Dave Ramsey: 3 Money Secrets They Don’t Teach You in School (2024)

Andrew Lisa

·4 min read

Whether you have a diploma from Harvard or a high school, the money lessons you learned at an academic level will eventually collide with the financial realities of life in the real world.

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Syndicated radio host, bestselling author and personal finance celebrity Dave Ramsey wants to teach you the money secrets that aren’t in the school books before you learn them the hard way.

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A 15-Year Mortgage Is the Key to Wealth Through Homeownership

A 30-year fixed-rate loan is the gold standard of mortgages in America. When a financial news site announces changes in “the mortgage rate,” that’s the one they’re talking about. If you learned about homeownership in school, you probably learned that a three-decade loan is the key to getting a bank to hand you the keys to a house.

Instead of just a place to live, Ramsey wants you to view a home as a powerful tool for wealth-building, which he thinks is possible only if you cut the standard mortgage loan term in half.

As a guest on “The Street,” Ramsey said, “If you’re a new homebuyer, listen to me carefully. We’ve studied millionaires for decades. The typical millionaire, their first $1 million to $5 million net worth they get is their paid-off home — and with a 15-year mortgage, you’ve got the opportunity to do that fairly quickly.”

Since your monthly payments will be higher, you’ll have to shop for less house, which Ramsey thinks you should do anyway. The tradeoff is that you’ll pay tens of thousands less in interest and own your home outright in half the time.

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Invest In What You Know and Never in What You Don’t

Dave Ramsey probably wasn’t surprised when legions of people who didn’t have the slightest clue about blockchain technology lost money when the crypto bubble popped.

“The secrets of the rich are not a secret,” he said on an episode of his radio show. “They invest in things they understand. If you don’t understand it, don’t put money in it. Don’t put money in something because it sounds cool and some goob that you think is cool is telling you to do it or that has done it himself.”

Ramsey said that’s precisely how people lost their life savings with Bernie Madoff, the former Nasdaq chairman turned notorious swindler who engineered the largest Ponzi scheme in history.

Ramsey said, “They got recommended by a friend to get in on something cool that was an inside deal that no one knew about. It was a secret. It was sophisticated. They thought, ‘This is how the rich do it. It’s all behind the curtain.’ It’s just not. I was with a guy the other day worth about $200 million. You know what he’s invested in? Farmland. He’s a rancher.”

Contentment Is Your Most Powerful Wealth-Building Tool

Ramsey often cites his motto that poor people keep themselves poor by spending like rich people, and rich people keep themselves rich by spending like poor people. It’s part of his philosophy that people who spend themselves into ruin usually do so while trying to fill an unfillable void because they aren’t content.

In a discussion with fellow financial expert Rachel Cruze, Ramsey said, “Contentment might be the most powerful financial principle there is. When you’re content, you can avoid debt. When you’re content, you can get out of debt. When you’re content, you have margin to be generous. When you’re content, you have margin to invest. But when you’re just, consume, consume, consume, consume, consume, and you’re just living in the basket of materialism — that’s the opposite of contentment — you can’t make enough money to live like that. You can’t make enough money to out-earn your stupidity.”

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This article originally appeared on GOBankingRates.com: Dave Ramsey: 3 Money Secrets They Don’t Teach You in School

Dave Ramsey: 3 Money Secrets They Don’t Teach You in School (2024)

FAQs

What are the three reasons to save money according to Dave Ramsey? ›

You should save money for three basic reasons: emergency fund, purchases and wealth building.

What are the three things you can do with money? ›

The basic truth is that we can do five things with our money: (1) save it; (2) spend it; (3) give it away; (4) pay taxes; and (5) pay down debt.

What does Dave Ramsey say is the most fun thing you can do with money? ›

Dave Ramsey - The most fun you can have with money is giving it away.

What does Dave Ramsey say is the most important thing to do? ›

Dave Ramsey has said several times that the most important wealth-building tool is your income. He advises getting rid of debt to free up your income for investing.

How to save $1000 in 30 days? ›

Here are some fast steps you can take to turn your goal of saving $1,000 in one month into a financial reality.
  1. Track Your Expenses. ...
  2. Automate Your Savings. ...
  3. Cancel Your Subscriptions. ...
  4. Cancel Amazon Prime. ...
  5. Press Pause on Eating Out and Date Nights. ...
  6. Sell Your Unwanted Items. ...
  7. Start a Side Hustle To Bring in Extra Cash.
Sep 26, 2023

How to save $4000 quickly? ›

How to Save an Extra $4,000 a Year
  1. Step #1: Look at Your Budget. “The first step in being able to save is to do a deep dive into your budget. ...
  2. Step #2: Figure Out Where to Cut Spending. ...
  3. Step #3: Determine Where Most of Your Money Is Going. ...
  4. Step #4: Sexy Math. ...
  5. Step #5: Set Up Automatic Transfers. ...
  6. Extra Tips.
Jan 7, 2019

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

How much does Dave Ramsey say to put in savings? ›

According to the Ramsey Solutions post, the recommendation is to invest 15% of your household income for retirement. The article uses the example of a household income which is $80,000 annually. Based on these earnings, each year you need to invest $12,000 towards your retirement savings.

What is Dave Ramsey's famous saying? ›

If you will live like no one else, later you can live like no one else.

What are the 4 funds Dave Ramsey recommends? ›

Pick the right mix of mutual funds.

That's why you should spread your investments equally across four types of mutual funds: growth and income, growth, aggressive growth, and international.

What is the number one wealth building tool? ›

“Your most powerful wealth-building tool is your income. And when you spend your whole life sending loan payments to banks and credit card companies, you end up with less money to save and invest for your future. It's time to break the cycle!” the post read, in part.

What are the three main reasons for saving your hard earned money according to Ramsey? ›

Emergency, large purchases, wealth building - The main reasons for saving your hard-earned money. 3-6 months of living expenses - The standard used to determine how much should be held in an emergency fund.

What are the three reasons people save money? ›

Over time, savings accumulate into a larger amount. The three reasons for saving are: to purchase a planned good or service in the future; to buy a good or service that people suddenly see and want; and to deal with emergencies and unexpected events.

What is the 3 saving rule? ›

This model suggests allocating 50% of your income to essential expenses, 15% to retirement savings and 5% to an emergency fund. This plan allows you to meet your immediate needs and plan for the future before you spend on anything else.

What does Dave Ramsey recommend for savings? ›

Ramsey's general recommendation in his Baby Steps has long been to start with having $1,000 saved in a starter emergency fund. If you earn under $20,000 a year, the post on Ramsey Solutions said you may adjust this amount to $500.

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