QUESTION: Becky from Vicksburg, MS, has been following Dave’s plan. She has her emergency fund in place and is investing in mutual funds, but a financial planner has recommended bonds to her. She asks Dave for his opinion. As you will hear, he is not a fan.
ANSWER: I’m not a fan of bonds, and I don’t own any. The bond market is almost as volatile as the stock market, and it doesn’t pay nearly as much on average. On top of that, bond prices work at an inverse of interest rates. In other words, as interest rates rise, bond prices go down.
Long-term interest rates right now are extremely low, and bonds are how mortgages are funded. You know how cheap mortgages are? If you were to buy a bunch of Fannie Mae bonds, as an example right now, and interest rates went up one percent, you’d lose your shirt!
If I were ever going to buy bonds, it would not be now — because of low interest rates. I’m not a fan of bonds in general, but I’m really not a fan of them right now. It doesn’t take much of a move in interest rates for bond prices to go down dramatically. It’s a serious, serious problem for the bond market right now.
I don’t recommend that at all right now. I recommend mutual funds and good growth stock mutual funds. There are always some bonds mixed in with a growth and income fund, and I’m not opposed to that to some degree, but it’s not my favorite. The bond market is really dangerous right now.
QUESTION: Kevin in Midland, Texas, just became debt-free. He is currently a renter. He calls in to ask Dave if he should get a mortgage and go back into debt or save up and pay cash for a house. Kevin is 28, makes around $75,000 a year, and is single. He’d like to keep the price of a new home around $200,000, and he thinks he can save $15,000 a year. Dave believes he can do better and get into a new home in 10 years.
ANSWER: Since you’re going to be debt-free, let’s round that figure up to $20,000 a year. If you’re saving $20,000 annually, that sounds like 10 years to a nice, new home — and you’re still debt-free.
That’s one way to do it. But I don’t borrow money, Kevin. And I don’t tell people to do things I won’t do. The one exception to that is that I don’t yell at people for taking out a 15-year, fixed-rate mortgage, where the payments are no more than 25 percent of your monthly take home pay. You could save for one or two years and put down a really strong down payment on a home in the price range you’re talking about.
Then you could pay that house off in 15 years maximum, but you might pay it off even sooner. That’s probably what you’re going to do.
QUESTION: Troy is a small business owner in Durham, NC. He’s a veteran of Dave’s EntreLeadership Master Series course, and he wants to formally implement a “no gossip” policy at his company. Troy asks for some creative ways to implement this type of policy within a company that has numerous locations, and Dave is glad to help.
ANSWER: First, let’s define the policy and what it means. Gossip is when you have a problem, and you yap about it to someone who can’t help you fix it. The policy is pretty simple; you hand your negatives up, and your positives down and laterally. There’s no sense in talking to the receptionist about how stupid your sales manager is. You’d better go talk to the vice president of your company if your sales manager is stupid.
I tell my team all the time that they’re going to have problems. You’re going to have frustrations with people and projects, and you might even get mad at me. And that’s okay. It’s part of life, and I don’t mind all that. But you have one choice when you experience a problem, and that is to hand that negative up. When you don’t do that, we’ll sit down and talk to you about it one time. But if we ascertain that there is a pattern of you running around the company, running everybody down and backstabbing people, we’ll fire you. You’ll get a warning first, but after that we will fire you.
In your situation, I’d start at the home office and let it bleed out from there to the other locations. Let’s start with the head organization and the home office, getting things fixed there, and then you can go out and testify to the other branches what you did and how it has worked. Go over how you talk about unity when you hire people, and we need to do this because gossip is an enemy of unity. Of course, the worst kind of gossip is somebody who sits and runs their mouth about the people who pay them. That’s disloyal, and that’s a special kind of thief. I’ll fire that kind of person quicker than anybody.
That’s what I would do. And then, invariably what will happen is that someone, for some reason, won’t believe it. You’ll have to warn them, and then sometime in the next year you’ll have to fire somebody. And that’s when it becomes real. The rest of the team looks around and goes, “Oh, Troy was not kidding!”
Then, the team will start to respect the leadership and cleanliness of the environment, because people don’t like working in cesspools of gossip.
QUESTION: Randy was notified that he is one of the beneficiaries of a class action lawsuit against a previous employer. The amount he can receive is $200, but Randy doesn’t think that he was wronged and feels weird about accepting the money. Everyone around him is urging him to take the cash, so he calls in from Dallas, Texas, and asks Dave what he should do.
ANSWER: Well, the people who are telling you to take the cash are not people who think like you think. They’re people who would just take any money; the kind of people who wouldn’t return a wallet full of cash if they found it on the sidewalk. But you would, so you don’t take advice from those people. They don’t live like you live.
Your heart has already told you what to do. God is whispering in your ear. If I were in your shoes, I wouldn’t take it. If it were $100,000, I wouldn’t take it. You were not wronged, and that money is for someone who was wronged.
I don’t know the details of the entire episode, or what happened with this particular company, but don’t agree with the idea that we’re supposed to beat up everybody and milk everything we can get out of every human we come across. Some people just live like it’s anarchy and have no sense of decorum. But you do. You have a sense of pride and a sense of dignity about you. And I agree with you.