While I completely agree with the mindset of living "debt-free" as far as frivolity goes, I do think that student loans can and should be the exception to this rule. For millions of bright, hardworking young people like myself, college (and subsequently better job opportunities) wouldn't be possible without the aid of student loans, and we would truly be limited in our options for bettering ourselves. Please keep this in mind.

Kristin July 28 2010 2:17 PM

My husband and I took one of his classes... i must say it was one of the best things we could have done for our future. those of you saying they wish teens and young adults would get this... well there are plenty of older adults who are just as nieve.. who do you think the young people learn it from? they dont know better unless you teach your children. We own no credit cards and save for everything we would need or want. I do have college debt, i do wish i had worked even harder to pay some while going to school but i did not, now i know some valuable lessons from dave to prevent getting into debt if i decide to go back to school ever. people think you need a credit card to get by in life but you know.. i am under 30 and i am living day to day with out them just fine. :) Thanks Dave!

steph June 18 2010 8:07 AM

We are 100% debt free. No home loan, auto loans, boat loans,etc. 100% debt free with nothing owed to anyone for anything and best of all we are able to pay ourselves. It is an incredible boost for our piece of mind. Stress is gone. Our biggest concern in life{pretty small at that} is health insurance. Life is Great.

Lloyd Powell June 18 2010 5:36 AM

This article has very valid lessons that I call life savers. We tend to be drawn to having all our needs met in the present but living us with very little if nothing to live by later in life.

kemmy June 15 2010 8:26 AM

I wish teens and young adults were taught of this sort of way of life creating good "habit's" and protecting them from harm.

Burhon Jora June 07 2010 10:44 PM

My wife and I are in our early 50s, married nearly 29 years, and have avoided debt as much as possible. We do not use credit cards, drive older used vehicles we pay for with cash, give money to our church regularly, and have saved 15 to 20% of our income since our mid 20s by paying ourselves first and investing. We paid our house off in less than 20 years. We have always sought to control household expenses. The result is that we are totally debt free with a healthy net worth! Our investments make more money than we do now through the miracle of compound interest! (once you have saved enough, your money starts working for you and it never sleeps, complains, or takes a day off). We have been called many things by others such as: cheap, frugal, lucky, strange, etc. In truth, all of these are probably true to some degree. Being debt free gives you incredible peace and tranquility in life. My wife and I never argue about money, or much of anything else for that matter. We truly believe this is due to having our finances in order. We also believe anyone can achieve this by setting their priorities and, above all, by being patient. We did not get here overnight. Our philosophy is that having "nice stuff" does not make one wealthy. In fact, it makes you broke when you go into debt to get it. The problem is, the stuff you have keeps you from feeling broke. We truly believe that financial peace is much better than stuff we don't really need. Obviously, this is something everyone has to decide for him/herself. We highly recommend the book "The Millionaire Next Door" by Thomas Stanley, Ph.D. (you can get a copy through Dave Ramsey's web site). It is easy to read and it will change the way you think about money and rich people. It might just change your life!

Kirk Forster June 05 2010 8:10 AM

Kevin - If you have the discipline to pay off your credit card balance every month on time it's nearly identical to a debit card, with the exception that you could spend more money than you have or will receive. I know someone who put all of her expenses on a credit card and then paid it off at the first of the month when she got paid. The problem is she was always a month behind, meaning she was spending the money she was going to get before getting it. Fortunately she stopped this and caught up before something tragic happened like losing the job that was going to pay for all those expenses put on the credit card. The other thing is you shouldn't really use a debit card all that often. Pay for things with CASH and negotiate lower purchase prices whenever you can. You can't really negotiate when you are using plastic. Also, studies show when you use cash you spend less, substancially less. So whether it is a credit card or a debit card, you are still spending more than you need to be.

Andrew Beckham June 04 2010 3:51 PM

Why use a credit card as an "Accounting tool". Can't you just use your bank statement? Credit cards are snakes, like Dave says. Do not underestimate the power and influence of the banks. They have done extensive research on our shopping habits and how advertising affects us. Do not make the mistake you can outsmart the banks!

Joel June 03 2010 7:49 PM

This is the first time I have been to this site and I like what it says about debt. My wife and I each have our own credit card (only 1 each). We use them like a debit card. Whenever a purchase is made it is entered into the check register the same as a check or debit card entry. When the bill comes due the money is pulled back in to the register and the bill is paid in full. It works great for us.

Kevin Scott June 02 2010 3:23 PM

Very very profound. I love the comments that people have put; they sum up my philosophy as well: Never get into a debt or borrow money from anyone, never bring yourself into such a situation, don't buy a house or car on credit if you cannot pay it up and if it causes you to lose your mind.

Abhilash May 20 2010 11:20 PM

Debt means you never have to understand the distinction between wants vs. needs. Debt means that you never have to practice self-discipline. That being said, there are a certain circumstances where I agree with using debt: 1) education 2) 30-fixed loan on a primary residence where you never increase the principal 3) medical bills Notice that your education and your health cannot be "repossessed" and will not decrease in value. My wife and I are in our 40's. In our combined lifetimes we have spent a *lifetime total* of $32,000 on vehicle purchases. The only way vehicles leave our possession is at the end of a wrecker. We don't waste money on a lot of "necessities" like movies in the theatre. (Netflix cost considerably less). We don't bother with cable (except for the internet access) - we spend the time with friends. We own our own home and will, never, ever sell it (so we paid real estate brokers only once in our life.) I think the best decision of all of these - is the decision to stop watching TV. All of sudden, we have more time for each other, the kids ears are not being filled with 'wants' and we were less stressed.

Pat May 20 2010 2:11 AM

The simple advice for credit cards would be to cut them up and don't use them. I would advise instead to shop for good terms and use the credit card as an accounting tool - paying it off every month. So you can reap the rewards of the points perks while frustrating the card companies as the dreaded "deadbeat" - that is, the customer they cannot make money off of with their (practically punitive) finance charges. The key is to not treat the credit card as a way to buy anything that you wouldn't buy with cash. In their defense, credit cards are practically a must for the emergency situation.

Brian May 11 2010 10:46 AM

Incredible post, I cannot agree with these ideas more, I also believe that renting a house is better than owning one, you have more freedom and whenever you can't afford the mortgage payment you can reduce expenses and so on or move to another house of a less expensive rent payment. Magnificent blog Thank you Dave

Alan May 07 2010 11:24 AM

In reference to Deborah's post, my husband and I are trying to do the same thing...sell our house to become debt free. My family taught us kids that owning is ALWAYS better than renting. Well, now I know that's not always the case. They never bothered explaining that it's only better if you can put a significant amount down and comfortably afford the payments (oh yeah, and don't have any other debt on top of it!). I bought my grandparents’ house right before my husband and I got married and it's been a financial nightmare ever since. We added two new cars to our debt load, had a baby and discovered the house is falling apart…so we have to come up with money to fix it up while trying to pay the debt off. Everyone is absolutely right when they say that debt is a huge stress factor in marriages, not to mention blended families (we each brought in one child from previous relationships). It's now a requirement in our home that each of the kids take Dave's class before they move out so that they won't repeat the same mistakes, hopefully.

Sarah May 06 2010 5:37 PM

How do you reconcile this with the literally millions of people who are helping to raise themselves out of poverty through the Micro loans provided by the Nobel Peace Prize winner Muhuammad Yunas' Grameen Bank? (and many others like it) Or the fact that you would be hard pressed to find many successful people that don't use debt as a tool? Incorrectly using any tool is dangerous, but that doesn't make it a myth. Claiming a 'Truth' about a perception without anything to back it up is far more dangerous...

CBear May 06 2010 2:20 AM

My dad always told us to stay out of debt, to save for the things we need in life (car, etc.) and do without, or do with less, until we could afford them. His one exception was a home loan, but even then he practiced austerity and only borrowed what he could comfortably pay each month, while still saving for everything else, including his retirement. I've followed his advice and am now living very comfortably, with two nice homes paid for, retired at 38. I agree with Ramsey 100%. A little reasonable debt is essential in a capitalist culture. But we've made debt into a cultural lifestyle, and are now paying dearly for it. Personally, I don't think we've seen the worst part of the recession as yet. I think we've been artificially assisted in the short term by (can you guess?).... historical new levels of government debt! Markers to watch: commercial real estate, jobs, nation defaults, and interest rates.

John L May 05 2010 7:40 PM

Dave, you are so right about the peace of mind that comes with being debt-free. When we bought our home, we "under-bought" based on what lenders/real estate agents were telling us we could afford. The home we purchased has met our needs and we paid it off in 11 years. Some friends and family acted like this was a mistake. However, when my husband was laid off and out of work for 11 months in 2008, this benefited us in two ways. First and foremost, we didn't have a mortgage or rent payment to deal with every month. Secondly, we had been investing what would have been going to mortgage payments in CD's in a manner that one would mature every month or so giving us potential cash flow if the need arose. We ended up not needing it. We have always paid cash for our cars and never carry a balance on our credit cards. The big pay-off is that this way of managing our debt or lack thereof has allowed us to do what we love for a living and still be financially secure. For us, this is OUR American Dream.

J Schmidt May 05 2010 2:54 PM

Agree entirely - I have followed this ethos my entire life thanks mostly to my father, helped on a little by some financial services training from a big UK lender early in my career and finally cemented by observing my friends in the very latest trends sweat over their huge credit debt. If you can't afford it now, you can't afford it later. But, big but, I did leverage debt to build a nice property portfolio in lieu of a private pension - another myth ready to explode en masse.

kathryn May 05 2010 12:20 PM

Debt is a reason that many people are afraid to take risks in their careers that might pay off in the long run. For example, if you have zero debt you can afford to take a job at a small start-up that could become the next google. When you have debt you are probably going to try to work for a secure company that isn't as innovative.

Leslie May 05 2010 12:10 PM

Even if you don't believe in debt, watch out for others (business partners, spouses, children you've co-signed for) who rack up debt. I scrimped and saved and invested -- and when I got divorced after 15 years of marriage, half of my retirement savings, investments, and other assets (including the house I had brought into the marriage) went to my husband, who had (unbeknownst to me) dug himself deep into credit card debt and had never set up a retirement plan at work. To make it even worse, I got half of his debt obligations because in our state, you divide "community property" equally. It's not just enough to be fiscally responsible yourself — you have to know what anyone else you are legally connected with is (or isn't) doing with their money.

Karen May 05 2010 11:27 AM

Listen up America. The banks and the credit card companies are scheming new ways as we speak to get us all back on the debt cycle. They benefit from our misery. Be aware and be strong.

Tyler Webb May 05 2010 10:14 AM

dave - i am equally inspired by your courage to tell the truth of how you, too, used to incorrectly sell debt. i also identify with your personal experiences with debt, and know that those experiences are true. while i'm not (yet!) considered wealthy, i do sleep deeply & peacefully at night knowing that i have zero debt, for almost a decade now. furthermore, it is amusing to me to calmly & dispassionately observe all the enticements offered to me to enter into debt (you'll have it now! it's good for you! it's not too much! you'll get an immediate discount! everybody's doing it! you'll have credit with us! it'll cost you nothing! think of all the savings you'll get! you'll be a preferred customer with preferred treatment! and so on and so forth). i just say no. i'm defined by myself, not by what acquisitions or memberships i have. good job, dave!

tochi May 05 2010 9:35 AM

Great article. Should be required reading for young couples preparing for marriage, college kids who are beginning their educational journey and mature adults who must learn to "wait on the Lord." Debt has ruined my marriage and I am committed to living debt free going forward.

Mark May 05 2010 9:03 AM

When you're in debt, your paycheck and the money you make really aren't yours. The money is already obligated to the one you owe. Anyone can make any argument as to borrow money to invest and then make more money of OPM. But I'm always reminded by Dave that debt brings risk. We don't know what's going to happen to the economy. You could borrow money and be making good money off the investments but then the next year you could close lose it all. Why get in debt and be so stressed? After our wedding my wife and I had $3,000 in cash from the different presents and what not. And I was stressed then thinking, "I hope we don't get robbed." If I get that stressed about my own money, how much stress would having someone else's money bring? Best to stay away from debt, it's not good. And it can really damage your life.

Jonathan Chang May 05 2010 9:03 AM

To the previous post made by Andrew Fenic - Andrew, did you read the entire article above? You just espoused the same myth Dave is debunking. Of course many young couples use the "tool" of debt to live in a "nice house" and drive a "safe car." That "tool" now has a large portion of their income flying out the window instead of building wealth. Then there's the risk they've taken on. What happens when one of them is out of work or gets disabled? Staying out of debt shields you from these (and other) dangers that come from debt. (Note: Dave does teach that a 20% down, 15-year fixed mortgage is the only debt that works in this program.) Your quote about the "housing bubble" has nothing to do with this article and is more a political statement, I believe, but at it's core is the same issue: debt. People bought houses they couldn't afford, while they were already in debt because our government and culture sends out the message that "everyone should have a home." Andrew - I'd challenge you to read more of the articles on this site, or one of Dave's books, before you start promoting the very things that Dave is teaching against. Tim

TIm Bourne May 05 2010 8:02 AM

Debt has been used by many to get a leg up, but it is a very fine line.....borrow too much and bam, you never pay it back and all your money goes to interest. Credit is a horrible system for an economy and I don't need God to tell me that when you owe someone, you owe them.

Nate May 05 2010 7:09 AM

It depends on what you are going into debt for. If you buy things that depreciate in value on debt, then yes, debt is bad. But if you are borrowing money at x% and investing it to give you a return of (x+1)% then debt is VERY good. Of course, an investment also has risks associated with it. But by and large, borrow to make money, not to keep up with the Jones's

Nick May 05 2010 6:25 AM

There is nothing inherently evil about debt. Best case, it allows young couples with earning potential to live in a nice home and drive good safe vehicles (i.e. Honda Civic) while reliably making payments that build equity. The problem is not so much debt but, rather, during the housing bubble people overpaid for homes. That is an entirely separate issue; the "Rich" made the same mistakes in spades and paid dearly for it.

Andrew Fenic May 04 2010 8:15 AM

Coming from an unbelieving poor family were we did not have very much, the only time my parents went into debt was to buy luxuaries that we really could have done without. Most of the debts contrated by them they had difficulty paying back or did not pay them back fully. As a first generation believer I have seen the stress brought on by debt. God has led us to become debt free, by selling our house, and he has provided for us abundantly. I do not wish to be a slave to anyone except Christ. The challenge is that so many people exclude mortgages in the debt picture and they say that renting is a bad option as it is dead money. I do not see renting as dead money as it is giving you somewhere to live. We are now debt free other than the love we owe others and of course the debt we owe Jesus Christ. Only the mercy of God has allowed us to do this.

Deborah April 10 2010 12:13 PM

My Dad gave me Dave's book to read while I was visiting my parents in Florida last month. I ripped through it and gave it to my wife, who read it as well. We decided to bite the bullet and ditch our debt. So far we are really doing well. The advice in the book is so fundamentally simple, we never thought it would be so easy to free up so much extra money each month simply by eliminating debt. We are on a plan to be completely debt free in 2 years.

James March 09 2010 3:10 PM

I really love the last quote. I have never heard a statement with such validity.

tyler trimnal March 02 2010 3:15 PM

Phil, you can't be serious???? Debt and people being greedy and spending money they don't have is why there is a financial crisis. Save up and buy what you need, have a plan, prepare for retirement and college. That is the way to do it, not borrow yourself into no way to pay it back. People are financially desperate because of credit. They are not getting ahead because of it. Phil, you may want to rethink your statement and position.

Joe Macfarlane February 15 2010 10:04 AM

So, neither you or your parents used debt to get ahead? The sidewalks are full of homeless people with no debt because they were unable to obtain credit to get ahead. The wealthiest neighborhoods are full of people whose families made their fortunes because they were able to get loans.

Phil Staudt February 04 2010 7:23 AM

I too believe that we are slaves to debt.I myself have had my share of problems,over the years I've put myself in at least 25,000 dollars worth of debt with hospital bills and student loans. I feel that the only people it helps is the rich. For years I have been trying to find a solution but it's i always take one step back putting myself in even more debt.Is there a solution to my problems.

Chalbie Ames January 22 2010 11:05 AM

Debt/money problems is/are a main cause of marital breakups. Children often self distruct, self punish, when parents divorce. Drugs, alcohol, crime, and in jail. You stress staying out of debt. The point: Maybe school loans shouldn't be promoted so much, or make them rare.

don ballew December 03 2009 3:27 PM

Like you Dave I am learning the hard way and trying to figure out what God plan is for me. I have recently become disabled and unable to work. This is certainly something you don't plan on but my have a disability plan that you think is your saftey net. This isn't always the case and I am fighting my insurance company as we speak but have lost everything in the meantime except my debt. 15yrs ago I was going to go bankrupt but God convinced me to our up to my debt and pay it off. We were doing ok until this hit and you see what a slaveto debt can be. Even if God was telling us to pack our bags and serve Him full time my Mortgage, car payment and credit cards would stop us, to the tone of 475k it is crazy the things we do. An then the unthinkable happens you can't make an income and have a mountain of debt. Not very pleasing to God or your family. I look forward to learning from you Dave Blessings to you, Kyle from Wolfeboro NH

Kyle Fenton December 03 2009 12:37 AM

It is so true that the "borrower is the slave of the lender." Of course that is also scary thinking that we as a nation have borrowed so much money from the Chinese government. How will we be expected to pay this back? I feel that even though many of us live by Biblical principles and what we learn from Dave Ramsey, we are in for tough times ahead because of our government spending money like it is either going out of style or it grows on trees. Life is going to be harder for those who are in debt and then they are going to have to pay more in taxes and health insurance.

D. Buchanan November 23 2009 10:59 AM

I am really inspired by your article, probably having something to do with you admitting you would spew the same lies to people in your past. It makes it seem your opinion is much more credible. I too think debt is an evil burden most people put upon themselves for something not worth it. You reference buying a car, I believe it is much more cost efficent to buy a used car over a new car. I believe it is especially true if you take the time to find the deal, a quality car at a low cost to avoid expensive repairs. The debt is a tool thing does sound a pitch, I would not fall for. DEbt could only be a tool in returns or investments were guaranteed, which their not. The risk does more often than not outweigh the reward. I wish more americans could use financial wisdom to improve the quality of their lives. I appreciate your posting to us thank you.

Erin Lamb November 15 2009 6:08 PM