Dave Ramsey: 12 Lies That Keep People in Debt (2024)

According to the New York Fed, total household debt rose by $212 billion to $17.5 trillion in the fourth quarter of 2023. As borrowing increased, so, too, did delinquencies — but according to Dave Ramsey, this is happening because of all the lies.

He thinks so many people are struggling because they accept certain personal finance lies as truths.

In a recent blog post, Ramsey’s team outlined the 12 lies that keep people in debt.

Debt Is Normal and Can Even Be Helpful

In a country where debt is the norm, financing your life might feel normal. But Ramsey and his team insist it is not.

The blog said that “living in debt kills the American dream,” explicitly calling out car payments and student loans. It went on to note that the concept of “good debt” is a myth, as is the misconception that you need debt to build a strong credit score.

I Have Plenty of Time To Map Out My Financial Future

The blog noted that one big problem with debt is that you can’t save for the future “as you continue to pay for your past,” — but people soothe themselves with what the blog calls the “I have plenty of time” lie.

Lost time hobbles compounding and it’s imperative to get the crucial first $1,000 in the bank now and not someday so you can start building real wealth.

I Don’t Earn Enough To Live Debt-Free

If you use a low income to justify debt, the Ramsey blog said you’d be much better off concentrating on earning more than borrowing to prop up your lifestyle. The lie is that it’s OK to borrow if you have to. Ramsey and his team believe that falling for it ensures a future of financial insecurity.

It’s Not Worth the Sacrifice

According to Ramsey’s blog, the lure of consumer culture spawns a lie that says it’s better to be broke than deprived of material possessions and lavish experiences.

His site recommends cutting small guilty pleasures out of your budget first, trading expensive vacations for “a budget-friendly staycation,” and selling your overpriced car and trading down to one you can afford to buy with cash.

Budgets Constrict Freedom

Ramsey’s blog also notes that too many people believe that budgets limit freedom, when in fact, “a budget gives you freedom” by providing a plan for your money.

“And budgeting isn’t hard,” his site said, which means there’s no reason everyone shouldn’t draw their own maps to prosperity.

I Have To Keep Up With the Joneses

The idea that you have to keep up appearances is a money lie that makes people try to match their neighbor’s new luxury car or kitchen makeover without realizing how much they had to borrow to finance them.

“We hate to break it to you, but it’s a big ol’ nope on both of those things,” Ramsey’s site said.

Most times, the people you’re emulating traded financial security for shiny things.

I Need It Now

Ramsey’s site said the desire for instant gratification leads people to spend themselves into poverty for wants, which they often finance with credit cards or BNPL services that let them stretch out purchases on payments.

Ramsey and his team have other ideas.

“Instead, don’t buy things you can’t pay for right now — ever,” the blog noted.

Debt Is a Security Blanket

Ramsey’s blog said people stay in debt because they’re scared to transition to a life without borrowing.

“But it’s kind of like slowly cooking in a pot of boiling water,” it noted. “It’s warm and cozy at first, but before you know it, you’ve been boiled alive. Yikes!”

Debt Is No Big Deal

Ramsey’s site said one of the most destructive lies is that it’s good enough to keep the wolves at bay by making minimum payments.

Ramsey and his team insist that it is not.

“Your credit card has sneaky hidden fees and interest,” the blog said. “Your student loans are growing bigger by the day. Your leased car is losing value as you read this sentence.”

To see what you’re missing out on, plug your monthly debt payments into an investment calculator to see how much you would have earned had you been investing for tomorrow instead of paying for yesterday.

It’s OK for Spouses To Be on Different Pages

Ramsey’s blog said that conflicting money goals, philosophies and behaviors are poison for both finances and relationships.

“Listen up — money issues aren’t something you want to disagree about,” the blog noted. “If you really want to get out of debt, you and your spouse have to be on the same page. And remember, it’s not my money or their money — it’s our money.”

You Need a Credit Card in Case of an Emergency

Ramsey’s team wrote that this is a lie because “if you keep that ol’ credit card around for ’emergencies,’ you’ll find that everything starts to become an emergency.”

The site insists that cash reserves are the best defense against crises — and if you’re paying cash instead of swiping a card, you’ll be much more discerning as to what qualifies.

It’s Just Not Possible To Get Out of Debt

The final lie might be the most destructive of all — the one about the inevitability of debt.

“Yeah, getting out of debt isn’t easy,” Ramsey’s blog said. “It takes a lot of hard work and discipline. But it’s not impossible.”

His site recommends the snowball method of debt reduction for most borrowers, but he always comes back to his central thesis — the key to wealth is to stop borrowing and buy only what you can afford to pay for right now.

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