Meet The $700,000,000 Man Who Lost Everything | Dave Ramsey

I'm an entrepreneur. This is going to work. It didn't. It didn't. It didn't. It didn't. It didn't. And then you put something out there that you kind of thought, "Yeah," and then it goes big and you got, "Crap, I don't know nothing." You know, so you just keep at it. You just keep at it. You keep at it. You fail forward.

So this is Dave Ramsey. It means quit going out to eat; you're broke. Even though most people might know him as the man who hates credit cards, pays cash for everything, and tells people to eat rice and beans as a way to save extra money, the truth is just 30 years ago he was absolutely broke. But little did he know that would eventually lead him down the path of creating one of the most successful personal finance businesses in the world.

Today, Dave Ramsey gave me the rare opportunity to sit down and pull back the curtain on how he makes, spends, and invests his more than 600 million dollars—all without using a single penny of debt. So if you enjoy these videos and you want to see more like it, including one of Mr. Beast, make sure to subscribe, hit the like button for the YouTube algorithm, and comment because I do my best to respond to as many people as possible.

And now, with that said, let's begin.

So can we start by talking about where your money is personally invested? It's inordinately tied up in these properties that we're sitting in: two 200,000 square foot office towers with a 25,000 square foot connection here at the thing and a 50,000 square foot event center on top of the hill that's almost completed. And I've got property here. I've got 60 acres of commercial property here that we can develop two more office buildings on. Right now, the tenant is Ramsey, and so I've got great tenants. But, it's inordinately tied up in that.

The valuation on that would be several hundred million. We bought the original piece of property for 10.5 million and that was, at that time, the largest purchase I'd ever done and paid cash for the dirt. Prior to that, I had bought an office building that we were leasing and had the option to buy it at 5 million. It was a five-year option. By the time I scraped the money together to do that five million dollar deal, it was the biggest deal I had ever done at that point. The building was worth 13 million, and so I desperately wanted to close on this option.

But I don't borrow money, so I had the cash. I'm getting the nickels out of the corner of the couch to get that 5 million together. We closed at the last minute; we barely slid under the door. So that's where Ramsey was housed at that time and a bunch of other properties that we were renting in the area. So we're spread out all over the place.

From a business perspective, we want to get everybody in one building. We start thinking about that, and I'm now piling up cash from the money we're making in Ramsey and the money we're making off books or whatever else. I'm like, "Okay, we need to build a campus for the good of the thing." But I want to build the campus in a way that if someday Ramsey doesn't exist, those properties are still legitimate office buildings. This is at a major interstate. It's got interstate view for the signage.

It's at an exit. It's at one of the outer rings of growth, so growth is coming this way very fast. We're not in an inner city or something where they're waiting for it to catch back up or re-gentrified. No, this is—we're out in the country and it's moving. You know Nashville is moving this direction anyway. All that to say, that was my reasoning for inordinately dumping money there versus anything else.

Right before that happened, right before we closed on that, I took every dollar of cash I had at the time, just about—not quite. I mean, I always leave some—a big cash reserve in the company—but I took everything I could get my hands on. When 2008 happened, I bought a bunch of property.

Was it coincidental that you just happened to have cash or did you see what was coming ahead and you just started stopping? Okay, no, it was—I’m that guy. I'm no debt, lots of cash; I'm always that guy. So when that market just disappeared, I did smell the blood in the water because I have been through those downturns in the past.

I grew up in the real estate business; I've watched it in the 70s, watched it in the 80s, watched in the 90s. This one was pretty severe. 2008's the most severe we've ever had as far as real estate values. These were properties. I was buying them from banks, and the banks were in trouble. It was awesome. It was so fun. It was like, "Hey banks, so can I get a deal?" and I get to punch them in the mouth; this is great!

So yeah, we were buying those things for a nickel to 20 cents on the dollar. One portfolio we bought like almost 10 million dollars worth of stuff for 2 million, and that was just one little grouping of properties. Lucky or timing or cash position or whatever, we dropped coin into that and it just took off.

So that's what I mean when I'm talking about your portfolio. When you buy something at 20 cents on the dollar for what it was worth yesterday and it's going to be worth in 18 or 24 or 36 months after 2008 before the value came back. I mean, those rates of return are astronomical; you can't even—the math on that just goes bananas.

So we have to run rent analysis on it now based on its current value, not based on what we paid for. Otherwise, we would not charge hardly anything based on what we paid for it. So we just have to stay at market based on its current valuation. How do you balance that with mutual funds?

I fully fund my 401k. I'll dump X number of millions a year, you know, my income into there. But it'll still never catch up sure with the real estate because the real estate deals were so freaking sweet, and they've done so good. But that's just because I'm a real estate guy.

But if people hate real estate and they're watching this, they don't need to do any of that. You know, you don't need to mimic and try to go, "Well, that was Dave Ramsey's pattern." Not this. There were a couple things in there that most people should not do, but I'm so real estate oriented and I caught a moment in time that I hope doesn't repeat.

You'd also mentioned a large cash position. How do you determine how much is enough? We teach people in Entree Leadership, small business people, to try to have six months of operating capital. That way they don't have to hit credit lines for cash flow fluctuations. So we take a percentage of our net profit at Ramsey. I'm putting money in cash every single month off of that formula.

Whatever profit there is, a percentage goes into cash. That pile of cash does not ever exceed six months of operating, but it never has because we've grown so fast. Our operating expenses have gone up faster than that cash balance can. But you look over there, it's a substantial number of seven figures in there. I mean, it's a lot of money in there. But when COVID hit and quarantine hit, I got 1,200 employees.

I was real glad to have that pile of cash because I don't have to lay them off like everybody else did. No debt and a pile of cash is a real peaceful way to live life. Do you know how many income sources you have, and do you find it important to diversify the ways you're making money?

I haven't worried about that, but the net result has been that I've got mutual funds that can pay. I'm 62, so I can take whatever I want. It's just sitting there. I've got real estate income; I've got royalty income off of books. We’ve got Ramsey as income.

As far as I'm concerned, you got a whole bunch of different properties. Those are all different income sources even though they all fall in the bucket of real estate. But the chances of all of them simultaneously going sideways is very, very low. So you know an office building and a strip center are very different cash flows.

Do you have any guilty expenditures? I don't have any guilt about it. One of the things, again, as we started studying and tracking with the wealthy, was that a lot of people who build wealth, especially if you didn't have anything growing up, have this sense that, "I just spent that on a car."

I spent that on a toy car—it's not even a car I'm going to drive; it's not a daily driver. You know, I spent that on a watch. In your case, you know, I spent that on a—I've got a lake house that's worth probably three million dollars. You know, and you know that's a toy. It generates zero income; it's going up in value because lake property generally does.

But what we teach people and what we live is ratios. So if someone—I've got a friend of mine made 20 million last year. If he buys a 200,000 dollar car—now, the neighborhood I grew up in, people would say stuff like, "No one should ever have a 200,000 dollar car! That's just evil and wrong!"

Well, it's not evil or wrong; it's a car. It can't—it doesn’t have the capacity for moral construct; it's a car. Is he evil or wrong for doing that? Well, okay, let's just take some zeros off. Instead of 20 million and a 200,000 dollar car, let's take it to a 2 million dollar income and they buy a 20,000 dollar car.

Well, that's not out of line. Oh, let's take another one. Let's take a 200,000 dollar income, and they buy a 2,000 dollar car. It's the exact same ratios, and so we use ratios. What we've noticed is people who have a good strong spiritual walk, meaning they're other-centered, they're probably a person of faith and have some kind of faith walk, they're great at relationships.

Their relational IQ is very high; in other words, they have a high quality life in addition to some net worth, right? They spend an increasingly smaller percentage of their income and their net worth on toys. You know, five percent of a billion gives you a really sweet life; five percent of a hundred thousand dollar net worth doesn’t.

You know, in terms of toys. So that's what I always look at. We take a percentage of our income and we just enjoy it without any guilt. Then we say, "Okay, the other percentage is for generosity and philanthropy, the other percentage is for investment, another percentage is for taxes."

If I get a check that's seven figures from a publisher, it's already spent on those percentages. I'm going to set my fun money over here, increase lifestyle, no guilt whatsoever. I'm going to increase my generosity over here, increase my investing over here, and so on. It's already done. I only think about it because I've set those percentages, and so the percentage of my net worth that is tied up in vehicles, for instance, of any kind—things with motors—is a tenth of a percent of my net worth or something—not even.

But I still got really nice cars, you know. Can you give us an example? I want to hear, like, what's your favorite? If you're defeat, like the top two or three, what are you doing? I was born in 1960, and so I bought a 1960 Corvette—a frame-up restoration. It's a sweet, it's sweet.

So I've got it on a lift in the garage; I park under it. But it's— I drive it some, but it's just off—it’s an eye-catcher. What have you noticed the differences between decamillionaires and billionaires besides the money? Because you were talking about doing studies now on billionaires, and I'm kind of mentally thinking through it.

And I think to myself, you have to be close or getting to that point. Well, if you look at the Forbes 400, they're all billionaires. Now, when you start studying through those guys and gals, you find almost all of them grew some kind of business. Almost none of them did it purely on investing.

I mean, you can't put enough in your 401k to be a billionaire; it's mathematically impossible. But you can do that to get a millionaire for sure, and you probably get to deca with, you know, a couple of properties that you rent, a couple of properties that you enjoy, and live in a lake house in a house or something like that.

You know, when you load your 401ks and you load your mutual funds and they're all paid for, you could probably get to 10 million doing that pretty conservatively. You could do that over time depending on when you start, sure, what your incomes were, and those kinds of things.

But to get to, you know, 200 million, 300 million, 500 million, a billion—a billion is a thousand million. You know, when you start thinking about the ratios on that, you almost always find someone that took something public or they kept it private and grew it to the level that it was an unbelievable cash cow, and the valuation of the business, in other words, was a key component of that. So I don't know many cases that somebody gets to a billionaire just investing.

Do you have any financial goals to reach or any milestones that you want to hit along with any giving milestones? You know, I hit one of mine the other day. I had always wanted to give a million dollars in a year, and I did that several years ago.

We were able to do it the year before last in one day. That was a vlog. Wow, that was fun! Not to shine a spotlight on us and our generosity, just because I wanted to do it though. The best way to do it is to get everybody involved, and I was a million dollars lighter at the end of the day.

[Laughter] What is your advice for everyone watching if they want to start a business or if they want to grow? It's harder than you think it's going to be. Perseverance is one of the key qualities of people who are able to do that.

You persevere through an amazing amount of manure, an amazing amount of pain that you know, that breaks your heart and hurts your feelings and mean people and everything else. Number one, so expect that. Expect the climb to be hard, but expect it to be worth it; that would be advice.

The second thing is do it—this moment in time economically in America with the things that you can do with the digital world that we now live in versus 30 years ago when I started—you have so many tools that you can get your hands on! I mean think about it, you and I can just turn on something and all of a sudden we're on YouTube.

Yep! I mean, you can just turn on something and I can launch an app and put it in the Apple store. I mean, the cost—the access to free distribution of ideas. Man, it's a great time to be alive and start and run a business.

The third thing is I call it failing, but you're failing. You're gonna—my friend John Maxwell says you're gonna fail forward. Everyone I know that has an inordinate level of success in any endeavor, whether it's ministry or music or business or anything you want to name—a name of the household name of somebody that some of them I've gotten to spend time with—you know they have—they've sold a bazillion books.

Whatever it is, every one of those people are standing on a pile of their mistakes. The gleaming mountain of success, it turns out, it's actually a big pile of garbage and you're just standing on it rather than laying under it and it didn't defeat you; you just kept climbing on the garbage and producing more garbage.

Ramsey is now a household name, and yet I have personal knowledge that about 90% of our ideas in the last 30 years have sucked. Everything you know about us that's positive was probably less than 10% of the ideas. They all sound great in the morning when you're on your walk.

"Hey, I'm an entrepreneur. This is going to work." It didn't. It didn't. It didn't. It didn't. It didn't. And then you put something out there that you kind of thought, and then it goes big and you got, "Crap, I don't know nothing!" You know, so you just keep at it. You just keep at it. You keep at it and you fail forward.

What do you think, or how do you plan to continue growing? Everything we do at Ramsey is really—we have a really easy asset test: does it help people? We're 100%.

We have figured out if we help enough people, we don't have to worry about money. So if we can find new and better and more efficient ways to help more people, even if it's at a lower price point, we'll end up with more money.

You know, in 2022, we'll hit 300 million this year. That's not a number that matters; that just means we were able to help more people because we do not have any revenue streams in this company that don't come from someone having been helped. In every case, there's a whole bunch of revenue streams inside the company.

But you know, someone got helped over there, someone got helped over there, someone got helped over there. In some cases we monetize it; in some cases we don't. But that's what we're always looking for, and yeah, we've got some products that are in beta and some stuff that's going to come out in scale in '23 that, yeah, it's going to be fun.

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Enjoy! Thank you so much for watching, and until next time!