#my rent has been paid by the catalyst fund | Explore Tumblr Posts and Blogs

meraenthusiast · 4 years

Text

Dave Ramsey vs Robert Kiyosaki – Who Should You Listen To?

If you’ve been following this blog for awhile then you’re aware that we used Dave Ramsey’s Baby Steps to become consumer debt free after racking up close to $300K in student loan debt.

The financial principles he teaches are important, especially for the masses. But with anything I read or people I listen to, I also form my own opinions (especially the older I get).

The first 5-7 years after training I’ll admit… I was a hardcore Dave Ramsey fan. And I still to this day recommend those starting out read his Total Money Makeover book.

I’m going to dive into his specific recommendations shortly but also wanted to compare him to another popular financial guru, Robert Kiyosaki.

He’s best known for the books, Rich Dad Poor Dad and CashFlow Quadrant.

Robert’s strategy is polar opposite of Dave’s. Where Dave is anti-debt, Kiyosaki is all for it when used wisely to build wealth.

Which person/strategy is right for you?

Is one person right and the other wrong?

Let’s break down each one’s point of view regarding finances and then you’ll be able to decide which is the best for you.

Dave Ramsey vs Robert Kiyosaki

Dave Ramsey’s Principles

If you don’t know much about Dave Ramsey then listen to a few callers on his radio show and you’ll soon realize what he’s dealing with. The majority of the people he talks to are in pretty bad shape.

At first I didn’t realize why he ALWAYS recommends people to cut up their credit cards. But the more I listened to the caller’s stories, the quicker I knew why.

I once heard someone ask him what they should do as no matter what they tried with money, they stayed broke. Long story short, they owed $48K on their trailer, $35K on their cars, had $12K of credit card debt but were clueless in where to start cleaning up their mess.

As you can see, these folks need MAJOR help.

In my mind, when I first started practicing, I felt I was like some of his callers. They were messed up with debt and I had debt so hey, we were the same.

After a few years of making a decent income, digging out of debt and investing along the way, the light bulb went off. I thought, “Hey Jeff, you’re not in such a bad position after all.”

But as a loyal Dave follower, I stuck with his seven baby steps (especially the debt snowball) until I realized that I needed more to do (I’ll discuss that shortly).

Here’s the basics that Dave’s teaching involves:

#1 Get on a budget

Dave states that if you don’t know where you’re money is going, then who does? Honestly, we’ve never had a set budget mainly due to our frugality.

But we did revert to a VERY strict one during the pandemic as dentistry in Louisiana was basically shut down for two months.

The amazing part of getting on the COVID-19 budget was just how little we needed to live on plus how much wasteful spending we’ve been doing for years.

I’m going to have to side with Dave on this one. No matter your income, it’s always a good idea to operate on a budget.

#2 Live frugally

Dave has now started to focus on teaching debt-free folks how to become millionaires.

He often quotes the book, The Millionaire Next Door. And one of the main traits of all “average” millionaires is frugality.

“Being frugal is a must,” says Dave “if you want to have a seven-figure net worth.”

I have no issue living frugally but I also believe that you don’t have to be frugal in order to build wealth.

If you’re a high income earner, you should be able live life like you want (frugally or not) and still get rich.

#3 Cut up the cards

As previously mentioned, Dave’s message is targeted to the general public.

Research shows that over 40% of Americans can’t cover a $400 emergency.

It’s safe to say that most people lack financial discipline so the idea of cutting of credit cards is good advice.

Occasionally someone will ask him about using credit cards to get “reward points” and Dave usually shoots them down with saying that “he’s NEVER heard of someone reaching millionaire status on credit card points.”

#4 Emergency fund

Dave recommends starting off by saving $1,000 in an account that is earmarked for emergencies only.

This amount is a decent goal for most as it’s enough to give some peace of mind without feeling overwhelmed.

The COVID-19 pandemic taught many people exactly WHY an emergency fund is needed. Dave recommends bumping up the emergency fund to cover 3-6 months of expenses after getting out of debt.

#5 Get out of debt

After listening to Dave’s show, it certainly doesn’t take long to hear his stance on debt. He despises it and often quotes Proverbs 22:7 – “The rich rule over the poor, and the borrower is slave to the lender.”

His failure (bankruptcy) in the past was the catalyst to become debt-free and NEVER use it again.

He gets what it feels like to be up to your eyeballs in payments wondering how and where to start the process of paying them off.

This is one of the main differences of Dave Ramsey vs Robert Kiyosaki.

#6 Invest in a retirement account

Dave suggests investing 15% of your household income into Roth IRA’s and pre-tax retirement plans or at least enough to get an employer match.

He recommends mutual funds and one of the biggest debates that comes up is that he tells folks they can expect to earn an average of 12%.

I’ve been investing in Vanguard Index funds for over 15 years and have never gotten those kinds of returns.

Maybe Dave knows something that I don’t?

Robert Kiyosaki’s Principles

When I first began educating myself about real estate, I decided to attend a handful of live events including Freedom Founders which mainly focuses on dentists.

That meeting, and a handful of others, helped me realize that I needed to set specific goals about what I wanted out of pursuing passive income.

I quickly realized that I did NOT want a second job (dentistry is enough!). So that scratched the thought of becoming an active investor which would have involved becoming a landlord, locating properties, maintaining them, finding tenants, etc.

One of the issues that was holding me back was that Dave’s principles were ingrained in my head, “don’t acquire more debt.” But I had to keep an open mind so I began reading books and came across Robert Kiyosaki, the Rich Dad Poor Dad guy.

When I began reading his material, I quickly realized that there was someone out other teaching the exact opposite of Dave.

But I want to be honest with you. When I initially started reading books that taught the opposite of what Dave teaches, I began suffering from selective distortion.

Selective distortion

Selective distortion involves the tendency to interpret information in a way that will support what someone already believes.

For me, when I first began to come across views that went against what Dave teaches, I immediately thought they were wrong.

This is selective distortion at work. Sometimes this makes people think that who they listen to or support is the ONLY way and everyone else is inferior.

Have you ever suffered from this? Most have.

Here’s the basics that Kiyosaki’s teaching involves:

#1 Focus on assets, not liabilities

At lunch recently, the topic of money was discussed as our 15 year old is working full time during the summer break. When I asked both him and his 13 year old brother about what it takes to become wealthy, the 13 year old stated that we should buy stuff that makes us money and not stuff that takes money away.

He gets it more than most adults! This is one of the main focuses of Kiyosaki’s teachings as well.

In Rich Dad Poor Dad, he states “You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule.”

#2 Start a business

Kiyosaki is all about becoming an entrepreneur. There are many advantages to owning your own business including working on your own terms and using tax advantages that you couldn’t otherwise as an employee.

He learned this from his “rich dad” that owned a construction company whereas his real dad or “poor dad” was an employee.

#3 Use debt wisely

Quite possibly the biggest difference of Dave Ramsey vs Robert Kiyosaki has to do with debt.

While they both agree that we should avoid consumer debt (credit cars, cars, boats, etc.), Kiyosaki recommends that “good” debt is OK if used wisely.

He goes on to say that we should only consider using this “good” debt after we’ve received enough financial education to prove we know what we’re doing.

I couldn’t agree more especially when it comes to investing in real estate. Just because you have a medical or dental degree, doesn’t automatically guarantee success in unchartered territories regarding investing.

#4 Learn from your mistakes

Look, we ALL make mistakes. I make them on a weekly basis. Just ask my wife!

Mistakes act as a guide in life to keep you pointed in the right direction.

For instance, I thought I knew what I was doing when I first started investing in real estate. A deal fell through that showed me that I had no business being involved as I was clueless at that time in my career.

I used to pick out deals to invest in like I was shopping online. The ones with the best looking pictures and supposedly highest returns would win. That’s it. That’s used to be my investing strategy!

That mistake pushed me harder to not only learn for myself but teach others what to avoid.

#5 Forget about home ownership

Kiyosaki and Grant Cardone have a similar stance on home ownership. In my article, Grant Cardone’s 9 Money Rules, rule #4 was:

Rent and lease, don’t own.

Neither agree that having money sitting “dormant” in a home does any good. Their thinking is that if you have $300,000 in home equity paying 3.5% or even worse, a paid for house paying nothing, then deploy that into something that is going to pay you.

#6 Use the tax code to your advantage

I rarely, if ever, here Dave mention anything regarding taxes. Especially when it comes to investing into assets that can bring you tax advantages.

Kiyosaki, on the other hand, is much different. One of his main driving points for real estate investing is to take advantage of all the tax advantages the IRS gives you.

Here’s What I Recommend

Dave Ramsey vs Robert Kiyosaki – which is best?

Personally, I feel that both are right depending on what stage of life you’re in.

Remember, both of their teaching philosophies are for two dramatically different groups of people.

Stage #1

If you’re fresh out of training with a high debt load and need guidance, Dave’s your guy. Again, he helped us develop a game plan to pay off some $300K of student loan debt.

Also, if you’re the type of person that thinks income = wealth and live ABOVE your means, then again, Dave’s your guy.

Stage #2

Now when you get to the point where you’re consumer debt-free then it’s time to really start building WEALTH.

It’s at this point you should consider listening to Kiyosaki or someone like him.

He’s big into diversification, specifically in assets that provide long-term gains and MOST importantly….CASH FLOW.

What do you think?

Who should you listen to….Dave Ramsey vs Robert Kiyosaki?

Are You Ready For Extra Cash Flow?

Join the Passive Investors Circle today.

The post Dave Ramsey vs Robert Kiyosaki – Who Should You Listen To? appeared first on Debt Free Dr..

from Debt Free Dr. https://ift.tt/2YjKu7B via IFTTT

#IFTTT #Debt Free Dr.

0 notes

cathrynstreich · 5 years

Text

8 Signs You’re Ready to Stop Renting and Buy a Home

(TNS)—Renting a place to live may give you the freedom to move when you want and relieve you of the responsibilities of homeownership, but at some point, most people yearn for their own home.

Buying a house is a good way to start building financial security. As you pay down the mortgage, you build up home equity, which is a valuable financial resource.

Mortgage rates are low right now, so if you think you’re ready to buy a home, it’s a good time to make the move.

“For prospective and actual homebuyers, the decline in mortgage rates has provided a much-needed boost to housing affordability,” says Mark Hamrick, senior economic analyst for Bankrate. “This comes after home prices have risen steadily on a national basis since 2012.

“For those who were inclined to buy a home anyway, the drop in the cost of financing translates to a potential reduction in monthly mortgage payments. For those who weren’t initially intending to buy a home, the improvement in affordability might be what helps them to get off the proverbial fence.”

Deciding whether to rent or buy a home is a major decision. How do you know you’re ready? Here are eight signs that you’re ready to make the switch from renter to homeowner.

1. You’re tired of rising rent prices. Rental prices are on the rise nationwide, according to Apartment Guide, which tracks trends in the rental market. The average rent on a one-bedroom unit climbed 4.2 percent in 2018, to $1,140; two-bedroom units rose to $1,354 and studio apartments rose 5 percent to $1,065.

Rising rent makes it harder to budget for monthly housing costs and to save for other financial goals. When paying rent begins to feel like a bad investment and you want to build equity for the future, it’s time to figure out what loan you qualify for, says Bill Golden, a sales associate with RE/MAX Around Atlanta, who has more than 30 years in the real estate business.

Golden says many renters are ready to buy a home once they are financially stable. Many are motivated by the pride of ownership and wanting more control over their dwelling place.

“If one or more of those is tugging at your heart, at least look into the possibility of owning rather than renting,” Golden says. “If you’ve seen your rent escalate significantly but you feel trapped renting, it means the balance may be tipping toward buying. With today’s escalating rental rates and low (mortgage) interest rates, chances are your monthly outlay could be less on a purchase than on a rental.”

2. Your credit score has improved. Some renters are locked out of homeownership because they can’t qualify for a mortgage. A low credit score is a common reason why renters can’t make the leap to purchasing a home. A history of late payments and too much debt will hurt your score. One sign that you’re ready to buy a home is having a healthier credit score, says Bruce McClary, vice president of Communications for the National Foundation for Credit Counseling in Washington, D.C.

Although borrowers with a credit score as low as 500 can qualify for some home loans, they will be required to make bigger down payments and pay higher mortgage rates. A good credit score gets you better interest rates and loan terms.

“Establishing a credit history or recovering from a credit setback can take time, but the goal of homeownership is still realistic under those circumstances,” McClary says. “Receiving help from a nonprofit housing counseling agency that also offers credit counseling programs can make a big difference for anyone struggling with those barriers to homeownership.”

Before you apply for a mortgage, get a free copy of your credit report.

3. You’re good at managing debt. Another thing lenders look at when screening mortgage applicants is their debt-to-income ratio, or DTI. This is a key metric that’s calculated by adding up all monthly debts, then dividing the sum by your gross monthly income. The higher your DTI ratio, the more risk you pose to a lender.

Some conventional loans allow a DTI ratio of up to 50 percent, but many lenders prefer a ratio of no more than 43 percent. If you previously had a high DTI ratio and have since paid off some high balances, you’ll be in a stronger position to get a mortgage.

You’ll also have more wiggle room in your budget to put money into an emergency fund for home repairs and other unexpected expenses.

“Keeping credit card balances low and debt under control is beneficial in many ways,” McClary says. “It’s important to consider that keeping credit card balances at or below 30 percent of the available credit limit has a positive influence on the credit score.”

4. You have enough set aside for the extra costs of owning a home. When a pipe bursts or the air conditioner goes out in a rental unit, you don’t have to worry about paying for it; that’s the landlord’s responsibility. The same goes for property taxes, routine maintenance and homeowners insurance.

That’s not the case when you own a home. All those costs are your responsibility. If your income has risen or you’ve been able to set aside savings, you might realize you have enough extra money to handle the added expenses of homeownership.

“Clearly, if you put everything you have into the down payment and such to buy a house, then you have no money to do repairs should they come up,” Golden says. “You’re better off spending less on the house so you have some money to make improvements and repairs.”

5. You can afford the down payment and closing costs. “First-time homebuyers don’t have proceeds from another home to help fund the down payment. It’s one of the main reasons why the down payment is the biggest hurdle to homeownership,” says Rob Chrane, CEO of Atlanta-based Down Payment Resource, which finds programs that help people buy homes.

The down payment requirement depends on the type of home loan you get. For conventional loans, 20 percent down is usually required if you want to avoid paying private mortgage insurance, or PMI. Some mortgages insured by the Federal Housing Administration, known as FHA loans, require just 3.5 percent down. Fannie Mae and Freddie Mac back some mortgage products that require just 3 percent down; and loans guaranteed by the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture (USDA) require no down payment.

Renters interested in buying a home should compare different loan programs to see which one is best for them. In addition, there are grants and programs to help homebuyers with down payments.

Another expense you have to be ready for is the closing costs, which typically equal 2 percent to 7 percent of the property’s sale price. The good news is that some closing costs are negotiable.

“Because the buyers are putting so much of what they have into the down payment, we usually try to get a seller to pay some, if not all, of the closing costs,” Golden says. “Even if (the buyers) have to pay a little more for the house, it doesn’t hurt their pocket as much.”

6. You’re ready to settle down in one place. Buying a home involves a lot of upfront costs that can take a few years to recoup, so if you anticipate moving before you can recover those costs, homeownership might not be right for you.

No one works at the same company for decades anymore, but a renter who is ready to buy a house should have job security, says Hamrick. A stable job means stable income, which lowers the risk that you will stop making your mortgage payments and default on the loan.

“For two-income households, obviously the risk and opportunity are twice that of situations where there’s just one wage earner,” Hamrick says. “In a perfect world, (buyers) would buy a home well beneath their means so they aren’t devoting so much of their income to the mortgage and other related costs.”

7. You’re going through a major life change. Many renters decide to purchase a home after a major life event, such as getting married, says Henry Yoshida, a certified financial planner and CEO of Rocket Dollar, a Texas-based provider of self-directed retirement accounts.

Marriage, a growing family, a new job and children leaving the nest are catalysts for people to buy a home.

“The four major cities in my home state, Texas, are simultaneously on top 10 lists for raising a family and retiring, so I see this firsthand,” Yoshida says. “My own neighbors on either side are retirees from California and a young family who relocated from the Northeast for a job.”

8. You know what you want. It’s smart to have a good idea of the area or neighborhood you want to live in and the type of home you want before you begin your quest. Houses, townhouses, condos, co-ops, duplexes—there are lots of options out there and each one has its own considerations for costs, upkeep and personal enjoyment.

If you buy a condo, for example, you don’t have to do the yardwork, but in addition to your mortgage, you must be able to afford the homeowners association fees.

Determine what you need and what is most important to you. Is it being near a good school or within walking distance of your job? Do you mind navigating stairs or having neighbors live above you? Do you want lots of amenities?

If you’ve moved to a new city or state to take a job, it might be a good idea to rent until you’ve familiarized yourself with the area. That way, you are more likely to choose a home and neighborhood you feel good about.

Ready to Leave Renting Behind? Here’s What to Do Next Before you start looking at homes for sale, shop around, compare lenders and get pre-approved for a mortgage. Getting pre-approved helps you know how much house you can afford, what loan program is best for your situation, and what price range to focus on so you don’t overextend your budget, says Ben Creamer, principal and managing broker of Downtown Apartment Co. in Chicago.

“This sets a realistic expectation for what the buyer is qualified to purchase, as well as what financial resources will be needed for closing,” Creamer says. “Knowing this upfront allows sufficient time to save and test the budget constraints.”

Choose a fixed-rate loan for 15 or 30 years if you want predictable, stable mortgage payments. However, don’t forget that owning a home involves a lot more than the monthly principal and interest payments for a mortgage. Property taxes and homeowners insurance are additional expenses that can increase your monthly payments over time, as is PMI if your down payment was too low. Then there are repairs, maintenance and utility costs to budget for, too.

As you weigh the decision to buy a home, make sure you can reach your other financial goals, Hamrick says. A new mortgage shouldn’t prevent you from paying down student loans and credit cards or from saving for retirement.

“In order for (buyers) to have a good chance of achieving a range of financial objectives, they should also have emergency savings,” Hamrick says. “That’s because of the inevitable expenses associated with homeownership.”

The post 8 Signs You’re Ready to Stop Renting and Buy a Home appeared first on RISMedia.

8 Signs You’re Ready to Stop Renting and Buy a Home published first on https://thegardenresidences.tumblr.com/

0 notes

soul2soulmates · 6 years

Link

Minister of Power, Works and Housing, Mr. Babatunde Fashola, disclosed this while speaking at the 7th National Council on Lands, Housing, and Urban Development, in Gombe, the Gombe State capital. He also announced a reduction of equity from 20 per cent to 10 per cent for loans up to N6 to N15 million.

Fashola said: "As for those who wish to buy houses, mortgages are the solution and we must issue more. This is in addition to a planned re-capitalization and the opening of the National Housing Fund, NHF, to non-government employees.

"Between May 2015 and July 10, 2018, the FMBN has issued 3,862 mortgages to Nigerians to acquire their own homes. But this is not all that is happening or can happen in the economy with an appropriate commitment to housing."

The minister, while speaking further at the National Council on Housing with the theme: Why Housing Can and Should be the Catalyst for Development and Sustainable Economic Growth, said President Muhammadu Buhari was determined to make housing affordable to Nigerians.

According to him: "Once again, the President has asked me to thank all those Governors who gave us land. Because of them, we are able to employ averagely, a thousand people at each of those sites, and this is only for the pilot stage. If you have been involved as I have been, you will know that the people employed at housing sites are builders, welders, carpenters, electricians, bricklayers, water and food vendors, and other suppliers along with labourers.

"They are the people who are largely paid on a daily basis or on weekly or at best monthly basis.

These are some of the most vulnerable people in our economy as they are in other economies. Whenever government can reach these people and provide work for them, you know that such an economy is working.

"President Buhari has reached these people. I have met them and we need to do more by multiplying the Housing commitment. But beyond building houses, there is the problem of affordability and definition. It seems to me that whether it is to buy or to rent, affordability will always be an issue. But we must start by making clear to our people that not everyone can afford to buy or own a house, but it is ideal to at least seek to shelter everybody who has a job, by rental which is affordable.

"The question, therefore, is that after we have provided work for these vulnerable people, which pays them weekly or monthly in arrears, is it affordable for them when they seek to rent houses, and we ask them to pay one or two years rent in advance? This is not government, this is us, the landlords, and we can change this by accepting monthly rent in arrears secured with their employers' guarantee.

"If this happens, we will see how housing will catalyze our economy. When my rent is matched with my income, you and I will be witnesses to a release and relief of millions of people who seek help to pay their rent even though they have a job. As for those who wish to buy houses, mortgages are the solution and we must issue more," Fashola noted.

Meanwhile, the minister equally disclosed that his ministry was working with the Ministry of Petroleum Resources to develop standards for pipes and installations that will facilitate domestic use of gas for cooking and heating.

Fashola, lamenting that the country is underutilizing its gas resources especially in the area of domestic use for cooking and heating, said: "The oil and gas sector can also benefit enormously from housing if we all commit to implementing the gas master plan."

#IFTTT #Blogger

0 notes