Naturally, I am skeptical of anything found on the Web. However, this story appears to be legit. Dave Ramsey, the popular personal finance talk show host and author of The Total Money Makeover, built a$4.9 million home. It appears he did so with cash, so can’t fault him there.
In fact, I really can’t fault him at all. He earned his wealth and chose to spend it on a home. Now personally, I could probably find other things to spend nearly $5 million on. Heck, I could easily build a $1 million home and give the rest away. But I suspect Dave has done his share of giving.
On the other hand, isn’t it a bit ostentatious to build such a magnificent home atop a hill for all to see? Shouldn’t Dave Ramsey’s new house be a bit more modest? I guess the bottom line for me is that we really have no right to tell Dave how to spend his money. After all, he was stimulating the economy. Someone had to plan and build that home, decorate it, furnish it, etc. It probably created a number of jobs for the life of the building project.
Interested to hear your thoughts on Dave Ramsey’s new house (click for pictures). Good for him, or over the top?
Update: Dave Ramsey shared his comments on the subject on another blog. Read what he had to say.
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He’s lived like no one else so he can live like no one else I guess.
Plenty live in expensive homes but most don’t pay cash
I can’t imagine why anyone would judge his choices – because it’s none of their business. If he was doing something against his own touted principles then it would be reasonable to stop listening to his shows or reading his books, but he has NOT done so. He paid cash. And I’m sure it’s just a portion of his assets, and that he’s got plenty stashed away and as you said, is giving away where he feels it’s appropriate.
Good for him! I hope he’s happy there [and that he's saved enough to pay someone else to clean that monstrosity]
Cherie, it’s not a matter of whether Dave is going against his own touted principles. He says he is a Christian. The standard then is not what Dave says is right but what Jesus Christ says is right. The principles of Christ should define and rule our actions as Christians.
You are the best, Paul. I have exhausted myself on BibleMoneyMatters with this issue. I have no more comments left!
I’m not the best, Jerret.
I just think it’s an issue that we need to discuss and think about very carefully. I read Jesus’ words to the rich, realize He’s talking to me (and most other American Christians), and worry that we just don’t take Him seriously enough on the issue.
I just read the other article you linked to. His home is beautiful. I can only imagine the other amenities the house has, especially in the kitchen.
I think that he should enjoy his home. Kudos to him for paying cash!
Thanks for the mention.
Sure, the house is way over the top, but I don’t have a problem with it.
Mike
Unfortunately in this day and age, someone who is as high-profile as Dave Ramsey must take security concerns seriously for their family. Ususally only expensive subdivisions offer security or else build your own in the middle of nowhere. Please note the high iron fence surrounding the property.
Besides, what if this was their dream home, would you deny him that? He has helped so many. This is probably only a fraction of the cash he is sitting on. Boy knows how to make bank.
Good for him! After listening to his show I know what a generous person he is and he tithed all the way through bankruptcy.
I’d love to see the inside.
“On the other hand, isn’t it a bit ostentatious to build such a magnificent home atop a hill for all to see?”
You’re basing this on what.. a few pictures? Are you familiar with the area? I don’t think he’s out of line building such a magnificent house. That’s a pretty good chunk of cold hard cash being pumped into the economy. Also, I can’t speak for everyone else but I myself find this extremely inspiring and I would think that it would be so for those who are also trying to live according to these financial principles. Not that my goal is to build a mansion of this proportion, but to see one of the end possibilities of maintaining a debt-free lifestyle creates a desire in me to continue to strive towards financial peace.
Just playing devil’s advocate. I agree with you, but I wanted to stimulate discussion on both sides of the argument. I don’t have a problem with Dave spending his wealth however he wants.
A few comments from the article I linked to are somewhat critical from a biblical view–citing principles such as “contentment, modesty, sacrificial giving, simplicity, humility, compassion, and possibly even love.” I didn’t address that angle, because it seems a little judgemental, and that itself violates biblical principles.
I’m sorry you found my comment judgmental, Frugal Dad. I in no way intend to judge Dave Ramsey or have anything against him. But, as Christians, we are to encourage each other to do good works and to be faithful to Christ. If we see a brother walking in a way that is inconsistent with Christ’s teachings, we ought to admonish him in love so he won’t be led away. I can’t talk with Dave Ramsey directly, but I can encourage other believers to consider how we ought to view and use wealth. That is all I intended to do in the comments there.
Thanks for commenting, Paul. And I didn’t mean to sound like I was judging your comments (is possible to judge the person judging?). I digress.
What I really meant was that to question Dave’s decision may give the perception of judgement, not that I was necessarily calling you out for it.
Heck, we all judge. We all fail…every day. I know I do. I appreciate your comments, and your perspective.
I agree we all fail and we will. We’re imperfect – it’s bound to happen.
I just felt I should comment because you missed the part immediately before the section of my comment you quoted. In context, it was:
“I’m not saying Dave is violating these Biblical principles, but here are a few ideas: contentment, modesty, sacrificial giving, simplicity, humility, compassion, and possibly even love.”
Specifically, I was saying that I can’t determine if Dave violated any of those principles because I can’t know his heart. But they are principles taught throughout the Bible and especially in Christ’s teachings. And spending so much on a house can certainly give the impression that you may have acted outside of those principles.
Again, I can’t say what’s going on in Dave’s heart. But I think it’s dangerous to dismiss his actions as perfectly fine for a Christian. Luxurious spending does not seem to be a Biblical norm for Christians, and greed (as in, wanting more than you need/deserve) is frequently noted as not coming from God.
For me, it’s just one of those things where we ought to stop and think about God’s will versus our will – God’s desires versus ours.
Spot on, Paul. You are very patient with your responses. I can be too knee jerk.
The Bible is very clear that the riches of this world are a trap to a Christian’s heart.
I would be disappointed if “paying cash” became the new definition of Christianity. I could pay cash for a stripper at a night club but does that make it ok? Well, I paid cash, why not?
Because, as you’ve said before, Paul, not all things are beneficial even though we CAN do them. Christianity, by design, will seem burdensome to those of this world. The world is watching.
I really hope this is the last comment I make on this issue!
I don’t want to be patient. I have to stop and pray before I start writing – Should I respond? If so, how? Without that, I would be too quick to speak harsh words.
Good illustration with the paying cash analogy. Obviously, you example involves more than one aspect but it works.
Really? Paying strippers with cash? How can you even use this example, when the heart of this discussion is Dave’s home. The two expenses are completely unrelated and I think it’s unfair to even hint that they may have some foundational similarities.
I agree with ninja. This has grown ridiculous.
While I can think of a number of better things to spend the money on, I too cannot fault Mr. Ramsey for spending the money he earned in the manner he sees fit. I think it is worth noting that the linked blog/article doesn’t say that he spent $4.9 million on the house. It says that the house has a total market appraisal value of $4.9 million, which includes the land. Certainly we are in a down market and the house was recently built, but it isn’t unreasonable to think he might have spent significantly less than that, especially if he paid cash. Regardless of what he paid, I am not sure I am now or have ever been in position to throw stones at someone for the way they spend their money. I am on the verge of getting out of debt for many needless purchases, some of which I don’t remember or no longer even own.
Thanks for clarifying that point about the $4.9 million. I should have made that more clear..
GOOD FOR HIM!! he is being paid tenfold for the freedom he has given to all of us!! me and my husband dream of the day we can live in the house we want, hopefully with a huge down payment! Now i feel a little relieved because the house i have dreamed of made me feel guilty. im only talking 180k price tag but now i look forward to being in the stage of baby steps that that dream will be real!!
Gina, he didn’t give you that freedom. You made the choice. Dave took a common sense financial approach and packaged it up with his passion. He’s a great marketer. I wish I were as astute
Part of me doesn’t grudge him…. however it seems like a waste of space & resources.
Will they actually use all that space? I used to be a miad & cleaned houses like that. So many of the rooms would be untouched when I went to clean them – the vacuum marks would still be in the carpet with no footprints every week. Most regular sized familys used 4 or 5 rooms(including bedrooms) and the rest was untouched. To me it wasted resources that could be better allocated elsewhere.
That said, it could very well be for security purposes too. If he tried to be in a regular neighborhood, with a normal house, it’d be very hard to secure.
I’ve always wondered what I’d do if in that situation – I sincerely like small houses more. The coziness & lack of housework is nice as long as there’s closet space
I used to listen to Ramsey regularly, and still believe the average American has much to learn from him. But after listening to his show for about a month, you’ll learn pretty much everything you’ll need to know. Once you’re out of debt – there’s nothing Ramsey can teach you that you won’t learn from blogs or other online resources. However, I got a little tired of the “I came from nothing, made my millions, lost it, then made it all back again” line over and over again.
Yeah, I get it, Dave: you’re better than the rest of us. There was just something ever so slightly condescending about some of his radio diatribes that gave me pause. This house seems to be part of that. I can’t put my finger on it, and who am I to tell Ramsey how to spend his money? But I’m ok without the righteousness of a Dave Ramsey in my life at present.
Yeah, I kinda picked that up from him too. Listening to the show really helped me keep my head on straight while I worked in a very materialistic industry however his arrogance was a bit much at times.
Kinda reminds me of a used car salesman. That, said his info is good & I think he’s put a lot of good out in the world by making the debt free program.
Agreed on Dave’s tone.
Yep. Agreed here. He doesn’t show much grace.
You don’t know what grace is if you can’t hear it in his show.
There’s no right or wrong about it, outrageously large houses and other status symbols just aren’t part of my value system. Ramsey has obviously come to a point in his life when they’re a part of his. I think there are very few Americans that wouldn’t do something like this–just watch one of those “I won the lottery” shows.
I don’t recall Dave Ramsey preaching minimalism except perhaps as a tool for getting out of debt. It’s his house and his money. If he enjoys it, more power to him.
Each of us might have different ideas on how to spend 5 million. I might go with a modest house on a large tract of natural land. To each his/her own.
Both. Good for Dave and it’s over the top. I would never try to tell a person what they can or cannot do with their own money but it does seem over the top to me. Dave Ramsey has never presented himself as a minimalist although Frugal Dad does have those aspirations… I think it’s easy to assume that somebody who is frugal (Dave Ramsey?) would also be minimalist so it’s surprising that he’d build something like this.
The cost of the thing aside, what does a family (small?) do with that much of a house?
Thanks for linking to my article about Dave’s new house Jason. I have to admit I can see both sides of the fence on this one. On the one hand it’s inspiring to see someone who once was in bankruptcy change his life around and get to the point where he’s able to build wealth and create jobs for other people, and build a beautiful home like this. It’s certainly only a small fraction of his wealth and he paid cash. That’s pretty admirable. By all accounts he is also quite generous giving away a large percentage of his income every year.
On the other hand, as a Christian I can see some other people’s point of view that a house like this may send a wrong message about how having a huge house is important, and how living to excess like this can be a good thing. As a professed Christian I wonder if Dave struggled with that at all when building the home?
When it comes right down to it, however, i have a hard time judging Dave for building a nice home like this, he certainly doesn’t brag about it or anything like that, and we can’t pretend to know the man’s heart. I have to assume the best about people, and I have to believe his heart is in the right place, in part based on what I’ve heard from him and from the huge focus on giving and charity in his FPU class.
I just wanted to thank you for the link. A boost in traffic on a Friday morning is always nice..
As for Mr. Ramsey: good for him because he’s helped lots of people get their finances on track. He deserves to be compensated accordingly. However, for PR reasons alone, I’m not sure that buying such an extravagant home will improve his image. Not sure if it will hurt him either. I’m actually interested to see how his fans react.
I’m happy for Dave and his family. After his story of losing nearly everything, it’s great to see that you if you sacrifice and live like no one else, then one day you can live like no one else. His company also owns the Financial Peace Plaza in Cool Springs, TN. That’s a pretty massive building, and I’m sure he paid cash for it as well.
One question that seems to be getting asked a lot is “Why does he need all that space for such a small family?” I would contend that while it might on the outset seem excessive, this provides a great opportunity for the Ramsey’s to display some good old fashioned Christian hospitality. It seems as though it’s a lost art these days but it is important nevertheless. Consider Nehemiah 5:17-18. One of his requests to the king was that a large home be built for his personal use. Seems selfish right? However when you read the passage above you realize the what great opportunity it provided for Nehemiah to show hospitality.
I have no problem with this in principle. However it does seem to be in juxtaposition with his professed religious beliefs. I’m not religious myself, but there is plenty in the bible stating the evils of wealth, and all that. Easier to get a camel through the eye of a needle…
While I do question the ethical/religious part of it, I don’t think it’s the place of anyone other then close friends/family to “admonish” another when the person’s decision is really between them & God/Jesus.
I think articles like this will allow him to see it causes some to question his values.
It does make me think/wonder what kinda of person he really is. I’d think the money would be better spent by giving classes at a homeless shelter or building a family shelter or two. that said, it’s between him & God and it’s not like Mr. Ramsey can take the money with him when he goes… may as well use it somehow while ya can enjoy it.
Sam, I agree it is best for admonishing and correction to come from other Christians who are close to you. But my comment was not referring to me admonishing Dave Ramsey. I’m simply saying that we can use this as a point of discussion to encourage each other as Christians to carefully examine our own motives for wealth and how we spend money (whether we’re close to each other or not). We are all one in the body of Christ and share a close fellowship regardless of where we live or how well we know each other.
Over the top and not at all in line with his anti-stuff message. I get he earned his money. And that he paid cash for it is great. He could have a beautiful home for half of that and still have money left over to help others. There are many, many, many other things that could be done with that kind of money. Isn’t is just him and his wife? Why in the world would they even need this big of a house?
Why is it even worth asking as a question? If he earned the money, he can spend it any way he wants. Doesn’t matter if we like what he buys or not. Unless he is doing something illegal, immoral, or goes against what he teaches, its his business. And I don’t even follow the guy that much.
A lot of people follow him. I listen to his show fairly regularly myself, and I figured many would have an opinion on his house. What can I say–it was a slow day!
What’s the fuss? Multi-million dollar homes are a dime a dozen today. How about Mukesh Ambhani’s 27 floor home recently built in Mumbai (Bombay), India. Now that’s food for thought and talk!
I fall in with the “it’s his money and he can spend it as he pleases” crowd. But like others, I wonder who will do the cleaning, yikes!
Dear Friends,
1) He earned the money fairly and without harm or injustice to others.
2) It’s his money; let him spend it as he chooses.
3) It is fair to ask whether this is in keeping with his constant admonitions to avoid more stuff
4) It is also reasonable to ask:
a} as a percentage of his net worth — what is the value of his home?
b} has he tithed?
c} has he given to those who are truly unfortunate?
Good discussions in the other comments~!
Great question! As a Christian, I do wonder whether or not a rich person can enter the Kingdom of God. But then I have to be honest and say that I’m calling into to question whether I believe God can love a wealthy person. Jesus’ comment about the camel and the eye of the needle was not about the wealth so much as it was about the relationship we have to the wealth. If we succumb to our own affluenza, then we will have difficulty in living out the lives Christ intended for us. THAT’S the issue in the Bible. I’m not sure that’s Dave’s issue here, big house or not. Not knowing Dave, who is to say that he’s not already using the space for hospitality for those that need help or even for his business, which I can imagine requires quite a lot of assistants and office space.
He deserves to enjoy his wealth in a way that he and his family want. I’m glad he has such an awesome home. Anyone who complains about it should stop whining and focus on getting their own financial lives in order. He is a very generous man and has touched the lives of millions. I hope to be there too some day.
He must have had one big envelope!
First off, thanks so much for the mention!
Now to Ramsey. Do we know what % of his net worth this house is? I bet it’s a lot lower than most of ours. What I’m getting at is it’s all relative. My home is nowhere near $4.9 million but could some argue that it’s bigger than what my family needs? Yeah, I guess so. I think many of us could live more modestly. I can’t say I know a lot of Dave Ramsey but I don’t recall ever hearing him talk about living like a monk with little or no possessions.
Now if we found out he bought the house with an interest only loan because he was leveraged up to neck in debt… well then we can say the home is too lavish.
He’s God in the personal finance realm…how could we ever question Him? It makes me wonder, personally, where his values are.
As I’ve said before (but not yet online)
there is a difference between Dave and Larry.
You can tell a lot about a company by its name.
Consider the differences here;
Dave Ramsey Show
Crown Financial Ministries
See a difference?
Didn’t he live beyond his means once, have to file for bankruptcy and have to start all over again?
How quickly the lessons learned are forgotten.
The guy has the money. He can do with it what he likes. Not only that it is REALLY his money – no financing. What business is it of mine how he spends it? Or of yours? Or anyone’s?
I commented on the other article but I just wanted to say that whether he deserves it or not (and he HAS earned that money through his work helping other people) isn’t the issue for me at all. I’m also not particularly concerned with whether he can afford it or what he donates to charity. My issue is that it seems counter to what he preaches that others should do.
The taxes on that property for 2011 are $27,001.00 and the upkeep and utilities are probably in the tens of thousands a year. While it’s wonderful that he paid cash, he also added thousands upon thousands of dollars of debt into his life that wasn’t there before. Again, my issue isn’t whether he can afford that it’s that he preaches that you should eliminate debt not create more. Property taxes ARE debt in that it’s money you owe someone else to keep something you want.
He’s also made a point of saying that people shouldn’t worry about what other people have or try to keep up with a lifestyle. If his philosophy is that, then why build a house that shouts from it’s perch high on the hill that,”Hey, look at me! I have much, much more than you”? Isn’t he perpetuating that problem to a degree?
I just don’t think that what he’s preached is what is being practiced. It seems contrary to the values he’s told others to hold to.
Taxes are not debt!
Got that right.
Keep up with your debt payments and it will eventually go away!
Taxes are forever.
I’ll say it again, “Property taxes ARE debt in that it’s money you owe someone else to keep something you want.”
If you aren’t paying the taxes, you can’t keep what’s being taxed. Simple. Just like a debt that requires you to pay (i.e. car payment) in order to keep the item. Steve (below) has it exactly right: at least debt in the traditional sense can go away, but taxes are forever and constantly increase. But taxes, while you own something being taxed, are a debt in the sense that if you don’t pay, you don’t play.
Irregardless of the semantics of the word “debt”, Dave has brought on “financial obligations” that he didn’t have before and that will never go away. They will only increase as the years go on. Whether he can afford them now or in the future isn’t the concern, it’s whether he is practicing what he preaches. He’s lived high on the hog in the past and lost it all before, so it surprises me that he’d gamble it again.
Just wanted to also clarify…I like Dave! I’ve read his books and enjoyed his TV show very much. I’m surprised because I do like him and like what he teaches but I’m not oblivious to the slight bit of hypocrisy that I see in this house.
If he paid cash, I’m impressed and encouraged but it doesn’t erase the impression of him that has changed just a little for me with this news. I would have thought he’d go the Warren Buffet way personally based on what I’d known of him.
You are wrong, Jen. Debt is considered funds owed because you borrowed them. Taxes are paid as you go along. Debt would be a judgment against you for unpaid taxes, yes. Property tax would only be considered “debt” if you didn’t pay the IRS. I’m trying to stay away from arguing semantics but careful how you use the word Debt.
TJ – you are wrong & your definition is grossly inaccurate.
Any outstanding obligation is a debt – not just borrowed funds. Jen is accurate in her observation of taxes since taxes are an obligation to the government if you wish to own or buy a given thing.
Examples would include:
- A court judgment, which would not be borrowed money, is considered a debt.
- In the legal system any money or goods a person is responsible for paying is considered to be a debt that can be pursued/collected on.
- I have medical debt not because I borrowed money from the hospital but because my kid was in an accident and they supplied services. I am in debt to them for those services.
–
Definition of DEBT
1 : sin, trespass
2 : something owed : obligation
3 : a state of owing
4 : the common-law action for the recovery of money held to be due
http://www.merriam-webster.com/dictionary/debt?show=0&t=1291302904
Thank you Sam. I also didn’t want to get into an argument about semantics so your astute reply and definition is appreciated. When you owe money to keep something you own, it’s a financial obligation. I used the word, “debt” knowing it would be a loaded word to use but you’re response clarified my opinion. Thanks!
Sam, we’re talking about property taxes, not sin. Calm down. I didn’t see property tax in the merriam definition. Let’s get back to the point. Jen claims (and judges Dave) that property taxes are debt. You have medical debt because you can’t pay all of it off at once, so now you “owe” someone. Dave is not “in debt” to the government because he has the ability to pay his property taxes whenever they are due. Property taxes are considered debt when you don’t pay, but not considered debt because they are a means of life. Dave will NEVER go into debt again so quit accusing him of it and take your judgments elsewhere.
Anyone else have an opinion on this subject?
replying to TJ post 60 (below)
I agree. Words have meaning. I cringe when I hear someone says “I’m investing in a new coat this year.” Really? Are they planning to lease it, and what’s the payback?
Tax on a house is not debt regardless of the definitions that may let it slip through. An anti-debt person buying a house for cash will dispute they are still “in debt.”
Ironically, though, a recurring obligation can have some of the same effects, so whoever started this would have been best off to simply point out the $50K/yr (What ARE his taxes? Not seen this) obligation he’ll have instead of introducing a red herring.
I agree JoeTaxpayer. I don’t think you can use Dave Ramsey and pin debt to his name in the same forum post. Diffuse the situation with “thousands in property taxes” each year and leave the debt part out. Good median.
TJ -
Any obligation of any form is a debt – whether it be past or present. Period – that is the definition of the word.
When a person has to buy a house they have to look at what the taxes are & whether they could afford to pay that – it is an obligation that comes with the house.
Property taxes are not a means of life ( I assume by that term you mean like food). Property taxes are implemented by the govt to fund govt programs but they are not required for a person’s survival.
And I’m not accusing Dave Ramsey of boo squat – I don’t really care what they guy does with his money since it doesn’t affect me in any way that I am aware of.
And unless your his friend or family member, I don’t think you know what his future actions may or may not be.
Words have power an you might want to think about how you implement them.
I implement my words to speak truth. Your nit picky way of living makes living debt free impossible. Unless you live in a tent (which you paid taxes, i mean debt, on when you bought it) property taxes are a way of life. Do you have a utility bill? Cell phone? Cable? Drive a car? Pay Insurance? Do you not see how ridiculous your claim is yet? These are not debts. But they are to you because you have to fork out money to make a necessary living. If you want to live by your definition (clearly you’re not a Dave fan) then you start making some outrageous claims as to what debt free living really is.
Warren Buffet’s house in Nebraska is worth a mere $700k. He has another home in Florida, but combined worth of both homes is < $5 million and he's a BILLIONaire. Mr. Buffet, in my opinion, is much more frugal with his money, spending a much lesser proportion of his wealth on housing, and gives an enormous amount to charitable endeavors around the globe.
From Luke 12:48: "From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked." Mr. Ramsey therefore has a higher accountability with his money, so I would hope that he is keeping this in mind.
Interesting thoughts….. I think we should all be using less resources so from the respect I think it’s a bit much but it is his right so I can’t comment on the spending part of it. $5million is big money but it’s all his and he worked hard for it.
I’m not a fan of Dave’s, but I see the good he’s done.
So, good for him, I guess.
Our house is 3400 sq ft, and we don’t use two rooms as it is. Living room (there’s also a family room) and Dining room (we eat in kitchen) are rarely used.
So when we retire, we’re sketching our ‘dream house’ and it’s looking to be 2/3 the size.
On the other hand, a neighbor moved a few years back, calling his similar home “a starter house” and moved up to 7000 sq ft. He happens to be a jerk, not for his house size, it’s nearby and I know some of his direct neighbors, who are nice people, but because of his condescending attitude.
Dave, on the other hand, is a media person, and I’m sure he entertains big time. I can actually see how he’d use that space. No envy or criticism from me on that.
The comments on allowance article were excellent. They are well worth a read if you have children.
Personally, Dave’s house is a tribute to all the people who feel that they need to pay someone to get out of debt! He figured out a way to get people to pay and he is living the dream that they all wished they had come up with.
It is capitalism at the best- and don’t let Obama tax any more of that $250,000 a year so Dave can be sure to be able to pay to keep that house cleaned!
I’m no fan of Dave either. But he probably earned that money in a respectable way, it’s his money, he can spend it the way he wants to.
I’ve got five kids. They take up space. So does the laundry and everything else. I wouldn’t mind having a bigger house. But I’d never spend more than maybe $1 million on a house (at today’s prices). There is a lot of good you can do for other people with a spare $4 million. But I don’t know Dave. Maybe he has given away $20 million already. Your question is not quite fair given a lack of data on his personal finances, something that isn’t any of our business. (Even if your personal finances are his business – lol.)
Does this mean the one with the biggest house wins? I thought the winner was the one with the most money. Dang. Guess I’ll focus on what really matters since I won’t ever have the biggest house or the most money. It doesn’t matter to me how much money you have or how big a house you have. I’ve known wealthy people that were the most down-to-earth wonderful people you could know, and I’ve also known wealthy people that I thought were jerks. What matters is the kind of person you are and how you treat others.
@Norman
True.
I also know some poor people that want people to believe they’re rich-and they are the most miserable people I know. I agree with you. It’s about the condition of their hearts. Not the physical condition of their, but the spiritual condition.
Hey, God knows his heart, right:? Who are we to judge?
Something to think about…
As some have alluded to, the real question is in his own heart and resources.
Personally, I’m all for it. Whether you like Dave or not, to me it’s a great demonstration of his philosophy to live today like no one else so you can live later like no one else. Dave isn’t a young kid any more, he’s in his “later” phase and living it.
With respect to if the house is too much, well none of us needs more than a cozy one room cabin with a well pump and an outhouse. Plenty of folks have gone through history and continue in the present day with as much or less and with varying family and cabin sizes. So if you got anything more than that, you’re letting envy get the better of you especially if you have a dedicated “guest” room or basement “spare room” or a garage where you leave the cars parked in the driveway half the time. It’s so easy to point at someone and say “that’s excessive” but it’s only excessive when compared to the norm you are personnally comfortable with. The norm in the US is different than the norm in Europe, and they are different than the norms in Brazil or India, etc. and that’s not even taking into account the “norms” within groups. Dave may be living outside of most of our “norms”, which makes plenty of folks living within those norms and sharing his values uncomfortable. The social animal in us doesn’t like it when someone appears to be showing off too much.
I love Dave Ramsey, and while I want to say “good for him,” I also think it’s a bit “over the top.” I don’t fault anyone for wanting to have an awesome house, but there’s a point where you really need to ask if, from a stewardship perspective, this is a good idea. Maybe he looks at it as an investment. I used to look at houses that way, but in today’s economy, I’m not so sure. I wish Dave the best, hope he enjoys his new house, and trusts he’ll use it to bless others.
I was referred to your blog after I forwarded a video about this for a guy I know who heads up another blog site (www.biblemoneymatters.com). Dave Ramsey is mathematically challenged when it comes to mortgages. His advice makes money for ONE party…the banks! This isn’t theory or opinion but mathematical fact.
I’ll link to your blog post here in my upcoming series that I just started about the truths behind mortgages (Owning A Home: The Most Misunderstood American Dream – http://www.bethebank.wordpress.com). I do think you’d find this quick video about Ramsey’s purchase and math behind it interesting.
Here’s the link: http://www.screencast.com/t/BRsxcC6Tz
Kelly O’Connor
Financial Hero #2
A house is not an investment so paying cash if you have it is the smart move; reduces the financial bleeding and prevents negative leverage from the borrowed funds. See my blog post on why your home is not an investment at http://wp.me/pZTwu-4r
Mike,
That doesn’t logically follow. “It is not an investment so you should therefore dump a ton of money into it?” Unfortunately, math is not on your side. If it truly is not an investment then keep your money away from it as much as possible. I did read your blog and you are right about all the different expenses and how they take away from your overall return; however, those expenses occur whether you finance or not. If you leverage you do not have to make up those expenses as well in order to make it worth your while because they happen no matter what. Math does prove that leveraging in a guaranteed and predictable environment (NOT in a risk environment) allows you to win.
I recently started a blog series on Dave Ramsey’s advice. I’d recommend you read the posts in order as I set the stage. They are titled “Owning A Home: The Most Misunderstood American Dream” (www.bethebank.wordpress.com)
Kelly – where in the world do you find “a guaranteed and predictable environment”?
I read through your site. What is it you’re selling? I have to admit, I stopped reading when I got to where you said a 15 yr mortgage cost the consumer more than a 30yr.
Joe, please understand that it’s not me or my opinion that can prove the 15 vs. 30 so please don’t take it as such or that I’m selling something. It’s math that proves it.
You must understand this banking reality: your money will never be worth more than it is today. This is the key principle behind banks making money. Based upon your statement above, I’m confident you’d look at the loan interest expense of a 15 year and compare that to the loan interest expense of the 30 and say “See, the 15 year saves you money”. It would seem to logically follow then that the banks would fare better if you the consumer went with the 30 year since its interest expense is so much greater. Let’s face it, banks are in the business of collecting interest and earning a spread over that which they borrower (depositors money). So, answer me this, why then does the bank offer a lower rate on the 15 year than the 30 year if they make more money on the 30 year? Why would they possibly give you an incentive to go with that loan which pays them far less when it simply counters their entire model of making money (i.e. collect as much interest as possible)?
Here’s the answer: your money will never be worth more than it is today. They want it back as fast as possible in order to leverage it out 5-10 times over. The bank makes FAR more money on a 15 year than a 30. The math is in fact on my side. I can prove it too but this format here is difficult. If what you knew to be true turned out not to be, when would you want to know about it?
You must follow the “control” of the money Joe. Look at it this way: if you took out a mortgage today with a monthly payment of $1,000, how much is that payment worth in 15 years assuming a 3% inflation factor? About $650. How much is that $1,000 worth at year 30? About $412. Which one do you think the bank would rather have back so that they can spin it out again multiple times? As much of that most valuable dollar as possible. Note, the discount on the shorter loan period. Banks aren’t stupid. Is it possible to function like a bank in a guaranteed and predictable environment? Yes it is.
Kelly O’
Sorry about the long post. I don’t like to do that. Also, Joe, sorry to hear about your back. Hope it gets better.
Kelly O’
Tax value is only $4.9, it is worth or would sell for around $9 or $10 million based on the original article you referenced at CoolSprings.com.
http://www.coolsprings.com/news/dave-ramseys-house/
OK, so this is an old thread, but I had to comment. WHO CARES IF DAVE RAMSEY BUILT A 5 MILLION DOLLAR HOUSE HE PAID CASH FOR? Who are we do judge whether or not Dave is doing the Christian thing by building such a house? Do you know how much he tithes (or beyond a tithe?) Do you know how much he gives to the poor? Dave Ramsey’s whole point is to accrue wealth so you can give like CRAZY. Having a nice (or even “over the top”) house doesn’t make him a hypocrite.