Dave Ramsey's Advice on Stimulus Money Put Owners OUT OF BUSINESS!

Hey, everyone, it's Mike Andes and you're listening to the Business Bootcamp podcast today. I'm a little bit frustrated. I'm gonna go on a rant about someone that I actually really like, and that's Dave Ramsey. And the cautionary tale of today's episode is to really encourage people to diversify the people you're getting your information from, and not take it as gospel truth from one individual. When it comes to your finances and your business, that includes me. Alright, if you're just listening to this podcasting, this podcast and these videos and think that you're going to make great business decisions, you're probably wrong. You need to really diversify the people that you're listening to and getting information from. So, Dave Ramsey, I like the guy a lot. When it comes to personal finance, being out of debt, living frugally, all the things that he speaks about, I generally agree with a lot of it, right, in terms of living within your means, not carrying a bunch of debt, et cetera, et cetera. Some things like home ownership for entrepreneurs, I'm a little bit skeptical of or like I wouldn't personally do. In general, I think home ownership is great for the average consumer and the average 9 to 5 employee because there's a lot of tax benefits. You know, it helps, you know, boil you against inflation, your value of your equity in your home goes up, et cetera, et cetera. But for an entrepreneur, the reason I'm a little more skeptical is because if you have a good small business taking the money that you would otherwise put into your real estate, into your business should, if it's a good business, have a better return on investment, etc. Etc. So I've talked about that before, in addition to the fact that owning a home usually will tie you down to a big piece of a big mortgage, a big piece of real estate, and that might not be what you want to do if you're an entrepreneur needing to travel, go after opportunity, et cetera. And we're seeing that more and more with the younger generation, the millennials, being wanting to be more of a renter generation instead of going after home ownership. Now, that's not to say that everyone should not own a house. I think it's a great way to produce equity. You know, like if you're going to rent some from someplace for 10 or 15 years, go buy a house. But if you're going to be going renting one year and then renting six months later, and then in your bouncing around like, don't go buy a house and think that you're going to buy houses and just like constantly be moving every few months. The cost of closing costs and real estate fees and all that that goes along with it, it becomes a risky thing that you're doing as well as you're starting to really not make much money, even if the market is going up because you're moving and you're closing costs and your real estate fees and all the other stuff that goes with it. So if you're gonna stay in a house for 10, 15 years, I agree. Go get a mortgage, go get a house, live in the house, and you're gonna produce really good equity. You're gonna pay down that loan. It's gonna be worth a lot more money because of inflation down the road. Alright, that's great. But this is one thing that happened this past week and that happened twice, and that's why I'm addressing it today. And if I'm a little bit fired up, it's because it makes me really mad when people.

Go out of business and when people that I have either helped or people that just listen to the podcast and they go out of business because they hear someone say, and this is what Dave Ramsey said a few weeks ago on his radio show is he said that he's very skeptical of these PPP loans and the Eidl loans that were recently introduced from the stimulus plan, from the government. As we're going through this whole coronavirus in the CARES act, there was money, billions and hundreds of billions of dollars for small businesses to take advantage of the Eidl program as well as the PPP program. Dave Ramsey said he would not take money from the government because, you know, he could not basically say, you can't trust the government. They're always going to try to, you know, mess you up. They're always going to try to throw something at you. And he would recommend not taking money from the government. And I get that, I understand that, but. And the reason that it's a popular notion is because that's a very, you know, really, if you're saying that, you're really saying that the government's lying directly to the small business owners and trying to deceive them because when they created the stimulus package, the reason they created that was to get money in the hands of small business owners as fast as possible. Was it efficient? No, it wasn't. I know there's a lot of waste that went into the money that was given out and that's gonna come out and people are gonna make big headlines over it. But at the end of the day, the reason it was inefficient was because they were trying to get money in the hands of the small business owner as soon as possible. Because for most of these small businesses, it's not like they did anything wrong.

No one expects to go from revenue just fine, best months ever to zero the next day. Usually in a recession, you might have 10, 20, 30, 40% reduction in revenue or reduction in traffic or reduction in sales. But to go from 100% to zero overnight, no one takes that into account. So the fact that some people are throwing around that, oh, you should have had cash on hand, you should have had six months of reserves. Like, I get that, that's all conservative and that's fine. But no one expects, even in a recession to go from 100% to 0% overnight. Usually if someone goes from 100% to 50%, it might happen over the course of a year. Or really you start to see the signs on the wall. You start to see like, okay, something's happening here and you can adjust or you can react or you can pivot or, or you can change your business model. And so the fact that people, some people are saying that people that are going out of business right now, they should have had six months of cash of their reserves on hand, it's pretty laughable for a small business to have six months of reserves if they're doing where their cost of Goods sold is 90% of their revenue. It's just not reasonable. And so when this program came out, the I was very disappointed that someone as influential as Dave Ramsey would tell people, don't take this money from the government. They're definitely going to try to screw you on the back end. They're definitely going to try to do something that's shady. You don't want to borrow money from the government when at the end of the day, let's just really quickly go over the PPP program. The payment protection program was designed so that small business owners can bring back their employees. Right now, the deadline to bring them back is June 30th. There's a really good chance it's to going, going to be extended. Basically, the PPP give you eight weeks to be able to pay your employees their paycheck for eight weeks. And that money would be forgiven if you spend it on payroll. Up to 75% of it would have to be spent on payroll. And then 25% of it could be spent on things like rent and utilities. And so this was like exactly what A lot of small business owners needed, and yet you have someone like Dave Ramsey that's putting doubt in their mind, saying, oh, you just don't take money from the government. And he's kind of. He was kind of almost not bragging, but just kind of saying, hey, like, we are keeping all of our staff on. We're paying them all. And that's fine. But, like, most small business owners are not in the same position as you. Like Mr. Ramsey, all due respect, love the guy. A lot of what he talks about, I stand behind it. But, like, when it came to business in this regard, it made me a little mad. Because what happened this past week that I heard back from is someone finally was able to reopen their business. But guess what? They didn't have enough money to pay payroll. And they could have had that money if they would have applied for the PPP program. But guess what? They can't apply for the PPP program now because it's done. The money's dried up. It's gone. And they listen to someone that said, oh, no, don't apply for that money. You don't want any money from the government. They're going out of business this week because they don't have the money to pay payroll and get those employees to come back. That's what the PPP was built for. Now, the Eidl, like, this is another topic. My goodness. The Eidl was free money on the advance, which means up to $10,000. You were giving an advance of money from the government to you, free. No payback, no loan, nothing. It was just money in your account, up to $10,000, $1,000 per employee. Why every single sole proprietor LLC corporation in America did not apply for this is beyond me. Like, it was free money. I got it for every single one of my LLCs. And that could have been. Even if you don't even have employees, you could have put one employee if you were the sole owner. You could put two. If it was like, you and your wife and you both worked on the business, you do not have to have W2 employees to get this money. You're like, oh, no, that's not true. No, I saw it happen in front of my eyes where I put my LLCs in, because the government was very clear. They were trying to get money in the hands of the business owners. They said, when in doubt, apply. Like, all over the application, all over the SBA website. It was like, if you're in doubt and you don't know if you should apply, just apply. What they were saying is like, we want to give the people that need money, we want to give you money. So I applied for all my LLCs, guess what? Every single one, even if I didn't have employees, I was giving $1,000 per employee. And guess what? For applications that were put zero on employees, the government was still giving $1,000. Knowing that someone obviously owns the business and is they were giving $1,000 direct deposit into someone's bank account three to four weeks later. And now the Eidl is converted into the loan part, which is only 3.75% interest over the course of 30 years. And for the most of it, the far majority of these being given out, the smaller ones are going to be no collateral. You don't have to have a personal guarantee on this. This is money that you otherwise would never be able to get. You don't get loans for a business that's 30 year terms, 3.75% interest and no payments for an entire year. This is like for a lot of small businesses, they could have taken the Eidl. Let's take like, let's forget about the PPP protection and the forgiveness of that. Let's forget about the Eidl advance. Let's just look at the loan aspect of the Eidl where for an entire year you don't have to make any payments on, on that loan. For most small businesses in America, they just need the year. They'll be able to pay that money back if they need 40, 50, $60,000 to get back up and running, get through the next six months, maybe of reduced traffic, you know, get there, you know, pivot their business model, make a new website, hire a couple more employees, whatever they got to do to get back on their feet. And they would never even pay a single dime in interest, but they would save their business in the next year. And guess what? 30 years for a business loan is unheard of.

Your monthly payment is so low. And so for people to go out and tell their listeners and their followers to not do something really based upon fear of like, it's just, it boggles my mind. And yes, people can look back at track record and say that the government's always trying to, you know, manipulate things or change things. But like I truly believe that for business owners, you gotta look at where you're getting information from. I love Dave Ramsey, the information he gives of personal finance, but when it came to this, I got really mad because two people now in the past week have told me that their businesses have been allowed to Open up. However, they didn't have the money to make payroll. They didn't have to make money to do anything for the next few weeks. And they had to close their doors and they had to default on their leases. And due to the fact that there was no money in the bank. And they literally told me, if I had money right now, I'd be able to probably pay it back over the next four or five months because they were running very profitable businesses before all of this happened. And if they would have had the ppp, they would have had the money to bring back their staff and get it forgiven for the next eight weeks. Well, seven weeks, because they got accepted a week ago. So seven weeks they'd be forgiven. And then guess what? The PPP, even if you don't get it forgiven, it's a 1% interest loan. And like, I just can't fathom why someone would push a business owner to not apply for these programs. And guess what? Now they're done. They're gone. The money's dried up. You try to apply the appropriations, it's all gone. All the money's gone. And people are now suffering. And they're going to suffer if they did not get these programs. And they were in dire straits and needed this money. And so the only thing I can say is, like, number one, I'm really disappointed in Dave Ramsey for saying such a blanket statement that you should not touch the government programs and really just did not communicate well with small business owners that are not in the same financial position as him, that he's just going to, like, pay for his employees to stay on payroll. He's just going to let them keep working and they'll just figure it out and it's okay. He didn't want them to go on unemployment. I get that. But for most small business owners, they don't have the kind of money just pay their employees and tell them to stay at home. They don't have that kind of money. And so I'm disappointed in that. And I'm disappointed in the fact that people, business owners, are not educated enough to be able to realize you can't take all your information from one source. And like, if that's me, you gotta figure someone else out. Like, there's other people that give good advice, are telling what's happening in the world right now. I wouldn't be getting my financial information or, or my business advice from the news right now. It's all gonna be bad news. It's gonna be drama. It's gonna be inflated like you gotta remember that news agencies, their job is not to give you good news. It's to make sure they get clicks and get their ads watched because people are actually viewing and seeing and interested in what they're talking about. So clickbait and over dramaticizing things is their business model. And so you gotta get your information from people. And this is why YouTube is so great, is because you can follow people like myself or people that are much better than I am in your industry or in finance or in business and in marketing and figure out what you can do right now. Don't listen to someone one person's perspective and just make your whole judgment. When the whole programs first started from the government, I was very skeptical, right? And so I spent literally days, if not weeks running through all of the bill that the government had put out, looking at all of the fine print, looking at all of the clauses, seeing if there was like loophole, like, where were they trying to get us? Guess what? There wasn't enough there for me to be able to say, they're definitely trying to get everyone in down the road. They're gonna mess people up. There wasn't. And so, like, I had to educate myself, though. It took me like a solid week of really understanding everything about it to be able to make the decision that, look, this is a very good program. People that need this should use it. I. My gym has been closed down for three months for a lot of anytime fitness franchisees. I can only speak for them. This is a very difficult time for Gold's Gym. They went bankrupt. Other gyms are gonna go bankrupt. And so if I was just owning that gym, this would be financially catastrophic for me. I've gotta be able to tap into these resources that the government's making available. And in order to do that, I've gotta be educated on what's going on in my industry, in the marketplace, in the economy. Small business owners need to educate themselves and stay educated on what's going on in your industry and in the marketplace. And it's more important than ever right now when the market's going everywhere, your industry's changing so rapidly, all of the slowdown of an economy or whether it's ramping up at incredible record speeds, you've got to stay focused and you've got to stay educated on what's going on so that you know where you can pivot, where you can take advantage of certain things and where you need to avoid. And guess what? I was really disappointed with Dave Ramsey. A lot of people, a lot of eyeballs are on him. A lot of small business owners eyeballs are on him. And I feel like he dropped the ball and forgot to convey that, forgot to remember that his listenership. The people watching do not have a ton of money to just get through this and just pay their employees to stay at home. They don't have the money. They don't understand maybe how unemployment's working and that the system is overtaxed and it's gonna take people three, four, five weeks to get their unemployment check. Like I just so frustrated. That's two people in the past week that have been had to go out of business because they did not take advantage of these programs. And the only thing I'm talking about today, the only thing I'm ranting about is I only thing you should take away from this is be educated. When there's something like an economic recession happening, get educated. Figure out what government policy is, figure out what these bills like. There's a new $3 trillion bill that's gonna be going to the Senate, the House and the President in the next few weeks. This is something you need to educate yourself about. And I didn't get really loud about this several weeks ago when I was educating myself. But right now there's a new stimulus bill coming. You need to know what that includes. It's your job as a business owner. I don't care if it's at night, I don't care if it's on weekends. It is job to know what's going on in your business, whether that be knowing your numbers and in this case, knowing what's happening in the economy and how you can take advantage or at least survive during this time. Alright, rant over Mike Andy's business Bootcamp podcast. Thank you so much for watching.