Dave Ramsey

on Reducing Debt
Host of "The Dave Ramsey Show" on Fox Business Channel and author of The Total Money Makeover

Favorite Cheer!

Exclusive Interview

Dave Ramsey on Debt Reduction

Dave Ramsey, who has helped many people reduce debt, is a personal money-management expert, radio personality and the best-selling author of The Total Money Makeover: A Proven Plan for Financial Fitness, The Financial Peace Planner and How to Have More Than Enough: A Step-by-Step Guide to Creating Abundance. Ramsey also hosts “The Dave Ramsey Show” on FOX Business Network. He is creator of Financial Peace University (FPU), a 13-week program that helps people dump their debt, get control of their money and learn new behaviors about money that are founded on commitment and accountability. Ramsey shares his beliefs about why debt accumulates, and what can be done to combat it.

What are the typical emotional stages a person can expect to go through during the first 30 days of trying to reduce debt?

The first stage is fear that your sacrifice of lifestyle won't work and anger at your debt. As you pay the first few debts and some traction is obvious, hope is your next emotion, followed by a positive-focused intensity to go faster and faster.

How can people best work through these emotions?

You’ll want to have written goals. Write down your debts smallest to largest and pay them off in that order. That way you have some quick wins that will get you fired up. Mark the debts off the list as you pay them. Make it a game.

Why are the first 30 days of debt elimination such a crucial time?

That great feeling you have as you pay off the small debts will keep you focused on getting rid of the larger debts. They take longer.

Is credit card debt ever appropriate?

No. Debt adds too much risk and takes away the power of your most powerful wealth-building tool: your income.

What are the three most important steps for a person to take as they try to reduce debt?

1) Make a budget and agree on it with your spouse. There will be lots of emergency budget-committee meetings [with a partner or spouse] the first month, because neither of you will get the budget right the first time.
2) Sell stuff or get a second job.
3) List all the debts smallest to largest so you can track your progress and know which debt to focus on.

What makes the difference between success and failure in the first 30 days of reducing debt?

You have to get angry. You have to say, “I've had it. I'm sick and tired of being sick and tired.” If you just wander into a plan to get out of debt, you won't stick with it.

What role do people’s beliefs about money play in their accumulation of debt and their ability to eliminate debt?

We live in a country of short-term thinkers. We want it and we want it now. So we buy lots of stuff with money we don't have to impress people we don't even like. Most people were never taught how to handle money so it’s easy to fall for all the marketing and credit-card ads. You are where you are now financially as a sum total of the decisions you’ve made to this point. Changing your view of stuff and money forces you to make better decisions.

What is your overall approach to debt help?

First, I have people do a budget and save $1,000 for emergencies. Then, they use our debt-snowball approach to get rid of all their debts except for their house. By debt snowball, I mean pay minimum payments on all the debts except the one with the smallest balance, and put every dime possible toward that smallest debt. When it’s paid off, add that payment to the second smallest debt’s minimum payment until that one is paid off. When that’s paid off, move on to the next one until you cross all the debts off the list. For most people this will take 18 to 24 months, but if they stay focused on the goal the debt will be gone in no time.

What’s the most important thing(s) to do to ensure long-term success?

Keep revisiting your financial goals so you stay motivated and keep doing budgets and having budget committee meetings with your spouse. You have to stay on the same page about money and what you want to accomplish.


What is the belief that you personally go to during times of change?

We all resist change, but it is where growth happens. So I use my will to overcome my emotional resistance to change.

The best thing about change is…

… it is the only path to bigger, better things.

What is the best change you have ever made?

I can't select a certain event, but I can say the best decision and/or realization I have ever had was to embrace change. I even cause change to happen continually in all areas of my life… This is the only way growth happens.

For more information on Dave Ramsey, visit www.daveramsey.com.

The Total Money Makeover: A Proven Plan for Financial Fitness


Ramsey offers a proven, comprehensive plan for getting in shape financially. The Total Money Makeover Workbook takes you one step closer to getting out of debt and achieving financial health. ...