Dave Ramsey has shared brutally honest money tips for decades. He has helped people get out of debt and gain better control over their finances. However, even though Ramsey’s biggest fans may remember some of his core money tips, it’s good to be reminded.
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These are seven of the brutally honest money tips Ramsey has shared over the years.
Work a Side Gig
Ramsey has encouraged people to work side hustles to make extra income. The side gig can help you move closer to your long-term financial goals. While this advice has become quite popular in recent years, it’s worth repeating.
Side hustles have become more plentiful and flexible in recent years. You can work for a gig company like Uber or Doordash, but remote side hustles are also available. You can use a side hustle to get out of debt sooner and reach significant milestones with your investments.
Learn More: Here’s How To Use AI To Quickly Start a Side Gig, According To Codie Sanchez
Pay Off Your Debt Before Investing
Ramsey is strongly against debt and does not believe in “good” debt. However, even the people who are comfortable with good debt and leverage should agree with Ramsey on this one.
Paying off credit card debt before investing will give you greater peace of mind and it’s also more profitable to pay it off. The interest rate on credit card debt typically ranges from 19.99% to 29.99% APR. The overwhelming majority of investors are not producing that type of return with their investments. It’s better to pay off high-interest debt and then invest.
Stop Getting in Debt Just To Look Cool
Some people get deep into credit card debt, get leases for luxury cars, buy expensive handbags and pursue other types of expensive items. People buy these products to boost their social prestige, but it comes at the cost of their long-term financial goals.
Ramsey discourages this type of behavior, saying that you shouldn’t get into debt just to look cool. He calls out people who look rich while being financially poor.
Spend Less Than 25% of Your Income on Housing Costs
While there is a popular 28% rule that suggests spending no more than 28% of your monthly income on a mortgage, Ramsey is known to suggest limiting your housing costs to 25% of your monthly income. This is a big pill to swallow for many people due to rising housing costs and elevated interest rates, but the benchmark can spark some action.
It may require picking up a side hustle and advancing in your career to get your housing costs below 25% of your income. Setting this goal gives homeowners and renters the impression that they cannot stay where they are. That’s a good mentality that can eventually turn housing into less than 25% of your income.
Don’t Lend Money to Friends or Family
Family and friends may not feel the need to pay you back since they know you. It’s a different relationship from asking the bank for money since you can’t negotiate as much wiggle room with them. Lending money to family and friends can also ruin relationships as people explain why they’re not going to pay you.
Some of these arrangements work out well, but it’s better not to find out in the first place. Lending money to Family and friends once can also prompt them to return for more and haggle you for extra funds.
A College Degree Isn’t Worth It
Ramsey has spoken critically about college degrees several times, saying that they aren’t worth it for most people. It’s hard to justify getting six figures into debt without a career to show for it. Furthermore, many companies have stopped requiring college degrees for job applicants. He only recommends colleges for people who have specific career paths or who can secure an affordable education.
Enrolling in the military will make college free and is one path for people who want a college education while saving a lot of money. Community college is also a viable option since you will get the same education while paying a lot less. After graduating from a community college, a student can then go to an affordable state college for the final two years of their college education.
Raise Your Kids To Be Good Adults, Not Good Kids
Ramsey also talks about parenting and advocates for raising children to be good adults instead of good children. That means teaching children about valuable skills that will help them become good adults, such as money management and being responsible.
While it’s a good parenting tip, it also doubles as a money tip. Having responsible adult children decreases the likelihood that they strain your finances in the future. Some kids who are never raised to be adults don’t become productive as they get older, which results in a lot of money going out of their parents’ pockets.
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This article originally appeared on GOBankingRates.com: Dave Ramsey: 7 Brutally Honest Money Tips To Follow Now
