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Can You Spot Dave Ramsey’s Bad Advice?

Dave Ramsey has built a substantial following through his practical and straightforward approach to managing money. His debt recovery program has been effective for many. However, many find Ramsey polarizing. 

While many praise his clear, actionable advice and credit him with helping them achieve financial freedom, critics argue that his one-size-fits-all approach doesn't account for individual circumstances.

According to financial experts, Ramsey's strong stance against credit cards and debt is strategically inappropriate, and his investment advice includes purchasing commission-based products widely seen as not in investors' best interests.

Can you pick out the advice Dave Ramsey proclaims to be best for everyone, regardless of their circumstances, which makes it bad financial advice for many? 

Dave Ramsey: Payoff Mortgage Early or Invest? 

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

We went into detail illustrating when it makes sense to pay off your mortgage early in our previous post, Should I pay off my mortgage early? 

When asked why a couple may not want to pay down a mortgage early, Michele Kruger, Ph.D. and CFP® noted that,

“Married couples may not want to pay off their mortgage early if they have a low-interest rate and feel confident they would save or invest the excess cash flow they are considering directing to their mortgage.”

What Does Dave Ramsey Believe?

What about the Dave Ramsey quote, is it real? It is. Source of the Dave Ramsey quote: Knox News

We decided to use Dave Ramsey’s specific example, his advice to take out a 15-year mortgage, current interest rates, and his example rate of return on investments. We even assumed that we would invest the saved amount after paying off the house early to calculate the outcome of his advice. 

Calculating Dave Ramsey's advice to pay off a mortgage early rather than investing more.

Dave Ramsey Mortgage Rule

Dave Ramsey has lots of rules. In today's housing market, some feel impossible. Take, for instance, his mortgage rule. 

Dave Ramsey recommends following the 25% rule—buying a house with a monthly payment that's less than 25% of your monthly take-home pay on a 15-year fixed-rate conventional mortgage. 

Is this possible for ordinary couples living on the coasts? I don't know, but I do know that if it is, I strongly agree with this advice. Maintaining low fixed costs is an essential strategy for couples who want to save more for retirement, not be tied down to a limited lifestyle, or not be concerned if their paycheck changes monthly. 

Dave Ramsey: Student Loan Advice 

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

Most would agree that if you can avoid student loans you should. I feel this way. However, that’s not what Dave Ramsey preaches, and that’s not what is in his high school curriculum. 

What Does Dave Ramsey Believe?

Dave Ramsey believes that, "You don’t need student loans to afford college."

Source of the Dave Ramsey quote: mtshasta news

While I was teaching personal finance a representative for Dave Ramsey’s curriculum tried to convince me that under no circumstances should any student borrow any amount of money to go to college, that they should just work at McDonald’s and save first. 

The next time you go to the hospital, ask your doctor if they paid for medical school by working at McDonald’s. 


Related: Use Student Loan Planner to eliminate your student loans.


Do I Need A Credit Score?

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

Those without a credit history may face higher interest rates, bigger security deposits, or outright denial. Credit invisibility can also limit opportunities for financial mobility, making it harder for people to invest in education, buy homes, or start businesses, ultimately affecting their overall well-being and stability.

What Does Dave Ramsey Believe?

Dave Ramsey thinks being credit-invisible isn't a problem. Source of the Dave Ramsey quote: The Dave Ramsey Facebook Page

This isn't just wrong; it's dangerous.

Failure to show credit history with the major credit reporting agencies can have serious consequences. A lack of credit visibility can restrict access to essential financial products and services, like loans and credit cards.



Will I Always Pay More Using Credit Cards?

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

It is true that for some folks they do spend more with plastic than cash. As we shared in our past post, How to Handle Credit Cards During Marriage, credit cards activate the reward center of our brains and drive spending, which explains why studies have found that people spend more when using credit cards instead of cash, up to 20% more.

Credit card debt can be at the center of frustration for some married couples, which is why we go to great lengths to help couples prevent or work through it in our toolkit designed to start, strengthen, or rebuild marriages. 

What Does Dave Ramsey Believe?

What Dave Ramsey actually said was, “You will always pay more with a credit card.” Source of the quote: KTAR News

Believing that you will always pay more with a credit card is dead wrong.

You will not “always” pay more with credit cards. In fact, I pay less with credit cards because I use them strategically to earn rewards. I also attribute my strategy for using credit cards as the tipping point to earning a perfect credit score.



The Dave Ramsey Snowball Method: Is it the Fastest Way to Get Out of Debt?

The Avalanche method works best for debt holders who can stick to the plan because the math is typically more favorable. Using this method, debt holders first eliminate the debts with the highest interest rates, then apply the additional money from eliminating that debt to the debt with the second highest interest rate.

Feel free to plug and play your debts into the Magnify Money calculator to see for yourself.

Another option is to start with the snowball method and, after gaining momentum, switch to the Avalanche Method.

What Does Dave Ramsey Believe?

Dave Ramsey believes the debt snowball method is the fastest way to get out of debt. Source of the quote: Dave Ramsey's TikTok 

This is another example of Dave Ramsey's absolutism, and it is simply not true.  He believes that folks should apply extra payments to the loans with the smallest balances first to experience the psychological boost of eliminating debt. After which, the additional money you have from eliminating that debt is applied to the next smallest balance. 

This strategy could work best for some, but stating that it is the fastest way to get out of debt for everyone is simply untrue. Below is an illustration of the math.

Comparing Dave Ramsey's debt reduction method to the avalanche method



How Much Do I Need to Save for Retirement?

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

Financial professionals who are forced to give a number will often state that you need 8-10x your current income in retirement savings. However, there are too many variables to rely on this rule of thumb alone.

I asked fee-only financial planner John Stoj for his insight on how much you need to have saved for retirement.

"In the end, no matter what withdrawal rate you get comfortable with, the amount a person needs to have saved before retirement depends on the difference between their expected expenses in retirement and their income in retirement."

What is a withdrawal rate?

The retirement savings withdrawal rate reflects the percentage that you may be able to take from your portfolio each year without depleting your money.

What Does Dave Ramsey Believe?

Although the rule of thumb for professionals is to feel you can safely establish a withdraw rate at 4%, he calls those professionals morons.

Ramsey's hard fast rules is to count on drawing from retirement savings at a rate of 8%.

John shared with us that the 4% rule has been tested over time, and remains a good rule of thumb, but as with any result based on models, the assumptions make all the difference. The assumptions surrounding investment returns are some of the most important.

"Making unrealistically high return assumptions can give you a false sense of security, such as thinking you can withdraw 8% per year, as was recently mentioned by Dave Ramsey."

Whether he made that comment for attention or he believes it, many folks have pointed out the potential problems with such a high withdrawal rate, like here on Morningstar.

Is All Debt Bad?

Did Dave Ramsey say this?

  • Yes. Dave Ramsey said this.

  • No. Dave Ramsey did not say this.

I hate debt, but I’m also a realist. Saving to purchase a home with cash is unrealistic for most, and as you previously read, it doesn’t always make financial sense. 

We recommend remembering the rule of thumb that good debt helps your future self; bad debt hurts your future self. 

Over borrowing hurts your future self. However, a small student loan to graduate from college and earn significantly more than you could have without a college degree helps your future self.

I hate auto loans, but if public transportation is unavailable and you don’t have enough cash to buy a car, an auto loan might be necessary to get to work. There are many examples such as this. 

What Does Dave Ramsey Believe?

Dave Ramsey said, "All debt is bad."

Tough Love

Christine Luken, Financial Dignity® Coach and host of the Money is Emotional podcast, is a past Dave Ramsey's Financial Peace University instructor.

I asked Christine for her thoughts on some of Ramsey's approaches.

One thing she said really stuck out to me. It is a common criticism of Dave Ramsey's "tough love" approach.


"It might make for an entertaining radio show, but shaming people for their money mistakes is deeply damaging and counterproductive. Shame causes people to hide from their mistakes and avoid seeking help."

Luken added, "I prefer to treat people with compassion and dignity, which makes them receptive to suggestions for positive change." 

Do I Recommend Dave Ramsey?

Dave Ramsey has helped many people. Couples who needed a strict, simple, and short-term debt recovery solution have told me it worked for them.

Most of those same people moved before applying step 6 and eventually turned to solutions that are healthier in the long run and more commonly recommended by financial professionals. Solutions such as ours.

One important lesson I hope you've learned from this deep dive into Dave's thinking is that there is no right way for everyone, only a right way for you in your marriage. And that could mean using Financial Peace University.

Marriage Toolkit

Personal finance is more personal than finance. This is especially true for couples, which is why our Marriage Toolkit provides couples with evidence based ideas from professionals they can use to start, strengthen, or rebuild their marriage.

The Marriage Toolkit includes advice from nearly 50 of the nation’s leading experts in managing money and the home as a team. 

Access a free preview of our Marriage Toolkit today.


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