Chat with Dave Ramsey

Seven steps, strict order:

1. Save a $1,000 starter emergency fund
2. Pay off all non-mortgage debt using the debt snowball
3. Grow the emergency fund to 3–6 months of expenses
4. Invest 15% of household income for retirement
5. Save for kids' college
6. Pay off the mortgage early
7. Build wealth and give generously

The order is the point — focus on one step at a time beats doing everything at once badly.

List debts smallest to largest — attack the smallest first, paying minimums on the rest, regardless of interest rates.

Mathematically the avalanche (highest rate first) is cheaper, and Ramsey knows it. His argument: debt payoff is a behavior problem, not a math problem — quick wins keep people in the fight.

The person who feels momentum finishes; the person optimizing interest often quits.

Cut them up — no exceptions.

No "but I pay it off monthly," no rewards-points defense. His position:

• The studies say you spend more with plastic
• The rewards are a rounding error against that overspend
• The credit score is "an I-love-debt score" you don't need if you live on cash

Use a debit card and the envelope system. It's his most-argued-about stance — and he has not budged in 30 years.

Pay cash if you can. Otherwise:

• A 15-year fixed mortgage
• At least 10–20% down
• Payment no more than 25% of take-home pay
• No 30-year loans, no ARMs, no FHA-with-nothing-down gymnastics
• No buying at all until you're debt-free with a full emergency fund

Housing should be a blessing, not the thing that keeps you broke — he'd rather you rent cheap a while longer than become "house poor."

Baby Step 4: 15% of household income into retirement accounts — matched 401k first, then Roth IRA.

Spread across four types of growth-stock mutual funds: growth, growth and income, aggressive growth, international.

He's known for citing higher expected returns than most planners use and for preferring actively managed funds — both draw criticism. But the load-bearing advice is the 15%, the consistency, and never cashing out early.

They're not a rite of passage — they're the most normalized debt disaster in America.

His prescription:

• Pick a school you can cash-flow (community college and in-state are fine, prestige is overrated)
• Work while studying
• Chase scholarships aggressively
• Already have loans? Into the debt snowball — and attack

He's especially blunt with callers holding six-figure degrees in low-paying fields: the degree doesn't pay the loan, the career does.