In researching personal finance and debt freedom tips, the Dave Ramsey tips you find are definitely ones to pay attention to. And researching the best hacks and advice is exactly what you should do when you start on your financial freedom journey.
If it’s already been done, there’s no need to reinvent the wheel!
Who is Dave Ramsey?
Dave Ramsey may be an outspoken financial guru, but his advice and teachings are solid.
With financial advice on everything from emergency funds, side hustles ideas, and destroying debt, you’re bound to find the answer to just about any financial question by listening to his podcast or reading his book Total Money Makeover.
Dave Ramsey Baby Steps
The main tenet of Dave Ramsey’s “get-out-of-debt” financial advice is to follow his baby steps.
Basically what he’s done is taken exactly what it takes to become debt-free and achieve financial freedom, and break it down into more bite-sized pieces to work on.
It is, after all, much easier to take big tasks in smaller chunks than wondering what to work on next.
Baby Step 1: Save a $1,000 emergency fund
Let’s face it, life happens. The last thing you want to do when trying to get out of debt is to get into more debt, so this should help you avoid that scenario, most of the time.
Baby Step 2: Pay off ALL of your debts (except your mortgage)
In this step, the longest and hardest step for sure, you’re going to put EVERY PENNY you have towards what you owe other people, and get them off your back. He prefers the debt snowball method, although any method is fine so long as you are always making the most progress possible.
Baby Step 3: Save 3-6 months worth of expenses in an emergency fund
Now that you’re bad-debt-free (more on that later), you’re sort of still in the “I owe money” mentality. Here you’ll capitalize on that by stashing away enough money to be able to pay all of your monthly bills in full, for 3-6 months, should some large crisis occur, such as the loss of a job or a medical event.
Baby Step 4: Invest 15% of your income to retirement
You’ve paid off your debts and you’re feeling nice and secure in case of catastrophe. Now it’s time to make sure that your retirement won’t become a catastrophe in itself!
Baby Step 5: Save for your kids’ college fund
Assuming you’re the type of parent that plans to help your child cover college tuition costs, after your finances are in order and your retirement looks bright, you’ll start setting aside money for them.
Baby Step 6: Pay off your home early
With your financial picture clicking along nicely, you’ll get that last lingering debt off your shoulders – your mortgage. Just like you did with baby step 2, you’ll push any extra cash towards your monthly mortgage payment.
Baby Step 7: Build wealth and give wealth
This step is the one for you – now you’re ready and able to live how you want! You can donate money to charities, build up a nice inheritance for your children and/or grandchildren, and be more generous in many aspects of your life!
15 Best Dave Ramsey Money Tips
The baby steps listed above cover the basics of his concepts, but not everyone has the time necessary to consume all the material Dave has.
Below we’ve summed up the top 15 hacks and tips Dave Ramsey wants everyone to know to get their finances in order and start living their dream life.
1. Create a Zero Budget with the Envelope System
Have you heard about this one? The concept is that if you ran your budget and paid your bills entirely on a cash system, you’d set aside the money for each line item of your budget in its very own envelope. As a zero budget, you’d have every penny of expected income each month assigned to an envelope in your system.
When you only touch a set, smaller amount of money per bill, you’re way less likely to overspend on anyone’s budget item.
This can definitely be done just as well with a non-cash system, it just requires a little more diligence and discipline on your part.
Take a look at some simple budget templates for ideas on how to structure your envelope system. Click here if you’re looking for a step-by-step tutorial on how to start a budget.
We also have a complete 20+ page Budgeting Binder that has helped over 1,000 families take complete control over their finances and stop stressing about money.
2. Stop Buying New Cars
Or, honestly, don’t buy any cars for as long as you can, new or otherwise.
His concept is this: as soon as you drive off the lot, your “investment” depreciates (i.e. loses value). If the average brand new car depreciates in value by 18% in its first year alone, it clearly makes far more sense to try to buy a 1-year old car for 18% off the sticker price instead!
The best way to avoid falling for this common pitfall is this: when you decide you WANT a new car (but you don’t, in fact, NEED one), find the car you want (at the best deal you can find), then figure out what the monthly payment would be. Out of your monthly budget, assuming it’s within your budget to do so, set that amount of cash aside in a cookie jar until you’ve saved up the cash value of that car.
It’s a long game, but the satisfaction of not accruing any more debt, plus owning the car outright when you drive off the lot, is incomparable.
3. Build Credit With “Good Credit” Not “Bad Credit” If You Have No Other Option
If you’ve listened to any of Dave Ramsey’s podcast, you’ll know that he segregates credit into “good credit” and “bad credit.”
In general, a mortgage can be “good credit” if done correctly, and just about everything else is “bad credit.”
Dave Ramsey’s tips on buying a home suggest it’s “good credit” because it’s substantial collateral with a great interest rate in comparison. When you pay a car loan, you end up with a depreciating asset.
When you pay a mortgage, you end up with something that (with care and updates over time), theoretically appreciates in value.
Wondering where college fits in? Dave Ramsey’s tips for college costs is to pay cash for your education! Either working while in school to pay the cost, or having generous parents help you pay, but he recommends avoiding student loans if at all possible.
Try to remember it like this: if you can make your money work for you and grow, it’s good debt. If you’ll lose money in the long run, it’s bad debt.
Click here to grab your free credit score now!
4. Keep Your Current Cell Phone
In today’s culture, this is probably one of the hardest concepts to wrap your head around.
If you asked Dave Ramsey for tips for cell phones, he’d probably tell you that so long as it still makes a call and maybe can send a text, it still works and doesn’t need replacement.
Have you ever thought about that when doing the typical 2-year upgrade on your phone? Why are you paying someone a ridiculously high full price for a phone that does EXACTLY the same thing your last phone did?
Instead of buying a brand new phone just because it’s 2 years old, keep your phone until it literally doesn’t work anymore. At that point, buy a phone that’s 1-2 models old or used/refurbished instead of wasting money on the latest, new models.
5. Pay Off Your Credit Card Balances Each Month (or don’t have cards at all)
A lot of people fall for the corporate trap that to be “affluent” you need to “charge it to your card.” Typically, the only people who truly benefit from this are the credit card companies.
Sure, you might earn some rewards but how much money do you need to spend to earn a 1% reward that’s worth something? When you get $1 for every $100 spent, it might be a better idea to just pay cash and not run the risk of accruing a 12-30% interest charge.
If you can’t seem to break the cycle of getting charged interest on your cards, here Dave Ramsey’s best advice is his famed “plastic surgery” — cut up the cards and say good riddance.
6. Pay Cash Whenever Possible
We’ve already talked about good debt/bad debt, credit cards, and cars. Every single time you pay with any method besides cold, hard cash, you run the high risk of paying over and above the actual price due to the “I.O.U.” fee, also called interest.
You might argue that “same as cash” financing is a good idea, because it’s no interest. Perfect, right?
Wrong. Next time you use a 0% financing offer with a credit card, run the math. You’ll find that your statement minimum payment does not equal the actual monthly minimum required to pay off the balance in full by the end of the promotional period.
7. You Don’t Actually Need a Credit Score
A lot of people like to tell you that you need a credit score or else you won’t qualify for a loan.
I’ll ask you to see number 6, and realize that if you always pay cash, you’ll never NEED a loan, so who cares!
And despite what the mortgage companies and realtors tell you, you do NOT need a credit score to be approved for a mortgage.
The mortgage companies make interest on your use of their financial products, and many realtors get small commissions for referring clients to companies and banks they have a relationship with.
As Dave Ramsey so accurately says, the only way to get a credit score is to borrow money, so your score goes up, so you can borrow more money. It’s an eye-opener worded like that!
8. Have an Emergency Fund
Paying cash for everything and avoiding as many sources of interest charges as possible sounds like you’ll be good to go, right?
Well, misery loves company and problems are bound to come up sometimes.
Where to put an emergency fund, you ask? When you build your small, fluid, $1000 emergency fund as part of following Dave Ramsey’s advice, you’ll want that to be cash or an easily-accessed savings account. This will cover things like smaller car repairs or furnace repairs.
As you make it through Dave Ramsey’s baby steps, you’ll eventually build a much bigger emergency fund, to cover 3-6 months of expenses should some seriously bad luck hit. This should also be a fairly fluid account.
9. Minimize Your Budget Line Items
The fewer things you need to give up your money to each month, theoretically the less money you’ll be spending each month.
Chances are good you’d do just fine without that magazine subscription, the weekly dinner out, or that third streaming service.
Turn it into a fun game, to see just how many things you can truly remove from your budget and then see how big you can grow your debt snowball.
Dave has some incredible budget percentage suggestions that were super helpful for us when we started budgeting.
Try using a company like Trim, they will automatically negotiate lower monthly bills for you.
10. Increase Your Income
While better-managing your money and shrinking your expenses are both huge in terms of getting your finances in order, sometimes that still isn’t quite enough to see much difference.
Whether it’s selling off your dust-collecting junk from your attic or finding a way to make a little extra cash on the side, increasing your income is a great way to quickly see your budget stretch farther.
The easier and less time-consuming the side hustle is, the better. If you can make money while you watch tv, well that’s the dream, right? (You can learn more about earning money while watching Netflix, here).
Besides our obvious favorite side hustle of blogging for an income, check out these other ways to make money online to boost your side hustle cash flow.
Start making money in your spare time using Swagbucks. Grab your FREE $5 sign up bonus now.
11. Go For Free Stuff Whenever Possible
Most Dave Ramsey tips include advice to get you to spend less, with a preference being on taking advantage of free stuff whenever possible.
There’s no shame in accepting (or asking for) unwanted, old furniture from family or friends.
There’s no shame in checking the free section of craigslist regularly for something that needs just a little TLC to be functional again.
And when you have the chance to use a coupon on an already good deal, do so, so you don’t pass up what’s basically “free cash back!”
Using a cash back app like Ibotta is perfect for this! Simply take a picture of your receipt and get paid to shop!
12. Avoid Brand Names
There’s no hard and fast rule that says that brand names are superior to “off-brands” or generics. Sure there might be a few exceptions, but in general, you’ll save a lot of money not paying for a name.
You’ll also save valuable time by not needing to shop around for a sale price since generics are typically consistent prices all year long.
13. Unsubscribe From Emails With Discount Offers
If you’ve signed up for newsletters from stores or brands, you’re definitely receiving “subscriber-only discounts.”
Those discounts, though, offer the big temptation to spend money. Why?
Those companies understand the psychology of consumers, that most shoppers will spend money purely to “not miss out on the deal” before they even realize that they didn’t need to buy any of it in the first place.
When you truly NEED something from that site, sign up for their emails then and unsubscribe after you’ve used the coupon.
14. Eat Less
I know, this sounds more like diet advice than financial advice, but it’s benefits are huge.
The fewer calories you consume, the less weight you could gain, which minimizes weight-related health risks.
Having less food per meal means less food in the house, which obviously makes your grocery trips smaller, faster, and cheaper.
Even if you start working on this advice by simply putting less cheese sauce in your mac and cheese, you’ll quickly see your grocery budget thank you!
Also by meal planning your weekly meals, you can save so much each week.
$5 meal planning, will help you save money and time by getting meal plans sent directly to your email.
15. Save, Save, Save.
With a whole plan of “baby steps to follow,” the common theme with all of them is to SAVE your money. Spend less, put the rest away, is the basis of all the Dave Ramsey tips you’ll find.
In a nutshell, start by saving money on the expenses you can’t get away from — don’t buy what you don’t need, buy less of what you do need (if possible), and always make sure you’re getting the best deal so you’re not spending more money than needed on any one thing.
It’s called being frugal and being frugal = FREEDOM!
Move on to saving your money for retirement, big future purchases (to avoid interest charges), or big life events.
The more money you save, the more money you have.
Bonus: Start a Dave Ramsey Side Hustle
Take Online Surveys – The perfect side hustle while you watch tv, wait in the doctor’s office, or even sit on the toilet. Yes, you can make money while you use the bathroom.
Start a Money Making Blog – It takes a lot of effort up front but once you start seeing the success the sky is the limit. Our blog brings in over $10,000 per month!
Start a Facebook Side Hustle – Want to make money using Facebook. There are plenty of small business owners in need of marketing help. The perfect flexible side hustle anyone can start.
Teach for VIPKID – If you love working with kids and have some teaching experience why not earn up to $22/hour teaching English online?
Become a Freelance Writer – Freelance writing can be an incredible side hustle. Earn anywhere from $0.10-$0.20 per word depending on your experience.
Become a Proofreader – Love to read? Why not get paid to read others work and find spelling/grammatical errors. You can easily earn a few hundred dollars a month in your spare time.
Become a Pinterest VA (virtual assistant) – Love being on Pinterest all day and all night? Why not help other online business owners market their business with your Pinterest skills?
Flip Items on Ebay and Amazon – Love going thrift shopping and finding neat things to turn into cash? Start your own flipping business today!
Start a Book Keeping Business – Love working with numbers? Why not start a legitimate work from home business as a book keeper?
As you can see from this list, there are a TON of ways to better make your money work for you — the thing Dave Ramsey advises the most. Any of these tips can be as small or as involved of an effort as you want them to be.
Just remember that the more effort you put into your financial journey, the better the results that will come out.
How do you find surveys online?
Great question Amy. We have a list of our top 10 favorite paid online survey sites right here https://thesavvycouple.com/paid-online-surveys/
Thanks for the tips! Will definitely try to be more financially self aware using your suggestions!
Thanks for stopping by Pete! Glad to hear you are getting your finances more in order, it will make a HUGE difference on your life.
Really good ideas! Thank you for these tips, I’ll be using some of them in the New Year!
Great glad you found these money tips useful! Can’t wait to hear how your New Year goes!
The theory that you don’t need a credit score let alone a good credit score is false. A good credit score goes far beyond loans. It also significantly reduces insurence costs and helps you in job and rental aquisition. Though Dave Ramsey has many good elements of advice for strong financial foundations…. this one falls flat in modern times. I watch families spend thousands of extra dollars each year because of a lack of a credit score in insurance alone.
Hey Fallon,
Totally agree with this one. A good credit score is important in the world we live in today. We have saved tons of money through lower interest rates on our home and insurance. Thanks for sharing your thoughts.
Thank you for the awesome tips.
When it comes to personal financing, no one’s recommendations are quite as actionable and returning as Dave Ramsey’s.
And thanks for brining a short and sweet version of his financial freedom tips to us.
Boom you bet! Dave has some great actionable advice that has helped millions.
I am 61 years old. Still working full time. If I don’t cut back on my expenses and save more for retirement I’m gonna be working until I die! Please help!!
I would watch this video from Daves channel and start taking action today. I am so sorry you are feeling the pressure. It’s scary when the finances are not lined up as we planned. https://www.youtube.com/watch?v=h-fcI7W-ucY
Can you teach me how to blog so I can make money doing it too??
Sure can! Join our Facebook community and we will get you started. https://www.facebook.com/groups/BloggingWithPurpose/
You might want to check in on Dave’s actual advice on a mortgage. He has never ever called it or suggested it to be good credit. He says it is the only debt he will not yell at you for as long as it is no more that a fourth of your take home pay on a 15 year mortgage. He will always advocate the 100% down method!
Good content enjoy your blog!
I disagree with the “good credit” thing you listed. Dave Ramsey would not say that. All credit is bad to him. He would not yell at you for having a mortgage as long as it is a 15 year fixed, with 10% down and no mores than 1/4 of your take home pay. You pay the mortgage off as soon as possible and acquire a 0 credit score. He would never use the words “good credit”.
Hi, thanks for all those good tips on saving money. I’m going to start on the tips right away! Thanks again. 🙂
Dave’s plan to buy a house is buying with cash. If you do get a mortgage you get a 15 fixed and your payment needs to be less than 25% of your take home pay.
He does not say that there is such a thing as good credit. He recommends paying cash but allows for buying a house with the above terms. And you should also have a 20% down payment to avoid PMI. You should also have all of your debt paid off and have an emergency fund of at least 3-6 months of your expenses.
Dave doesn’t say to pay off your credit card every month. He says, close your cc accounts and cut them up. Never use credit cards!
For RESPONSIBLE borrowers, this is bad advice! You can have credit cards, a good credit score and NEVER pay a nickel of interest as long as you pay off the statement balance on time. I always have and always will. You may be able to find a mortgage lender that will finance you with NO FICO score, however, it will likely be more challenging to find that lender and I’m confident you would be viewed as a riskier borrower and your rate is probably going to be higher as a result. Dave gives good advice to the mass market that has difficulties managing their finances.
I have done the survey thing to make extra money and I was never paid. I am afraid to trust these people, after putting in the work one company was only paying .50 cents for each survey. They did not pay me either. How can I get involved with a reputable survey company that will pay me for the work.
Yea, unfortunately, a lot of these survey companies are complete junk. You have to be very careful which ones you sign up for and put your time into. Luckily Brittany and I have put together our favorite Paid Online Survey Companies that we have personally used and earned money from to help you get pointed in the right direction.
We are a retired couple who get more than $2,000 a year cash back from no-fee credit card rebates of 1.5-5%, on money we’d have spent anyway and pay off in full each month, so no interest. However, it is tough for young couples to maintain the discipline to pay card balances in full each month and avoid the temptation of overspend on their credit cards. Also, they may not qualify for the no-fee cash back cards without a well-established high credit rating. So for the most part, Dave’s advice to get in the habit of paying cash instead of on credit is probably best for most, especially those trying to climb out of debt. When your frugal habits start to pay off and you have established the discipline to use credit to your advantage and never pay interest, though, it’s time to start taking advantage of that and get paid for charging things you typically would have bought anyway. As for mortgages, we have refinanced the home we built in ’92 (putting more than 20% down thanks to each of us selling a previous home) with a bank that charges minimal ($350 or less) fees to do so, every time interest rates have dropped by more than half a percent, so for years we have been paying a lower rate than we can get with relatively low-risk investments (not even counting the mortgage interest tax deduction which effectively brought it down even further), so that now our 15-year mortgage interest rate is only 2.625% and the cash is earning interest and instantly available to us should we ever need it, vs being tied up in our house. We do pay an extra $100/month towards the principal just to help assure that the balance will be paid off before we die so heirs can take their time and sell it at a fair price. Our monthly payments are a fraction of what we would have to pay in rent for anything even semi-comparable. We both did probably pay more than 25% of our income (and I had an FHA with a minimal down payment) for the first homes we owned, but otherwise might have had to wait years longer before becoming homeowners, so were building equity and appreciation for all those years vs skyrocketing monthly rent. It depends on the market and your income how much sense this approach makes for you, definitely do not let yourself be “house poor” (OR pay too much for rent), but I am glad my spouse and I both jumped into home ownership when we were in our early 20’s, it has paid off for us (we later even bought rental properties that helped boost our retirement assets exponentially).
Thank you so much for providing such a great resource for Dave Ramsey’s plan to financial freedom.
We resisted his teachings for years. Then the time came when we realized the financial mess we created for ourselves by following “our plan.” When we finally broke down and followed his baby step plan – – – success followed!
Keep sharing the message – it works!
Thanks for sharing your knowledge. I’m hoping to make money blogging and potentially never have to return to work outside the home.
Our pleasure Kim! Blogging has completely changed our lives. It’s a TON of work but if you really want to make it happen it can be done.
Dave Ramsey’s “Fiancial Peace University “ courses was the best $99 I have ever spent. It has taken us a few years, but we will be debt free by the end of this year! I only wished we had learned this earlier in life.
Amazing! Congrats on the hard work!
I read Dave Ramsey’s books among others, tracked my spending but was always in the credit card float & paycheck-paycheck cycle. Finding YNAB – You Need A Budget.com saved my life. I’ve been using it for 2.5 months now & it’s so empowering how being in control of your money feels. I pay bills automatically, save for irregular bills & other true expenses, pay my credit cards weekly since the money is there, and am living within my means. I’m going to make sure my true expenses are covered & then attack my line of credit debt. My MSCD gives amazing points & I use my Visa for PAP, gas, groceries for 3% cash back.
Glad I found this article on Pinterest, there’s a lot of great tips here. I use both Swagbucks and Inboxdollars to earn a little extra cash, cashing out for PayPal with Swagbucks and usually choose a check for Inboxdollars and both have other ways to earn other than just surveys. I also came across Stash and Acorns that allow you to start investing and/or saving retirement for $5 and they give you $5 to start. Do those with Swagbucks or Inboxdollars, link your checking account and fund your account to earn whatever the offer payout is, they both have the offer so if you have both, it’s best to see which one gives the better payout. My money is working for me now with Stash and Acorns. I wish I found them a lot sooner than I did to maximize my retirement savings.
Hello! I like your post and I just started a money saving challenge on my brand new blog. I am going to link this for further reading at the bottom of my post, I hope that is ok!
Great Work!
Sure thing! Glad you enjoyed it!