Dave Ramsey is known for his financial guidance with a side of no beat-around-the-bush, tough love, with a touch of compassion.
You’ve probably heard of him. Made famous by his best selling books, Youtube Channel, Podcast, Finacial Peace University classes, syndicated radio show, and countless other platforms and guest appearances.
He is the controversial budget guru who tells you to cut up your credit cards and stop increasing debt.
His free budget advice will give you the steps you need to pay off debt and never go back if you are willing to listen.
He has created an empire by saving people from themselves.
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What Is A Budget Coach?
I joined the Ramsey Solutions Family about 18 months ago and became a certified Financial Coach. I guide people toward financial freedom and help them navigate their financial journey.
I am not a financial advisor and always recommend one as needed.
I went through extensive training, and I am offering it to you through these 29 Dave Ramsey Top Tips.
Who is Dave Ramsey?
Making millions of dollars in his 20’s and then losing it all taught Dave a few life lessons, being a man who will admit his stupid money mistakes, learning from them, and analyzing the teachings of the bible, he came up with a system that has helped hundreds of thousands of people get out of debt.
Famous for his live debt-free screams, he shows you that anyone can get out from under the stress of debt and live the life they have always wanted.
He is a trusted voice of both money and business. At age 26, he was a multi-millionaire only to be completely bankrupt and broke by 30.
Dave then took all of the lessons learned and started counseling others in 1992 on money management and personal finance, creating Financial Peace University.
He may be most famous for his best selling book The Total Money Makeover designing the perfect program for debt payoff.
Dave Ramsey’s Budget Advice
“Debt is dumb. Cash is king.”
“Live like no one else so later you can live and give like no one else.”
“Winning at money is 80 percent behavior and 20 percent head knowledge. What to do isn’t the problem; doing it is.
Most of us know what to do, but we just don’t do it. If I can control the guy in the mirror, I can be skinny and rich.”
Dave created an entire financial system to not only get himself and his family out from under a pile of debt but then went on teaching his methods to others.
The 7 Baby Steps:
- Baby Step 1 – Save $1,000 for a starter emergency fund
- Baby Step 2 – Pay off all debt (except the house) using the debt snowball
- Baby Step 3 – 3 to 6 months of expenses in a fully-funded emergency fund
- Baby Step 4 – Invest 15% of household income into retirement
- Baby Step 5 – Save for your children’s college fund
- Baby Step 6 – Pay off your home early
- Baby Step 7 – Build wealth and give!
Finding True Financial Freedom
Our financial journey started 20 years ago. As a young stay at home mom and a failed business, I needed to find a way to help my husband pay our bills. It was my job to get super frugal.
And I did.
The next step was to pay off our debt, and I found Dave Ramsey. I read and reread Total Money Makeover (you can get it through this link through Amazon), took notes, and implemented his ideas.
We stopped and started several times, but finally, after years, we became debt-free and paid off our house.
I became a little obsessed and just couldn’t get enough of Dave Ramsey, Ramsey Solutions, and the entire team. I knew I wanted to be a small part of that organization – I knew I wanted to be a budget coach.
And that’s when I decided that already being a teacher, this was something I could be good at. I became a Financial Coach.
29 Dave Ramsey Top Tips For Money
Decide that you are finished with this money game, and you aren’t willing to play anymore. Decide that you are ready to get your life in order and be at peace with your finances once and for all. And you are never going back.
Jump in where you are.
Don’t wait. Start right now. The best time to pay of debt was yesterday. The second is right now.
Get fired up.
I’m talking gazelle intense excited. You need to be sick and tired of being sick and tired. You make to much money to be this broke. Get mad. Get intense.
Change your behavior.
The only person that will be able to dig you out of the hole you are in is you. Deciding to create new spending habits is all up to you.
Deciding to stay home and read a book rather than go to the mall shopping for shoes is a behavior change that you need to come to terms with.
Know yourself. If you are out of control and find your checking account is overdrawn because your debit card can’t stay in your purse, you have a little bit of work to do.
Take care of 4 walls first.
This means making sure your home payment is made, the electricity stays on, you have heat and food.
And make sure you have transportation for work. Keep the priorities straight and the most important things front and center.
Start a baby emergency fund.
A baby emergency fund is $1,00. It is collected first before you make any debt repayment. Its a cushion in case anything happens because the last thing you want to have to do while paying off credit cards is to have an emergency come up and have to add that to your debt.
Dave suggests selling stuff, picking up side jobs, or returning things just to get this fund put in place as soon as possible. Save money fast; by whatever means you can.
My favorite Dave Ramsey financial advice – Cash is king. If you know plastic just gets you into trouble, stop using it.
As a budget coach, I always recommend this. Many people are apprehensive so I suggest trying a cash only system for just a little while. Just so they can stop the cycle of swiping that card.
Cash envelope system are the best way to keep track of how much you have to spend. When that money is gone, you are done spending. Check out this article on the cash system wallet.
Ignore the Joneses.
There’s a pretty good possibility that they are buried up to their eyeballs In debt. The house they live in, the car they drive, the clothes they wear. If they are flaunting it, there’s a chance its all bought on credit. You don’t know their story, so stop comparing yourself to them.
As you are traveling through your debt free journey, it is ok to give. It doesn’t have to be a lot, and it doesn’t have to be monetary. Give your time—volunteer to feed the hungry. Walk dogs at the shelter. Do crafts with the senior citizens.
We are all here to serve each other.
Use sinking funds.
After using cash, this is my next favorite Dave Ramsey advice. Sinking funds have saved me over and over 9and over again).
These are just mini emergency funds for things you know coming like Christmas, pet bills, once a year heating fuel bill, or hunting camp dues.
Having the money ready when its time has not only saved me from scrambling around trying to collect the money but also given me peace of mind knowing its there and available. For more on sinking funds, check out this article.
Stop all debt.
Cut up the credit cards, don’t ask Aunt Mindy for another loan, and commit never to borrow money for anything again.
Understand that if you can make a “payment” each month, that you can save up that same amount of money for the same amount of time and pay cash for a car.
Communicate with your partner.
Have a budget date night once a month to make sure each of you knows what is happening with your finances. Allow feedback and understanding.
Decide together what your future financial goals look like and how much should be assigned to each budget line. Check out this article on couples and money here.
Create a zero-based budget.
A zero-based budget is just a fancy way of saying that every dollar has a name. The incoming minus the outgoing equals zero. So even if you have $109.43 left after all your bills are paid, you assign a purpose tot hat money.
Call it “cushion” or “just in case” but don’t leave it hanging out without a purpose. You can read more about how to create a budget in this article.
Consider budgeting apps if you are not old school pencil and paper type.
Be grateful for what you have.
Gratitude will keep you going. Finding debt freedom may be a long road.
Keeping up that motivation is going to get hard, but if you remind yourself how grateful you are to have the ability to make more money and pay off debts to change your family tree, it will just take you that much further.
Be thankful for the roof over your head and the food in your belly – even if it is rice and beans…again.
Eat at home.
Preparing your food at home is a foolproof way to decrease your spending and find money to throw at debts. Going out to eat is not cheap. And even that $25 family meal deal at KFC once a week on the way home from soccer is an extra $100 a month.
Look for a deal.
Always. Never pay full price for anything. Shop around and thin outside of the box. Then, pay cash and ask them if they will take less if you do.
We got a deal on tuxedo rentals for my oldest son’s wedding because we paid cash. We got a better price on a porta potty for a party because we paid cash. You never know unless you ask.
Never buy a new car.
A car depreciates so quickly. It happens the second you drive out of the parking lot. There are so many perfectly acceptable used cars out there that are a fraction of the original price.
When we were looking for our minivan, I found one that was two years old in our budget. We paid $22,000. The comparable model that was brand new was TWICE that amount. Yup. I kid you not. Ours looked brand new.
Cut back on spending.
This is where you go into everything that you spend money on and find a cheaper alternative.
Calling your cell phone company and asking for a less expensive plan, shopping for clothes at Target rather than the Banana Republic, using coupons and sales when buying groceries. Cut back in every area.
Earn more money.
This may mean picking up an extra job, starting a small business, or shaking things up with a side hustle. This may also mean walking into your boss’s office and asking for a raise or applying for a higher paying position.
What would an extra $1,000 a month do for your life? Check out this article on making money with a side hustle.
Practice saying no to your children.
Saying no to your children when they want something might be hard. But its not forever and it might just be good for them.
They won’t slip into a coma if you cancel cable.
They will be just fine with a small family birthday party instead of 50 kids, a bouncy house, and a catered menu.
This also goes for older children getting ready for college.
There should be an understanding that you will not partake in student loans and putting them into debt at the very beginning of their adult lives.
Sticking with a 15-year mortgage.
If you can’t afford the payment on a 15-year mortgage, you can’t afford the house. The interest on a 30-year mortgage is more than you should be spending.
Practice the debt snowball.
The debt snowball method is a debt elimination technique that allows you to pay off your debts from smallest to largest (paying no attention to the interest rate) and focusing on the smallest first while paying minimum payments on the rest.
Because this technique focuses on quick wins by paying off the smallest debt fast and emotions rather than math, interest rates do not play a part.
Save 3-6 months of expenses.
This is your long term emergency fund. Included are three to 6 months of expenses in case of job loss, illness, or pandemic. It will also cover any type of emergency repair to home or vehicle or airfare if you need to get someplace fast.
Again, decide ahead of time what you will consider an emergency.
Find a good savings account like Capital One 360. Something that will earn you a little interest yet is easily accessible.
You don’t need a credit score.
This Dave Ramsey tip is pretty controversial. Even in my Facebook group.
The theory is that a credit score is only good for getting more credit. So if you never plan on borrowing money, you don’t need a credit score.
The controversy lies with mortgages, jobs, and rentals. Many of these places will check your credit score.
It’s a decision that you are going to have to make. Perhaps explaining that your morals and ethics align with not borrowing money might be enough. Or extra letters of reference might be in order.
Save for retirement.
After you have gone through baby steps 1,2, and 3, its time to start saving at least 15% of your income for retirement. If you can and want to save more, that is also alright.
Don’t rely on your company or the government to take care of you in your older age. Keep those decisions and choices in your hands.
Go through your house and pull out everything that you don’t need and aren’t using. Garage Sale season is almost here, and that is a great way to make some extra money.
Sell stuff on Facebook market place or craigslist. You could even get extreme and sell a car!! Here’s an article on having a successful garage sale.
No credit cards.
This may be one of the most famous Dave Ramsey tips. He is known best for telling you to cut up those credit cards. Credit cards are just borrowing money to pay for stuff you don’t need.
Be mindful of every penny.
Know where your money is going. Don’t just spend will nilly. Designate a specific amount to the task and don’t go over that amount.
Keep it simple.
Don’t over complicate things. It’s ok to have five budget categories if that’s your personality. Let’s not make this anymore overwhelming than you need it to be.
This is quite the list. Dave Ramsey’s money advice is well known for being filled with love and no bull. He teaches people to build a life of freedom from restriction and debt while building a legacy for generations to come. He shows you how to change your family tree.
As a financial coach and a student of Dave Ramsey, I can confirm that these tips work.
But it’s all up to you. You must make your financial journey a priority.