Man with a Plan: Worse Than Broke in His 20s, Dave Ramsey Learned His Money Lessons the Hard Way. Today, the Personal Finance Guru Shares What He Learned with Equal Parts Education and Motivation

By Vinnedge, Mary | Success, February 2010 | Go to article overview

Man with a Plan: Worse Than Broke in His 20s, Dave Ramsey Learned His Money Lessons the Hard Way. Today, the Personal Finance Guru Shares What He Learned with Equal Parts Education and Motivation


Vinnedge, Mary, Success


Author-radio host Dave Ramsey dispenses advice on personal finance with the fervor of a country preacher and the common sense of Ann Landers. He colorfully pounds home his core mandate--eliminate debt--with a tried-and-true, step-by-step program to achieve fiscal fitness.

His message hasn't changed, even as the U.S. economy trembles from the most crippling recession in decades. "What the recession has done is turn up the volume, so [that consumers] sometimes experience more hopelessness," Ramsey tells SUCCESS. "We try to show that there's a light at the end of the tunnel, not a train. Hope1 lope is a major product of ours."

Ramsey guides people toward financial stability through his radio show, classes, counseling and coast-to-coast how-to events. He started in 1992 with the book Financial Peace. That same year, he launched The Money Game on a small Nashville radio station--mainly as a way to hawk the book. That show, now syndicated and renamed The Dave Ramsey Show, has 4.5 million listeners per week. And Ramsey has added two more best-selling books to his resume;: More Than EnglishEnough and The Total Money Makeover. The three books have combined sales of about 5 million copies.

Ramsey says the recession adds one major complication to financial rescues, however: reduced income from job losses, which impairs the ability to erase debt. "It's easier to get them out of the hole if they have a good-size shovel".

Having made and lost a small fortune while just in his 20s, Ramsey speaks from experience. With parents in the real estate business, Ramsey caught the bug early, attending sales conferences as a teen. After graduating from the University of Tennessee with a finance and real estate degree, he and wife Sharon started with nothing as he began buying and selling real estate. By age 26, he had build built a $4 million portfolio and had a net worth of a little over $1 million--"which, for a kid from Antioch, Tenn., is what we called rich." Ramsey says.

Keeping Up with the Joneses

"Only I borrowed too much money, of course, and this was back in the go-go '80s, and our bank got sold to another bank and they called our note, and we spent the next two and a half years of our life losing everything we owned. We were sued and foreclosed on, and finally with a brand-new baby, a toddler, a marriage hanging on by a thread, we were bankrupt."

The pressure and stress were tremendous. "We were freaked out, awake at night and fighting a lot," he says.

"I had such an empty feeling," Sharon Ramsey recalls in Financial Peace. "I felt that the whole world was crashing in on us."

Dave Ramsey pauses to calculate the length of their struggle. "It took four years to get everything paid off. It wouldn't take me as long now, because I know how to do things now."

While he rebuilt, Ramsey was a self-employed real estate broker and took a giant dose of the medicine he now prescribes for others. He worked 80 hours a week and drove an embarrassingly beat-up, older-model car.

He blames many of his past money problems--and those of most financially troubled consumers--on the keeping-up-with-the Joneses mentality. And that's a product of the great American marketing and advertising machine, he says. "We're the most marketed-to culture in the world, and we have the highest spending in the world.

[ILLUSTRATION OMITTED]

"We see someone with something nice, and we think, 'I want one,'" regardless of its affordability. "The nature of marketing is to create discontentment, so that we think we need to make a purchase."

After working his way out of that financial hole, Ramsey was intent on learning about money by talking to "old rich people," he says. "I didn't want to talk to young rich people; I've been him, I didn't want his opinion. And when I did that, I discovered this disturbing thing called common sense: Live on less than you make; get out of debt; have some money set aside for a rainy day, because its going to rain; invest for the future; learn to give. …

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