Surely some kinds of debt are good?
Why do you think all debt is bad? Arenít some kinds of debt, like a mortgage or student loans, good?
It sounds like youíre letting me know you think some kinds of debt are okay, instead of really asking for my opinion. When you ask a question thatís really a statement, itís called a passive-aggressive question. Thatís okay. You and I will now argue as best we can in a newspaper column.
Itís not necessarily a question of what I think. Iím really just the aggregator of information weíve gathered while walking with people through their financial issues. Iíve worked with tens of thousands of folks over nearly 30 years, everyone from billionaires and millionaires to broke people, and those in between.
In the process, weíve collected a lot of data through formal research projects ó Iím talking about a huge stockpile of statistics, facts, and figures. And all that data shows debt is the biggest roadblock between people and wealth.
Iím also a Christian. Having read the Bible, and what it says about money, I can tell you thereís not one place where it says debt is a good idea.
So, all that information leads me to one conclusion. Debt is not a positive thing. The only kind of debt I donít beat people up over is mortgage debt, as long as itís a 15-year, fixed-rate loan. Houses are wildly expensive, and I understand that most people canít save up to buy a home with cash in a reasonable amount of time. Still, that doesnít make mortgage debt a good thing.
Any kind of debt is a burden, Nathan. It steals from your ability to save, build wealth, and be generous.
I owe $18,000 on my only car, and the payments are killing me. Iím also upside down on the vehicle by about $4,000. Iím 31, and Iíve got exactly $18,000 in my pension fund. Should I cash it in to pay off the car?
I love the fact that you want to get rid of your car payment, but I donít want you to cash out your retirement plan to make it happen. If you can pay off the car in 18 months or less, Iíd advise living on a strict, written budget, and throwing as much money as possible towards the car debt until itís out of your life for ever.
If it would take longer than 18 months to pay it off, Iíd get rid of the car. To do this, youíd have to sell it for as much as you can get, then go to a local credit union for a small loan to cover the difference. If itís your only car, youíd need to ask for an extra $2,000 to $3,000 to buy a little beater to drive until you can save up and get into something better.
ē Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey