When it comes to debt, personal financial advice guru Dave Ramsey is quite staunch in his opinion towards it. Clearly, he is not a fan. In fact, he strongly believes that debt is not only a heavy financial burden, but it can potentially trap you from achieving a secure financial future.
Instead, he advises consumers to stop taking on more debt. He follows up this advice with the importance of creating an effective strategy to pay it off, completely. By following his “7 Baby Steps” as a powerful debt reduction strategy, he advocates that the first Baby Step begin with saving $1,000 for an emergency fund.
In Dave Ramsey’s world, there is simply no such thing as “good debt” and that by paying off every penny owed, it is more likely to help you reach the financial stability that many Americans are yearning for. As the U.S. household debt reached a staggering $17.3 trillion in the beginning of 2024, it may be time to hear the reality of what debt truly is…a trap. To hear more of Dave Ramsey’s take on what debt is, here are eight quotes about debt that you really need to hear.
1. “The only good debt is a debt that is paid off.”
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Why It’s Relevant
- Debt is a burden
- Debt-free means true financial freedom
- Financial responsibility requires eliminating debt
Key Message: No Debt is Best
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Although financial advisors in the industry have promoted the view that debt can be categorized as “good” and “bad” debt, Ramsey teaches that all debt is bad. His stance is that debt is rarely positive. Furthermore, he refers all debt as a burden that needs to be eliminated. He believes that debt is only “good” when it has been completely paid off.
2. “Debt is normal. But the truth is that you should not want to be normal. You need to be willing to be weird. Weird is when you live sacrificially in the present, pay off your past, and invest in a financially peaceful future.”
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Why It’s Relevant
- Just because it’s common, it’s not the best situation.
- Take control of your finances
- Invest in financially stable future
Key Message: Sacrifice the Present
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How many people have told us that debt is an inescapable part of life? Ramsey begs to differ. Just because debt has become a pervasive part of our society, it does not mean that this is a normal way of living. Common does not mean normal. Ramsey believes that all consumers have the power to take control of their finances and not fall for society’s pressures or the lure of advertisements to purchase. He encourages consumers to go against what is currently considered “normal” and forge a new path towards financial freedom. It begins by making better financial choices.
3. “Debt always equals risk, and it’s always dumb.”
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Why It’s Relevant
- Debt locks you into a financial obligation
- It increases the risk of financial strain
- Unexpected events will jeopardize your efforts to pay off your debt.
Key Message: Debt Limits Your Options
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Although debt will allow you to acquire that which you desire, it is never without risk. For one thing, taking on debt creates a financial obligation that you will be required to fulfill. Furthermore, life is rarely without bumps on the road. There is always that risk of losing your job or having to bear an unexpected financial expense. These events can easily thwart your efforts to pay off your debt. Also, if you are unable to pay your debt, you will likely face late or penalty fees, further increasing your debt responsibility.
4. “Debt is not a tool; it is a method to make banks wealthy, not you. The borrower truly is slave to the lender.”
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Why It’s Relevant
- Debt should not be leveraged to reach financial goals.
- Borrowing means you will pay more than you initially borrowed.
- Debt will control your finances.
Key Message: Don’t Be Trapped By Debt Obligations
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Debt should never be a means to reaching your financial goals. With this quote, it appears like Ramsey is criticizing banks for charging interest on loans. When a consumer borrows from a bank, they normally end up paying above and beyond what they originally signed for, generating more revenue for banks. That is why Ramsey encourages financial responsibility so that consumers don’t find themselves in a financially vulnerable situation where they must resort to borrowing money.
5. “There are no shortcuts when it comes to getting out of debt.”
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Why It’s Relevant
- Will require sacrifices in spending
- Will require discipline to get out of debt
- Will also require a steadfast commitment to make it happen.
Key Message: Dedicate yourself to a strategy and stick with it.
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When it comes to liberating yourself from the snares of debt, Ramsey says that there are no quick fix solutions. It will take developing an effective strategy to control your spending, paying down your debt, and remaining consistent until this goal is reached. Ramsey cautions against falling for anyone who tries to sell a quick, debt-elimination scheme. They don’t work and they will simply take your money.
6. “We are being taught by everything around us to have dessert before dinner. Now we are paying for our lack of knowledge and discipline.”
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Why It’s Relevant
- Don’t prioritize instant gratification over long-term, financial benefits
- Instead of spending on your wants, invest.
- Ignore the media advertising that only encourages you to spend.
Key Message: Focus on Having a Satisfying Financial Dinner
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Like eating dessert before dinner, making repeatedly poor financial choices will leave us in poor financial health. Wanting to purchase everything your heart desires, simply because you want it, will not set you up for financial freedom. The bottom line is that expenses add up…fast. Long-term financial well-being should be paramount in order to remain in control of our finances. This involves gaining as much financial education you can about investing while simultaneously curbing your spending.
7. “Knock out a small debt first so you get a quick win. Momentum is key.”
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Why It’s Relevant
- Don’t spread your payments across multiple debts
- Knocking out your smallest debt gives you a sense of progress
- Creates a sense of momentum
Key Message: Smaller Success Leads to Bigger Success
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Paying off a significant amount of debt can be daunting. That is why it’s important to tackle the smallest debt you have first. By doing so, you will be able to pay it off sooner, boosting your confidence and motivation to tackle the next debt you have. By experiencing these “quick wins” you will gain a sense of momentum. This more manageable approach to paying off your debts comes from Ramsey’s believe that small wins can easily translate into bigger wins.
8.  “The first step in taking control of your money is to stop borrowing money. Start using cash today.”
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Why It’s Relevant
- Stop relying on debt
- Interest rates will diminish your income
- Using cash forces you to me more mindful in your spending.
Key Message: Use Cash to Deter Overspending
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Just because most people use debit and credit cards to make their purchases, it doesn’t mean that the use of cash is dead. On the contrary, there are many consumers that still prefer to pay with cold, hard cash. The great thing about cash is that you have a physical representation of where you are spending your money. When the money leaves your wallet, you gain a better understanding of your financial situation, encouraging you to make your purchases more judiciously. Using cash also has the power to curb any impulse purchases that tend to happen with card purchases.
Why This Matters:
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With the mind-blowing debt that Americans are carrying here in the U.S., it is only fitting to take a pause to evaluate how we are spending our money. Although Americans have high hopes about their retirement, the sad reality is that most are falling short of these goals. With 40 year olds inching closer to their retirement years, the window of opportunity to earn an income and invest these earnings is quickly diminishing. That is why it is important to solidify your financial goals by working out a detailed plan and follow through with it. Dave Ramsey offers his advice for 40 year olds in these quotes.Â
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