Dave Ramsey often reminds us that “personal finance is 80 percent behavior and 20 percent head knowledge”. So how do we become debt-free with Dave Ramsey’s 7 money traits?
You can always gain more knowledge on how to become debt free.
Or you may already know about what you need to do to cut down your debt and become debt free.
So what’s more important for you is to recognize and understand your behaviors that are shaping your personal finance situation.
Are your behaviors helping you to stay away from more debt? Or are your behaviors taking you deeper and deeper into debt?
Let’s take a look at:
– What Dave Ramsey says about the 7 behaviors towards becoming debt free.
– What More Money Tips says you can DO to adopt the 7 debt-free behaviors.
Bankrate.com contacted More Money Tips and kindly offered this great resource, Debt Consolidation Guide, for anyone who is thinking of debt consolidation.
This resource looks at multiple ways to consolidate your debts and weighs the pros and cons of each method so you can decide the one that suits you best.
Bankrate.com is the trusted source of financial data for outlets such as The Wall Street Journal, The New York Times, and CNBC.
Behavior #1 Reject Debt as a Fact of Life
Dave Ramsey says that debt is so common that it’s accepted without a second thought.
Debt’s all around us. We hear of mortgage debt, student debt, credit card debt, and installment plans including car payments.
More Money Tips Action #1: What to Do About Your Debt
Know that you may need debt for now. But only for now.
You need to reject debt – your goal must be to take concrete steps to cut down on your debt ASAP. Start today.
Only when you take debt reducing steps can you begin to change your debt situation. Your goal needs to be on debt reduction.
For instance, let’s talk about your credit card debt.
CNBC reported that the average American household with credit card debt owes $16,883.
Do you know how much interest your credit cards are charging you? If you don’t know, look up your credit card interest rates now.
I think you’ll find your interest rate shocking.
Look up your bank statements to see how much interest you are paying each month on your credit card debt.
Realize that a lot of your hard-earned money is quickly going down the drain as interest payments.
Therefore you must take steps now to reduce and pay off your debt. It’s possible not to have debt.
Behavior #2: Self Control
Dave Ramsey says correctly that children do what feels good.
But he says adults should have self control – should make a plan and follow through the plan. Obviously, a plan to cut down your debt and become debt free is super important for you to create and use.
More Money Tips Action #2: How to Increase Your Self-control & Motivate Yourself
Do you have a written plan to slash your debt?
Don’t have a plan? You must create one now.
If you do have a plan, that’s great.
Make sure that it details the actual things you’ll do or avoid doing, to cut down on unwise spending.
Also, write down how you will reward yourself for hitting your debt reduction goals. (But make sure your rewards aren’t costly).
Do you know where all your money’s going every month? Finding out exactly how much money is spent in what areas. Knowing this will shock you into developing more self-control in your spending.
Do you buy stuff because you can’t resist the huge discounts and “savings”?
Ask yourself: are you still as stoked with your discounted buys?
No? Then it’s time to make yourself say no to discounted stuff you don’t need that drain your wallet.
Do you upgrade your phone, TV or computer regularly?
Stop and think about it carefully. Do you honestly need to keep paying money and incur more debt to replace your TV, phone or computer?
If you upgrade your stuff and charge what you buy to your credit card, how much money will you be spending and paying interest on?
Won’t your debt increase after you buy and upgrade your stuff? I think you know the answer.
FACT: You often do not need to upgrade your stuff at all. What you have is usually enough to serve you well.
So, do yourself a Huge money favor and appreciate the things you have.
There is no need for the latest model, the latest technology and bells and whistles.
Stop your additional spending that is sinking you deeper into debt.
To control your spending, check out 14 Reasons We Overspend and How To Stop
Behavior #3: Self Confidence
Dave Ramsey says that “a person who believes in their money plan doesn’t care what others think of them”. How true.
It’s financially savvy to drive an older car without needing a car payment. I’d say that it’s totally unwise to own a late model car that’s costing you an arm and a leg.
I don’t think you can feel good for long when you look at things this way.
More Money Tips Action #3: How to Grow Your Self Confidence
Do you feel uncool or dissatisfied if you aren’t using or wearing brand name stuff? Do you feel good only when you have the latest phone or computer?
Stop and think about it carefully. Make a choice now.
What is more important?
Other people being impressed with your new phone or watch or branded apparel?
Or taking steps to cut down your debt so that you can enjoy the freedom of being debt free? You know what’s more important.
You and your future self are too important to be burdened by increasing debt. Far more important than merely feeling good about spending on unnecessary brand name stuff.
Far more important than thinking that others are impressed by what you have.
Now, I’ll tell you a fact.
Most folks do not care about you and what you have or do. They often care most about themselves. Even if some people are impressed by what you have, you really don’t need that!
So, stop wasting money on upgrading your stuff or buying more things. As long as your things work and serve you well, just keep using them.
Use your growing savings to slash your debt.
Behavior #4: Goal Driven
Dave Ramsey advises that you need to “set goals that are specific, measurable, achievable, relevant, and have an expiration date”, to become debt-free.
More Money Tips Action #4: Set SMART Money Goals to Slash Your Debt
Focus your mind, time and money on cutting back your debt.
If you have written goals and are taking steps regularly to reduce your debt, congratulations! Keep at it and keep motivating yourself.
If you haven’t made your money goals yet, it’s alright. You can take the first step soon.
Behavior #5: Gazelle Intense
Dave Ramsey explains it this way: “you are so fed up with debt you run as fast as you can (like a gazelle) in the opposite direction”.
This emphasizes how super focused you need to be on earning and saving more to reduce your debt.
More Money Tips Action #5: How to Get Gazelle Intense
Do you just accept your debt or are you sick of your debt?
Like Dave Ramsey says, you really need to sprint away as quickly as you can from your debt.
Remind yourself that debt is quicksand.
If you do nothing to cut back your debt, or worse, if you go deeper into debt, you will sink ever deeper into debt. That will make your debt much harder to manage and reduce.
Many folks make the terrible mistake of thinking that they are living the American Dream. You know, having possessions like a beautiful home and nice cars, and enjoying regular vacations.
But those who have borrowed a lot of money to spend on all these things, are really going to have an American Nightmare if they are not careful.
If you let your debt grow, you’ll have to keep working your tail off just to stay afloat financially.
Your home can be an investment, provided it is well located and was bought at a reasonably low price.
But a pricey car is a total money pit and is worth less and less over time (this means your hard-earned money down the drain).
Vacations are good to take, but not pricey trips that, I suspect, are often taken more to impress others than to meet our own needs.
It really pays to avoid lifestyle inflation – don’t increase your spending as your income increases.
Instead attack your debt and focus on becoming debt free.
Behavior #6: Not being Materialistic
Dave Ramsey says people who aren’t materialistic “don’t fall into the trap of wanting as much stuff as they can get.
They have become content with what they have and aren’t seeking to buy their happiness”.
More Money Tips Action #6: Stop Buying More Stuff – They Don’t Bring Joy
Many studies have shown that happiness does not come from having more stuff. You probably know this too. Often the stuff we buy make us happy for only a short time.
Let’s get real – real happiness comes from having peace of mind, not more stuff.
Your peace of mind is real when you take the right steps to reduce your debt and to build a better financial future for yourself and your loved ones.
Behavior #7: Make Sacrifices
Dave Ramsey talks about avoiding “eating out, going to movies every week, and getting the premium cable package” to help us become debt free.
More Money Tips Action #7: Make Enough Sacrifices to Become Debt Free
We all know it’s enjoyable to regularly eat out, go to the movies weekly and go on vacation yearly.
You don’t have to stop these pleasant activities. You simply need to reduce them.
For example, if you eat out three times a week, cut back to twice a week at first.
Later on, cut back to eating out only once a week.
Similarly, give yourself some time to get used to going to the movies less often.
You simply need to make a written budget and stick to it, to reduce your spending on these things.
Use the money you save to pay off your debt ASAP.
More Money Tips Takeaway
Be assured that you can definitely cut back your debt and become debt-free.
What you need is to understand how to change your habits now.
You need to make SMART goals for debt reduction, and take the needed actions to pay off your debt.
It may not be easy to make a start or to keep going.
But remember that what you are doing now will decide your future finances.
Do you want a debt free future or a future buried in debt?
It’s really up to you.
Remember – you’re in charge.
Decide now to reduce your debt and become debt free. Start taking action now.
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More than 4 million copies of Dave Ramsey’s books have been sold. They’re the ultimate textbooks of personal finance. Learn more by clicking on his books.
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