Let's talk about Dave Ramsey and why he doesn't like credit cards!

One of my common comments I get a lot, especially with my recommendations to get a credit card and start building credit, are comments like “Dave Ramsey’s head would spin if he heard this.” And I used to be one of those people, growing up I was told that credit cards were awful and it wasn’t until I was older did I realize that this was a terrible mentality to be in. Feel free to add me on Snapchat / Instagram: GPStephan

If you don’t already know who Dave Ramsey is, he’s a financial speaker who teaches about money, and also has a youtube channel where he takes calls and answers questions. I’d say he provides a pretty decent foundation for someone just getting into personal finance and financial independence - He focuses primarily on the average person with the average income and the average spending habit. Which, less face it, the average person has a terrible spending habit and usually loaded with debt from over spending. He’s also terribly against credit cards and debt, to an extreme.

I hate to say it, but from my experience, the average person isn’t interested in finance, saving, and building wealth. I’d like to go on a limb and say most people would rather increase their annual income and increase their spending by the same amount. Only a small percentage are more interested in saving and investing long term. The immediate gratification of cars, houses, vacations is a lot to resist…so in this regard, Dave Ramsey comes on extremely hard in his approach to break that cycle that so many people get caught up in.

The thing is, I think this advice is perfect for the average person who has a spending problem. If you’ve proven you can’t responsibly handle money and debt, the best choice - psychologically speaking, is to cut it out entirely - no exceptions. This isn’t a mathematically correct choice, but when humans deal with emotions, wants, and needs, this often over-rides what’s really the “correct” thing to do.

And that’s what Dave is great at - he knows the spending psychology of his viewer. Many people who can’t control themselves. So for this, I applaud him because his strict advice of no debt, no credit cards, cash only is the best possible outcome for someone climbing out of debt. If I were to say people as a whole could responsibly handle money, I’d say no - they couldn’t. Even you watching this right now - you’re in the very small percentage of people actually interested in money and wealth building. So overall, Dave’s advice is good…for most people who are bad with money.

But this isn’t the full picture. Credit cards are amazing when used responsibly. Want to buy a house and invest in real estate? You’ll need good credit for that. Want a business loan to expand your products? Need good credit. Lease a car? Good credit. At a certain point, the money you borrow is paid back at a lower interest rate than what money makes you, so you can dramatically increase your income by leveraging yourself.

Good credit for me has been the foundation of everything I do. One of my biggest mistakes was not getting a credit card sooner, because I was brought up with the mentality that credit cards were evil. If I had credit, I would have been able to double the amount of properties I was buying in 2012 vs buying fewer of them, cash. The thing is that it needs to be done responsibly. Like any financial tool, it can’t be abused - it needs to be used wisely. Don’t go and buy things you don’t need just because you have credit - this is what Dave Ramsey is good at stopping. But for people with self control who understand the benefits of building their credit score and reaping the rewards, building credit could be one of the best things you do. At the end of the day, it’s important to know yourself enough to do things responsibly. If you can’t handle it, fine - at least you know that and not having a credit card/debt is much better than maxing it out and moving on to the next one, while paying crazy high fees. But if you can handle it, get the credit card.

Feel free to add me on Snapchat / Instagram: GPStephan

Suggested reading:

[rat]

Dave Ramsey is basically "Personal Finance for Dummies" in radio show format. His advice is for people who are just awful with money and cannot trust themselves with any type of credit. He's super entertaining, but he's successful because his philosophy is simple and black-and-white.

[jvolstad]

I have a FICO score of 825 and am debt free! I use my credit cards but never carry a balance beyond the end of the month.

[joseopao]

If you're in debt or know someone that is, Dave's plan is #1 in getting out of it. When you're debt free, still listen to Dave but also broaden your listening avenues in terms of investing :)

[rookierider]

Dave Ramsey callers be like "I'm making 300k a year living paycheck to paycheck "

[johnkesto]

Credit can be the most helpful possible tool in the world or the most destructive one.

[julianh]

I like the Alcoholics Anonymous analogy. It helps reconcile the differences in opinion between Dave Ramsey and others.

[dominicgraziano]

I've been watching guys like you, Grant Cardone, and Patrick Bet-David for some time now. You are the first to say that anything you say should be taken with a grain of salt. Not only do I respect that, but it also increases your credibility!! Thank you Graham, can't wait for more vids!!

[KellanJames]

Got it - leverage alcohol. Oh wait!
Using credit cards alone, I built a credit score of 820 (with no other forms of credit). When used responsibly, they're really all that you need. Just remember to pay it off in full every month!

[staytruewarriors]

The sad truth is that most people are not responsible (like you said) and this is the reason most Americans are in DEBT up to their eyeballs !! 😱(Darn Immediate Gratification lol) I think it's super important to know the rules of the money game, that includes the credit cards and the credit score. Thanks for the different perspective, I think it's important to know!!

[ambaby]

Dave Ramsey is the Gordon Ramsey of credit cards 😂

[CaesarAugustus.]

Old school Graham is so interesting to watch!

[jonathanpolanco]

I hope Dave Ramsey sees your video and responds to it!! You made some great points and defended both sides accurately.

[BandosNBread]

Who Else Share The Videos With Their Friends & Fam To Put Them Up On Game?

*Great video again Graham!*

[thoughtsauce]

As much as I enjoy watching Dave, I don't agree with all he says. He seems a little draconian in his beliefs.

You're right, credit cards arent that bad but takes lots of discipline and self control. I ruined my credit and put myself into a lot of debt when I was younger. I'm 23 now, and had 4 credit cards at 19. I was making $1, 000 a week and couldn't control my spending. Now I'm making maybe $1500 a month and stuck paying the bills I was too naive to responsibily pay for when I was making way more money. Don't be me. :)

[alejandrocano]

I would love to see a debate between Graham Stephan vs dave ramsey

[xana]

Growing up, I've heard so many stories of people drowning in credit card debt and it made me wary of getting one.

But through my parents and life experience, I've learned that if you use your credit card in moderation and pay off your balance quickly, you'll be fine.

[Zeeangelofdeath]

One size doesn’t fit all. If you know you are financially Irresponsible go with Dave Ramsey.
If you are financially responsible do it grams way.

[ericp]

Pay your credit card balance off in full at the end of every period then it's pretty much the same as using cash, except you can score some rewards points too.

[TheAstrogrl]

I just shared this with my sister. I have been trying to tell her about credit scores and the credit card game for years. Girl just shared a tiktok video with me about how to make money of credit cards.
I about died. Haha I said, this is what I've been trying to tell you! 😆😆
But hey, if a tiktok video got her interested in getting ahead financially, I'm not mad. Haha
I'm just glad there's great YouTube people like you I can direct her to.
So Thanks!!

[MayJM_]

Wow, you've grown so much from this video! It's so cool to see =)