You’re reading a personal finance blog right now, so you’ve probably heard of money expert Dave Ramsey.

Dave has authored several books, teaches a popular course called Financial Peace University (which I highly recommend), and hosts the Dave Ramsey Show.

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I recently shared my thoughts on three ways Dave Ramsey is wrong about money.  This quickly became one of my most controversial posts and it sparked more debate than any other article on this site.

I do disagree with Dave on a few key points, but I love the vast majority of what he teaches.

Reading his book The Total Money Makeover shifted my perspective and completely changed my life.  Since reading that influential book a few years ago, I’ve paid off $127,000 of debt, bought a car with cash, and purchased my first home.

I’m not sure where I’d be right now if my friend had never lent me a copy of Dave’s book.  I am so incredibly grateful that she did!

Here are five crucial ways Dave Ramsey is absolutely on the money…about money.

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Cash is King

“If you can’t afford to pay cash for it, you can’t afford it.  Don’t let monthly payments become a way of life.” – Dave Ramsey

Dave is strongly opposed to debt and encourages people to pay cash for everything instead…even expensive things like cars, college, and homes (note: Dave is okay with a 15 year mortgage on a home if you don’t have enough saved to pay cash).

This perspective is unusual in our society.  Most of us are raised to believe that debt is a “normal” and necessary part of life.  How many people do you know who have ZERO monthly debt payments?

While it may seem crazy if you’re used to debt, it IS entirely possible to live a debt-free life and there are SO MANY benefits of doing so.

As Dave says, “You know what you can do when you don’t have debt payments?  Anything you want!”

The average American household carries nearly $2,000 in monthly debt obligations…between a mortgage, two car payments, student loans, credit card debt, and other forms of debt, it adds up quickly.

Imagine if you had nearly $2,000 back in your budget every month.  What could you do with that money if it wasn’t going toward debt payments?

Debt is Always Bad

Dave is blunt about his views on debt.  He does not distinguish between “good debt” and ”bad debt” as many people do.  I love this and completely agree.

There was a time in my life when I thought that certain types of debt were necessary and that debt could be a useful tool.  I no longer believe that.  Student loans are NOT “good” debt.

Debt is debt.  Period.

Like Dave, I wouldn’t tell someone not to buy a home with a mortgage (because I realize that expecting EVERYONE to buy a home with cash is unrealistic).

However, I would not say a mortgage is “good” debt.  It’s better than other types of debt, sure, but that doesn’t make it “good”.

There is no such thing as “good” debt.

A Budget is Crucial

Many people hate budgeting.  I get it.  Budgets have a bad reputation.  We think that they’re restricting and we don’t want to feel deprived.

The funny thing is that’s not really true.  A budget doesn’t take away your freedom; it gives you freedom.

Why?  For one, a budget gives you permission to spend.  You don’t need to feel guilty or concerned about your spending if it’s accounted for in your budget.

Another reason a budget is freeing is because you can tell your money where to go instead of wondering where it went.  You don’t have to be broke all the time.

You can get control of your money and achieve your financial goals, whatever they may be.

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Invest ASAP

This is one area where Dave Ramsey receives a lot of criticism.  While personal finance nerds agree that investing ASAP is important, many are skeptical about Dave’s math.

Dave says that if you follow his investing advice, you’ll receive a 12% return on your investments.  Many people think this rate of return is unrealistic.

I didn’t mention anything about investing in my post about why Dave Ramsey is wrong for one crucial reason: people are missing the point here.

Dave Ramsey himself has said that even if you disagree with the 12% return, it doesn’t matter.  If he’s half wrong (and you get a 6% return), you’ll still earn a lot more on your investments if you start early.

The sooner the better.  That’s the point.  Start as soon as you can, and you’ll reap the benefits of compound interest over many years.

The Joneses are Broke

My favorite Dave Ramsey quote is “live like no one else now so you can live like no one else later.”

If you do what other people are unwilling to do (working like crazy, being super frugal, living way below your means), you’ll be able to live a life they’ll never be able to live.

While they’re drowning in debt for many years to come, you’ll be living your best life.

What does your dream life look like?

Do you want to travel the world, retire early, give generously, volunteer, work fewer hours, spend more time with your kids?

You know what you can do when you don’t have debt payments?

Anything!

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