Debt Free Dr

To help other dentists obtain financial independence within 5-7 years by investing in passive real estate investments.

Blog By:
DebtFreeDr

Dave Ramsey and Financial Perspectives

Dave Ramsey has been instrumental in helping millions of people, including myself, early in my practice to get out of debt. However, this approach comes at a cost. Let me explain.

Dave Ramsey's advice is typically aimed at most people who live paycheck to paycheck and have little to no financial education. This includes most doctors and dentists, who often lack time to learn about financial management due to their extensive schooling and patient care responsibilities. We're thinking, "We have all this student loan debt, but we'll make good money, so we don’t need to worry about finances." Society often perpetuates the myth that all doctors are rich, right? But let me tell you how I changed my perspective and thinking about money.

My Early Financial Mindset and Background

I was born into a household where money was scarce. We had to save, scrimp, penny-pinch, and use coupons for everything. For the first 20-30 years, that was all I knew. After dental school, I started making good money, but I still had that scarcity mentality. I listened to Dave Ramsey, who advocated against taking on any debt and advised paying cash for everything, including liabilities like cars and homes.

The Problem with Paying Cash for Liabilities

Dave Ramsey's philosophy is that liabilities, such as your house or car, take money out of your pocket, while assets put money into your pocket. I followed his advice and paid cash for the vehicles. It felt great to drive a paid-for car without monthly payments. But then I started listening to other financial experts like Robert Kiyosaki and Grant Cardone. They offered different perspectives, which made me realize that there are multiple ways to approach finances.

Exploring Different Perspectives on Debt and Assets

I was focused on paying cash for liabilities, which meant I had to treat patients to save up for things like a truck. This approach took time and effort, and I ended up with a paid-for liability depreciating in value. Instead, I learned about leveraging Other People's Money (OPM). This concept was never taught in dental school, but it's crucial for financial growth. By investing in cash-flowing assets like real estate, which appreciate in value and generate income, I could use the returns to pay for liabilities.

Leveraging Other People's Money (OPM) to Cover Liabilities

For example, instead of saving up for a $50,000 truck by trading time for money, paying taxes, and then buying a depreciating asset, I could invest in real estate. The rental income from tenants would cover the payments for the truck. Over time, the asset increases in value, and I’m not trading my time for money.

The Value of Real Estate for Wealth Building

After six years, I might have a $30,000 truck, which I didn't directly pay for, and an appreciating real estate asset that's still cash-flowing. This shift in perspective showed me the importance of using good debt to free up my time and build wealth.

Final Thoughts: Time, Freedom, and Finding Your Financial Path

If you’re just starting and lack financial knowledge, paying cash for things might be a good starting point. But as you learn more, you’ll realize that time is your most valuable asset. Use good debt to free up your time and focus on what matters most – spending time with your family, enjoying your home, and living life to the fullest.

The bottom line is this: You can follow Dave Ramsey's advice and pay for your liabilities with your time and effort, or you can use good debt to leverage other people's money, freeing up your time for what truly matters. Hope this helps!