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.
He became famous for his easy to follow baby steps to financial peace.
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.
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 best money 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-Based 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.
Dave also has some great guidelines when it comes to budgeting percentages you should strive for.
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
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. Buy a Modest Home You Can Afford
The biggest expense most people have in their life is their home. Dave’s advice is to buy a small modest home so you don’t overextend yourself.
A good rule of thumb is keeping your housing expenses under 30% of your take-home income. Better yet give yourself some more wiggle room and keep it under 25% of your take-home income.
If you fall into the trap of buying too big of a home all of your other expenses will follow. You will also naturally buy more things to fill the space in the house.
Keep things simple and buy a comfortable house your family can afford and give you a good quality of life.
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.
There are so many benefits to having a frugal lifestyle and saving money is just one of them.
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 Expenses
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).
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11. Go For 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 essentially free money.
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. Stop Eating Out All the Time
The amount of money people spending on eating out every year is insane.
Learning how to cook from home will not only save your bank but also your health.
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 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.
Flip Items on Ebay and Amazon – Love going thrift shopping and finding neat things to turn into cash? Start your own flipping business today!
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.