Dave Ramsey is Very Wrong on this Important Piece of Advice
Financial gurus have helped a lot of people. But when you’re dealing with the masses, you have to do generalized and blanket financial information. That usually works… except when it’s bad advice.
Dave Ramsey has some great advice, and has helped a lot of people along the way. But he is really, really, wrong on one important aspect of debt. View the video, or keep reading for the deets.
How Dave Ramsey is Wrong with Credit
One of the big selling points for Ramsey is the idea that debt is evil and we should all bust our asses to get out of debt and stay out forever and ever.
That’s cool and all, and probably feels really good. It makes sense emotionally, but not financially.
One of the ads that popped up in my social feed was from Dave Ramsey that mentioned how a credit score is just a score of how much you love debt. And that’s all good for Dave, who has a net worth north of $200 million. He can pay cash for just about anything he wants. For the rest of us, we need a healthy credit score so we don’t get screwed over in interest rates.
Let’s say you want to buy a home. If you have a low credit score, you have to pay more in interest than those who have a healthy credit score. To the tune of about 1.5% more interest.
It doesn’t sound like much, but that extra 1.5% means an additional $300/mo on a $250,000 house.
Your “I love debt” score saves you thousands of dollars per year… but it’s not important to worry about is it?
Why Debt isn’t All Bad
The second issue that I have with the anti debt movement is that not all debt is bad.
I’m not talking about how home loans and student loans can be good, versus credit card debt is bad.
I’m talking about how if you’re locked in at a low interest rate, like less than 3% low, you should keep that debt as long as you can. Inflation is rising faster than the interest on your debt. So over the years, your money does more good invested or saved than it does paying off a loan.
Grow Your Net Worth; then Grow it Some More
Furthermore, however, is that you can actually use debt to increase your net worth.
Rather than reinvent the wheel, I’ll turn it over to a handsome fellow I know that talks about using leverage debt to grow your net worth.
Get Rid of that High Interest Debt with No to Grow
The only way to get out of debt is to rapidly pay down your highest interest debt.
I’ll show you how to get the funds in order to make those extra payments through the No to Grow course. From there, wipe out the high interest debt, freeing up your access to credit so you can make money leveraging the debt you have.