Dave Ramsey is a well-known radio host, a successful businessman, and a best-selling author. He is also known as one of the best personal finance experts in the country.
He is also a self-made man who started with nothing and made seven figures and $250,000 a year by the time he was 26. Now in his early 60s, he has spent many years getting even richer by helping other people get rich. Here are some of the wisest things Dave Ramsey has ever said and some of the best tips he has ever given to his many fans.
Reduce Debt Before You Invest.
Ramsey’s first rule of trading is that you shouldn’t put any money into anything until you’ve paid off all of your bad debt, which he says is pretty much everything except your mortgage.
Ramsey says that you can’t get rich if your main way to get rich, which is your income, is going to financial charges every month.
Use the Snowball method to your advantage.
It’s easy to talk about getting rid of debt, but it’s hard to do. That’s why Ramsey has been a supporter of the “snowball method” for a long time. For this debt-reduction plan to work, you have to pay off your debts in order from smallest to biggest.
This way, you can get quick wins that pay off your debts and boost your confidence as you go. When it’s time to face your really scary debts, you’ll have momentum on your side, and you’ll be able to focus on them alone now that your smaller debts aren’t following you around.
Build a fund for emergencies before you try to get rich.
Ramsey’s number one rule for saving is to get out of debt. The second is to make sure you have enough money in your backup fund before you try to make your money grow on the market.
Eliminating debt puts you on solid financial ground, but if you don’t have enough money in the bank to cover three to six months’ worth of costs, you’re just one emergency away from having to use your retirement account.
Give 15% of every cheque you get to yourself for the future.
Ramsey says that the most important thing you can do with your paycheck is to save 15% of it every pay period in a tax-advantaged account. This is true once you’re out of debt and have enough savings to last at least three months.
Most of the time, a 401(k) is the best choice because every dollar from a company match is free money, and free money is always good. But if you can’t do that, a pre-tax IRA or a Roth IRA are the next best thing.
Trying to keep up with the Joneses is a game you can’t win, so don’t play. Sometimes what you don’t do with your money is more important than what you do. Ramsey wrote in his book, “The Total Money Makeover: A Proven Plan for Financial Fitness,” “We buy things we don’t need with money we don’t have to impress people we don’t like.”
In the world we live in now, social media stars literally count on you being willing to spend money to show off for people you don’t even know, let alone like. Spending money on things you don’t need is bad for building wealth. Remember that every dollar you spend is one you don’t save.
Utilise Money-Saving technology.
People in the modern world have access to amazing gadgets and apps that would have been unthinkable even a generation ago. Ramsey wants you to use all of them because many of them can save you money.
This includes smart thermostats that can save you money on your energy bills, banking apps that can save money for you automatically, smart shopping and coupon apps, apps that help you make a budget and more. Or, Don’t follow the crowd and go old-fashioned. Technology can help you save and grow your money in easy ways, but Ramsey has a lot of fans who got rich the old-fashioned way.
Ramsey wrote about a student named Kay N. on his blog. Kay said, “Go old school and balance your bank account. This is very important! First, make sure your bank account is in black, so you know where you stand. Then, start with a simple budget. It all comes down to taking small steps.”
Make use of what you already know.
Getting more information is always a good thing to do unless it makes you too smart to do anything else. Remember that every hour you spend learning about new ways to handle and grow your money is an hour you don’t spend building a budget, making a spending plan, or investing for your future. You should learn more as you go, but you can start right now with what you already know.
Ramsey wrote in “The Total Money Makeover (Classic Edition): A Proven Plan for Financial Fitness,” “Winning at money is 80% action and 20% head knowledge. The trouble isn’t knowing what to do; it’s doing it. Most of us know what to do, but we don’t do it. If I can control the person in the mirror, I can be thin and wealthy.”
Don’t go inside a grocery store without having a plan.
Ramsey writes on his blog that a USDA study shows that even the most frugal family of four spends almost $1,000 a month on groceries.
But you can lower that number by getting rid of what Ramsey calls “budget busters,” which are small, impulsive purchases that cost a lot of money in the long run.
His answer is to only buy the things he needs for a meal plan he has already made and to never, ever change the plan. He also says that to avoid temptation, you should order your goods online and pick them up, or at least leave your kids at home when you go to the store.
Know what you don’t know and get help from a professional.
Ramsey’s own blog says that he still uses a professional advisor to help him make decisions about his investments and general financial strategy.
No matter how much you keep up with news and trends, a good money pro will have more insight and a better viewpoint based on their own experience and what you tell them about your goals, strategy, and circumstances.