Debt Free Silver - A Dave Ramsey Way
Dave Ramsey and GOLD, SILVER,/other metal investing are often enemies. Ramsey has talked down on investing in metals consistently over his years and often refers the the only gold he buy as being in jewelry form for his spouse. So why is he so staunchly against it and is there a way to follow Dave Ramsey’s financial advice AND bring home metals?
My research indicates yes.
I have reviewed hundreds of hours of his radio broadcast and watched countless videos of Ramsey commenting on many financial issues including GOLD and SILVER investing and have found one way in which even Dave Ramsey would not have much issue with collecting gold, silver, or other metals. Before we get to that though, I think it needs to be stated who Dave Ramsey was and is so that you understand his arguments.
Mr. Ramsey has built an empire of empowerment by living his early years in a way that is reminiscent of some other notable financial voices like Robert Kyosaki. Ramsey, a product of American Appalachia, grew up poor but made millions in real estate, taking out debt to fund more projects. This is an attempt to formulate passive income but is grounded in debt being an asset to ones abilities.
For Ramsey, this worked quite well until the debt became overwhelming due to many issues and caused Ramsey to fall into bankruptcy. Ramsey found himself in the darkest of times with nothing to his name and homeless. He vowed to never take out debt again and found biblical principals to back his new financial outlook.
“We buy things we don’t need with money we don’t have to impress people we don’t like.”
Slowly, Ramsey paid off all of his debts and started a new journey towards “financial freedom.” Ramsey has documented his journey by many books and a media empire of empowerment based on the same debt free approach he found to be so beneficial. His messages are carried by millions and have created estimated millions to become debt free and on the path of earning an “Everyday Millionaire” title.
“Pray like it all depends on God, but work like it all depends on you.”
Now that you know who Ramsey is, what is his plan and why does it not favor SILVER and GOlD?
Ramsey’s plan is comprised of 7 baby steps. This is an intentional process that is broken down in small, comprehendible ideas so that everyone who reads them can understand the process. Here are the steps broken down on a macro level:
Save $1,000 as a starter emergency fund. This is only to be used in emergency situations. Once you have done that, we move to step 2.
Pay off ALL debt except for mortgage using the debt snowball method (smallest debts to largest debts.) The small to large process creates early winning debt battles and helps add steam to this often long process. Once you are done with this step, move to step three.
Save 3-6 months of living expenses in a fully funded emergency fund (replaces the $1000 emergency fund) Once you are done with this step, you move to step four.
Invest 15% of household income into retirement. Once you have done this move to step 5.
Save for children’s college fund. Once you have done this, move to step 6.
Pay off your home. Once you have done this, move to step 7, the final step.
Build Wealth and Give.
As you can see by these steps, there is not much room for Gold or Silver anywhere except possibly step 7. Ramsey, has stated many times how even in step 7, he would not personally ever invest in GOLD or SILVER as he states his returns on investments are not close to what his real-estate or mutual fund returns have brought him.
There is a silver lining however so all hope for us enthused SILVER and GOLD collectors can take a sigh of relief. In listening to Ramsey for as long as I have, there are questions posed occasionally about spending money on things outside of what even Ramsey would normally recommend and I have been surprised at his answer.
“Fear is the enemy of hope.”
One example would be a caller who was debt free and asked Ramsey about spending money on a fun hobby of collecting vehicles he likes. Ramsey stated that he himself loved cars and if you found yourself debt free, you could spend up to 10% of your net worth on a hobby. He warned to never go beyond the 10% but conceded that the caller worked hard to get where he was financially and that a portion of these funds should be used for fun.
This is where I have found my balance of following Ramsey AND collecting metals. If one is on baby step 7, they could spend up to 10% of their earnings on SILVER or GOLD and still be inline with Ramsey’s principals. So what does this look like and is it enough?
Let’s say you are 50 when you get to step seven. And let’s say I take the U.S. Census Bureau’s numbers on the AVERAGE HOUSEHOLD INCOME which is $97,026 a year. This would mean a yearly metals budget of $9700 a year. This means in ten years it would be $97,000 in purchased value. That does that look like. Let’s say you purchased Silver Maples with $97,000 and just for the sake of argument, let’s say you payed $35.00 a coin. This would put you at 2771 OUNCES OF SILVER.
The question you might ask yourself is, is this enough? I would think the answer would be yes. I cannot find research on top financial personalities who are against diversification of financial assets. GOLD and SILVER would offer diversification and the 10% for 10 years in my estimation would be a great number to aim for.
History tells us that in the Stock Market’s lowest crashes, it rebounds within two years. Historically when when volatility is high and inflation is rising, SILVER and GOLD tend to rise. This being said, let’s say the market crashes and your Maples rise an average of $10 a coin.(low estimate) This means the perceived value of your Maples would be at $124,000 which would mean that you could literally not change a thing about your lifestyle and slowly sell off coins and buy into low market valuations and ride the wave back up. Then as markets stabilize, you SILVER and GOLD would likely normalize and you could rebuild that area of your metals.
Ramsey does not like metals due to volatility and historical markers when it comes to an investment tool but it is clear that if we were to consider it a hobby and only use 10% of our assets after Ramsey’s baby step 7, we can comply with his teachings AND enjoy the all of the things SILVER and GOLD bring us.
