I am an avid DR fan and absolutely love the show. However, I don’t follow his advice to the last detail. For me personally, an emergency fund of $400 was PLENTY to get by while paying off debts, and I chose to attack different debts in their own order for personal reasons… dancing between balance and interest rates for each card. I also intend to retire at 35, if not sooner, and so my financial goals are not to “retire with dignity” at 65-80, but to retire early and have fun for the rest of my life – clearly, my financial pursuits will be more extreme than what he suggests for the long term.

However, I have to disagree with you about the owning-the-house stuff. For your particular situation, yes, selling your house and buying a cheap one does not make sense, but that doesn’t mean that paying it off early would be a bad plan. The minute you don’t have house payments is the minute that you have that much more money to invest or save or spend… whichever you want. I understand that it’s not the right thing for you, but I still think paying off a house is the best plan, always, hands down, for the majority of people out there. Because then it’s free and clear! On top of that, then you can sell if you’d like, or live rent free (or if you consider property taxes, nearly rent-free then) and save like a madman.

As an aside, Dave has no problem with 15 year fixed mortgages, or even 30 year fixed, so long as you pay the 30 of early

FJH
http://daveramseyguru.com/

Your example about owning real estate and getting 100% financing is flawed. I would argue that it definitely doesnt improve your financial situation, because you have just put a lot of risk into your family’s life. What if you lost your job tomorrow or something tragic happened. The last thing you would want to be thinking about is those four properties that you have and the thought of a renter flaking out on you and breaking a lease.

This idea that debt is a great financial tool to become wealthy if you know how to use it is silly. It’s been branded into our heads by banks and lenders, because THAT is how they make money. They want to keep us believing that we can use it to help us, when all it does is help them in the long run.

My goal is to acheive financial independence. What is that defined as? The ability to live off of your assets without working. In other words, where your money works for you well enough that you no longer have to work at all. At that time, work is no longer a burden but a decision of how you want to spend your time.

Getting to financial independence varies for everyone. Some get there through living a frugal life and getting used to spending very little. Some get there by earning so much money they can’t spend it all no matter how hard they try. In between are folks who live moderately, but save as much as they can in sound and diversified investments. Sometimes this includes investment debt.

I’m still mired in consumer debt, but I hope to be out of that within 4 more years. At that time, all of my debt will be investment level debt. Another 10 years or so of savings and investing, and I should acheive that promised land of financial independence. How I look forward to the day when I can say, I am not working because I have to. I am working because that’s what I want to do with my time. What a wonderful world it will be!

As for owning vs. leasing, you are right of course that real estate would be an asset on the balance sheet, but that’s not what motivates a company to enter into a lease-buyback. Also, real estate is recorded at the lessor of cost or market value, which means that long-held real estate that has appreciated significantly is reported at a number that is much lower than its actual value. In fact, if a company has refinanced the property, the debt tied to the property can be much higher than its reported value, particular once you factor in depreciation. So the result of a lease-buyback can have a positive impact on the balance sheet and also result in a substantial gain on the income statement. And a lease-buyback is not itself improper; it happens all the time. The key is in how it is recorded and disclosed.