Dave Ramsey has been a very influential figure for me that has helped me take more financial responsibility in my life. I wanted to write about how he had changed things personally for me and why I found his advice to be highly effective.
Currently in America and around the world at large, many fall victim to bad financial decisions. To make matters worse, we live in an age of social media gurus who look to take advantage of others by promoting get rich quick schemes. Those that are desperate to solve their financial problems are more vulnerable to be taken in by false claims, looking for any way out of a crisis. Standing out from fake wealth gurus, Dave Ramsey offer realistic and practical advice for getting out of debt and living a better lifestyle.
I liked how Dave Ramsey’s content was structured because he would take real calls from people struggling with debt and other financial issues and give them solid advice on how to remedy their situation.
My Debt Story
In 2016, I did not make much money but I also did not have any debt yet either. I was living in Boyle Heights, a neighborhood that I wanted to get out of at the time. In desperate hopes of a better lifestyle, I made many decisions that actually slowed things down for myself.
During this time, I got my first credit card, a Discover, and began making foolish investments in the hopes of getting quick returns on my money. Eventually I got a Mastercard from Capital One, which I would quickly exhaust along with the Discover card Although I had assistance from my parents in paying off a debt of around $1,500 that seemed large at the time, I eventually spent everything on the card again.
As the years progressed I found better income opportunities, but I had not learned to manage money properly and spent most of what I made, overestimating the amount coming in. Around 2018 I was approved for a credit card from Chase as well as an American Express Gold Card. Initially I did not spend much on either of these.
During the summer of 2018 I realized that I wanted to move to Miracle Mile, a neighborhood that I loved in Los Angeles. I was making $4,000 a month around this time and I used a lot of the income to pay off half the debt on my Capital One and Discover cards, raising my credit score to around 690. Upon applying for the apartment I wanted, the landlord thought that the credit score alone was sufficient and didn’t even review my income or further documents much, showing me the importance of financial responsibility at the time.
My Mistake
After having two cards halfway paid off, I should have continued to pay off my debts. However, throughout 2019 I attempted to utilize credit card debt in order to build new business ideas I had in the hopes that they would turn out profitable. While there were some successes at times, this was ultimately a foolish idea. I was too inexperienced to run these businesses and any money put into them should have come from saving up 6 months of operating costs, not utilizing credit card debt. Looking back, I needed more time to work and understand finances before I attempted to start businesses. I also realized that many things I spent money on had alternatives that were lower cost or free, that I could have chosen instead if I really wanted to explore certain ideas.
Throughout 2020, I felt that I couldn’t give up on the ideas I had started and I continued to spend a lot of money on the wrong ideas and people. Eventually, I had accumulated about $16,000 total in debt. Towards the middle of 2021, I realized that I couldn’t sustain things any longer and that changes needed to be made.
Dave Ramsey’s Advice
Prior to my awakening, I had been following many social media wealth gurus too closely which gave me a warped view of attaining success. I realized that I had to leave those ideals behind and look towards real advice if I wanted to succeed.
I remembered that I had listened to Dave Ramsey a bit in 2017, and liked his practical advice on not living beyond your means and being realistic with money. I realized that during the last few years, I had really lost focus and wasn’t tracking what I was earning and spending. I had believed any debt could be easily replaced because my ideas would earn the money back quickly, which had been wrong too often and was not something I could continue to believe anymore.
During May of 2021, I began to really think about my future and how I was not at all on the path to reach it. I cut off many ideas and people that were not conducive to my well-being. It was time to rebuild.
I reread and re-watched much of Dave Ramsey’s content during this time, and as I did I took his advice more seriously. A few things struck me the most:
- Pay off debts
- Live below your means
- Buy things in cash
- Debt is a lifestyle problem, not a math problem
I realized that living with constantly maxed out credit cards was no real way to live and that my life would rightfully be viewed as disappointing by others if they knew the full extent of my situation. I began to understand how right that Dave Ramsey about the damage that debt could cause. Following his advice, I began to become hyper focused on paying debts off before doing anything else. I focused on the activities that were already generating consistent income and put more time into those, decreasing the time I put into speculative ideas.
I also remember how Dave Ramsey once told a couple that they would have to work a lot more hours temporarily, and that it didn’t have to be a life sentence but they had to take action now in order to secure the future that they wanted. I adopted this mindset during this time and realized that I was going to have to do more work and learning if I wanted to leave the situation, and as of now I usually spend 7 days a week working in some form. I also decided to quit gaming during this time, which also greatly allowed me to focus on my financial situation. I however do not view that as a sacrifice and I likely won’t be returning to it in the future, as I feel much better without it.
As a result of Dave Ramsey’s teachings and my newfound understanding of my own situation, I took a completely new attitude towards how I viewed my debts. Instead of spending as soon as I had a card balance, I would now try not to touch my balance at all once I had paid part of it, only viewing my cash assets as things I could spend to buy things. This helped me cut down on unnecessary spending and made me only buy the things that I really needed. Furthermore, at times when I wanted to buy something, if I didn’t need it instantly, I would put off buying it and put the equal amount into paying off debt instead.
The Strategy I Used
To pay off the 4 cards that I had, I mainly did 4 equal payments between all of them. I would then not allow myself to use the cards to make purchases. There were some times where I overpaid a bit for the month and I had to use the card instead of cash, but for the most part it wasn’t a large setback.
During this time, I made tremendous progress by staying focused on earning more, reducing spending, and paying debt. In the span of about two months my credit score had already risen about 80 points.
Although my strategy worked and I incorporated Dave Ramsey’s advice on paying debts as a priority, I think I also should have used his snowball method for paying debts, which I did not do initially.
Debt Snowball Method
Dave Ramsey often says that debt is a lifestyle problem, not a math problem. This is true, because if we were truly doing math, we wouldn’t have ended up in debt.
“A lot of people wonder the same thing when I bring up the debt snowball. Some think paying off the debt with the highest interest rate first is the best approach. This may seem to make sense mathematically, but I realized a long time ago debt is not a mathematics problem — it’s a behavior problem. Personal finance is 80% behavior and only 20% head knowledge. Besides, if all those people were so great at math, they wouldn’t be up to their eyeballs in debt in the first place.”
I realized that for myself, this was definitely true. During my times of deepest debt I was often not thinking mathematically and was not thinking of my spending in a rational manner. I also realized why he recommended the snowball method once I had paid off the first card.
In detail, the snowball method involves making the minimum payments on all debts for the month and then putting the rest into paying off the smallest debt until that one is paid off. Once the smallest debt is paid off, the next debt up should be focused on until only the largest remains. This method is meant to give people motivation and build smaller goals into larger ones.
When I paid off the first card, I realized the relief and motivation that I gained from having it completed. Although I was mathematically paying the same amount by splitting it between 4 and I was saving on interest, I felt that if I had focused on paying one off earlier, my motivation would have been stronger.
Being burdened with debt can be psychologically damaging and makes it difficult to take action when the amount looks extremely large or unpayable. Without seeing enough progress, some people may be prone to giving up on the task. Dave Ramsey highlights the importance of paying the smallest debt first as it can give a much needed boost in self-esteem in order to make paying the next debts easier.
While I was paying off my 4 debts at once, I saw the progress I was making incrementally, but the task would still feel daunting at times and I felt very disappointed in myself for ending up in such a situation. However, I think that if I had put the efforts into one card first, I would have quickly seen what I was capable of and gained the stronger will to earn more to improve my financial standing.
Although my remaining two cards still have 70% of the debt to be paid, the task ahead seems much more manageable now that I have finished paying the first one and am almost done with the second.
Real Results
Dave Ramsey has helped millions of Americans pay off their debt, with advice such as his 7 Baby Steps. I find his advice to be especially good because he is willing to be honest with individuals about their financial situation. He lets them know what they need to immediately change and how damaging their current lifestyle can be. When many callers call in to explain their situation on his show, it is apparent that not many have given them true advice before they consulted Dave Ramsey. People may have friends or family members that enable them to continue a destructive lifestyle or who may not be aware enough of the situation. Additionally, the average American carries about $16,000 in debt, so living in debt can almost appear as a normal situation. Dave Ramsey is always ready to dispel money myths that people have and give them real advice on how to build a future.
The great part about Dave Ramsey is that he does not try to sell you expensive products to promise you a way to wealth. All of his important teachings can be found for free on his website and in his videos. They are simple teachings that are easy to remember and that can be applied immediately to one’s life for results.
I found Dave Ramsey’s story to be very inspirational because he once faced crushing debt himself, and he started Ramsey Solutions as a way to ensure that no others would have to go through the same struggles.
“Many companies define success based on the dollars coming in, but at Ramsey Solutions, we define our success by the number of lives changed: listeners getting out of debt, readers taking their first Baby Step and saving $1,000, Financial Peace University graduates investing for their future. We learned early on that if we help enough people, the money will come. Our mission statement isn’t just lip service — it’s our mantra.”
Dave truly cares about the well-being of his fellow Americans, which was truly shown during the pandemic. In a time where many Americans were struggling to make on-time payments, Dave Ramsey helped forgive $10 million in debt. He did this in order to show people the love of Christ for the Christmas season.
Although I am not religious, I am in awe at this type of gesture and I am very thankful for how considerate he is of others. I personally have benefited very well from his teachings, and I hope that one day I can show others the way like he does.
Moving Forward
Although Dave Ramsey’s advice is great for individuals, we have to remember that it also applies to the larger framework that we live in. As of June 30, 2021, the United States government had a total debt of $28.5 trillion. This type of irresponsible spending by public officials is endemic to almost all governmental institutions.
In the future, we need truly responsible citizens that can uphold these roles of office, who understand the basics of finance and do not create unsustainable social security or pension systems.
Later on, I’d like to write much more on those topics at large. For now, although I have big plans, I know that I need to resolve my own issues first before I can do anything beyond myself.
My upcoming plan is to continue to pay off my remaining debts until they are completely resolved. I plan to use Dave Ramsey’s snowball method on my remaining two cards and I will pay the one with the smallest balance in full first.
Beyond that, I want to live in a more responsible manner, so that I can eventually be someone who can make positive changes in the lives of others.
