Many Americans spend money without tracking where it goes. Dave Ramsey often highlights how small expenses can quickly sabotage financial goals. His advice focuses on cutting out waste and choosing value over convenience.
Things Dave Ramsey says to stop buying:
New Cars
Ramsey discourages buying new cars because they lose value fast. A new car can drop over 50% in value within five years. Ramsey recommends buying used cars in good condition.
Designer Clothes
High-end fashion carries heavy markups. He focuses on practicality and value over name brands. Affordable clothing often lasts just as long.
Daily Coffee Trips
Buying coffee outside every day adds up quickly. He says habits like this delay financial goals. Brewing at home costs far less.
Extended Warranties
Most items do not need repairs during the warranty period. These warranties are often expensive and full of conditions. Ramsey prefers relying on an emergency fund instead.
Dining Out Regularly
Eating out often drains your budget fast. He suggests cooking at home and planning meals. Dining out should be an occasional treat.
Name-Brand Groceries
Store brands often offer the same quality for less. Ramsey believes paying extra for labels is unnecessary. Switching to generics saves money over time.
Vacation on Credit
Going into debt for vacations leads to financial stress. He believes trips should be paid for upfront. Budget-friendly travel is a better option.
Leasing Vehicles
Leasing builds no ownership and usually costs more long term. Ramsey considers it the most expensive way to drive. Paying cash for a reliable used car is his preferred approach.
New Tech on Release
New gadgets lose value soon after launch. Ramsey warns that early adopters pay more for small improvements. He recommends waiting or buying used.
Unused Subscriptions
Monthly charges for unused services pile up. He urges reviewing and canceling what you do not use. Small recurring costs add up each year.
Timeshares
Timeshares come with hidden fees and are hard to resell. Ramsey sells them as poor financial decisions. He recommends renting vacation spots instead.
Whole Life Insurance
Whole life insurance mixes coverage with investment, but at a high cost. He believes investments should be kept separate.
Lottery Tickets
The odds of winning are extremely low. Ramsey views the lottery as a waste of money. He promotes saving or investing that cash instead.
Fancy Wedding
Weddings that cost too much can cause long-term debt. He advises couples to stay within their means. The focus should be on marriage, not the event.
Things Dave Ramsey says are worth it:
Emergency Fund
An emergency fund is one of Ramsey’s core steps. He recommends saving $1,000 first, then 3-6 months of expenses. This helps avoid debt during unexpected events.
Down Payment for a Home
Ramsey encourages saving 10-20% for a home before buying. A strong down payment reduces mortgage costs. Ramsey also prefers a 15-year fixed-rate loan.
Career-Focused Education
He supports education that leads to strong job opportunities. He warns against heavy student loans for low-paying degrees. Trade schools or community colleges can offer better returns.
Budgeting Tools
Tracking expenses is key to Ramsey’s money plan. Ramsey recommends using spreadsheets or apps. Zero-based budgeting helps manage every dollar earned.
Nutritious Food
He values spending on healthy food, even if it’s slightly more. Good nutrition can prevent future health costs. It supports overall well-being.
Term Life Insurance
Ramsey suggests term life coverage for those with dependents. It provides financial protection at a low cost. He advises getting 10-12 times your income in coverage.
Financial Advisor (Fiduciary)
A good advisor can guide important decisions. He recommends fiduciaries who act in your best interest. They help avoid costly mistakes in investing or planning.
Used Reliable Car
A good used car offers value without heavy depreciation. He says it avoids loans and keeps you debt-free. It’s a smarter buy than a new car or lease.
Home Security System
Ramsey believes it’s worth paying for basic home protection. It brings peace of mind and may lower insurance costs. Safety should be a priority.
Quality Home Appliances
Comfort and health are impacted by these two items daily. Ramsey sees them as smart purchases when chosen widely. Good options can last years.
Basic Durable Clothing
He supports buying clothes that are practical and long-lasting. This avoids frequent replacements. Fewer, better pieces save more in the long run.
Quality Mattress and Shoes
Comfort and health are impacted by these two items daily. Ramsey sees them as smart purchases when chosen wisely. Good options can last years.
Charitable Giving
Giving is a key part of Ramsey’s philosophy. Ramsey encourages consistent tithing or donations. It builds discipline and helps others in need.
Experiences Over Stuff
Ramsey supports spending on meaningful experiences. He believes they provide more joy than material items. Memories create long-term value without clutter.
