Dave Ramsey Says These 12 Lies Keep People in Debt
Written by
Ashley Donohoe
Edited by
Maria Concepcion
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
A recent Federal Reserve Bank of New York report showed that households had $212 billion in debt during the last quarter of 2023. Whether you’re struggling with credit cards, student debt or auto loans, you might believe several misconceptions that keep you stuck. On his blog, the financial guru Dave Ramsey debunked these 12 common lies about debt.
1. A Debt-Free Lifestyle Is Scary
Living without borrowing money might appear uncomfortable, but drowning in debt is scarier. Ramsey explained that you could still use cash and a debit card for everyday purchases.
2. Debt Is No Big Deal
While monthly payments might seem affordable, the long-term costs include interest, fees and missed opportunities. To see the big deal, consider the total borrowing cost versus the return you could receive by investing the cash instead.
3. Budgeting Limits Your Freedom
Rather than feeling like a budget limits you, consider that the plan gives you better control and can even help you find spare cash. Ramsey highlighted how budget apps can make the task more convenient.
4. Debt Is Normal or Maybe Helpful
Although the majority of Americans are in debt, Ramsey disagreed that this is normal or financially beneficial. By changing your lifestyle to avoid debt, you’ll avoid the stress and financial dangers.
5. You Can’t Afford to Live Without Debt
Your current income shouldn’t stop you from getting rid of debt. Ramsey suggested seeking a promotion or pay increase at your current job or taking on side hustles to speed up the payoff process.
6. There’s Plenty of Time to Prepare Your Finances for the Future
Delaying decisions to prepare for your future and manage money responsibly will only keep you stuck. Ramsey suggested using his 7 Baby Steps program immediately to tackle debt, save and invest.
7. Making Sacrifices Isn’t Worth It
Saying “no” to nonessentials, selling possessions or cutting overall spending can seem frustrating in the short term. However, Ramsey agreed it’s worth it to escape debt and free up your income.
8. You Need to Keep Up Appearances
Spending cash to keep with others often just leaves you broke. Ramsey wrote, “If you want to stop being in debt, then don’t let people who are in debt be your role models.”
9. Your Spouse Doesn’t Need To Be on the Same Page
Ramsey advised that you should always consider your and your partner’s finances to be combined. Because of that, you both should commit to and work toward getting rid of debt.
10. “I Want It, and I Want It Now!”
Insisting on buying things outside your budget is an easy path toward burdensome monthly payments and interest. Ramsey wrote, “Here’s the deal: If you can’t pay cash for it, you can’t afford it.”
11. A Credit Card Is Essential for Emergencies
While convenient, using a credit card for emergencies can lead to long-term financial trouble plus high-interest costs. Ramsey suggested a hefty emergency savings fund is what you really need.
12. Becoming Debt-Free Is Impossible
Although it requires major effort, getting out of debt is achievable with the right attitude and strategies. Start with budgeting wisely and consider the debt snowball method that Ramsey suggests.
More From GOBankingRates
