4 tips from Dave Ramsey you must stop following in 2023

The person with facial hair sorts out the bills on the kitchen table with a neutral expression.

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Make sure you are listening to the right financial advice this year.

the main points

  • Many people re-evaluate their financial situation at the start of the new year.
  • If you’re following Dave Ramsey’s advice, there are some tips you should stop listening to.
  • This includes paying off your mortgage early and avoiding credit cards.

Dave Ramsey is a well-known financial guru who has provided some great advice, including his suggestions on… Which retirement account to invest in And why you should stay away from borrowing a new car.

But, Ramsey gave some, too bad Advice. And if you’re contemplating how to manage your money over the next year, here are four suggestions from Ramsey that you should absolutely stop listening to ASAP.

1. Don’t worry about your credit score

Ramsay told you over and over again You shouldn’t care about your credit score. Basically, he believes that only people with a lot of debt have good credit and that you are in a better position once you stay away from borrowing.

There are some problems with this advice. First, you will probably have to borrow some time – like buying a house. And while Ramsey said lenders will do “traditional underwriting” and look beyond your credit, that’s not always the case.

Your credit score is also important for other things, like renting an apartment or getting affordable insurance. You should care, and if you’re listening to Ramsey and don’t care whether your credit score is good or not, you should stop following this advice now and start Work to earn score He opens doors for you.

2. Avoid credit cards

Ramsay also says you should never use credit cards, opting for a debit card or cash instead. This is also a bad move.

credit cards Help you build credit. They can also give you the opportunity to get rewards for the spending that you have to make no matter what. If you pay off your balance in full, you can earn hundreds or even thousands of dollars a year in additional credit card rewards.

It’s also easier to rent a car or hotel with a credit card than a debit card because you don’t have to associate physical money when you make a deposit. You must have a credit card, unless you have proven in the past that you are completely irresponsible in the use of credit and do not trust yourself not to have a huge balance that you will not be able to pay off.

3. Pay off your mortgage early

He advised Ramsay to pay cash for your house if possible, or take Mortgage loan for 15 years If you can’t do that. He also suggested that it makes sense to pay off a home loan early.

This is bad advice. A mortgage is one of the most affordable loans out there, and the interest on it can be tax deductible if you itemize. You should take out a 30 year mortgage and not pay even $1 more on it. Instead, you should Invest the extra money You would have used it to pay off a loan at a lower interest rate than you could likely earn investing in a safe S&P 500 index fund.

4. Invest in mutual funds

Finally, Ramsey said you should choose mutual funds over ETFs. He advises actively managed funds.

it does not make sense. You’ll pay higher fees and have more restrictions and, in many cases, fewer options. ETFs that track market indices are usually the best bet for most investors.

You should stop following all of these tips in 2023, because doing so can help you in your better financial situation in the long run.

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