Donna Genie critiques Dave Ramsey's advice that people should only buy what they can pay for and stay within their means. She argues this guidance can be harmful for business owners, who often need to leverage other people's money, knowledge, or assets to grow (e.g., financing $100,000 equipment with $2,000 down if ROI justifies it).
Hey there. Who out there loves Dave Ramsey? He's a pretty popular guy. Got a beef with Dave Ramsey and I don't think he's for everybody. That may be a little controversial. Let me explain what I mean. Dave's premises is that you should stay within your means and you shouldn't buy anything unless you can pay for it. That's it in a nutshell. As a business owner, you need to know how to deal. You need to know how to leverage other people's money or other people's knowledge or other people's assets to be able to grow a business. You can't just wait until you have enough money to buy a machine, a new person, whatever. That's too far in advance. You need to be able to leverage the dollars other people to make your money. So an example and I have ability to buy a piece of machinery that will help me magnify my sales by 10 times because I can do things 10 times faster. But that piece of machinery is going to cost me $100,000. I have $2,000 to put down and I can finance the rest. I'm going to say let's look at the payback. What's the return on investment on that piece of equipment purchase? Alright, if in 2 years you can 10x your sales twice that will pay for that piece of equipment. That is a way that you should be looking at leveraging dollars.
