With his straightforward, often blunt, down-to-earth advice, Dave Ramsey has developed a loyal following. His approach to achieving financial freedom involves controlling, reducing, and eliminating debt. His “snowball” method of debt elimination, as well as his Total Money Makeover plan, has helped numerous people get out from under the burden of lifelong debt.
15 pieces of advice from financial guru Dave Ramsey
“My financial life began turning around when I took responsibility for it.”—from Total Money Makeover.
One of Ramsey’s major tenets is a focus on personal responsibility. As with anything else in life, if you don’t take responsibility for controlling your spending and your financial future, nothing will happen to change your predicament. Unfortunately, many people see financial planning as an unpleasant subject, so they avoid it—often until it’s too late.
“Winning at money is 80 percent behavior and 20 percent head knowledge. Most of us know what to do, but we just don’t do it.”—from Total Money Makeover.
Knowing what has to be done to take control of your financial future doesn’t help your bank account grow any more than knowing what foods are good for you helps your waistline shrink. It’s only when you act upon that knowledge that things start to happen. But it can be hard to take the steps necessary to slim your expenses and fatten your savings. It takes hard work, dedication, and even a certain amount of deprivation.
“I came to realize that my money problems, worries, and shortages largely began and ended with the person in my mirror. I realized also that if I could learn to manage the character I shaved with every morning, I would win with money.”
Again, a testament to personal responsibility. Too many people want to blame their money problems on other people, or on circumstances. But the state of your bank account isn’t entirely to blame on your ex-wife, or the president, or the current economy. If you can manage yourself, and take control of spending, debt, and other aspects of your financial situation that are under your control, you can turn your situation around.
Video: Dave Ramsey tells his story
“If the Red-Faced Kid (‘I want it, and I want it now!’) rules your life, you will stay broke.”—from The Total Money Makeover.
Our society has become more and more focused on instant gratification. You see that $2,000 HDTV, and instead of evaluating your finances, making a plan about how to buy it, and then saving to make the purchase feasible, you just buy it, immediately and on credit. This tendency towards large-ticket impulse purchases has turned us all into the “Red-Faced Kid”—who should be put in a time-out until he can get himself under control.
“After losing everything, I went on a quest to find out how money really works, how I could get control of it, and how I could have confidence in handling it.”
Knowledge is power, in finances and elsewhere. Doing a little homework about how to make your money work for you, how to control your finances, and how to eliminate your debt, can put you on the road to financial strength and confidence. But don’t forget—the knowledge alone won’t do the trick. You also have to act.
“Broke is normal. Why be normal?”
The majority of households in the US have more debt than they can handle. Staggering under massive mortgages, auto loans, and credit card debt has become a way of life. It’s this view of “normal” that has us all only a layoff or a medical emergency away from financial catastrophe. Ramsey offers a way to no longer be “normal,” and to get out of the precarious place where most people exist, and onto firmer ground.
“Don’t take financial advice from broke people.”—from Total Money Makeover (Revised 2007).
People are always willing to give advice, even about things they know nothing about. So people who have failed at managing their own finances will be more than happy to give you advice about how to handle yours. Don’t listen. Not even if it’s your mother. You have your plan—stick to it.
“If broke people are making fun of your financial plan, you’re on track.”— Radio Show, August, 2007.
Not only are people always willing to give advice, they’re also always willing to criticize. Especially if you seem to be succeeded where they have failed. Ramsey’s take on this is that if those who have failed at what you’re attempting to do are mocking you, then you’re on the right track. He’s probably right. After all, if they thought your plan was solid and sensible (as you know it is), they would have tried it themselves (which they didn’t).
“We learned early on that if we help enough people, the money will come.”
It’s a paradoxical but true phenomenon that if you help other people, the rewards will come back to you. Whatever your plan to recover your financial footing may be, altruism should be an important part of it.
“Debt has become a part of who we are.”
The American Dream has truly become a dream built on massive debt, on both the individual and national scale. People assume debt is necessary in order to have the necessities of life, or to keep up with the neighbors. It’s become so accepted and assumed that we don’t even think of other ways to manage our money anymore. Which leads us to….
“Debt has been sold to us so aggressively, so loudly, and so often that to imagine living without debt requires myth-busting.… We’ve been sold debt with such repetition and with such fervor that most folks can’t conceive what it would be like to have NO payments.”—from Total Money Makeover.
There’s a huge profit in this country built on individual debt. Banks, credit card companies, and mortgage brokers have made millions—even billions—of dollars from our debt-based lifestyles. The recent mortgage crash has shown the folly of this in a concrete way, but as individuals we need to find our way to controlling the debt economy in our own homes, on our individual level. This means shutting out those loud, aggressive voices clamoring for our dollars in the form of exorbitant interest.
“We have discussed how the strengths and weaknesses in your life will affect your personal finances, but we cannot leave that subject without dealing with one of life’s dirtiest words—discipline. You will have conflict, worry, shortages, and general lack of fun until you achieve some discipline in the handling of your funds.”
Discipline is hard to achieve in any application, whether it’s losing weight, learning a musical instrument, or financial management. Discipline, consistency, and self-control require hard work and delayed gratification, and we tend not to be very good at any of those things. Once you’ve mastered the fine art of self-control, though, everything else tends to fall into place. You might even find other areas of your life coming together, not just your finances.
“To think that the handling of your personal finances is merely a matter of math control is naive. You must get better control of all aspects of your life. Until you do, [even the best advice] will have little effect but will instead be neutralized by the other habits in your life.”
Another example of knowing what to do versus doing it. All the studying, advice collecting, note-taking and research will do you no good at all until you act upon it. And once you act upon knowledge gained to bring your finances under control, you’ll have to keep a close eye on other areas of your life, as well. Lack of control and discipline in other areas can bleed over into your focus on your finances, potentially undoing anything you’ve achieved.
“We must develop a power over purchase—instead of allowing our purchases and the people from whom we make the purchases to have power over us.”—from Financial Peace.
Being in debt gives our creditors power over us. Any time you have a large debt hanging over your head, you’ll always run the risk of getting into a situation where you can’t repay it. You could lose your job, or become disabled or have a sudden, costly medical emergency. Suddenly your debt becomes completely unmanageable, and power over your financial future goes into the hands of lenders and credit card companies—although, truthfully, it was there already. Keeping control over your finances helps you make sure the power is always in your hands, and not in the hands of a faceless creditor who doesn’t have your best interests at heart.
Video: Dave Ramsey Video
“It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity. However, our culture teaches us to live for the now”—from Total Money Makeover.
Delayed gratification is an important skill to learn on the way to self-control. Wanting everything immediately, regardless of the cost or consequences, is a sure way to lose control of your financial future, and it isn’t the best course of action in other areas of your life, either. Learn to control yourself, and controlling all aspects of your life—including your finances—will naturally follow.
One of Ramsey’s major tenets is a focus on personal responsibility. As with anything else in life, if you don’t take responsibility for controlling your spending and your financial future, nothing will happen to change your predicament. Unfortunately, many people see 
The majority of households in the US have more debt than they can handle. Staggering under massive mortgages, auto loans, and 