Many people aspire to do what they love for a living. But turning that goal into reality involves some complex decision making.
Dave Ramsey, the bestselling personal finance author and radio host, has some strong advice about how to achieve success. Importantly, he suggests caution for people planning ways to follow their dreams.
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One woman seeking Ramsey's advice recently asked him about a decision she and her husband had been discussing.
"My husband is a good, hard-working man, who has been stuck in a job he really doesn't like for almost 10 years," wrote Renee, according to an email sent from Ramsey Solutions to TheStreet.
"He came to me the other day with an idea to cash out his 401(k) and using the money to open a business," she explained. "He has always loved the idea of going into business for himself, and I want him to be happy, but I'm not sure this is a good idea. Do you have any advice?"
Ramsey took no time addressing her concern.
"Yes, I do have some advice," Ramsey answered. "And it can be summed up in one word: Don't."
The personal finance personality encouraged her to think about the implications of such a move.
"I admire your husband's spirit, but the way he wants to approach this turns the entire situation into a trap," Ramsey wrote. "Think about it. If his business idea doesn't work out, you guys have lost your retirement savings, and bankruptcy becomes a very real possibility."
"Diving head-first into opening a new business just because you're bored with your current situation, or tired of answering to others, is not a good idea," he continued.
Dave Ramsey respects the desire for financial independence
Ramsey expressed a sense of understanding about how people want to take control of their financial lives.
"Look, I get it," he wrote. "Lots of folks have an entrepreneurial spirit. And everyone I know like that wants to live their dream. The problem is these dreams can turn into nightmares, for the entrepreneur and everyone around them, if they don't plan wisely and very carefully ahead of time."
The radio host cautions against gambling with too large of a bet.
"In my mind, one definition of a nightmare in business is 'going all in,'" he wrote. "When you're playing cards, this means betting everything on a single hand. You never go 'all in' when it comes to business."
"So, for the moment, the first question he needs to ask himself is this: How can I live my dream without going all in?" Ramsey wrote.
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Ramsey suggests a practical financial approach
Ramsey offered up the idea of framing the situation in a different way.
"For starters, he needs to find something he truly loves doing and can look forward to every single day," Ramsey wrote. "To have any chance of success, he'll have to live and breathe that idea."
"I know you love this guy and want to help," he continued. "So, the best thing you can do right now is express your concerns about his idea, and offer to help him think about what he could do every day that would make him smile. Once he has the answer to that question, the next step is figuring out how to start that business without putting your entire financial world in danger."
Then Ramsey aimed his thoughts toward a blunt question.
"In other words, how can he save up some money — and start small — instead of blowing your entire savings or going into debt?" he asked.
"If you have some cash other than your emergency fund or retirement fund, it's okay to use some of that," Ramsey continued. "But never, ever, go into debt to start a business, or pledge every dime you have to something that could be a complete disaster."
Ramsey offered a parting thought with a positive statement.
"It's not an either/or proposition, Renee," he wrote. "He doesn’t have to risk it all to get away from a job he hates and live his dream."
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