6 Financial Rules for Greater Happiness with Dave Ramsey

My guest is the world's leading expert in this subject. That is happiness and money. He's helped people buy the millions take control of their money and their lives since 1992. As I look at what you've been saying over the years, debt, you don't like it, right? Well, it did not bring me happiness. It didn't bring you happiness. Our money flows to the things that we love and the things that we fear. And it's a representation of our values. So yeah, I hate debt. And I hate what it does to people. And I hate what it's doing to Gen Z and the millennials right now. These large banks and car companies and the student loan industrial complex has got its thumb on these two generations and is milking them dry and taking away their opportunities in it. As a crusader, it makes me angry. When you lack hope because you owe money or because you feel like a victim or you're aggrieved by the culture or the politics around you, you're the product. When life feels hopeless, you've been productized. Hey, friends, welcome to Office Hours. I'm Arthur Brooks. I'm your host of the show dedicated to lifting people up and bringing them together in bonds of happiness and love using science and ideas. That's what this show is all about. I want you to become a happiness teacher. That's why I teach this subject in my university. That's why I do this show. That's why I do my writing. I want a generation of people that wants to make a happier world. If you are watching the show, thank you very much. If you're sharing it with your friends, thank you even more. Please do feedback on anything that you hear. Make sure that if there's anything you don't like, you have some criticisms, some questions, whatever. Let us know. OfficeHours at Arthur Brooks.com. That's the email address. Also, you can feed back any place for your watching or listening to this, any of the platforms. We look at the comments, believe it or not. I mean, of course we do. We want to know what you think. I'm really delighted this week to talk about something that I've been thinking about for years and years and years. And my guest is the world's leading expert in this subject. That is happiness and money. I was trained originally as an economist. Well, actually I started off my career as a French horn player, which is not the difficult path to doing what I do today, but America is a great country. When I finally found my way to academia, I became an economist and I taught economics for a long time. I've taught principles of microeconomics about 45 times as a matter of fact. And one of the questions people often asked me was, what's the connection between money and happiness? Is it true that money doesn't buy happiness like my grandmother told me? And I never really had a good answer until I started studying that. And I've done a lot of studies since then, but my academic study really isn't good enough. Today I want to talk about the subject, but somebody who's gotten truly world famous for talking about how people's lives can be changed. Their lives can be better by the way that they interact with their finances. That in point of fact, how they do their finances is a reflection of who they are as people. And you probably already know that I'm talking about the one and only, the great Dave Ramsey. Dave Ramsey is the founder and CEO of his company, which is Ramsey Solutions. It's not a coincidence. It's the last name of the guy in this, the name of the company. He's helped people buy the millions take control of their money and their lives. Since 1992, going way back, he's also a nine time national best selling author, personal finance expert, and the host of the Ramsey show, which I'm delighted to have been a guest on myself. I want to talk to Dave because he's been giving people advice on how to live better for a long time, a lot longer than I'm studying the subject. And he's also my friend and I love seeing him. Hi, Dave. Hey, brother, how are you? I'm doing great. It's good to see your happy face. You too, brother. Thanks for having me. Are you a naturally happy person? Oh, yeah. I think so. If there's such a thing, I don't know if you're research bears at all, but yeah, a glass half full guy. Oh, yeah. And you have been for the very beginning. It seems to me that you've always been an optimist in your career endeavors and the things that you've done, right? I do think it's going to work out. Yeah, I always have that tendency to think it's probably going to be okay, probably going to be okay. And one of the things we've been, and I think that increased over the years as I met God and started a faith journey. And so the hope is the word we use around our place. And so what we're trying to do is be hopeful and share hope and show someone why there is reason for them to have hope. Even if they're in a dark place in the math, pretty much sucks right now. It doesn't mean it can't change for you. And we can do this, this, and this, and let's get it done. Yeah, that's great. And it sounds to me like we're going to be talking today about how money is a representation of how you should be living your life. It's not about the money per se. It's about the life that you're actually building where money is an important part of it. Is that right? Absolutely. Jesus said your treasure is where your heart is. And so, and that's very, very true, that this idea that our money flows to the things that we love and the things that we fear. And it's a representation of our values and our concerns and our fears and our dreams. And that's why it's so important for a couple to get on the same page because they're combining then the blueprint for their life instead of building a pretzel. And so we're getting aligned on what we value, what we fear, where we want to go. And let's go there together. And it's an astronomical thing for couples when they do that. We have a lot to talk about, that's for sure. And let's start actually with the very beginning because people who know you, they know your backstory about a lot of people who are watching this show, they might not. And it's very easy to look at a guy like you who gives solid advice and has for a long time to say, well, that guy probably grew up in, with means and he had good lessons from his parents and everything's gone great. So let's start from the beginning, Dave. Let's talk about a little bit of your own financial journey growing up and some of the twists and turns. Well, I grew up in a real estate household, mom and dad sold real estate for a living. There were fabulous entrepreneurs. And so they inspired us with this idea that, you know, you can go do things in America and it's possible. And to assume otherwise would be silly. And because you just get up, leave the cave, kill something and drag it home. That's what they were very good at. What they weren't good at was the money stuff. So you didn't grow up with money. You didn't grow up in an animal. No, no, no, no, no, no. I was a little redneck kid and middle class, lower middle class. And so real estate business feast or famine. And so we were either buying Cadillac or having them towed. You know, I mean, it was a lot of volatility around that subject. And so, but I always did believe that I could sell and I did believe that I could earn and I did believe that I could do things. And that set me up in a positive sense, but also set me up for what a lot of people fall for, which is this idea that I can make enough to out earn my stupidity. And I couldn't do that. And it caught up with me, of course. I mean, you actually started working in being an entrepreneur when you were a kid, right? I mean, I've heard that you've what you said if you're your first business at 12, right? Yeah, we were, dad said, if you want some money, you better get on the business end of a lawnmower. And so I ended up with like 20 yards to cut. And I think they call that child abuse now, but that was my job. And so how to keep a profit and loss statement on the little business. And but I did learn again that, you know, if I cut the grass in an hour, I make twice what the kid working at Burger King flopping whoppers makes at minimum wage. And so self employment is a great thing. I can control my destiny. And those are early in greened lessons, you know, sweat and calluses are good for you. And it's said, but this idea that I can control my destiny with hard work and with diligence. Yeah, you went to college, right? I did. I went to University of Tennessee at Knoxville and graduated in four years with a degree in real estate and finance. It was going to go be a real estate mogul. That was my plan, follow in the footsteps. But I wanted to do, you know, shopping malls and larger stuff, not sell houses. And sharing that got married, we were broke. I think we had a dollar 12 in our checking account. Started off our life. We ain't got money, honey, but we got love, you know. And I started buying and selling real estate pretty quickly after college and I got rich. By the time I was 26, I had a million dollar net worth making 200,000 hours a year, which in 1983 was a lot of money. Especially in rural Tennessee. Yeah, I mean, that was, we were rich. So we had Jaguars and Rolexes and whatever. But we also had a lot of short term notes because I was doing flip this house and before there was cable TV or chip and Joanne weren't born yet to show you how. So I was still doing that stuff back then and making money, I was making money. But the bank got sold to another bank and they called our notes. And we spent the next two and a half years of our life losing everything we owned. Two and a half years of slow rolling bankruptcy. Yeah, it was like towards bankruptcy and finally resulted in it. But it was, you know, we were foreclosed on, we were sued, we were selling everything inside, trying to honor the obligation, but you're not in control of everything. And I'm 26 years old with a brand new baby and a toddler in a marriage now hanging on by a thread. I had met God on the way up, but we always laugh and say, I got to know him on the way down. And so at 28, we were bankrupt again with a brand new baby, a toddler and a marriage and no money. And a lot of shame and a lot of guilt. And so I have a PhD in DUMB. How much of that was bad luck and how much of that was bad decisions on your part? I don't know percentage wise. You know, if you don't make yourself accessible to evil doers, then they don't get to have their way with you. And so by signing those notes and dealing with these banks, most of which were violating things left and right, but I didn't have the power to do anything about it. But I signed up for the trip. So, you know, so what percentage? I mean, I willingly went in, no, I didn't willingly. I could talk them into loaning me money like nobody's business. I could talk some banker into doing deals that he probably shouldn't have been doing. They're illegal, wouldn't anything fraudulent, but it's just bad judgment. That was buying stuff so fast, it was crazy. And so, you know, my ambition borderline on greed led me to a whole series of bad decisions. I violated everything in proverbs that a wise man, I signed up, you know, the borrowers slaved to the lender and where I proved that one true. In one sense, 99% is my fault, but in another sense, the banking climate changed. The government changed the tax laws about the end on real estate. And a lot of people started failing around me. I wasn't the only one that failed in that season. But again, I, that will never happen to me again because I won't sign up for the trip. Right. Again. Right. So, I mean, you're not responsible for the viruses around you, you're responsible for actually not taking care of your immune system so that you're, it was easy to get sick when things weren't right when it came down to. And this is one of the things that actually impressed on you is I look at what you've been saying over the years about debt. You don't like it, right? Well, it did not bring me happiness. It didn't bring you happiness. It brought calamity. And it brought people controlling my life. And I was a slave. I guess in a metaphorical sense, if you will, obviously I wasn't technically in slavery, but the spiritually, emotionally, psychologically, all my choices were taken from me by the choice to use debt. And so other people controlled my life. And I just didn't have a path forward. And for someone who was taught early to control your own destiny and that you can control your own destiny, it was pretty devastating. And so at the, at the bottom of that, and not only was I broke, I was broken. And so I had to reform character and personality and other things that led me into a get-rich quick. Why is it people do get-rich quick? Because that's what I was doing. I built a house of cards and then was shocked that it fell. So yeah, I hate debt. And I hate what it does to people. And I hate what it's doing to Gen Z and the millennials right now. These large banks and car companies and the student loan industrial complex has got its thumb on these two generations and is milking them dry and taking away their opportunities. And it, as a crusader, it makes me angry. The problem is that you were 28 years old. It's not that you didn't have money. You didn't have freedom. Sounds like to me. And you had traded away your freedom for a bunch of jaguars and Rolexes. I gave up agency. Yeah. Yeah. And freedom is your most valuable asset, especially when you're young, right? At all times it is because it allows you to do things that bring happiness, bring prosperity, brings stability, brings sustainability, all that goes away when you give up your freedom. Now, so the people don't misunderstand us. Dave and I are talking about freedom here. Freedom properly understood. This is not to say that your life doesn't have constraints. I mean, it's a great thing to get married and you're supposed to be loyal to your spouse. That's a constraint, not a loss of freedom. But when you trade away your ability to do what you want and need to be able to do with your money because you want a bunch of temporary possessions, that's truly a loss of freedom, right? And that's a dangerous thing to do. Exactly. Yeah. So, okay, we're 28 years old at this point and some things have gone south the life of Dave Ramsey. A lot has happened since then. So let's actually start the clock again and say, what did you do to actually go from poverty to prosperity at this point? Well, I mean, I had two little babies and a wife all of which were hungry. And so I didn't have a lot of choices. I went back to doing real estate deals but with no credit and no money. I was a real estate broker to this day. And so I would dig up a deal and flip it to one of my buddies that was still doing investing. That had money or had credit. And so, and just make a spread. So I went back to doing deals just to get food on the table. But I was in church as I mentioned. And there was a guy on the radio on Christian radio named Larry Burkett teaching in the evangelical world teaching what the Bible says about money. And to me, that was intriguing because I never thought the two things should ever be in the same conversation. I never would have thought you'd put spiritual out of your Christianity with money. And yet one thing he brings up is 2,500 scriptures where our Heavenly Father tells us, hey, kid, there's a great way to handle money. Great way to look at possessions. Here's some warnings. Here's some guidelines. And so I started learning that stuff. And a lot of it was perpendicular to what I had learned in academia, which was all leverage. And the power of leverage. And the power of borrowed money. And even 19 different formulas on how to calculate how advantageous leverage is. Right. And I could put you sleep with that stuff. And I did put myself to sleep with it. So anyway, I did this about phase. And I said, I don't borrow money anymore. The borrowers slave to the lender. Period. I saved money always in the house of the wise. There are stores of choice food and oil. I saved money always. I'm always generous. God loves a cheerful giver. I'm going to always be generous. And I'm always going to be cheerful about it. And I'm going to start just living my life. I'm always going to have a budget, a written plan. Don't build a tower without first counting the cost. Jesus said. So these are scriptural principles. And I started living them. And then I started teaching them in our church. And then the class had 30 people in it. And I looked up and there were 400 in it. Because apparently I wasn't the only one that was struggling with these issues. And we had the solution. We had common sense. God's and grandma's ways of handling money. And got a great story to go with it. Been there, done that. Can't really argue with a man. My pastor used to say, you can't argue with a man with an experience. So you can have an opinion or an experience. But the guy with the experience of win the argument. So been there, done that. I'm sorry. If you have a different opinion, you're what's known as wrong. So I've been there. And so, you know, very, very resolute, very decisive. And then started doing some one on one, counseling outside the church, helping people stop their foreclosures. And they pay me a little fee. And then I went on this little broke radio station that was in bankruptcy. And started answering questions on the air. And sounded like, you know, he all does finance. Because my accent was so country-wide and thick. I had to do a lot of voice work to get to where people in Boston could actually understand me. But because it was nasty in the early days. But people, the phone rang from day one, because there's this tremendous need on this subject. And a tremendous lack of hope, the sense of, the sense of a rat caught in a wheel and I don't know what to do. And there's no way off. Yeah. So your secret actually was to go from leveraged investment to teaching your teacher from the very beginning. It's, you helped people actually, through your bitter experience and what you learned along the way through missus and the way you were doing it. And you were able to go away through mistakes, but also through the wisdom that you got from experience helped you to actually lead other people to get them what they truly created, which isn't money. It's freedom, freedom from these outside forces that can take away your peace. And as a matter of fact, you actually called it financial peace, didn't you? Yeah, the first book was called financial peace. Two words that don't go together. Yeah. Yeah, yeah. And of course, what that is is the lack of financial turmoil, a lack of financial chaos is what came about. And for you, this is really linking up to owing people money. It's not entirely that simple, but it's really not that far off, isn't it? Well, it's owing people money and having some savings and not owing people money, having some savings and having a written plan, being in agreement with your spouse, seeing a future with compound interest that's going to allow you to retire and not eat dog food. When you see a positive future, a positive outcome, and your present is also, you have agency, you're in control as much as you can be as a human, with a big ol' emergency fund and no debt payments, that's way different and a game plan, a written budget, and your spouse and you are working together on this, there's a lot of peace in just those phrases right there. Yeah. How much of your success and prosperity do you think actually came from the mindset difference of going from doing things to help yourself to fundamentally orienting your ideas and your ingenuity to helping others? You know, the most happiness anyone finds that I know of is in serving. It is not in receiving. Being served. Yeah, not in being served or not in, so as soon as we got stabilized and we went, hey, these ideas work. These truths, when we apply them in our lives, they move the needle. They don't move it fast. It's not a microwave, it's a crock pod, it's slow. But we immediately started feeling different about it. Our emotions started moving. Our spirits started calming down, because we had been living in terror. I mean, I mean, water was cut off. The lights were cut off. They were going to foreclose on the house. My wife would have left, but she didn't have a car. I mean, it was bad. So, but as soon as we got that, I think immediately what anyone does, and not just me, but, gosh, this works. I want to share it. I want to tell people about it. I mean, I'm the cure for cancer. I want to tell people about it. I don't want to just get healed. I want to tell everybody, so they don't get to die from this stuff. Yeah. I'll man completely understand. I mean, this is why I wake up every day with so much energy to talk about the science of happiness. I'm using behavioral science and neuroscience to help people get the secrets, to actually figure out that getting happier is within their grasp. And you and I are in the same business, aren't we? We're talking about slightly different subjects, but it's really what it's all about. People can get better. They can get happier. They can have more peace. Yeah, when you make believe people believe that they can have a better future if they take these, if they do these basic principles, whatever the principles are in, whether it's health and fitness, whether it's relationships, spiritual walk, money, happiness, whatever it is, that's just called hope. Yeah. We're just spreading hope. Yeah. We're the product. A positive future versus a negative future is hope. Yeah. And in a culture where there's so many things stealing people's hope, I mean, I got one friend that's watching Fox News and CNN all day long, if he doesn't turn him off, he's gonna end up in a rubber room. You know what I mean? This is bad. So it's the opposite of hope. It's doom and gloom. Doom and gloom all day long, being fed into his spirit and into his mind. And you know, the opposite is what you do. And what I do, which is show people away that they can have better than they have today, a better tomorrow than they had today. And that's the essence of hope. Yeah. And one really important point that you're making, I want everybody to really understand this, is that when you lack hope because you owe money or because you feel like a victim or you're aggrieved by the culture or the politics around you, you're the product that this is a dead giveaway. When life feels hopeless, you've been productized. You're being used by somebody. When you hate your neighbor because of how she votes, you become the product. When you're owing somebody money that you don't have, and you're in harness to the bank, you've been productized. It's the whole point. And that's once again, we're getting back to the whole theme of freedom. Freedom is your most important asset. What are the big patterns that you actually see? Because it's pretty interesting, I have to say. I mean, I deal with some really hard charging strivers. And a lot of them are not at peace either. They live highly leveraged lifestyles. They're looking for satisfaction through worldly idols, like money and power and honor and possessions and all that. Tell me what you see in your work. Are the worst habits that you have to deal with most consistently? Who knows? Maybe our listeners might recognize and themselves or others. Well, I think the first thing that always comes up, when people say, what's the number one thing people do with money that's a number one problem, is simply they're not intentional. They just wander through life. You don't have to be very organized or intentional to live a pretty good life in America. I mean, if you get up and go to work and buy a car and put it on payments and put a house on payments and have a student loan on payments and pay those payments by going to work, you can kind of muddle through and your standard of living is pretty good. Your peace is not real high. Your happiness factor might not be there. But you can have what we would call the good life in a fairly easily and without much brains. It doesn't take it. But if I can get people to stop that, this meandering, and just say, okay, intentionally, what is it you want? What's your desired future? And they start with then something like, I want to get out of debt, or I'd like to have some money at retirement. And then the question is, why? Why do you want money at retirement? I want to be able to retire with dignity. Okay. Now that's more important than money. Now if money will give you that, which it does, I mean, a big ol' pile of money at retirement, I'll help you retire and control your life instead of other people controlling. That's a good thing. But then let's go all step further. What do you really want to do? I really want to change my family tree. I really don't want this to happen to my kids and my kiddos' kids. And so, oh, now we've got a higher plane that we're going for. And then all of a sudden, this desire for stuff, when people change their vision on that, it melts away because it makes, it's very apparent how shallow it is then, because it doesn't do it. There's nothing wrong with getting some stuff. It gets you some stuff. But if you make a lot of money, when I was a little kid, I remember Red Lobster came to town. And we, I was 12 years old, and I can taste the butter right now in my mouth. And the drawn butter, and the first time I ever had lobster, I was 12 years old, and went to Red Lobster. This high, fine dining establishment, right? And I thought, the only thing I was sure about that experience was, I'm going to eat a lot of this in my life. I like this a lot. And so, the more money I make, the more lobster I want to buy, right? And the problem is, if you eat enough lobster, it tastes like soap. Right. If you have enough cars in the garage, all you got to do is know a car repairman. This is the principle of diminishing marginal utility, by the way folks. I mean, it's like, you know, the fifth ice cream cone is not that great. You get satiated. And once you're satiated, the joy, the supposed happiness, this car turns into a rust bucket. This house becomes a money pit. And these things that were supposed to do it for me, didn't do it for me. Right. And so, it's the lie of hedonism, the lie of materialism. And yet, we all think, if I could just get that car, I'll be happy then. Yeah. You know, if I could just get to go on that trip, I want to go on that cruise, I'll be happy then. And as soon as you get back, you find out, that was a lie. Yeah. As soon as you get the car home, the first time somebody bounces a door off of it in the church parking lot, right? And now I got a dent in my new car, there's going to make me happy. Real quick, this stuff's just stuff. Get you some stuff, but don't let your stuff on you. And it owns you, if you thought it was going to give you happiness, if you thought it was going to give you hope, it's the bully in the school yard. Draw a line, step across this line, we'll fight. So you get the thing, and we're going to be happy now. Well, then back up and draw another line, because they don't really want to fight. So it doesn't matter what, I had a buddy of mine bought a jet the other day, and he said, it's the weirdest experience. He means and means of dollars to buy this jet. And he said, when you get off the jet, you know what there is on the tarmac? Jets bigger than yours. Yeah. And, and furthermore, he doesn't have that new jet smell. Unbelievable. Can you never get there? The truth is you can't. You're chasing hope in a place. That stuff is not designed to provide happiness. It's not designed to provide hope. Yeah, that's called, in my business, the hedonic treadmill. hedonic means as in hedonism, as the feeling. Exactly. And the treadmill is you're always looking to keep that feeling. And our feelings are our limbic system of our brain, which actually produces our emotions. Our emotions don't exist to give us permanent satisfaction. Our emotions exist to alert us to threats and opportunities. They're supposed to be transient. And so if you think that you're going to get a feeling from the jet or the car, or the watch, or you know, even the relationship, you're going to be sadly mistaken. It's not a question of arriving at a particular place and keeping the emotion forever. That's impossible. That's neurophysiologically impossible. So we have to get away from that. Of course, Mother Nature lies to us and continuously tells us that if we have that thing, if we get that millionth Instagram follower, we get that little bit of admiration, or we get the things that actually money will buy, then we will have this kind of permanent status satisfaction. You know, Mick Jagger got so famous singing, I can't get no satisfaction. It's actually not true. He should have sang, I can't keep no satisfaction, right Dave? That's it. And that's why you try and you try and you try. And that's when you get into a whole life of trouble, right? Is trying to keep satisfaction. And the problem in our culture is that no one is told, no, there are no limitations in terms of purchasing. So you can get payments on anything and by anything when you shouldn't and couldn't and are going to make a mess of yourself. You can get a $1,200 car payment. I was buying a T-shirt online the other day for $12 and they offered payments. I mean, this is a very good thing. I mean, this is how stupid it has gotten out there. And so, you know, buy now, pay later, right? I'm going to corner my T-shirt. You've got to be kidding. Oh, I know. I know and you can very easily get an 84 month long payment, $1,000 a month payment plan for a pickup truck in America today. All day long. 20% of the new cars that rolled off last month, rolled off the lot or above $1,000 payment. That's just insanity. It's absolute insanity. That's just for the average American. I mean, that's just your behind the eight ball from the very beginning. And, you know, I've done a lot of work on happiness and debt. debt is a very interesting subject. And actually, I've found, and this is where, you know, you and I actually met after I wrote a call in the Atlantic about happiness and debt, where I ranked the kinds of debt that will bring you the most misery. Now, the first principle is really important for us to remember, which is that just as saving your money will authentically bring you happiness because you're building your future. And we're future-oriented creatures. We're, you know, built in God's image to have greater generativity in front of us. The problem is that the opposite of saving is debt. And so therefore, just as savings brings you a sense of optimism that debt will bring you a sense of pessimism, a sense of foreboding, the worst kind of debt when it comes to unhappiness is credit card debt. Why do you think that is, Dave? We're great. They have a financial hangover, they wake up and go, God, I'm stupid. It comes at you really, really fast. No one, no one on our show when they call in Defend's credit card debt. Now, they'll defend a car payment. I had to have a car, or they'll defend a house payment, or they'll even defend student loans. And go, I had to go to school. You can't get ahead without going to school. But when they say I got credit card debt, they always just tuck their tail, drop their head, and, and, and, or a shank. No one, no one is happy or is happy. Or is thinks that this is wise. They all know they've been screwed by these companies, and they stepped up and signed up to be ripped off. And, and they all feel bad about it. Yeah. I mean, there's one thing that nobody has ever said on her or his deathbed, I wish I'd bought more crap. Yeah. Exactly. On a credit card. Yeah. Yeah. So there's regret for having been bamboozled and regret for having made bad decisions. That's what it comes down to. Now, why do people make those, those consumption decisions that they later regret? Why do we have so little foresight in this day? Why are we, why are we doing this? And I could talk to you about the neurobiology of why we do this, but just in terms of common sense, why do people make these mistakes over and over again? Why do we need Dave Ramsey in our lives so much? Well, I think it's a lack of vision. Again, they're, they're, they're people that think, thank God it's Friday, oh God, it's Monday. And when you get caught in that little tight feedback loop, and you live in for the weekend, right? Then, then you're going to make these crazy decisions because in the short term, they don't feel harmful. They only when you pan back and say, over a period of 10 years, man, I really have messed up here. That's when you see it. And so when you, when the wealthy people that we survey, all have a planning window of 10 plus years, and a vision paradigm, meaning when they're analyzing a purchase or an investment or a generosity move, the wealthy people think, how's this going to affect me long term, 10, 20, 30 years out? The poor person thinks, and poor is a state of mind, not a number, that they think, how's this going to affect me Friday? Interesting. Do we use cigarette smokers, young man? Nope. Yeah, I was. And what really changed that for me was not thinking about wanting a cigarette right now. It was what I was going to want in my life in 10 years. And what that really brought home to me was kind of your, it was like your early bankruptcy. I mean, I had just gotten married and I was smoking a cigarette at four o'clock in the morning when I woke up and I fell asleep and I burned 10 holes in my bed. And I woke up and my wife said, what gives with all the holes in our bed? And I said, it's a obvious message from God that it's time for me to give up the cigarettes. This time, boy, I'm giving you a pass. It's a God. Next time you might not be so lucky. But every cigarette is like a little one more line in your credit card bill that individually, yeah, sure, I can buy those lawn chairs. And yeah, I can buy those pool toys. I can buy whatever plastic crap is at the wall mart there. I can buy it on credit. The problem is it adds up to being in harness. It adds up to taking away your liberty and peace, right? Yeah, it doesn't take me where I want to go and I need to go somewhere beyond Friday. Yeah. So the second worst kind of debt for happiness or for raising unhappiness, I should say, is car debt. Talk to me about that. People are a little bit more defensive again as I mentioned with that than they are credit cards. Because they say, well, I was forced, which they weren't. Nobody had a gun. But you know, the car went out, it went kaput, and I'm always like, what does that mean? Fix it and drive it somewhere. I mean, they don't go kaput, stuff breaks, but fix it and keep going. So, you know, it didn't cost you the car. So I had a $500 repair, and my answer to that is by a $25,000 car. How does this add up? But I was forced to do it. So they make more rationalizations on this than they do on credit cards. And then of course, there's the old, I want something safe for my children as if a $15,000 car in America or $8,000 car in America is not safe, which is absolutely a ludicrous statement. So that's bull. But what it really was is I wanted something big and shiny to impress people to stop light that I'm really never going to meet. And again, it's a false place to place your hope. It's not a place that's designed to hold your hope, and it will destroy it. Then the reason that the happiness thing kicks in is it's the largest thing, or the unhappiness thing kicks in. It's the largest item we buy that goes down in value. It's the biggest thing. So mathematically, it's the most destructive thing. So you take a $40,000 car in 36 months, it's worth 10. Right? You've lost substantially in your net worth. And you paid payments for the privilege of that and insured it for the privilege of that. And probably owe more on it than it's worth the vast majority of this journey. And so you are literally trapped. And it's very difficult to get out of upside down on a car thing. And so there's a sense of being trapped, a sense of that. I've made a large mistake. And when it comes home to roost, it comes home hard. Right. It sits down on your head hard. And so I guess that's the reason that the unhappiness factor with it is there because it's so mathematically damaging. Right. People buy homes and homes hold their value. A real estate tends to be an appreciating asset. But the car is by, you know, they're very, very few cars that are appreciating assets. None. Yeah. They're none. You drive them off the lot. And it's worth that sound. When you go over the curb and it goes blunt, blunt. That was $10,000. That's what that sound much. Yeah. That's the sound of $10,000 going up in flames. Next in line, which is not as bad as cars, but not that great as student debt. Tell me about student debt and how you talk to people about going into debt for their education. If I can catch them before they do it, obviously, we would explain to them that where you go to school really has absolutely no bearing on whether you're successful. Education knowledge is important. Knowledge is currency. So go get some knowledge. Don't overpay for it. And therefore, don't tell me that I had to go to this school because it's the only way you can get ahead because there's absolutely no data that says that's true. Right. None. 78% of the Fortune 500 companies are run by CEOs that graduated from a state school. Eight out of 10. They didn't go to Harvard. They didn't know you are. They didn't go to MIT. They didn't go to Vanderbilt. They didn't do any of that. And so this idea that you have to go to a certain school. And then while you're acquiring knowledge, acquire knowledge that is useful that will help you and your family prosper. And so getting a nuanced, weird, left-handed puppetry PhD is a dumb but idea. Why are you attacking me? I'm asking you on my show, Dave. Not attacking you. Not attacking you at all. You've made good use of your knowledge base. Not understanding my left-wing puppetry degree. Yeah, left-handed. Oh, that's what you said. That's how you would not make a political comment. Let's stipulate to German. German polka history is not something that that degree is not going to cause you to prosper in a minute. Unless you're going to be a professor of German polka history. That's the only possible job for that degree. And so study something, get knowledge that's useful, and pay a reasonable price for it. And then that allows you to avoid student loan debt. The number one cause of student loan debt is not education. It's college choice. Choosing to go to the more expensive school than is necessary to acquire the knowledge. That's absolutely the case. That's 100% on the money, all the data show that. And there is a way, my friends, to actually get a very good education. Generally speaking, if you have no money in the bank and you don't have parents, you're going to backstop this thing. Two years of community college in state, followed by an education, your junior and senior year at the flagship university, that's the way to go. You still in America can get a college education without taking out a whole bunch of loans. Yeah. It's $12,000 or $14,000 a year to go to your average state school right now. In state, and the whole idea of coming out of college at 22 years old with $75,000 in debt or $150,000 in debt, is going to take years and years and years for you actually to start living your dreams, to start building your life the way that you want to do it. Yeah, but again, again, we've asked something to provide you hope that doesn't have the ability to. We ask a degree to do something that the degree doesn't have the power to do, and that is to make you successful. Degrees don't make people successful. Knowledge applied with character continuously in the marketplace causes financial success, not degrees. Yeah, yeah, no, this is really important. We're going to come back and review this before we finish. The last one that actually tends to lower happiness, the least, that raises unhappiness, the least, is a mortgage. And that tends to be the least consumption and the most investment, right? Exactly. And that's the reason. So you actually don't discourage people. You tell them not to buy a house beyond their means, so that their house payment is not too high. You're asking them to take out mortgages. They're short as you can actually make them, but you don't tell people to buy their house and cash, do you? No, no. It's the only thing on our show or the advice that we have at Ramsey that I don't personally do. I don't personally borrow money for any reason ever. Right. You don't have a credit card, do you? I don't own a credit card. I don't own a credit card. I don't own a credit card. I don't own a credit card. I don't own a credit card. I don't own a credit card. Dave and Arthur literally don't even have a credit card. And my debit card does everything your credit card will do because there's plenty of money in my account. Shout out. So, I mean, that's how it works. So, but the only thing we don't yell at people is I don't do that. That's stupid. It is a mortgage and we tell people a 15 year fix, as you mentioned, where the payment is no more than a fourth of your take home pay. And that's hard to do. You're going to buy less. You're not going to get the one with the Jacuzzi and the skylight. Okay. You're going to get a good starter house and get yourself going. And you can do that if you got rid of the $1,200 car payment and the $150,000 student loan, but I get them paid off and get yourself out of debt. You've got some money then to be able to buy a home and then turn around and get it paid off. The average millionaire is paying off their home in 11 years in all the research that we've done detailed in-depth research. Large sample size. Right. Right. And you have an aspiration at it by a particular age to be completely debt free in life, including mortgage, right? In your view, people at 65 years old should not even have a mortgage, right? Oh, no. No, no. Because you've affected the sustainability of your retirement plan. Right. If you go in with a mortgage into retirement, it's very difficult to sustain. Yeah. But if you can go with the typical millionaire that we find, first one to $5 million in net worth is a paid off home and a well-funded 401k Roth IRA. Right. And so, you know, 800,000 of each of those and you got a million six, you know, paid 800,000 dollar house paid off over years, series of years. And over those same number of years with employer matching, just steadily investing in your 401k, you got 800,000 there. Those two numbers are 1.6 million. And that's the typical millionaire in America. That's what they look like. And so, they're entering typically going to enter at 51 years old. There'll be 100% debt free. That's the average. Yeah. Now, there's a big principle that's lurking behind this day for happiness that I want to point out to everybody listening to us, which is that debt is problematic inherently. That's exacerbated when you're using debt to finance consumption as opposed to investment. So, there's the kind of two dimensions here. There's debt and saving on one dimension. And there's consumption and investment. And the quadrant in that two by two diagram that's most deleterious to your most corrosive to your well-being that takes away your piece, that takes away your freedom the most is debt with consumption. That's just the worst combination, right? It is. And then if you go over into the other quadrant and added a caveat to that in the investment quadrant, the higher your debt load there, even if it's free. The higher the stress level and the higher the risk factor. And so, more debt equals more risk, period. So, even if it's a house or then I've got to have two rental houses, those are all investments and they're all in that quadrant. But then you can get back down to where I was in my 20s. And that was all investment. But it crashed me, too. Yeah, I mean your leverage was just way too high and that'll take away your piece in and of itself. I want to talk about something that's parallel to these things that we're talking about that might strike some people as counterintuitive, which is that there's one thing that you should actually do that pumps money out the door gives you absolutely nothing in return. And that's giving your money away. And yet Dave, you're talking off a lot about your, I mean you're a, you're a tither, you're a man of tithing, which is a tenth of your take home and me too. My dad taught me this. My dad was a strong Christian, his whole life, a great man, the most brilliant man I ever knew personally was a bio statistician PhD and I asked him one time I said, Dad, do you tithe before or after taxes? And he said, well, before on the whole thing on the gross and I said, Dad, net, net, what's wrong? Why are you doing that? He said, just in case. In case I'm wrong when I get there, but you talking off a lot about saving money and not paying for things that don't actually serve you and yet you are a tither and you think we all should be giving to people for charitable reasons really abundantly and from our hearts explain that and how it's consistent with the whole philosophy. Well, the odd thing is, and you can get accused of being on the wrong Christian channel if you say this, but the odd thing is there's an actual correspondence between a direct correlation between generosity and prospering. Here's why. And here's why God has us to give a tenth of our income as we earn it to our local church, the tithe. Here's how he says he loves a cheerful giver. Why is he teaching us to give money away because there seems to be no return on it and yet there's a huge return. Here's the return. Every time you give money away steadily or in a large gift, you move from the self-ish side of the spectrum to the selfless side, one more notch. And guess who the most attractive people are in our lives. They are people that are generous, they're givers, they're not takers. You know, we all have the friend that every time they call, it's because they want something. Right. And then we have the friend that every time they call, it's because they want to add value to our lives in some way. They're a giver. So generous is not just a financial transaction. Generous is a character quality. Generous people hold the door for you at the supermarket. Generous people help you pick up the groceries that are rolling around the parking lot because the bag broke. Generous people, you know, it's a thing that they are. And the way you become that is you build the muscle with the math by giving money away. So what we find is who gets a promotion at work? Two guys that are sitting there just alike, they have the same skill set, they've been there the same period of time. And why is it that one of them gets noticed? And it's almost imperceptible unless you stop and think about it. And it's the guy that adds value, the guy that gives. You want him in the meeting. You want her in the meeting when we're trying to solve a problem because they're going to add. They're not there to see what they can take away. They don't come in a little late, leave a little early and steal while they're there. They're not mailing it in on the job because they're those that's what a taker does. Not a giver. A giver is almost a little extra. Make sure this gets done. And that's who always gets the promotion. So what ends up happening is the data shows us that generous people tend to prosper further in their careers. And here's another one. They tend to stay married. And you know, marriage is grand divorces 50 grand. I mean, just try splitting your assets ever so often down the middle and starting over and see how hard that is on wealth building. Right. And so, you know, I had this old Baptist preacher in Kentucky. I was speaking at his Baptist church 25 or 30 years ago. We got, I did a lesson on tithing and he said, you know, I've been pastoring for 40 years. He said, I've never had a couple of my church that tithes get divorced. I said, why do you think that is? You think that's a spiritual like some kind of who do thing or some kind of a mystical thing? He said, no, he said that these are givers. Yeah. You know, husbands that give serve their wives. Wives that give serve their husbands. Submit yourselves one to another. And you can't do that if you're a taker. Yeah. Yeah. No, that's this is really good. And reminds me of the old, you know, those little joke. How do you make a small fortune? The answer is make a large fortune and then get divorced. Yeah. And I've actually, as an economist, I've put numbers to this. I have noticed tests of causality over time. And what you find is that a dollar given to charity on average in the United States is based on data collected in 2000 across the American population results in $3.85 in higher income the following year. Yeah. That's a big deal. That is a really, really good multiplier is what we find. And there's a reason that it's not one of those things like I'm going to give money away. So God gives me money. No, this is not prosperity gospel here. This is not what we're talking about. But this is you change who you are and you I am more attractive at 65 years old of the last 30 years of generosity. Then I was that greedy little twerp driving that Jaguar. Yeah. This is really important to keep in mind that that in point of fact that giving money away is not a form of consumption. By the way, don't folks don't borrow money from the bank to give to charity. That's a dumb thing to do. Give it of what you have. And that is a form of investment in yourself as well. I got two things left to do before before we break. Dave, before you go back to what you're doing in beautiful Franklin, Tennessee, I got a few questions for you. The people have actually written in because they knew you're coming on the show. And then I want to summarize a little bit and see if you agree with what I'm going to call the Dave's six laws of money and happiness. All right. Okay. Okay. This is a step H writes in from Instagram. How do I stop feeling so scared about money? I'm stressed out constantly. Two things. Dr. John Deloney, your friend and mine that works on my team here says solve for peace. And so let's solve for peace. How do we solve for peace? What's causing the stress and the anxiety? I'm going to read between the lines and guess two things that we've talked about. One is the debt load versus your income. So too much of your income goes right back out the door before the month begins. You got too much month left at the end of the money. And then the second thing is there's no plan. So you are a lot more stressed out if you don't have a map to Florida and you're trying to drive to Florida. You should have a map. It lowers the anxiety. And so a written budget is not a form of punishment. It's me telling my life what to do. Instead of my life telling me what to do. And when my life tells me what to do, I'm stressed out and I'm scared. And so when you just start doing a written plan and go, okay, I'm going to put this towards this, this towards this, I'll start cleaning these debts up. So because if I don't have any debts and I've got an emergency fund of $15,000 sitting there. And I have a written plan that I'm not going to spend more than I make my anxiety goes way. Yeah, yeah, that's called insurance. By the way, I've studied insurance companies. Insurance is one of the only true happiness industries because what it does is it turns uncertainty, which leads to fear into risk. Risk is not the same thing as uncertainty. We live in risk, but with risk, you know, you know, you know, possible problems. You you can estimate probabilities. You can make contingencies and and the insurance policy for your life. Financial means number one in these like everybody listen to Dave on this number one live below your means number to have a plan. That is your insurance policy. And that's how you stop stressing out. That's how you solve the problem. Second question here before we go to the summary, this is from Patty S once again, once again, an Instagram. What's the best plan to start saving for college? I don't know if she means for kids or for herself, but what's the first step in actually doing that and and as a side note, Dave, how do you keep from saving too much for college and giving your kids an incentive to go to some fancy, you know, private school that you shouldn't be going to in the first place? Well, it's okay to go to any school as long as you pay for it. And as long as you don't think that school is the cause of the success, I don't care where you go to school. If you want to go to Harvard, you want to go to MIT, you want to go to Vanderbilt, fine, I'm not mad about that, but I am, but don't tell me that it's going to do something for you. It won't do whether you paid for it or whether you student loaned it. I don't care, but I do care, but that that's the big thing. So we teach your thing a process. A decision making framework called the baby steps baby step one is just save a thousand dollars real quick. Two is you pay off all your debt, except your home. Three is you build an emergency fund. Four is you put 15% steadily of your income into retirement. Five is kids college and six is get the house paid off by paying extra on it as you find room in the budget. So I would not worry about saving for kids college until I got myself out of debt, except the home in baby step two and until I had an emergency fund in place. So those things need to happen because you're most powerful wealth building tool in your retirement or in your kids college fund is your income. And when you give it away to Ford Motor Company and Citibank in the form of payments, you cannot invest steadily. It's almost impossible mathematically. You don't need disposable income to use your economic term, but so let's get there, but let's get there in order. And then the way you don't save too much is you decide what my target is. And so my target is when the child is 18, I want X number of dollars. And then you can back into that equals how much a month that I want to put in there. And then based on that, you start having discussions with the child that this is how much you're going to have. And so this is the type of school that we can afford to go to based on this amount of money. And we will not be participating with this money. And you subsidizing it with student loan debt. If I give you this money, we're paying cash for college. Otherwise, you're going to leave here and do the whole thing on your own. And I'm not supporting it. Right. Right. So one really important point is to and answering this question. However, Patty Dave says the best plan to start saving for college is to not start by saving for college. By thinking about other things that are probably more important, such that you're in a position where college actually can be affordable and it won't be if you're in debt, if you're in other kinds of debt. Very important. Can I take a shot at the six big principles of Dave Ramsey's principles of money and happiness? Sure. Your life and your peace are set up through hard work and good habits, not through hacks and tricks. Always. Lesson number two, freedom is your most important asset. Don't trade it away. Always. Number three, prosperity comes when you add value and help others. You're not just looking to be served by others. Exactly. Lesson number four, be aware of everything you're doing and live on purpose. Ask what you actually want. And you'll never be surprised by the outcomes. And to insure that. Yeah. Number five, tame your consumption. You tame your debt and you buy your freedom. Boom. That's a t-shirt right there. Dave Ramsey no swag. And last but not least, when you give more, you prosper in freedom and in love and in happiness. You're investing in the life that you want to live. Absolutely. These are great rules for living Dave. I'm going to make sure that some of the studies that we've talked about here and all of these ideas are in the show notes. You've done a wonderful thing for a lot of people, including me, have enriched us all through these basic principles based on faith and based on hope based on the charity that you have for in love that you have for other people. So thank you for that. Thank you, my friend. Honor to be with you today. Thanks for having me. It's an honor to have you. I'm looking forward to seeing you in person next time down in beautiful Franklin, Tennessee, which is pretty regularly. And for anybody who doesn't know Dave's work, do look to Ramsey solutions and all the shows that Dave and his colleagues have. They're so wonderful. They're so helpful. They're relentlessly trying to actually help every single person listening, live a better life and lift up other people as well. Thanks as always for listening to office hours. Please do like and subscribe, Spotify, YouTube, Apple, wherever you are listening to this show or watching us and leave a comment. I promise I'll read it even if it's negative. And I will still say a little prayer of charity for you, even if you don't like the show and we'll do what we can to make it better. Follow me on Instagram, LinkedIn, all the other platforms where you'll get content that you're not seeing here. And also go order the meaning of your life. My new book coming out on March 31st ordered in advance. So it comes on the very first day. Dave, do you have anything that you want to talk about? You want to help people go look at right now so they can get a little bit better before we close. I think we covered it, man. It's all there. I appreciate you having me. Absolutely great to see you and God bless you. God bless your family. Happy holidays. We're recording this before the holidays. It'll come out afterward. And thanks to everybody for listening. Have a great week.