I Borrowed $20,000 On Credit Cards To Invest, Now I'm Broke!
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- เผยแพร่เมื่อ 27 ก.ย. 2024
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"He who hasten to be rich, won't go unpunished." I live by those words.
I don't think this person was hastening to be "rich" - I think he was just trying to get to a more comfortable place than where he is now but that's not "rich". That's just "better off".
@@thomashaas5965 your logic is incorrect lol
The bibles been teaching for years ppl wanna be wise in their own eyes thou so
@@thomashaas5965 20k loan is hastening
Yea, live poor for 40 years.
Borrowing to invest is a fool's errand at best. Greed can be an excellent teacher to the right student.
Same borrowing for a home if you lose your job you lose your home eventually only hope is you sell it and its higher then when you bought it but most people lose job during recession and there are lots of new home buyers before recession . Risk is everywhere
Not really, smart money do it all the time.
Not if you do it wisely! This person did it the wrong way. Borrowing money and investing the right way can be the best and fastest way to build wealth, especially in real estate. It's called leverage. Saving to pay cash for EVERYTHING will take ages and only limit yourself.
@@muradshawar Not if you do it the right way. Dave gave up after his first loss in real estate because he didn't do it the right way. If you buy a home with equity below the median every time, and follow the right strategy it can be an excellent way to build wealth quickly (but not overnight) Leverage is a powerful tool when you use it correctly.
@@AdamGbl95 Thats a good point
There’s a 100% chance this guy watched a TH-cam video before borrowing $20k to invest in ETF’s.
And probably a Tik Tok video that says Dave Ramsey is a fool and doesn't want you to get rich.
The issue with borrowing is that when you lose your income, you're in a deep hole.
@@sblijheid not necessarily
@@erikq9788 I had to stop watching that guy after he became widely known. He became everything he said he hated early on in his TH-cam channel.
Yes. A "How to earn a passive income in 2022" video, no doubt. lol
Nah it was probably one of the youtube grifters, that pump nothing but debt heavy trash.
Honestly when ever I complain about life I always think someone’s situation is way worse. I ain’t no millionaire but I ain’t in any debt either and ain’t planning on being in any debt.
Depends on the type of debt.
Totally!
@Yehuda Stollak Debt is great for wealth creation.
Wait until a future-ex-wife shows up!
Good debt that can be managed is a good thing. Dave needs to do a better job of teaching his listeners that, they are missing out on a lot of opportunities
His first mistake was thinking gambling is the same as investing.
You said it best.
It kind of is.
@@jimmymcgill6778 Explain how long-term. Decades worth of investing. Is the same as gambling.
I do both BTW.
I love sports betting.
But it's for fun. Not a way to make money. Unlike my investment portfolio.
Yes, totally agree. His case was more of gambling then investing 🤦🏻♀️
@@I_like_turtles_67 Well you putting money in it hoping it will grow.
SO it's kind of the same thing. But it's also not the same.
Never heard a rich individual say: Take a line of credit to invest in the stock market... 🤨
well all of the richest people operate on debt to avoid taxes but they just are better risk managers and evaluators.
Lesson here: NEVER borrow money to invest in stocks.
even more generally, never use money that you can't afford to lose value on, to buy stocks. ( e.g. down payments, loans, emergency fund, etc)
@@soogasooga Yes!! I agree
What about real estate?
@@JeanValjean875 That I will borrow money for but not to buy stocks.
Unless you have a sure thing/hot tip, of course.
The expected value calculation on this trade is horrible. Risking $20,000 to make $5,000?
I hope the caller didn't listen to Dave and held his ETFs. He would be ahead now.
6 months from your comment and he'd be double extra ahead
I bought a house when I was 25 years old ( Calif ) It rapidly increased in value. I bought a 2nd home and rented it to a relative who made more than I did. He flaked on me, addiction got him. I could have paid off the mortgage on my house instead of trying to continue to ride the real estate market. I sold the 2nd house & was only able to cover the existing mortgage. Years went by & I stayed conservative, investing slowly & incurring no more debt. If I hadn’t of gotten burned with that 2nd house ? I may have done something REALLY stupid later. Some of us just have to learn from stupid mistakes.
You borrowed money to *gamble*.
For real!!!
Zero percent interest.. can't say it's a silly move. Him making $35k per year is the silly move; bump up that income. Take zero percent loans all day long use it to your advantage. Reasonably calculated debt is the way to go for most people.
At least he didn't blow it on a penny stock that went to zero.
@@MrTrevorDidier ...? It's only zero percent for a certain amount of time unless I'm mistaken
If the rate blows up at some point, have a way to pay it off in full. This is the mistake in the video's scenario. I would take unlimited 0% loans... even with 6-12 month pay back in full at the end of the term, or rate balloons. Definitely be mindful not to blow it all. ( ^.^ )@@AM-dk5ym
The best way of gaining wisdom is learning from other people's mistakes. I have a lot of knowledge, thanks to all of these callers, etc.
I bet he's up now
I'd ride it out... Pick up extra jobs right still though but start paying that CC debt down as much as possible.
Completely agree those ETF will recover and he has the time to over work to pay that off
Agreed
Should definitely not cash out today. He needs to work it off and reap the reward at the end.
Man look at snp now
This is what the result is if your read the garbage that the financial media puts out. Stocks/equity funds didn't _crash;_ they simply went from obscenely overvalued to slightly overvalued.
The currency is dramatically overvalued. Once you understand that you begin to realise how low stocks will go.
Completely
PSA: For those who are thinking about or are already delivery drivers. You will need to look into getting commercial or delivery insurance. In most pizza chains, the managers won't tell you to need special insurance. Insurance companies will deny your claim if you get into an auto accident while delivering pizzas. No matter if it was your fault or the other driver's fault.
The extra insurance and ware and tear on the vehicle probably means you're losing money. Also this renting out your car to people, if that really worked out would people just get 10 cars rent them out and just quit their job.
Interesting thanks for the information!
I'm not advocating insurance fraud (even though they like over charging customers) but how would they know your delivering pizza's if you don't tell them? The police aren't going to include that in an accident report. You definitely would increase chances of accidents though driving around all day and would wear out car parts faster so I don't think it's as profitable as Dave thinks.
@@chrishart8548 You would probably be better of renting trailers for moving or something like that, less insurance, less moving parts and less things that can break and cause expensive maintenance. People drive rentals like they're in the dukes of hazard lol
@BillSanders My insurance company State Farm was across the street from where I delivered pizzas. Someone from State Farm called me about getting commercial/business car insurance. That's how they knew I was a delivery driver. If the cop fills out the accident report and includes that the delivery driver was delivering pizzas or sees a car topper. Then, the insurance companies might find out you are a delivery driver from the accident report.
So the s&p can go to zero Dave... but mutual funds make 12% a year🙄
Sell nothing and start paying the loan... you have 15 months to do it
@Joaquim Sabina VTSAX though encompasses all chosen stocks by mutual funds. One of the safest investments there is.
Cause he wants people to buy the mutual funds he selling 🤣.
I would ride it out until the due date becomes closer. He has until October 2023 before he has to make the decision. A lot can happen in a year
Correct. For example, he could lose a lot more money.
@@ASimoneau Correct. He could also make more money or break even as well.
Yah he could lose even more money by then.
@@shrimuyopa8117 He can also make more money by then as well.
They might back date the interest.
My favorite Ramsey line of all time is I have PhD in d.u.m.b.!! I think and use this phrase often.
Such a risky move. I would never borrow money to invest for only a couple of years. You should be invested for at least 10 years. If I were him I'd hang on but save as much as possible to cover his (potential) losses. This must be so stressful for him.
@@erikq9788 Sorry you took that loss. But I bet no longer having this hanging over your head is priceless!
I think we all know best until we don’t. I thought I was the new oracle of trading until I took a huge haircut on options. Good news is, lesson was learned. Now I invest in mutual funds and have no debt. You will recover Rick!
When I get money issues, I just pray and it goes away. Prayer works people! Just pray it away!!!!
It worked with the supreme court. 🤣😁😆😂🤪😅
This is a joke right?
@@cutehumor They just put a woman on SCOTUS that doesn't know what a woman is 🙄
give to caesar what is caesar's and to god what is god's. Gotta love people that pray to god for money 😂
when the collectors are banging at the door I pray even harder ( o.o)
Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder.
''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
Unfortunately, most people don't get this, the majority is after chasing tops/bottoms where they fail & get out of the game. Risk management is the key.
“Never lose money”
-Warren Buffet
Deep. I haven't heard it put like that before.
I was waiting for Dave’s head to explode while George was reading this. 😂
Looking back, it was even lower in October 2022, and only coming up at bit in August.
Speak Dave Ramsey appreciate all your wisdom. I went through your course 17 years ago with my church. I wish you would have listened to some of that wisdom back then and I'm cleaning up a little bit of a mess but hopefully it won't be long and it will be done
I've did exactly what this guy did on a smaller scale, used credit to buy product for flip sale but ended up not even going half even. So now I got some debt, but now have a solid full time and part time gig, putting my head down, understanding that you live in learn, should be back out of debt on baby step 2 in 3-4 months 🙏🏿
That’s called trying to catch a falling knife. 🔪
It always cuts you 😂
😅😅😅
I’m not a religious person by any means but through Dave I say that proverb with him every time. He’s got it engraved in my head.
You don’t need to be religious to find wisdom in religious texts.
...a diamond is a diamond even if it's buried under a dung pile...
If he held it he would have got his money back and then some stocks just hit all time highs again 😮
Get Rich Quick.
Soooo ... "three to five grand" ... is ... "getting rich" these days?
When you make $35k a year getting $3-5k all at once would be a huge paycheck.
57% of the people don't have $500 in cash in savings, so yeah . . .
I had a lender try to coerce me into refinancing and cashing out equity to put into stocks. Couldn’t convince him it isn’t a wise decision.
Why were you trying to convince him? Just say NO.
@Day Sounds like he was wasting his time.
If he kept it and it was in VOO or VOOG or QQQ then he'd have be way up now.
Slow & steady wins the race. "Slow" as in 40 years of buying a small amount with each paycheck into various funds. Reward comes when you're 60 years old. Start at 20 yrs old.
Dave is one of the very few guys who can insult people and not offend them
It's called being honest.
@@superblump87 I agree. He's not insulting anyone. He's teaching. Take notes, folks!
@@superblump87 Is part of it, yes.
This guy bought the farm on an I.O.U and didnt plant a single seed.
When you borrow to invest, you magnify your gains when your stocks up. But when the stocks fall, you also magnify your losses.
Never invest what you aren’t willing to lose. Never buy on margin.
Never invest what you aren't willing to lose? 😂 The entire retirement system is based on investing.
He bought when stocks were on sale. He didn't know that they would go on sale even more. A cautionary tale for those who like to use this strategy.
Nothing wrong with Buying the dips, just as long as you don’t use borrowed money
@@juanmartinez-ts2bg exactly
Good advice from Dave is to choose your pain and it takes a big man to admit mistakes.
These are the kind of genius plans that broken dreams are made of
He said October of next year. AKA October of 2023. He needs to wait it out.
$9k will cripple him with that income.
And what if it goes down another 25%+ in the next year?
Only issue with working a delivery gig right now is you're spending $600+ in gas. Get a remote online gig for more money and save that gas money.
This is hilarious knowing what the stock market did after this. It bottomed out in October and now has go way higher than what he bought for.
What the caller did was dumb. What Dave told him to do at the end was dumber.
No, it was the smart thing to do.
S&P drops to 3,000 and I'll be very tempted to buy on margin. Personally if I was him I would hold the ETF and pay off the cc as quick as possible from over time or side jobs.
That’s what I was thinking
🤞
Still very risky - some think the S&P is going to 1800.
@@JohnSmith-gy8rc that would be crazy
@@JohnSmith-gy8rc It will always come back.
More reason why i dont take all Dave’s advice seriously and start to think on my own. Right now kids money wouldve went up if he held, hope he did. No selling especially u know what ur investing. But then yeah start looking for a 2nd job a part time maybe
Ride it out, but don't do it again.
Stupidity has consequences
Stupid should hurt
Been there, done that. Stocks never go the way you think it would. It is really gambling. My advice is to either cash it out and take the money and pay what is left. Other option would be to transfer to another 0% interest credit card if you have that option. This all depends on how long you want to wait but remember every time you transfer there is 3-5% fees and they will add up.
Stupid idea with the get rich quick scheme.. very risky !🤑
Just like cryptos.
It's a cluster.
It went up.
Never ever buy stock on borrowed money.
Keep the index funds because they will eventually come back if they are worth anything and get a second job to pay off CC
Investing should be money you have and can afford to lose
I would hold. What was your strategy going to be with respect to downside ? You must've considered the possibility.. If you haven't considered downside, then that was just gambling. Otherwise why should the strategy change just because downside materializes ? I'd cover / move the balance once it's due, and keep managing the position until satisfied.
I've done the same and many times and for a long time. Been doing this since 2020, and am fine. Lessons were learned and mistakes were made, but "as soon as you get downside, realize losses and quit" was not one of them, not with respectable securities or broad indexes. Have a realistic plan and reasonable position, and stick with it.
@@JC-sh6im With all due respect, "since 2020" is not "for a long time". Not in investor terms.
@@wololo4761 granted and noted. Yet, that's a lot more than this guy, and I don't just talk the talk, I've experienced it in practical terms.
Also, I am specifically not an investor, I do not want that term applied to me ; you could say I'm an anti-investor, a speculator.
"Taking a quick 3k profit" is not investing, that's speculation, that goes for this guy too, and there is nothing wrong with that, there might just be somewhat more work and risk to this than he originally anticipated.
Furthermore, if you apply longer-term logic to this - then it makes all the more sense - if you "invested" at the height of past pre-crash peaks, you'd still be way in the green, so all the more yay for this guy, including by the "investor" logic.
By the way, I would not necessarily recommend it, it's not for everyone. It can be done, but it takes time, work, patience, math, and some kind of consistent longer-term plan, and oh there is risk and a whole variety of outcomes.
This guy went into it without much of this, didn't consider "what if this downside happens", and here we are.
Dave is right on this point - this guy thought he was signing up for a whole different game - and I'm not convinced he is up for the real one, is willing to, and have what it takes.
But his problem is not with debt - it's the rest of it - he had the right idea, he just misjudged the casino.
Oh and by the way there are costs and taxes to consider too - if we go by the "3k" figure - a good chunk of whatever comes out, if any, will be gone to costs / taxes.
So I’ve been watching Dave for a while and his answer is always deliver pizzas at night so let’s break this down you work from 8 to 5 go to deliver pizzas from 6 to 10 pm go home sleep from 11to 7 Where in the world are you going to go to doctors appointments have time for your spouse your mental health your physical health. So the answer is sacrifice your marriage , mental health and physical health to pay off some credit cards it ain’t with it
Genius man, he should open his own hedge fund.
Why would you invest with borrowed money?!?
The problem is he couldn’t afford to wait for the return. IMO that’s the bad decision. He will look back on the etf in the future and say if I held it until now… but that’s the game.
Why would anyone take such a risk.
If I did like Dave and blocked everything I tried once and went wrong I wouldn't move a muscle.
I've learned to become knowledgeable of the subject matter before I jump into action. That has reduced my failures.
@Day well, he says all leveraging is bad because he tried it once and got it wrong. That would be what the reference is to.
@Day see above
Don’t risk what you need and have for what you don’t need and don’t have.
lol...I think the kid who wrote in is a troll.
Ramsey laugh’s 😂 like Chucky!
You’re only down 30%?
Cute.
To quote a famous rabbit... "What a marroon! What an ignoranimous!"
Always position yourself in high risk situations that you can afford to loose
Better yet just keep your money and build. Don't take risks.
I lost nearly everything twice in my life.
Sometimes you have to tough a hot stove twice before you learn you shouldn't touch a hot stove.
The S&P500 will not go to zero, he should just hang on to the ETF shares.
The only issue I see here is that he invested on ETFs instead of Bitcoin.
He scammed himself. New record.
I think his other problem is that he only earns 35 k at 27
This is an example of someone who should never have a credit card.
Mostly follows your plan
Mostly peaceful protests
He would’ve never profited that much, not if he was paying capital gains tax. So capital gains on top of whatever money he was losing in interest payments. My guy can’t do math.
Play stupid games, win stupid prizes.
Looking at it retrospectively it wouldn’t have mattered had he waited until October to sell.
$35,000 annual income and you wasted $20,000 gambling on stocks?? If stupid was an actual person. I'm amazed that this guy is even able to keep his head above his shoulders and not lose it somehow
Trying to time the market 😬 with money that's not his 😬. Just flat out greed.
In my opinion 35k leaves plenty of room for a second or third job. If you don’t have kids or responsibilities. Put your head down and clock in. Ignore your portfolios. 9k isn’t all that much if you break it down. Set everything to sell when you break even.
You Ramsey you love debter haha
Often, when there is an A or B choice like this, the best solution might be a hybrid. I would have considered to go half: cover $4500 now, wait and see if the market does not recover.
This was a lot of people during the GameStop mess
That moment of silence
No common sense for this guy. He is just getting 35K. What is this.
As Bugs Bunny would say, "What a maroon!"
dave is valuable based on how smart he is. but george is my favorite copilot. like rachel too
Leverage used wisely is the best way to become wealthy especially in real estate. Dave suffered loss because he did it the wrong way, now he assumes that all forms of Leverage is bad, though there are many who are very successful through leveraging debt to increase wealth. However, I do agree with Dave's system for those who don't really have a plan for their life and need the discipline to break bad habits.
You should watch starting at 7:03
My first thought was, "What an idiot!" Then that ended up being my 2nd, 3rd, and 4th thoughts too.
how do they mess that he doesn’t have to pay any extra money? 10k of that 30k was not from the credit cards. He lost 9K but he still ends up with 1K in his pocket.
I bought around 100k in etf 6 months ago, first month up 600 us, next down 1200 us, now is around 6000 up us and I took out around 3000 us out of the profits for Holliday and presents , so total would be around 9000 gain.
Now I have decided not to touch it for 20 years lol. Of course I didn’t borrow / loan. Savings .
Rick needs to play the long game and start small.borrowing is the worst thing you can do
He borrowed on a loan to invest. Think about that, that is the worst thing to do. Thats like jumping on a sinking ship and will be sinking forever.
invest or trade , don't borrow and play at your own risj
A credit card is the bank's risky investment in you. I didn't even realize there was such a thing as a 0% APR cash advance. Always thought they had at least a fee, which means it's not really 0%.
This is freaking crazy because the s and p did recover in October. It’s still gambling.
For those curious, the market tanked since this call was made and went down till October. So if this guy held on , he is probably a goner now.
If he had hold, he'd have a great win 😊
It's almost October. I hope he didn't hold onto those stocks 🤣🤣