Personal finance expert Dave Ramsey is known for advocating a conservative approach and stressing the importance of getting out of debt. But according to real estate mogul Grant Cardone, taking it to the next level requires leverage.
“At some point, people who want to be wealthy are going to leave Dave’s advice behind and start looking at what wealthy people do,” Cardon said in a recent paper. Interview with DJ Vlad. Cardone claims he made his first million by age 30. As of the age of 65, his net worth is reported to be $600 million.
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Cardone said Ramsey’s advice only applies to individuals who tend to overuse their credit.
“They borrow money to buy Gucci belts and try to pretend to be someone they’re not,” he explained.
But Cardone is not one of them.
“Visa, MasterCard and American Express have never made a dime of my money,” Cardon said.
“Well, I’m not talking to that group of people. If you’re an idiot, listen to Dave.”
Does America have a credit card debt problem?
Cardone doesn’t think overspending on credit cards is a widespread problem. And he hasn’t shied away from credit cards in his life either.
“I use a credit card, but I pay it off in full every 30 days so I don’t pay any interest,” he said.
Cardone believes Americans need to think bigger. “Most Americans suffer from saving too much money. Most Americans suffer from being too conservative and not taking enough risks,” he said.
Nevertheless, Ramsey’s guidance may still be important given the increasing levels of credit card debt in the United States.
Credit card balances increased by $48 billion to $1.08 trillion in the third quarter of 2023, setting a new record high, according to the latest data from the New York Fed.
Carrying credit card debt can be costly.online marketplace lending tree The average interest rate on credit cards in the United States is currently 24.46%.
Indeed, you can use credit cards without paying exorbitant interest rates.
“I use a credit card…I pay it off in full every 30 days, so I’m just not paying interest,” Cardone said.
He also acknowledged Ramsey’s contribution to people’s economic health.
“I think Dave is a great guy for most people who want to know how to get out of debt. He’s done a great job,” Cardone said. “But I’m not going to follow Dave’s advice to build a real estate portfolio, because if you want to build a $4 billion real estate portfolio, you’re going to have to use debt.”
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Building a real estate empire
Cardone knows a thing or two about real estate. His private equity firm, Cardone Capital, boasts a multifamily asset management portfolio worth more than $4 billion.
Debt can be a useful tool for such businesses.
“While it’s true that too much debt is bad, debt can be one of the most powerful tools for real estate investors,” Cardone wrote in the paper. blog post.
He explained that there is good debt and bad debt. Bad debts include things that don’t put money in your pocket, such as credit card or car payments. Good debt, on the other hand, is an investment that ultimately helps you build wealth.
“Real estate is the best example of good debt because it has the potential to generate both capital appreciation and cash flow,” Cardone noted.
These days, there are multiple ways to utilize real estate.
You can borrow money to buy rental properties directly, or you can buy shares in listed companies. Real estate investment trust (REIT). You can also explore crowdfunding platforms that allow you to own shares in private REITs or pieces of physical real estate such as apartments, commercial buildings, or even land.
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