Dave Ramsey’s 4 Tips To Pay Off Your Credit Cards Faster

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Dave Ramsey is a financial radio host, author and personality who has attracted 4 million dedicated followers on Instagram alone. Ramsey espouses no-nonsense principles regarding getting out of debt and controlling your financial life. If you’re one of the many Americans struggling with credit card debt, Ramsey has lots to say on the matter.

Here are some of his best tips regarding how to pay off your credit card debt faster.

Stop Digging

Ramsey is famous for his dislike of credit cards. While many Americans see them as a necessary convenience in everyday society, Ramsey wants everyone to drop that type of thinking. In fact, Ramsey states in no uncertain terms that “a credit card is not a tool. It’s a trap. Seriously. Focus on the money you have and make it work.”

In Ramsey’s line of thinking, if you’re spending money on a credit card, it means you are spending money you don’t have. Rather than paying for your purchases with your own cash, you’re using the bank’s money, and that’s a no-no.

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Ramsey’s first step for those looking to get out of credit card debt is to simply stop using them. Credit card debt is not just a drain on your cash flow, it’s also a major financial stressor. And the relief you can feel when you finally pay it off — not to mention the financial freedom it will give you — is immense.

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Build an Emergency Fund

Contrary to what you may think, in Ramsey’s view, the best way to pay off credit card debt isn’t to instantly attack it.

First, Ramsey stresses, you need to build an emergency fund of just $1,000. The reason behind this line of thinking is that there will inevitably be bumps along the road as you dedicate yourself to paying off your credit card debt. Think an unexpected car repair here, an uncovered medical expense there. If you don’t have an emergency fund to deal with these types of unexpected but predictable expenses, you’ll find yourself going even deeper into debt.

Manage Your Finances — Especially Your Budget

Ramsey believes in paying off debt aggressively, to the point that your friends and family might even think of you as “being weird.”

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Ramsey says “normal” thinking is to be in debt and to live an extravagant life beyond your means, so to get out of debt, you’ll have to be “weird.” For example, as Ramsey puts it, “If you’re working on paying off debt, the only time you should see the inside of a restaurant is if you’re working there.”

Ramsey stresses the importance of making — and following — a budget. In his terms, you should “give every dollar in your plan a job,” meaning you should assign all of your income to productive purposes like paying for rent, utilities and food.

This type of “zero-based budgeting” means you don’t have “extra” money in your budget to just be blown on discretionary items. Rather, every dollar in your budget has an assigned bucket, including paying down debt and savings. If it’s not in your budget — like buying that new phone that caught your eye — it means you don’t have the money to spend on it. This type of organization can help immensely in terms of getting out of debt. 

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Use the Debt Snowball Method

The debt snowball method is where the rubber hits the road when it comes to Ramsey’s action plan to get out of credit card debt.

Under the debt snowball method, you’ll first list your debts from smallest to largest. Then, you’ll make minimum payments on all your debts while paying as much as possible on your smallest debt. Ramsey believes this method works the best because it plays on human psychology and is the most likely to keep you constantly attacking your debt.

Critics claim — and rightly so — that the debt snowball method isn’t technically the most prudent from a strictly financial standpoint. Just using straight mathematics, you would theoretically save the most money on interest if you paid off your highest-rate debt first. But, according to Ramsey, the snowball method allows you to rack up “small wins” that can keep you motivated over the long run.

If it takes you years and years to pay off your highest-rate debt first, for example, you may lose motivation. But if you can continually knock out smaller debts and get that feeling of satisfaction and progress, you’ll likely be motivated to continue.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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