Dave Ramsey’s Top Financial Advice

Dave Ramsey, author of The Total Money Makeover, is a widely celebrated financial expert. See some of Dave’s top financial advice.

1. Don’t use credit cards. Everything you buy should be paid for with cash. This way you save money on interest charges.
   
   
2. Create a budget. Account for every dime you receive. Put your budget on paper and give it 3-4 months to begin working.
   
   
3. Save $1000 in an emergency fund. Before you begin paying off your credit cards, build a small emergency fund that you can fall back on in an emergency.
   
   
4. Begin a debt snowball. With a debt snowball, you pay off your debts, smallest balance first, using your discretionary income. As you pay off each credit card, you take that money and put it toward the next credit card.
   
   
5. Finish your emergency fund. Once your credit card debt has been repaid, build your emergency fund to include three to six months of living expenses. This will keep you from using credit cards in emergency situations.
   
   
   
   
   
   
   
6. If you try to impress other people, you’ll lose the wealth race. Dave recalls the tortoise in the fable The Tortoise and the Hare. The lesson to be learned is that slow and steady wins the race.
   
   
7. Winning at money is 80% percent behavior and 20% knowledge. You don’t have to be smart to get out of debt, you just have to change the way you behave with money.
   
   
8. Pay off the mortgage on your home early. The sooner you pay off your mortgage, the sooner you’ll be completely debt free and the less you’ll pay in interest.
   
   
9. The average millionaire reads two nonfiction books a month. Dave talks about the habits of people in debt, saying they watch too many television shows and don’t read enough. The wealthy, he says, can’t tell you who got voted off the island.
   
   
10. There is no positive side to credit cards. No matter how you cut it, there’s no true benefit to using credit cards, even if it’s to get so-called rebates or rewards.
    
    
11. You cannot beat credit card companies. Consumers are wrong to think they can go against these multi-billion dollar corporations. Credit card companies make the rules and consumers have to play by them.
    
    
12. True debt help is not quick or easy. No matter how hard you look, you won’t find an easy way out of debt. It takes time and hard work to turn your debt around.
    
    
13. You are the problem with your money. Nothing else is to blame. If you want to get out of debt and start building wealth, you have to change your money behaviors.
    
    
14. Budgeting is basically a plan. Though many people fear budgeting like they fear bankruptcy, a budget is simply a plan for how you’re going to spend your money. It’s nothing to be afraid of.
    
    
15. Bankruptcy is listed as one of the top 5 life-altering events. While bankruptcy may be a viable alternative to getting out of debt, it will affect the rest of your life – financially and emotionally.
    
    
    
    
    
    
16. Wealthy people don’t use debt. Wealthy people didn’t get there by borrowing money from other people. Neither will you.
    
    
17. Use debit if you must use plastic. There may be times when you need to process a transaction with a credit card. In those situations, use a debit or check card rather than a credit card.
    
    
18. Do not be concerned with interest rates (in debt payoff). Since money management is 80% behavior, you’ll build momentum by paying off low balances quickly.
    
    
19. Invest 15% of household income into pre-tax retirement. After your debt has been paid off, you should start putting away some retirement savings into a 401(k) or Roth-IRA.
    
    
20. Build a college funding for children. Once you’ve repaid your debt, built an emergency fund, and began saving for retirement, you should start saving for your children’s future.