Host of syndicated Dave Ramsey radio show

2009 Marconi Award winner

When I walked into Dave Ramsey’s office building, it smelled like cookies.

The building itself could have been the headquarters of a certified public accountant (CPA) or law firm, as professional as it was, but to the immediate left there was a bookstore.

It displayed all of the books that Dave Ramsey has published, as well as his motivational DVDs, board games that teach you how to manage your money, and select titles from other authors on how to get your life together—especially your financial life. There was a flat screen TV on the wall running one of Dave’s speeches in front of an audience, where he lays out the steps to go from financial ruin to financial responsibility.

“May I get you something?” the lady behind the counter asked. “I just made a batch of cookies. Do you like chocolate chip?” As I recall my visit, she looked like June Cleaver. But it could be that my mind simply took a step back in time because I wanted her to look like the Beav’s mother. There’s something about Dave Ramsey’s story, about his modest beginnings in Antioch, Tennessee, and his straightforward approach to helping people get out of debt and take control of their lives that speaks of a simpler time.

“I think what you’re doing,” he told me when I was escorted into his personal office, “is encouraging, because I believe the little man really can get ahead. ”

That’s it. Forget the complicated financial schemes created by Wall Street financial experts that promised never-ending riches based on leverage and widely distributed risk—we all know where they got us. Dave Ramsey’s story is heart-of-the-country Americana.

“America is the only place that has sanctified capitalism—capitalism done with morals,” he continues. “It’s the only system with the opportunity for the little man to get ahead. Socialism doesn’t give the little guy the opportunity to get ahead. Communism certainly doesn’t. So other methods or strains of economic thought do not lift people up. What lifts people up is opportunity, and then people deciding to go take it.”

It’s a philosophy that has convinced more than a million people to take his courses all the way from beginning to end, from personal financial collapse to fiscal control and the ability to sleep at night and get away from the nightmare of creditors hounding you day and night for what little money you may still have. Dave knows all about it.

You have that moment where you say, “Never again. Never again will I be beholden to a banker. Never again will American Express call my house and ask my wife why she would stay with a man who won’t pay his bills. Never again am I going to be subject to that kind of abuse because of my own stupidity. Never again.”

You can’t fake that. The authenticity of Dave Ramsey’s story rings true to his readers, viewers, and listeners (he’s been on the radio for more than 17 years).

His story is a classic case of getting the most out of a mistake. But the lessons came hard. He says:

Pain is a thorough teacher. You don’t forget. And the deeper the pain, the more thorough the lesson. It certainly is the mistake that has been the comerstone of our story. Everybody’s got a story. And it’s the thing that allows us to relate our readers, our listeners, our viewers.

And in a classic quote from a wildly successful boy from middle Tennessee, he says, “I’ve done stupid with zeros on the end. I know what it looks like.”

But while Dave Ramsey’s approach is nonblinking, it’s a little too easy to consider him just an average guy. It’s one thing to get your financial life together and make your bank statement balance again, but it’s quite another to build a self-help business empire based on it. He’s got the radio program, a cable TV show, books, DVDs, speaking engagements—the whole works. And he’s become a millionaire—twice. The first time he lost it all, and the second time he figured out how to hold on to it. But he wouldn’t have succeeded the first time without the ability to do deals. He tells me he’s always been a guy “who doesn’t take no for answer,” at least not without a fight. And that persistence has served him well as he’s built his self-help business.

“I’ve met successful people all over the world,” he says, “athletes, artists, and people who have huge ministries, people who are known on television or whatever, and we perceive those people’s success as somehow being linear, from point A to point B, just a straight line up the mountain. And the truth is it’s a whole life full of fits and starts. It’s a life full of course corrections. It’s a life full of bumps on the head so you learn where to not put your head again.”

Dave Ramsey’s story is a clear case of someone making the best out of their mistakes. And his business started with his best mistake.

“Everything we’ve done has been built on mistakes. We figured out that the gleaming mountain of success looks more like a pile of garbage. All you’re doing is standing on it instead of lying under it. That’s the only difference between being successful or not. This whole place is built on a series of errors. The way we run the organization—the core values that are written down—are the things that we did wrong and figured out how not to do anymore.”

Dave Ramsey’s Best Mistake, in His Own Words

I started with nothing when I was 22 years old. I got married and I was out of college and I started buying and selling real estate and got rich—at least by the standards of a kid from Antioch, Tennessee. I ended up with about $4 million worth, and about a million-dollar net worth.

We were going great guns, and I had borrowed a lot of money because I have a natural gift with deals and a natural gift with math, and I really don’t accept no as an answer very often. Put those things together and I was able to talk my way into a ridiculous amount of debt. And those days were not unlike the days a couple years ago when bankers were throwing money at the Street. [This was starting in 1984 up to about 1986.]

Interest rates were high but coming down. We were seeing fixed rates in the 11 to 12 percent range, down from 17 percent. That was great. The real estate market was doing well. So I could go into a bank as a young go-getter, with a nice suit and a nice car, and show them the deals I had done, and talk them into loaning me more money. And I did. And if that banker turned me down, I could go talk to another one, because there was one on every corner.

So I had lines of credit or deal money all over town. All of it was aboveboard, but it was just ridiculous, honestly. For a 26-year-old kid to be able to go $3 million in debt, all for the fact that his dad used to be in the real estate business, and he’s had a real estate license for a few years and he seems to be making money in these deals.... It enabled me, through my stupidity, to be able to build a house of cards, which is what it amounted to.

We had a lot of 90-day notes because we were “buying it, fixing it, and flipping it.” That enabled the banks to call the notes. I didn’t have a lot of long-term mortgages; I think we had fewer than 100 properties with long-term mortgages on them. Most of the stuff we had was flip stuff.

Then the tax law changed under President Reagan. And the savings and loan (S&L) failures were beginning. And as word of that stuff started hitting the street, and the bank that I was working with got sold—and it was the first time that a bank in Tennessee could be owned by a bank that was not chartered in Tennessee—suddenly for the first time we had the megabank in another city, 500 miles away, looking over a portfolio that they just bought.

They looked at that and said, “There’s a kid that’s 26 who owes us a million bucks here. What the heck’s going on?” And they freaked out. And they just came in with a hatchet to clean up, and I was one of the branches. So they called our notes.

And I had 90 to 100 days to come up with a million bucks, and in real estate, that doesn’t work. Had we been given the time, say over two years, to work out these properties—we had plenty of equity in them—we could have done it. We were not losing money; we were making money hand over fist.

But I had left myself vulnerable because of my arrogance.

There was no exit strategy—it was all up!

It was 1986 when they called the notes. We spent the next two and a half years fighting, and trying to do the right thing and pay the bills. My income was $250,000 one year, and the next year my taxable income was $6,000.

I spent the whole year selling stuff trying to meet the obligation. By the time we got to the bottom we owed less than $400,000—two and a half years later—from $3 million. But by then the lawsuits had stacked up and they were well on down the pike, and they were literally coming on Friday morning to get the furniture out of our house (they had gotten a judgment and they were collecting assets to try to pay the bill). And we had a brand-new baby. And it was a fairly small bill on that particular lawsuit, only about 20 thousand bucks. But it didn’t matter. The furniture was probably only worth 15 hundred, but I was out of emotional energy. I had done all I could do.

So we drove a stake in the ground and filed bankruptcy that Thursday afternoon to keep them from coming that Friday morning—September 23rd of 1988. That’s the splat. You jump off a cliff, you go splat.

So, millionaire at 26, bankrupt at 28.

I’d like to tell you that I bounced back, but I really didn’t. I sat around whining and blaming everybody else for a while. It was everybody else’s fault. It was the bank’s fault. It was the IRS’s fault. It was Congress’s fault for changing the laws. It was everybody else’s fault but mine. It couldn’t be my fault.

It couldn’t be the obvious, that I’m the klutz. It took a while. And that was an emotional, relational, and spiritual growth to the point of owning that, to the point of saying, “I’m the one who put my family in jeopardy. My decisions did that.”

Following that, you have that moment where you say, “Never again.”

So I went on a quest to find out how money really works. Because obviously the plan I had didn’t work. It’s kind of like a Dr. Phil moment: “How’s that working for you?” It’s not!

And I discovered common sense talking to old rich people. And I saw a bunch of common threads, and as a Christian I discovered that the biblical financial principles really are common sense. There’s nothing mystical there.

One of the things we discovered was that debt is really a pretty dumb idea. In spite of all the sophisticated nonsense that flies around, with fairly naive mathematical formulas, pitching what a good idea it is, at the end of the day Warren Buffett doesn’t like debt. He says it’s the number one thing that keeps people from building wealth. And that’s probably a guy you ought to listen to.

I just figured out that most wealthy people avoid debt like the plague. And why is it that they’re able to avoid debt but the middle class isn’t? And the middle class stays middle class. And I discovered a trend. If you want to be skinny, do what skinny people do. And if you want to be rich, do what rich people do. It’s not a hard program.

At the end of the day, people who are icons in business, dotted across the American landscape, don’t like debt. And it’s one of the reasons they got where they are, because it keeps risk out of your life. And it keeps your most powerful wealth-building tool in your control, which is your income. When you commit that to somebody else, you don’t have any money.

So we started leaving debt out of our lives and the healing then began. We started living those things as just a pain-avoidance mechanism, if nothing else. And my wife Sharon and I slow-w-w-w-ly started putting our lives back together.

Then I started teaching a Sunday school class on the subject, and there were ministry people in our church who were in foreclosure and the struggling preacher didn’t know what to do with them—preachers aren’t good with money usually.

He’d call me up and I’d go sit down with them and help them do a budget and help them save their foreclosure and that kind of stuff, and it evolved slowly into a business, with speaking and teaching.

Then on a lark I went on this radio program as a guest. Then the guy quit and I talked the guy that ran the radio station into putting me on for free.

Q. Did you go back into real estate and just do it in a different way?

Yes, I didn’t have any choice. I had two kids to feed and I didn’t know what else to do. It ways the only skill set I had. I can either dig ditches or I can do this. It’s what I know how to do.

So I would go dig up a deal on a house, a great bargain, contract for it subject to a partner’s agreement, and then go to all my old competitors who used to bid against me for foreclosure deals, and then sell it to them, and make a spread. Even though I didn’t have credit I knew how to put together deals, and I knew how to find them, and I work harder than anybody else.

It took a while. My confidence was shattered. I didn’t believe I could do anything. But I was too scared to do anything else, because I had to keep the lights on and these babies fed. I didn’t know what else to do, so I was just running.

A little desperation is good for the soul, but a lot of it’s not.

Q. How did you expand your self-help business, besides helping people at church?

We started syndicating the radio show. We were just taking calls from hurting people.

Q. How did you know enough to handle the variety of questions?

When I started out I was doing real estate deals and I bought and sold foreclosures. So I knew foreclosures inside and out. And then I had been a foreclosure. [Laughs.] And in bankruptcy, it was the same thing. I had worked the bankruptcy courts, buying deals out of there, so I knew the law and the way the stuff worked in the courts. That’s the way I made my money. And I was buying deals. Anywhere I could find a deal I’d scratch it up. So I knew how the banks thought; I knew how the foreclosures worked; I knew the laws. I had worked that for almost a decade—a lot of hours, a lot of deals.

So I learned that side of the business, and then I went through it personally and that gave me another decent set of information on the business. And dealing with collectors—I got to deal with them personally.

And there have been changes over the years, but thank goodness we’re not just a radio show, or otherwise we probably wouldn’t have the expertise. But I’ve got a building full of people who do this stuff every day. We’ve got some four or five thousand counselors nationwide that we have trained and that are in the field giving us feedback all the time, too. So we’ve got our finger on the pulse of what’s going on.

About Dave Ramsey

A personal money management expert, Dave Ramsey is an extremely popular national radio personality and best-selling author of The Total Money Makeover, Financial Peace, and More Than Enough. He is also host of The Dave Ramsey Show on the Fox Business Network. Ramsey knows firsthand what financial peace means in his own life—living a true rags-to-riches-to-rags-to-riches story. By age 26 he had established a $4 million real estate portfolio, only to lose it by age 30. He has since rebuilt his financial life and now devotes himself full-time to helping ordinary people understand the forces behind their financial distress and how to set things right. Through his proven plan, Ramsey helps people eliminate debt and credit cards, learn to budget, avoid bankruptcy, build wealth, and find financial peace.

Ramsey founded the Lampo Group, Inc. to provide financial counseling, through various means, to the public. More than one million families have completed Financial Peace University, with the typical family saving $2,700 and paying off $5,300 of debt. More than 650,000 people have attended a Dave Ramsey live event. Ramsey created Financial Peace Jr. to help parents teach sound financial principles to their children. Active in more than 5,000 schools in all 50 states, Foundations in Personal Finance educates high school students on the importance of financial planning and the dangers of debt. Ramsey’s syndicated newspaper column, Dave Says, is read by nearly five million readers weekly. The Dave Ramsey Show is syndicated to more than 450 radio stations nationwide with more than 4.5 million weekly listeners. The Dave Ramsey Show on the Fox Business Network launched October 15, 2007.