WHAT WAS COVERED
- 00:00 – Episode begins Paul welcomes listeners.
- 01:55 – Video Review: Dave Ramsey Reacts to Youtube Financial Advice
- 03:35 – Corey first reacts to the financial video.
- 08:14 – Paul clears the air on what to expect from financial advisors.
- 11:46 – How we respond to financial decisions.
- 14:40 – “What Millionares actually did.”
- 19:30 – Why a lot of financial advisors have the wrong orientation in there approach.
- 25:37 – Episode ends, thank you for listening.
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——————————————————————————————————————————- 0:05 2:27 2:33 2:38 2:45 3:08 3:11 3:23 3:34 3:44 4:17 4:35 5:15 5:30 5:37 5:51 6:12 6:54 7:00 7:03 7:11 7:14 7:21 7:39 8:03 8:07 8:11 9:33 9:36 9:40 9:46 9:50 10:01 11:43 11:45 11:46 13:08 13:46 14:09 14:19 14:43 15:00 15:18 15:53 16:20 17:33 17:37 20:51 20:54 22:27 22:42 This Material is Intended for General Public Use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. Sound Financial Inc. dba Sound Financial Group is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Insurance products and services are offered and sold through Sound Financial Inc. dba Sound Financial Group and individually licensed and appointed agents in all appropriate jurisdictions. This podcast is meant for general informational purposes and is not to be construed as tax, legal, or investment advice. You should consult a financial professional regarding your individual situation. Guest speakers are not affiliated with Sound Financial Inc. dba Sound Financial Group unless otherwise stated, and their opinions are their own. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. Past performance is not a guarantee of future results. Each week, the Your Business Your Wealth podcast helps you Design and Build a Good Life™. No one has a Good Life by default, only by design. Visit us here for more details: yourbusinessyourwealth.com © 2020 Sound Financial Inc. yourbusinessyourwealth.com ———————————————————————————————————————————
Full Episode Transcription
Hello, and welcome to your business your wealth. My name is Paul Adams, and I’m joined today by the nicest man in finance. His name is Corey Shepard. If if you ever need to bend any topic, Corey Shepard, not Jim Cramer. That’s right. But Cory, we got a little bit of a different kind of episode today, where oftentimes we’re reviewing things that are articles saying a financial publication, etc. Today, we’re branching out into assessing other clips from other YouTube channels. And because we don’t start small here at your business, your wealth now why wouldn’t we? Yeah, I say we go straight to one of the biggest financial YouTube channels out there. And we’re going to take a look at Dave Ramsey. Polar Bear. And I’m not meaning to poke the bear here, you guys notice periodically, I get really wound up etc. This one we’re taking with a little more of a serious slant, because we think that some of the way, Dave Ramsey and I believe this is his daughter, who were on the show together. And I want to give her just a ton of credit. Because as Dave really, I think crosses the line and to just be a mean. And you know, having a show without anywhere near the reach he does. I do have to have Cory sometimes pull me back to make sure that I’m not being mean. And she tries to do that with Dave in this episode. But you can see Dave just really wants to go after the situation of somebody disagreeing with one of the tenants that he’s very zealous about. Okay. And so what we’re going to do, we’re going to tune into this YouTube channel, we’re going to watch a little bit of it. And what they’re doing is they’re looking at an Instagram video, where a guy and his daughter are talking about her buying her first car, but being able to take the money she saved up and invest it probably with her dad and an Airbnb property where she’s going to earn interest. And she’s going to use that interest to pay for the payments on her car. So we’re going to watch that together here real quick. Coroner, Ding live where
we’re financial channel, reviewing financial channel reviewing financial channel. Whoa,
oh, yeah, this the rabbit, folks. All right, here we go.
This is my daughter, Maddie. We’re at a car dealership right now. And she’s about to buy her first car. Tell me how you’re buying your first car.
This morning, I went to the bank, I got my first car loan, I qualified for 15,000. And what interest rate 3.5% was the money that I have saved up, I have $7,000 in cash, I’m going to invest that into an Airbnb property and get 14% interest back so that way I can use that money to pay off my car loans. So basically, kind of getting a car for free.
Wait, Maddie, can you explain that one more time a little more simply.
So it cost me three cents to borrow $1 from the bank. And then I go and take that dollar now my dollar and I give to someone for 14 cents. And then so 14 minus 311. So I keep the difference in the middle.
But what’s that called? Aren’t trash, but um, you buy assets that then cash flow and pay for your stuff.
Okay, so we’ll stop there for just a second before the Ramsey reaction, Cory first reaction to that young lady and her dad from you.
So, you know, he’s obviously doing something cool. He’s teaching her in the real world. And he’s involved in some of his own money because he absolutely and Dave’s going to talk about this. He had the cosign on the loan, she’s 15 So she’s not doing it all on herself. You’re not buying an Airbnb for 14, you know, for $7,000 let you know so yeah, she’s, he’s allowing her a screaming deal. Like he’s given her a huge advantage in order to get that in the free market, but it’s for educational purposes. Which is Yeah, go ahead.
I was gonna say which I think is key is that this is not a they’re not constituting this strategy as here is the way to retire. They’re illustrating a tactic of being able to borrow money for less than you’re able to invest it for.
Now, she said it’s basically a free car which I would disagree with that because you’re buying the car still, it still cost what it costs. You could be investing that in something else or saving up that money for so you know, it’s not a free car but but I like the system he’s he’s building because if she just saved up all the money for the car, bought the car she’d have the car, the car would go down in value. In this case, she has the car, she pays off the loan with her income. And if it’s still flowing, then she still has the income and the car. So like I like I’d like that. And it’s not like she bought an $80,000 cars or first car,
right, which I think is something that’s easy to overlook. She’s buying a super reasonable car for her first car. But now let’s go to the Dave reaction. I mean, he’s
so proud. Well, I mean, he’s so slimy, there’s that there’s a few days to take a shower after watching.
Can you pause it that like right there? Like this is the beginning of the Dave meanness like, what is slimy? Like what I like I just don’t understand how that connects to what I just saw at all.
Like, yeah, what was? What’s the joke? You know about asking a girl, if she’s still in high school, that slide. This is a dad trying to teach his daughter something cool about finance and choosing a post to get online. Let’s keep going.
We, especially with our, you know, you and I especially don’t put a lot of value on on cars are spending. So I probably wouldn’t do that with my daughter for the first the first thing. But I think you said when we were prepping, she can’t buy a house yet. Like that’s a bigger deal. So she’s 15 by I would rather actually have her be 15 by that first car, realize how quickly the shine comes off. And she doesn’t care as much anymore. And it’s a much cheaper lesson to learn that early in life. And maybe that saves her from trying to buy expensive cars for the rest of her life, because she just doesn’t care as much anymore takes the mystery out
of it. Yeah, so let’s see what else he has say we stopped this slimy.
It just drips in arrogance.
Well, there’s a lot. There’s a lot of things about this. Number one, I really don’t feel like you can get an interest rate. I don’t think you can get a lunch. She’s
How old was she? She’s 15. She cannot get a bank loan? No.
So he co signed which probably helped get a lower interest rate. And then what I don’t understand is the $11,000. In an Airbnb property,
you can’t buy an Airbnb property for 11,000. A bunch of partners in zooming, the Airbnb property stays rented in the local city council doesn’t pass a law against Airbnb, in which case your little butt would be 15 year.
I think that’s fair to say. I mean, this is where it’s easy to talk back at someone when they’re not here to respond, just like we’re doing today, I guess. But he’s so out there. Yeah, there’s all kinds of risks in investing. So probably her dad knows that and is teaching about that? Yes. But that’s why it’s all small numbers that they’re doing right now.
Exactly. Exactly. Uh, Dave gets even more fired up. Let’s wait for here.
Because your father’s a moron.
All right. So he, this is the thing, as you listen to this, and you have people that you care about, maybe you’re a client of our firm, and you wish that the people that you know and love could make better decisions with their money or learn how to be better stewards. When you introduce them to an advisor, this is what they think they’re going to get is this kind of treatment. They think that so and I even see it people that have been a client for a year or two, and they’ll show up to a meeting by God, you’re really gonna get mad at me because I bought a car like, I’m not gonna get mad at you. But why do they feel that way? It’s because they hear things like this. Where what Dave is saying, A doesn’t need to be said. Because what he could say is here’s why that strategy doesn’t work. But you know, you’re stupid but is gonna get tripped up in it or your dad’s a moron. Those things don’t further the conversation for somebody to perform better with money what it does do a good job of and a lot of these shows do this is does a really good job of keeping you hooked and keeping you through the next commercial. Because you’re like, What crazy thing is he he’s going to tell some lady that she her husband’s a deadbeat and she needs to leave
it’s just kind of Jerry Springer financial
is indeed let’s get a couple more clips out of this before we’re done.
Oh my god was are unclear. No.
We’re not gonna harp on the people are gonna harp
on that right there. That’s where it felt the most like me and you were exactly right. Oh, hold on. We have to get to it. I got a good drill,
which, which I will rant against the machine, if you will, the machine of, you know, misnomer, financial advice and financial publications etc. But even the times where there’s an author that’s specifically wrong, I’m not this kind of made. This is a lot coming out of. And notice, if you watch Dave Ramsey much, and we’re going to look at more clips of this over time, is if it is a little bit outside of his narrow band of what we somebody ought to do to build their finances, then everything outside of that narrow band is somebody being foolish, someone being unwise, someone being whatever. And he goes on to say, in fact, I think we’ll hear it here in a moment. There’s never been a person who’s gotten wealthy arbitraging a car. It’s like, right. But how somebody learns to arbitrage, I would hope would be with smaller amounts of money first. Yeah, you know, like one small arbitrage is, don’t pay your home down with an extra payment every two weeks, or an extra payment a month, pay your home down by investing that money somewhere else. And then take out one lump sum and paying off your home when you’re ready, but keep maximum control of your money. And if somebody really wants to pay their home off over time, they’re making a decision about trade offs. It doesn’t mean they’re a moron. It doesn’t mean they’re silly. It doesn’t mean they’re an idiot, it doesn’t mean they’re gonna get their butt handed to them. If they Airbnb, there’ll be consequences to whatever actions we choose to take. But you know,
When I was a younger man in this industry, I confess that there were moments when I would get off a call, I probably came and ranted to you a couple of times. I didn’t say it in those words was kind of like, oh, my gosh, this person is doing this, like, how could they possibly. And I had a real breakthrough, probably, I don’t know, 10 years ago, where I realized like, everyone’s only doing exactly as well as they possibly can. Like, no one is looking at the facts, making a decision that says, I’m going to pick this one, because it’s worse for me. They’re just not. That’s not how our bodies our biology or human psychology works. Now, the framework that they’re using for deciding which one is better, might be a different framework than I would use. And so that’s where I bring into with clients, the idea that, and as a firm, our old friend, Joe, every interpretation is equally valid. But not all interpretations are equally powerful. Yep. And we’re trying to help clients find the one with a greater power, but they’re never wrong, for picking the one that you did, because it did something good for them. In the moment that they picked it.
Well, that and to your point, any decision somebody’s made, before they go meet with an advisor, they made of their own volition that was their call. So then advisors if you’re listening, like the worst thing you could do, is tell a client that they were foolish for doing something that they did, because they did it. You’re calling them foolish. And that’s not just like, tell it if you’re trying to lead an employee to higher levels of performance, you go up to them and say, That was foolish, but you did. You come alongside them, and you show them how they could have done it more effectively.
Or your kid like this dad, probably his daughter probably said, Hey, Dad, I want a new car. Look at this. Oh, you know, $11,000 car. It’s so cool. I really want are 1514 I forget the numbers. He could have said, Oh, you’re stupid for wanting a new car and 15 but he didn’t. He’s like, Well, let’s figure it out.
Yep, I love that. Yep. Well, let’s, let’s get a little more here. I jumped ahead to the touch. I think this is right where David goes on a pretty good rant.
The set of assumptions you have to go through for all that crap to be true, are absolutely ludicrous. Okay, number one, you have never met a millionaire. We studied 10,167. Zero of them. Precisely, zero said I borrowed money on my car, and arbitrage into being a millionaire. Zero. Real millionaires do that Z.
But how many real millionaires kept control of their money, kept debt on their real estate and then continued to build their fortunes while they relied on fixed interest loans on their residential and commercial income property. This
Dave’s one of Dave’s big tenants, his baby steps is, you know, get out of all debt, except your mortgage first, as quickly as possible and then pay down your mortgage really aggressively and then start investing. That’s basically what he’s done.
Yep. Which, which would mean that a huge amount of millionaires probably interviewed by his study he’s referring to, did use leverage early on to get themselves now maybe at some point, they said, Okay, I don’t need leverage anymore. I’m gonna let real properties get paid down, etc. But what he’s right that nobody did it with a car. But what he’s leaving out is that many, many, many of them did it with some degree of arbitrage. Yeah. So let’s go a little deeper here.
He wrote 090 Cory, I borrowed money on my car and put $11,000 into an air b&b When I was 15. With all of my business acumen on display, because she didn’t even know what the interest rate was, go back and watch the clip again. She’s I had to edit it. What was it? Oh, three and a half. We’ll tell him again, man. Tell him again, darling, what you did.
So see that? Like that? That is, this is why people don’t want to go meet with a financial professional. Know that. If you guys ever have a financial person talk to you like that. It’s really good reason to leave. Because what used to go by just go just yeah, you just get up, pack your bags and leave. But it’s, it’s that somebody of that mindset who’s willing to say something that mean to a 15 year old girl? It’s specifically about her. Probably same guy, I’d say, you know, online bullying is no good. But he’s willing to say these mean things about this 15 year old girl. All because he doesn’t like her strategy. Like now, what would you say about the 15 year old girl, if she said, I saved up money. I bought a Cash used car. I’m dollar cost averaging into what Dave Ramsey refers to collectively as a good growth mutual fund. And if she was doing the things that he said you should do,
she’d be brilliant.
Now, by the way, neither one of those have enough information to say she’s brilliant, or she’s not read because we don’t even see the full financial picture. But in terms of wanting to teach a young person to do something unique and different, and and frankly, that dad, kudos to that dad, for simply teaching a 15 year old what arbitrage is, let alone giving her the opportunity to exercise it. Like that’s a that’s a great dad. Now, is it? Is it sustainable? Well, she’ll find out pretty quick, Dad can probably make the payments on an 11,000 because of $15,000 pre approval $7,000 She hasn’t cash 11,000 car loan approval. So she could take her 7000 Put it in there and maybe they don’t get Airbnb? Well, the funny thing is, I bet you a 15 year old with any kind of job can probably make a payment on $11,000 loan, and or dad good, because dad’s the one that got her in this situation. But she’s probably not going to ruin her credit. Because she’s probably not building it until she can sign on her own. Right. And it’s not enough money for her to get hurt with. What bothers some people is you’re not doing it my way. We have clients that don’t do it the way we recommend. And our job is to say, here’s the outcome from the strategy you put together. Here’s the outcome from the strategy we put together. And here are the differences. And they get to choose and doesn’t become a you need to do it our way or don’t call into our radio show anymore. Or don’t, you know, or worse yet, these people didn’t even come to him with advice. They just found this clip and played it and it is meta that we’re reviewing the review of somebody else reviewing financial advice, but we’re not reviewing the advice we’re reviewing. The orientation that people are afraid of with money is if somebody’s going to act like they’re smarter and they’re gonna treat me like I’m an idiot. Now I’m gonna let all the clients of the world or potential financial adviser clients in on a bit of a secret that Corey and I discovered quite some time ago. And that is most advisors are this way Now the reason that they’re this way, is it’s a psychological defense mechanism that’s taught to them by the financial institutions they first work with. Because early on, let’s say your 20 to 20 year old intern at Northwestern Mutual or whatever, and you go out and you’re trying to help people, but you get said no to a lot. So there’s two things that can be going wrong. It could be, wow, my message isn’t landing, I need to work on what I’m saying, or my delivery, or who I am as a person when I show up. Or they’re an idiot, which leaves me not having to work on much myself. And the early on training inside, most financial organizations revolve around the people that don’t listen to your idiots. They don’t say it outright. But you can pick it up in the hallways,
sometimes they do their weed,
or yes, yeah, yeah, total sales language. Yeah, like there are we’d pull them out of your process that edit. And what it is might just be somebody thinks a little bit differently about money. And maybe they’re not a good client for you. But it doesn’t mean that there’s something wrong with them. And because that’s so prevalent in the industry, you’re not wrong, when you see something like this video, where somebody’s just being made wrong for the financial decisions they made, instead of having some understanding of people come from whatever knowledge that they have, because how much better this is eight minute long video, and I gotta tell you guys, you guys know I can get work riled up and ticked off, I got uncomfortable listening to a, you know, DECA millionaire, plus, with a huge audience, just hammering this guy and his daughter. But the reason but the fear that you might have of that would happen in a financial meeting is not miss allocated. And you may have to go meet with a few people. And if you feel like somebody’s acting with you, like you’re an idiot, when you don’t agree with them. It’s a real good strategy for many advisors not to get questioned, and lots of people do just go, oh, gosh, I’m sorry. You know, like, I shouldn’t have done that. I’m a fool. And they’ll line up with that financial advisor. And the financial advisor has a whole book full of people that are willing to listen to what they say, and not much else.
Yeah. And I think it’s even worse, when most of the time an advisor is not going to say it to their face as much as Dave’s saying it right here. But if you’re like, if the advisor is thinking it, the client can feel it, they can sense it.
Yeah, like if that guy, really on Yeah, if that guy and his daughter just came on Dave show the next day. Even if Dave tried to be really nice, Don’t you suppose some of this is going to come out, just in a mannerism and a look and etc. And so my advice for everyone out there, if you do have an advisor is treating you like this, like get a hold of another advisor, it might be us. If we’re not a good fit, we’ll point you in the right direction. But feel free to reach out to us. But the bigger thing is, if you feel like every time you talk to somebody that they’re treating you like you’re foolish, and you don’t know what you’re talking about, that could be your CPA, your attorney, your financial advisor, any of those, it may make sense to look for a new one. And mainly because there may be ideas you have that will be more effective, what the adviser has. And if the advisor is not willing to sit with you and do the math, like we say, like we don’t care what the right answer is, we just care that we get as close to optimal as possible. And that might be something we bring to the table. But it’s also those clients, they got, you know, two sets of eyes also on the screen, and they may have an idea that’s more effective than the one I came up with, because they know something about their own finances, I know, well, if you create a relationship like this, you’re never gonna have clients wanting to co create anything with you or check them out, they’re gonna be afraid to tell it to you, and they’re just going to transact somewhere else do that thing that the advisor didn’t approve of. And they may hurt themselves, or may help themselves greatly with that outside decision. But if you don’t have an advisor that you can help check the math on it with, then you don’t really have a teammate, you have somebody you’re buying products from, and you’re hiding the products you’re buying from other people from them. So if you want to have somebody who’s going to co create the future with you, it has to be somebody willing to listen your ideas and do the math, and not simply say that’s outside of what I normally teach and it’s no good. So that’s what I hope we can leave you guys with today. We’re gonna put the full link down in the description. So if anybody wants to go check out this full episode, and don’t hesitate. If you don’t, if you think we’re inappropriate for calling it out, please put that in the comments too. You know, we want to know, but, but then also if there’s something else you saw in this episode, or in one of the clips we showed or going to the YouTube video later, come back here, put a comment on what We want to hear it because we want to see what what’s going on for you guys when you’re listening to the show. So with that, I don’t want to forget you guys forget super helpful to subscribe super helpful to subscribe both on YouTube and to the podcast. It makes a big difference when you guys like these videos and putting a comment on might not only get you some interaction with us but may also put this content from somebody else that needs it. So with that, from myself from Cory from everybody sound financial group, we hope that this episode has been a contribution to you being able to design and build a good life
This Material is Intended for General Public Use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation.
Sound Financial Inc. dba Sound Financial Group is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Insurance products and services are offered and sold through Sound Financial Inc. dba Sound Financial Group and individually licensed and appointed agents in all appropriate jurisdictions.
This podcast is meant for general informational purposes and is not to be construed as tax, legal, or investment advice. You should consult a financial professional regarding your individual situation. Guest speakers are not affiliated with Sound Financial Inc. dba Sound Financial Group unless otherwise stated, and their opinions are their own. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. Past performance is not a guarantee of future results.
Each week, the Your Business Your Wealth podcast helps you Design and Build a Good Life™. No one has a Good Life by default, only by design. Visit us here for more details:
© 2020 Sound Financial Inc. yourbusinessyourwealth.com
Podcast production and show notes by Greater North Productions LLC