The answer may surprise you.
- Dave Ramsey is not a fan of consumer debt.
- He thinks it’s best to avoid borrowing money at all costs — even to buy a home.
We all have those things that get under our skin. For some of us, it’s noisy neighbors. For others, it’s slow drivers.
If you ask personal-finance expert Dave Ramsey what one of his major pet peeves is, his answer will likely be consumer debt. Ramsey is very opposed to the idea of owing money to a lender in any shape or form. Not only does he think consumers should ditch credit cards and pay for purchases in cash, but he believes that it’s ideal to purchase a car outright rather than have to take out an auto loan.
Ramsey is so opposed to consumer debt that he’s even advocated for buying a home in cash rather than signing a mortgage. (Granted, Ramsey recognizes that many people can’t purchase a home outright, but in his mind, it’s better to not owe money on a home than to have a loan hanging over your head.)
Meanwhile, you’ll often hear consumer debt broken down into “good” and “bad” categories. Credit card debt is generally considered the bad kind to have. Sometimes, it’s unavoidable, such as when you run into an emergency expense you don’t have the money to cover. But all told, credit cards are notorious for charging loads of interest, and carrying too high a balance could damage your credit score. And so it’s easy to see why credit card debt may be considered a bad thing.
Mortgages, on the other hand, are generally considered a good kind of debt because they tend to come with reasonable interest rates, and because they make it possible to eventually own a valuable asset outright. Auto loans can also be considered a good kind of debt, because while cars don’t tend to appreciate in value, they’re an essential purchase that, in many cases, make it possible for the people who drive them to earn money (after all, many of us need a car to get to work).
But if you ask Dave Ramsey which type of consumer debt he thinks is the good kind to have, he may have a different answer than what you’d expect.
No debt is good debt
Ramsey recently tweeted that the only good debt is debt that is …….