Dave — One thing I always find most fascinating is how many of your callers with the latest idea to make a great deal of money off some hair-brained idea always forget about one thing. Risk.
And you patiently remind them about it.
Risk is a funny thing.
Some try to manage it, but it sure seems to take on a life of its own.
We humans almost always ignore it. You always point out that the math doesn’t lie, but we do, and frequently it’s to ourselves that we lie.
We miss the parts that can do us in the fastest – risk.
You give risk names Dave. Dear old Murphy. Along with his cousins Broke, Desperate, and Stupid.
One definition of risk is this: the possibility that something unpleasant or unwelcome will happen. Murphy is the unwelcome part.
That’s the kind of risk we encounter if we don’t have an emergency fund in place. Something unwelcome shows up. A stove goes out. A squirrel finds its way into the walls of your house. A hailstorm pummels your cars and your house. All of these are things that have happened to us in the past 5 years.
But the parts of risk you point out to those who have a plan to invest rather than get out of debt and pay off their mortgage isn’t that kind of Murphy-like risk. No, there are other forms…and this is the one these callers fail to take into account.
The word risk can also be defined as the possibility of financial loss.
And that’s the risk I think you are pointing out to people. We humans are funny about overlooking what we may lose, all the while focusing solely on what we think we will gain.
Jesus said, “What does it profit a man if he gains the whole world but loses his soul?”.
So many of those who call you want you, Dave, to be able to suspend that part of the equation: the idea that they might lose something while only gaining something else. Yet, as you testify to about your own experience, attempting to leverage someone else’s money (debt) to gain wealth simply doesn’t work in the long run. It can’t.
Eventually, math takes over. Probability catches up.
Risk is a funny thing. It lurks just around the corner and catches too many people unaware.
Thanks for making people pay attention to the potential for loss Mr. Ramsey. That may not be all that you are trying to do, but it sure is needed.