costing you a million dollars. Do you care about it that much? Can you instead get a five to 10 year old car, save up, pay cash for it, and start investing whatever the difference would be? Instead of a car costing you a million dollars over the course of 30 years, it can cost you way less and you can invest. And I'm a poet and I didn't know it. The Bible says that the borrower is a slave to the lender, and Dave Ramsey quotes this all the time, and it's extremely true. If you're paying credit card debt, if you're doing payday loans, it's literally costing you hours of your life. It's costing your life in order to pay for this debt for crap you don't need. So we need to avoid bad debt like the plague. Also, I'm a million dollars in debt. Check out this video here. It's good debt. It's not bad debt. I'll explain in the video. Three to six month emergency fund. After you're done paying off debt, Dave recommends the three to six month emergency fund. Couldn't agree with this more. The peace of mind that it brings you and preventing you from getting into more bad debt is absolutely unbelievable. So before you invest in anything else, three to six month emergency fund, gotta love it. Financial peace. Dave Ramsey once said that, I believe that through knowledge and discipline, financial peace is possible for all. And it's absolutely true. So much of this is understanding what you need to do and then just having the discipline to act on that. And if you don't know exactly what to do or you wanna get better, then follow people who have been there before and are telling you the things they've learned. You can subscribe to channels like this one. It's absolutely free. Trying to hit half a million, means a lot. Like 70% of you guys are not subscribed, so subscribe. But also if you're into Dave Ramsey's stuff, follow him. Listen to him all the time. The more you know, you can like brainwash yourself into making good financial decisions. The Superbowl rule. No one wins the Superbowl accidentally. No one gets in shape accidentally. No one builds a million dollar business accidentally. They have a plan. It takes years of hard work and it all culminates into getting lucky. Like Bill Belichick says, you put yourself in a position to get lucky. You put yourself in a position to succeed. And that's how you win the Superbowl. That's how you become a millionaire. That's how you blow up your business or whatever it is. It's because you put yourself in that position through intentional planning. Your car should be less than half of your annual income. Cars are a depreciating asset and it drives me absolutely crazy. When people are making $25,000 a year and they have a $40,000 car, they have a $60,000 car, it doesn't make any sense. If you're making 30K a year, your car should cost like 15,000. As you raise your income, you can get a slightly nicer car, but it should never be, I make 100K a year and therefore I'm gonna get a brand new Tesla Model X that costs 120K. It's gonna be great because I can afford the payments. Just don't do it. It loses so much value as soon as you drive it off the lot. It doesn't make any sense. Save at least 10% for a down payment on a house. Dave recommends getting into as little debt as possible for a house, preferably saving up at least 20%, more if possible. And there are actually good reasons for that, especially if it's your primary residence because you're not gonna have PMI, you might have lower interest rates, your closing costs might be less. So for a lot of people, it can be a good idea to get a bigger down payment. There's also a few downsides to it, which we'll talk about in the bonus points in a second here. The relationships rule. Dave talks about this a pretty decent amount that like what if your kid is hanging out with some kids who are smoking pot, those pesky kids, they're doing whatever. They're getting into trouble, they're a bad influence. Would you allow your kid to keep hanging with the wrong crowd or making them misbehave, get in trouble? You probably wouldn't allow that, right? But why do you allow yourself to hang out with people who are dragging you down, who are wasting your time, who are making you depressed, getting you caught up in drama? There's been a bunch of studies that like, if you take the top 10 people that you spend the most time with, your income is probably gonna be like right in the middle of that. There's another quote that you're the average of the five people you hang out with most. It applies to almost every area of your life. So be very careful. The 80% rule. Winning at money is 80% behavior and 20% knowledge. While it's important to follow people who inspire you and learn lessons from videos like this, it doesn't really matter if you don't take any actions on them, so take action. Be that guy. If you will do the things others won't do, then someday you'll have a life that others won't have. I couldn't agree with this more. Most people are unwilling to live in a construction zone for years like I've done, invest their entire life savings into starting businesses. They're unwilling to be a property manager. They're unwilling to take risks and be different to go against their family and their friends. And because of that, they will end up like everybody else where they're like an overweight American living paycheck to paycheck and stressed out about their finances. That's the average person. So if you wanna be average, just be like everybody you know. But you do gotta have some fun. According to Dave, someone who never has fun with money misses the point. When you're in debt and you're trying to get out of that, you don't deserve to have any fun. You need to get out of that situation where you can have free fun, but as you get through these different stages of your finances and you start to actually build some wealth, it is important to have some fun. That's something I've been focusing more on recently where it's okay if it takes me a year or two longer to reach financial independence if I enjoy the process a lot more. Like a lot of us take it too extreme where money's just to invest or just to save. Sometimes it's okay to spend a little bit and just enjoy your life. Contentment may be the most powerful financial principle. You can give more, avoid debt, and live better. But now we're gonna talk about some of the things I disagree with. Mutual funds. Dave talks a lot about investing in mutual funds. However, many of them have much higher fees than low-cost index funds, and there's a lot of times where just low-cost index funds end up outperforming actively managed funds. So that's why personally I choose to go with the S&P 500, that type of stuff. But I mean, maybe it works for him. All debt is bad. I'm a million dollars in debt, and that debt allowed me to leave my job. It allowed my wife to leave her job. It gave us financial stability. It's gonna end up being our retirement. So leveraging debt can be a really good thing for an insane amount of people. It can also ruin your life if it's not done correctly, if you don't do the math, if you don't do the research. So just a blanket statement. Don't necessarily agree with. Same thing with credit cards. He talks about credit being a bad thing. Credit can be a really good thing for a lot of people. It's not a blanket statement for everybody. It's a lifestyle choice to not have a credit card, to not try to apply for a loan. If that's what you wanna do, that's totally fine, but it's definitely not right for everybody. Four-hour work week. Dave once said that you can't work three hours a week. While that is true for a lot of people, you should at least try. What's the worst that could happen? Maybe you work 10 hours a week and you make 50K a year. There's hundreds of thousands of people who do that. By creating a business, by investing a little bit more actively, instead of just investing in the stock market, which has a cap to how much you're gonna return, you can make a lot more money, and you can turn that into different investments, like for me with real estate. In some of those businesses, you can literally work 10 hours a week and earn 10, 20, 100, 500K a year. So at least shoot for it. Don't just shut it down right off the bat. I don't know, I get excited about that type of stuff. So I hope you enjoyed. Don't forget to subscribe. Love a lot of what Dave Ramsey talks about. Just a few things that I kinda disagree with because of my own personal experience. So thanks for watching, and I'll see you next week.