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7 Rules to Dave Ramsey Stupid Tax Money Mistakes

Dave Ramsey, a financial guru and one of the most popular radio personalities in the country, used biblical principles to help him get out of debt.

Ramsey, who has a weekly audience of 13 million on 600 radio stations throughout the country, is second only to Rush Limbaugh and Sean Hannity in terms of financial advice, although he was once in serious debt.

The evangelical Christian from Antioch, Tennessee, said he was able to pull himself out of a financial rut by relying on his religion.

Ramsey told ABC News, "The Bible talks about money a lot." “What the Bible says about money is essentially common sense, even if you're not a Christian. It's all about living on less than you earn and saving money.” In the 1980s, Ramsey and his wife reached rock bottom and declared bankruptcy after losing most of their money in real estate.

“I made a mistake. “I borrowed money out of my ears, eyeballs, and everything else,” he explained. “We couldn't breathe because we were so in debt - it wrecked and made our lives.”

Ramsey's Bible lessons had a positive impact. He and his family are now financially secure.

“Whatever it takes, I'm not putting myself or my family in this situation again,” he declared. Ramsey started giving financial advice at his local church before moving on to a local radio station.

Ramsey is now known for offering direct, to-the-point advice on how to get out of debt.

He also based his experiences on a best-selling book. Ramsey's methodology is broken down into "baby stages" in "The Total Money Makeover," which makes financial literacy feasible for the average person.

Baby Step 1 is to save aside $1,000 for emergencies, and Baby Step 4 is to set aside 15% of your income for retirement. Millions of Americans will benefit from Ramsey's guidance, as they have contributed to a year of unprecedented household debt levels. Student loan debt is approximately $30,000 on average, with credit card debt around $6,000.

“Debt is a symptom, not the cause,” Ramsey explained. “Debt is the result of being disorganized, immature, and buying stuff I can't afford in order to impress people I don't like.” So, let’s find out the rules to Dave Ramsey stupid tax money mistakes.

7 “DON’T DO IT!” ITEMS – ACCORDING TO DAVE RAMSEY

Payday Loans

Payday loans sign with money in wallet
Payday loans sign with money in wallet

To begin with, if you live in a low-income neighborhood, you've probably heard of these. Otherwise, you might not have. Payday lenders tend to target and set up shops in areas where the poor and desperate are more likely to be found.

Most importantly, if you only accomplish one thing on this list, make it this one. Payday lenders should be avoided. The reason for this, according to Dave, is because the people in charge of these businesses are full SCUM. Dealing with loan sharks is akin to this. They loan you money and then deduct their payment from your salary after charging you exorbitant interest. Can't afford to pay? You'll be pursued to the very ends of the planet, and they won't be nice.

Credit Cards

6 different types of credit cards
6 different types of credit cards

This one was certain to be on the list. Credit cards are basically a milder version of payday lenders. You'll understand if you've ever been late with a payment or had a difficult month paying all of your payments.

Yes, perhaps you always pay your balance in full. But what if your child ends up in the ER and is admitted to the hospital, and you forget to make your credit card payment in your haste? Or you are unable to pay it due to an unanticipated increase in medical expenditures. Things can quickly spiral out of control, and each month you carry a balance is another month you could be pulled into revolving credit card debt.

The point is that unexpected events occur. As a result, if you have the funds, BUY THE THINGS YOU WANT. Use cash instead of a credit card. You should avoid playing with snakes since you will almost certainly be bitten.

Life Insurance Policy

LIfe Insurance Policy paper with sign pen
LIfe Insurance Policy paper with sign pen

This one goes in the stupid category because, according to Dave, you'd make more money, in the long run, putting the money you'd spend on premiums in a fruit jar than in one of these policies. Whole and universal life insurance policies combine investment and life insurance into one package. You may get a better interest rate on a solid mutual fund investment account by purchasing a term life insurance policy for a fraction of the cost of whole life insurance.

Furthermore, the whole life insurance firm KEEPS the money you've put up in the investment element of the policy when you die and only pays out the life insurance portion. It isn't a good deal at all. In fact, it's as if you're throwing your money away every month. What a waste.

Keeping your life insurance and investments separate is a good idea.

Car Leases

Two men shaking hands in front of cars
Two men shaking hands in front of cars

Car leases are referred to as "fleeces" by Dave Ramsey. In other words, if you buy a lease, you'll be fleeced like a lamb. This is something he is adamant about. In fact, he claims that auto corporations generate more money from leases than from car sales. That has to make you wonder how good of a deal the consumer is getting. The lobbies of car dealerships weren't cheap. It was most likely covered by your lease payments.

Co-signing A Loan

Even when a friend is in need of a car for work, and they've fallen on hard times, it's hard to refuse. It's also difficult to advise your toddler not to dance around the fire pit while they're having a temper tantrum and all the neighborhood kids are doing it.

It’s hard to say no, but we must.

When you co-sign on a debt, your connection with that individual is likely to worsen, if not completely break. What makes you believe they'll make their payments after you help them receive it if the bank labels them a financial risk and refuses to lend them money? It's unlikely.

Either you'll end up borrowing the money yourself, or you'll have to harass your friend to the point where they avoid you and don't want to speak to you again. You can't win.

Shacking Up Before Marriage

Couple moving in together carrying boxes out of car
Couple moving in together carrying boxes out of car

Dr. Laura Schlessinger, I believe, popularized the term "shacking up." She, like Dave Ramsey, is a talk radio broadcaster, but her concentration is on personal advice. She, like Dave, is opposed to couples living together before marriage. However, we're only concerned with the financial ramifications here.

Consider this. Certainly, if you live with your spouse or buy a house together before you're married, you're more likely to lose your shirt. You are essentially "playing home," and a lot may go wrong in that situation.

When you are married, you have access to the legal system to assist you to divide your assets and debts. If you don't do that, you'll be facing a mound of attorney expenses and headaches if you and your partner break up. Which is statistically more likely for unmarried couples living together.

Timeshares

Beautiful hotel property with pool
Beautiful hotel property with pool

Those complimentary timeshare promotion excursions appear to be a no-brainer and tempting. At least until they put you in a room for hours while their skilled salesman convinces you (or, rather, forces you) into signing a contract you don't fully comprehend. You may be liable for more than you realize. On top of the mortgage payments, the fine print frequently contains extra assessments, property taxes, maintenance fees, and utilities.

It will be quite tough to get rid of it once you have purchased it. Timeshares do not have a large resale market. In fact, many people find it difficult to give them away! It's a bad investment.

About The Authors

Alberto Thompson

Alberto Thompson - I live in Vancouver, Canada, and work as a web developer and graphic designer. Back end programming (PHP, Django/Python, Ruby on Rails) to front end engineering (HTML, CSS, and jQuery/Javascript), digital usability, user interface, and graphic design are all areas of web development where I spend my days. I'm a huge fan of web creation and design in all of its forms, as well as assisting small businesses and artisans with their online presence.

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