The Ramsey Show - App - The Credit Card Is the Cigarette of the Financial World (Hour 1)
Episode Date: July 19, 2019Take control of your money once and for all. The Dave Ramsey Show offers up straight talk on life and money. Millions listen in as callers from all walks of life learn how to get out of debt and star...t building for the future. Check out the fifth most downloaded podcast of 2018! Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR
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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios,
it's the Dave Ramsey Show, where debt is dumb, cash is king,
and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.
I'm Dave Ramsey, your host. Thank you for joining us.
Open phones at 888-825-5225.
That's 888-825-5225.
Stephanie starts off this hour in Louisville, Kentucky.
Hi, Stephanie.
How are you?
I'm good.
How are you?
Better than I deserve.
What's up?
Yes. We are on baby I'm good. How are you? Better than I deserve. What's up? Yes, we are on baby step
number two. And my husband right now is contributing to his 401k. And I'm trying to convince him to
stop doing that temporarily. And he just doesn't want to because he doesn't want to miss out on
the match. And I've tried to, you know, tell him that we're going to pay down now so that later we can contribute more.
And I'm just having a hard time getting him to agree to that.
Okay.
So how wealthy are you all?
We make about $100,000 a year.
But how much money do you have?
Not that much saved up.
And his 401 he has probably around
$16,000 right now. And then I'm a stay-at-home mom, but I work part-time as well. And you have
how much debt? We have about $62,000, not including our house. And so you have what's called a negative net worth. Do you know what I mean? Yes. Okay.
And the man that has a negative net worth has a financial plan.
Your husband. Uh-huh. That's kind of like hiring a fat person to be your personal trainer okay does that make sense yes it does yeah so um i mean he can do whatever
he wants but i don't hire someone to be my personal trainer unless i'm going to submit to
their suggestions because they have an eight pack and i I have a keg. Right.
And so I have to do what they say in order to get to look like they look.
Uh-huh. Because my method of eating two pounds of Oreos is not working.
Right.
Your husband's method of handling money has a negative net worth.
Knucklehead.
You know?
Yes.
You can play this for him later if you want to off the podcast.
But, I mean, it's, you know, at some point you have to say,
I don't know how to do this.
And so I need to do something better than my best thoughts.
Now, let me give you the explanation, and maybe that will help.
But until Knucklehead determines that he doesn't have the answers
with his negative net worth on how to build wealth,
I can't help him, And you can't either.
Okay.
Okay.
But if you can get past knuckleheadism, my wife has to deal with knucklehead too occasionally.
So this is part of life, right?
Right.
I don't think your husband's a bad guy.
I'm just picking on him.
All right.
But it's just kind of, if you think about the logic flow of it, it's absurd for him
to be giving forth his financial wisdom
given that given that he has a negative net worth okay so you're you're not on baby step two
you're on your and your husband's version of something that looks sort of like what we teach
but what we teach is if you're on Baby Step 2,
you have stopped all investing temporarily while you get out of debt.
And here is why.
How long have you all been married?
It'll be seven years this year.
How long did you date before you were married?
About two years.
Okay.
Let me tell you what you succeed at.
You succeed at things you pay attention to.
The reason he succeeded at making you his wife was he paid attention to you.
Right.
The things you focus on are the things you win at.
And right now, he's focused on two things.
One, trying to work this weird plan his wife has come up with,
this weird guy on the radio told her to do,
and at the same time keep investing.
He's dating two women.
Uh-huh.
It ain't going to work.
Right.
The lack of focus is what causes people to lose, not math issues.
Okay?
If his plan and if math could fix your all's mess,
it would have been fixed before you ever heard of me.
But our plan works because you only date one girl if you want to get married.
Okay.
So right now you're dating the baby step two girl,
and you're completely focused on her and get her out of debt.
And that means the matching girl over here in the 403B is no longer in the equation.
Okay.
Because otherwise the other one is not going to have fun.
It's the focus.
You follow me?
What you focus on is what people win at.
Okay.
And you have no chance of winning at something if you don't focus.
And the power of that focus supersedes the power mathematically of his match
for a one to a two-year period of time while you all get out of debt.
I'm not suggesting he abandoned the match for the rest of his life.
That would be mathematical blaspheming.
Right.
But for two years, focusing matters.
Because for two years, he focused on you, and you ended up in the altar.
Right.
Focus.
Stop the 401K, even though there's a match.
I understand the math.
It's not about math.
It's about what you pay attention to is what you succeed at you can wander into debt
but it takes extreme intense focus to get out you cannot wander out of debt you can't play both
sides of the of the field you can't play the field while you're getting out of debt it's too powerful
it's too magnetic it's too big a part of our cultural draw and so uh knuckleheads got to go i got a negative net
worth i'm going to try a different plan than mine and go all in go all in for 90 days go all in for
six months and see how it works submit yourself to a different idea it's not that it's my idea
except that i've got better fruit from my ideas than he does from his regarding financial things.
And not only do I have a positive net worth, but I've also led 30 million people out of debt.
So I probably know a little about this.
And so that's the thing.
It's not me bragging on me.
It's not arrogance. It's not that you you gotta it's not me bragging on me it's not arrogance it's not
that at all it's simply this it's you if you if i'm gonna hire an estate planning attorney i need
to listen to what he says understand why he's saying it and then agree to do different things
than i used to do in order to have a good estate plan. Same thing.
Same thing.
Whatever it is, you're going to bring an expert into your life.
This is not a DIY thing.
Ish is a wish.
Doing the baby steps ish is a wish.
Don't be an ish wisher.
It doesn't work.
This is the Dave Ramsey Show. This is big news, guys.
You need to stop and listen.
The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again.
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Call 888-LOAN-200.
That's 888-562-6200 or churchillmortgage.com. Greg and Tia are with us in Oahu, Hawaii.
Hey, guys, how are you?
How are you?
Better than I deserve.
I see on my screen you're debt-free.
Congratulations.
Hello? Yes, we are. Very cool. Congratulations. Hello?
Yes, we are.
Very cool.
Good.
And how much have you paid off?
We paid off about $90,000 in 11 months.
Good for you.
And your range of income during that time?
About $110,000 to $120,000.
Okay.
All right.
And very cool.
And what kind of debt was the $90,000?
It was everything. So campers, vacations, cars, a little bit of credit card debt, just everyday life savings.
Very cool. Good for you guys. What started you on this journey?
Well, I was employed at the time, and then something came up.
I don't remember exactly what it was, but it would have been another payment.
And I was like, we can't afford another payment.
Like, we weren't basing it off overall things.
We just couldn't afford to have another piece of income going somewhere else.
So I started doing some searches, YouTube and everything,
and I came across the debt- Free Community and Dave Ramsey.
Very cool.
Cool.
Well, thank you for your service.
And so then what happened?
So I purchased the Total Money Makeover,
and it was one of your summer sales,
so it was a bundle with some of the CDs and Rachel's audio book.
So I read it about a day, and then I told Greg, I was like, you've got to read this.
And he's pretty indoctrinated, so he gets on board pretty quickly.
He read it in about a couple days, and we were all in at that time.
Very cool.
So that's how you got your spouse on board.
Read the book, honey.
Yeah.
I love it.
Very cool.
It wasn't hard at all.
So what do you tell people the key to getting out of debt is?
I think that you have to have a budget, you have to be intentional, and you have to have a plan.
You have to know that your needs tomorrow are greater than your wants today.
And you just got to know, like, where every dollar is going and what you're actually doing. Because, like you say all the time, you can wander into debt.
But getting out of debt is not so easy if you don't have a plan.
Now, did you guys sell something?
You must have.
Oh, yeah.
Oh, yeah.
What did you sell that was big?
That was my goal.
The camper.
Okay.
And how much did the camper sell for?
It sold for $10,000, I think.
$10,000.
Yeah.
Okay.
What else did you sell?
Just odds and ends, things that we weren't using, clothes, electronics.
The big thing was, though, I was a saver.
I already knew that I wanted to have a large down payment for our retirement home,
but I just didn't know that I needed to get rid of all the debt.
So we had about $34,000 in non-retirement debt.
Okay, so $44,000 was the sale of the camper and savings that you threw at it.
Yes.
And then that leaves you with about $45,000 you did in 11 months making $110,000.
That math makes sense.
Very good.
Good for you guys.
How does it feel?
What was that?
How does it feel?
It feels amazing.
How does it feel, Greg?
It feels amazing. How does it feel, Greg? It feels amazing.
Just ready to, so now we can just continue on with our retirement goals and everything like that.
It's just great.
Yeah, you don't have any payments.
You can do a lot of stuff, right?
Oh, yeah, it's amazing not having any payments.
It gets a little hard actually doing the budget when you're trying to allocate funds.
Because there's so much money left, yeah.
Using your EveryDollar app, it's like we got a pay raise.
The first time I did it, I was like, there's no way that we have this much left over at the end of the month.
Because I didn't know where it was going.
Wow.
Way to go, you guys.
I'm very proud of you.
Good job.
Good job.
Did you have people hating on you or people
encouraging you uh i think it was a combination of both uh what we did is you have to be around
like-minded people so uh your online community and then all the resources you offer online
um the good thing that i do like about your program is anyone can do it so my mom who's
been teaching for well over 30 years,
also is doing the program at the same time,
so we can talk about things.
I got her on board with the envelope system.
And then the people who are naysayers,
we just kind of X them out of our lives.
Ah, okay.
There you go.
Well, you've got to have people around you saying yay,
I mean, because it's just too hard otherwise.
It really is.
Well, way to go, you guys.
Very, very well done.
All right.
We've got a copy of Chris Hogan's book for you, Retire Inspired, number one bestseller.
We all know that'll be the next chapter in your story that you become millionaires, everyday millionaires, and outrageously generous as you go along.
So very, very well done. Greg Antia, Oahu, Hawaii, $90,000 paid off in 11 months, making $110,000 to $120,000.
Count it down.
Let's hear a debt-free scream.
Three, two, one.
We're debt-free!
Well done, you guys.
Very well done.
Man, that's fun.
Open phones at 888-825-5225.
Dominique is in Pittsburgh.
Hi, Dominique.
How are you?
Great.
Thanks, Dave, for taking my call.
I just need to tell you that my husband and I have been following our principles for 10 years now,
and it's just amazing what it's done in our life.
Wow.
Very cool.
How can we help today?
Okay.
So my stepmom, who I'm really close to, who lives in Florida, I live in Pittsburgh,
my dad recently passed away about two months ago.
I'm sorry. My dad recently passed away about two months ago, and she's 73, and she really wants to downsize.
The house is too big.
It's too hard for her to maintain, and so she really wants to downsize into an apartment.
I really don't know how to advise her because she's on a very limited income.
She makes about $24,000 a year.
And if she was to sell the house, it'd probably be about $130,000.
So I'm not sure what to say to her.
Is the home paid for?
Yeah.
Okay.
And what's it worth?
$135,000, you said?
It's probably between $135,000 and $150,000.
Okay.
And what city does she live in?
No, they're not safe, but it's in Florida.
Okay.
Well, if it's a city that's a reasonable real estate expense for 150... It's really reasonable.
I'm sorry?
It's a very reasonable area.
Okay.
Then she should be able to get a condo for much less than $150,000,
shouldn't she?
Maybe $100,000, $110,000 condo?
Yeah, that's what I was thinking,
but do you think it would be better for her to rent
or do you think it's better for her to own?
How is her health?
Well, she had a heart attack in January.
She really came back.
You know, she's walking two miles a day.
But her hearing is not really degenerating.
Well, the point is that she's likely to live as much as 30 years.
I know.
During that 30 years, her income's probably not going to go up a lot,
but rents will.
I know.
And so don't rent.
Okay.
Buy something.
A little condo.
Yeah, buy a little condo and pay cash for it.
And then she can make it.
Then she can make it for 30 years on her income.
The $24,000, I assume, includes social insecurity?
Yep.
Okay.
All right.
So she doesn't have any other money, I assume?
Nope. Okay. All right. So she doesn't have any other money, I assume. Nope.
Okay.
All right.
Yeah.
Because, you know, if she lives 20 years, she'll be 92.
She probably won't live 30, but she'll be 92, right?
Yeah.
And in 20, think about what rents have done in 20 years.
Yeah.
Doubled.
I agree.
And I don't think her income's going to double during that time.
No.
I mean, I've offered to have her come live with us,
but she says she can't take the winters anymore.
So, you know, to help her save money.
But, yeah, I think the condo is the way to go.
Yeah, something that she can pay cash for.
And I'm sorry you lost your dad.
I'm sorry she had to make these decisions while she's grieving.
If there's nothing pushing her, I'd recommend she tap the brakes just a little bit
and maybe wait until spring, maybe wait until he's been gone a year,
because you'll make better decisions after that.
It's tough to make good decisions, big decisions like this, when you're kind of in the midst of grieving.
Now, if he passed away in the home and there's a situation like that where she doesn't want to be in the home, I understand.
And if you want to go ahead and sell it, it's okay.
But financially, it's okay to wait until spring.
Take her time.
Make decisions slowly and carefully with wisdom.
Hey, thank you for the call. Sorry for your time. Make decisions slowly and carefully with wisdom. Hey, thank you for the call.
Sorry for your loss. This is The Dave Ramsey Show. Thank you. Linda is with us in Boston.
Hi, Linda.
Welcome to the Dave Ramsey Show.
Hi, Dave.
Thanks for having me.
TGIF.
Sure.
What's up?
So I have a question for you, and I'm really thankful that you're taking the time out to talk to me because we've got a decision coming up, and I'm not sure which way to go.
My husband and I are selling our house, and we've been living away from the city, kind of living cheaply,
and the commute's just kind of killing us.
So it's really time to move closer into the city in Boston.
We're about an hour out right now, and with traffic,
our commute's around an hour and a half sometimes,
an hour and 45 minutes, and we just can't do it anymore.
So when we move closer to the city, the home is going to start to get expensive.
We're also looking at renting, and the rent for, you know,
to try to live a little cheaply is just as much, you know,
two to three thousand a month kind of range, which is, you know, pretty much a mortgage payment on a
smaller house. We're close to zero. You know, we're on our second marriage. And when we first
started out, we were pretty far in the hole. And we've worked very hard over the past six years to
really get ourselves into decent shape.
I hope we're in decent shape.
And so we kind of have to decide now, do we get ourselves back into the hole?
Okay, when you sell your current home, are you going to get equity out of it?
Yeah, we're going to get around $100,000 equity.
Okay, and how much debt do you have not counting your home?
$20,000 on a car.
We bought a car used, but it was $20,000 on a car. We bought a car used.
Okay, so that's got to go.
The debt's got to go on that.
And that leaves you $80,000 or you sell the car, one of the two.
And then you buy a house with $80,000.
And what's wrong with that?
Well, I'm just not sure because, know we're still gonna well okay so right now
our total debt is around 150k including the mortgage what's your household income so we earn
a little under 280k combined that's gross annual okay so here's the thing figure out what your
take-home pay is not counting insurance coming out not counting. Figure out what your take-home pay is, not counting insurance coming out, not counting 401K coming out.
That's on 8K.
Your take-home pay after taxes should be around a little over $200,000.
Yeah, yeah, yeah. So by month, it's around between $8,000 to $10,000, somewhere in there.
No, it's more than that.
Oh, okay.
$10,000 is $120,000 a year. You do not have $200,000 in taxes.
No, that's true.
Okay, so it's more than that.
Yeah.
So your take-home pay ought to be approaching $17,000 a month after not counting health insurance, not counting 401K.
Okay, so I don't want you to have a house payment that is more than a fourth of your take-home pay on a 15-year
fixed with the down payment that you have okay and that's what i would tell you to buy and i
think you can do i think you can buy in boston for that as you're getting closer it's you know
you're just going to get what you've got is a per square foot shock you get sticker shot per square
a bit because what we're going to buy is, you know, in that range, the houses are
around double the price, and the taxes are double, too. And the good news is it's going to go up,
the good news is it's going to double, it's going to go up double, too. So, I mean, you're going to
get great appreciation on it as far as an investment goes long-term as well. So here's the thing. The
other option is to rent. That's an okay short-term goal.
Renting is okay short-term for different reasons.
It's a bad 10-year or 20-year strategy to rent because during that time, house prices go up, and you would have benefited from owning a house.
You know, the equity, for instance, you're getting out of the house you're selling.
That's money you made because you owned because you didn't rent.
And the second thing is rents go up.
And when you buy that house on a 15-year fixed rate, your payment's not going up.
Now, your taxes and insurance will go up over time, but your payment itself is not going to go up.
And when you rent 100% of the time, over a 10-year period of time, your rent's going to increase.
Always it's going to increase.
So you've got an increasing cost of housing with no investment when you're a long-term renter.
When you're a long-term owner, you've locked in your cost of housing, you've sealed it,
and you're getting this return, even though it doesn't go into your pocket,
but you're building worth.
You're building net worth.
You're building wealth by being an owner.
And in most cases, it's tax-free growth in most situations.
So the vast majority of them under current tax law.
So I'm going to tell you to buy.
Now, if you're going to go live in Boston, you think this is a little bit of an experience downtown.
You know, we're going to try this for a year, and then we're going to figure out what we're going to do.
Rent for a year, that's fine.
It's an adventure.
But if this is a five-, a ten-year plan, you think you're staying, buy.
Lacey is with us in Charleston, South Carolina.
Hi, Lacey, how are you?
I'm great.
Thanks for taking my call.
Sure.
I am wondering if my husband and I should stop on our debt snowball in order to save for an upcoming military move.
And that move could happen any time from next month to two years from now.
Okay.
The military, yes, that move is likely to happen because about the only thing you can count on with the military is they're going to move you.
That's right.
But they don't give you 20 seconds notice.
They give you plenty of notice.
Well, my husband is in, he has unaccompanied orders right now,
like he's already gone, and we're left behind.
And if he's going through a thing, and if he doesn't make it through the thing, we move
at the end of that month or he'll get orders and we're ready to move.
Okay.
So you've got notice.
You're pretty much going to move.
Yeah.
Yeah.
It's not going to be two years from now before you move.
Well, that's when he'll be done with his school is two years from now.
Oh.
Yeah. It's a big one. So the decision won't be made until then i'm hoping he gets all the way through it and we expect where we're going next the decision won't be made until he drops out of
school kicked out of school or finishes school right okay yeah okay so he's gonna finish school
it's gonna be two years before you know.
Yeah.
So you got two years.
So you don't need to.
I mean, 90% probability you got two years.
Yeah.
I mean, unless something really bad happens, you know.
I believe in him.
I think he's going to make it.
I think he's going to make it too.
I don't know. You know, you could ask what the percentage of people that start this are that finish it, you know, and try to look at it that way and say, you know, well, only 10% finish this thing, whatever this thing is he's gotten into, right?
And if that's true, then maybe you are going to move sooner than two years.
I don't know.
But the thing is, you're usually going to have more than a few minutes notice and you could stop then i i think right now it's just this exciting
change and you know you're dealing with a separation and all these other things that
you deal with in the military and so um i'm not ready yet to stop your debt snowball and start
saving for the move yet but stop it in plenty of time to save for the move once you kind of see the move coming
and you really got the date nailed down.
But usually you've got three months to figure this out.
And if you stop it for three months and throw all your money in a pile for three months,
you can cover the move in most cases.
I don't know what level in the military you are.
I don't know what your income is.
I didn't ask those things.
But most of the time, that's the generic you know the general
way you're facing this and so thank you for your service by the way and thank him for his service
we appreciate you guys folks if you are a buyer in this hot seller's market i mean you put a sign
yard right now in a house it sells right you might feel pressured to buy more home than you can
afford or pay more than you should for that particular house because oh oh oh oh it's gonna sell it's gonna sell it's gonna say everybody's in a panic right
and so what you've got to do is you've got to put somebody in your corner
that keeps you from getting off track you're gonna have somebody that guides you through the process
and a great agent is the guide that'll help you stick to your goals. And a bad agent will cause you to buy a house you didn't need to buy or get all
hyped up and sell, you know, put in $40,000 extra just to cover the bid or,
you know, because there's a bidding war or something.
But no, a good agent's going to help you hit your goals.
They're going to help you know that you got the write-down payment on that 15-year
fixed, the payment's no more than a fourth-year take-home pay.
Our endorsed local providers are the top 10% of real estate agents in your area.
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This is The Dave Ramsey Show. Thank you for joining us, America.
We're glad you're here.
Open phones to 888-825-5225.
Ariel is with us in Silver Springs, Maryland.
Hi, Ariel.
How are you?
Hi, Dave.
I'm well.
How are you doing?
Better than I deserve.
What's up?
I'm so happy that you took my call.
So I'm going through a little bit of a problem.
I just moved from St. Thomas, Virgin Islands.
That's where I'm originally from in Maryland. And I, because of the hurricanes and stuff, I got a job here in Maryland. And
I'm about $40,000 in debt, $30,000 being student loans, and the other $10,000 being
credit cards and miscellaneous, but mostly credit cards. So my question is, I only have about $200 in the emergency fund. Should I
just save up the other $800 and then do the snowball and pay the student? Okay, so I should
do that. Yes, absolutely. You need that $1,000 cushion. What kind of money are you making right
now? I'm making $40, and the thing thing is i live in the most expensive county that taxes
the most so i thought my check would have been way more than about 400 more a month than what
it is now so i kind of um what are you doing i work at uh walter reed it's the medical hospital
are you a nurse or what do you do no no i'm an administrative assistant
um so yeah so are you single yeah i'm single i'm single and i live alone so here's the thing
here's the thing four hundred dollars was a big deal yes so that means that if you were to find
an extra job making a1,000 a month,
that would probably change the formula on what you're doing a bunch.
Number one, you tighten up the budget.
You learn what the budget is.
It's all brand new to you.
And then the second thing is you increase your income and you throw it all at the debt.
Because, you know, like $10,000, $12,000 a year extra all going at the debt and uh because you know like 10 12 000 a year extra all going into debt that's a big change in how fast this debt goes away so i would tighten up the budget jump on every dollar.com
download the uh the the free every dollar uh app which is the best budgeting app on the planet
and it'll get you going and then um you you know, do your zero-based budget.
Tighten up the budget as tight as you can because you've got a big goal here.
I mean, you came out of a mess away from the hurricane.
Now you're trying to land and clean up the debt mess now.
And income minus outgo is the equation.
The equation's not hard.
You cut back on the outgo, and you increase the income.
And the more you do that, the more room there is in the middle to attack this debt and gets rid of there so very very well done congratulations our question of the day comes from blinds.com
they have a 100 satisfaction guarantee that means even if you screw up and i do that sometimes you
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Gabe's in California.
I'm curious as to why you condemn the use of credit cards for everyone in every situation.
It's kind of like I condemn the use of a cigarette.
Cigarettes don't kill everybody that smokes them,
but they are good for no one that smokes them.
That's why.
I'm 37 years old.
I make $90,000 a year.
I'm on baby step six, and my credit score is 815.
I have four credit cards, four of which I use regularly,
based on which one gives me the best rewards at particular places.
I pay the bill in full at least monthly for every card.
Why shouldn't responsible individuals such as myself use credit cards?
Because you're not.
You're delusional.
You are more responsible than the average cat.
I'll give you that.
But $90,000 a year doesn't make you rich.
And those points, you know, I've met with thousands and thousands of millionaires.
I never met a single millionaire who said, Dave, you know, I made all my money with my airline miles.
Dave, I got 1% back on Discover.
Let's do the math on that for a minute okay
you run a hundred thousand dollars worth of expenditures through your discover card you
know what you get a thousand dollars you want to explain to me how that's a wealth building method
that's dumber than a rock
well I'm spending the money anyway.
Yeah, I know, but all of the studies tell us that the lack of friction,
the lack of emotional friction causes you to spend more when you use plastic
than when you spend cash.
So, Gabe, you can do whatever you want, but your judgmental butt little email,
I can read between the lines, you Pharisee, You go do whatever you want to do, dude.
But millions and millions of people have said, I've had enough of credit cards.
They have not been a blessing to me.
They've been a curse.
You spend more when you use them.
You spend 12% to 18% more when you use plastic than when you use cash on the typical purchase.
If you go to a vending machine, it's 178% increase in sales for plastic users versus
someone actually puts a dollar into the little dollar eater.
When you go into a fast food setting, quick serve restaurants for my friends in the business,
a fast food setting, you roll into Mickey D's, you spend an average of 37 percent more when you use plastic
than cash than cash buyers do because when you lay cash up on the counter you emotionally go
ouch i just spent money and something leaves your possession in return you get something back like a
hamburger have you ever thought about the fact that r Rachel Cruz brings this up, when you put your
credit card on the counter, they give it back to you and your hamburger.
There was no visual trading going on here.
If you trade something for something, you recognize that a transaction has occurred.
But where you give them something, they give it back to you and they give you their stuff. No visual transaction has occurred. But where you give them something, they give it back to you,
and they give you their stuff.
No visual transaction has occurred.
Now, I know that's primitive, Gabe,
and you think you're above these primitive things, but you're not.
These are behavior processes.
And personal finance is 80% behavior.
It's only 20% head knowledge.
Now, you're probably not going to go bankrupt
because you're conservative and you're legalistic and everything else.
And you've got your little financial plan figured out so go do your plan dude that's fine
i'm fine if you go do whatever you want to do but i am 100 sure after having worked with millions
and millions and millions and millions of families over the last 30 years five million families have
gone through financial peace university we've sold 15 million books.
16 million people listen to this show.
Now, what does that say?
It says credit card's not working.
And I think we're going to look back in a decade or so and look at the credit.
Remember when you were a kid, any of you old like me?
You're a kid, everybody smoked.
And then they decided it wasn't healthy, so they had smoking sections in restaurants,
remember that?
And as if the smoke didn't leave the smoking section and go over to the other section,
it was the dumbest thing.
They had smoking sections on airplanes.
I'm old enough to remember that.
And before that, you could just smoke on an airplane.
It was like a tube full of smoke with wings.
But gradually, society went from the 1950s or 40s with Clark Gable or whoever
with a cigarette hanging out of his lip in every movie,
or Frank Sinatra or whoever with a cigarette hanging out of their lip in every movie
because that made you cool.
It went to where the cigarette isn't cool anymore.
It's just trashy because people die from it, and it's pretty much nobody likes it anymore.
Society has kind of looked up and goes, cigarettes kill you.
They're stupid.
Why in the world would you smoke?
Now, people do still smoke, and if you smoke, I don't care.
I'm not mad at you.
I'm not listening to your rooms.
You don't like smokers. I just don't see there's society has turned on you because society has recognized that smoking is stupid and it kills you.
And so if you're in the tobacco business, your business is almost gone during my lifetime.
It was a massive multi-billion dollar thing when I was a kid,
and it's dried up to almost nothing now.
The credit card is the cigarette of the financial world.
There's no upside.
It kills you.
When you can have a debit card that does everything a credit card does,
and you're not out here chasing discover points, thinking that's going to make you rich,
which really makes you look mathematically stupid.
So, Gabe, that's my why.
I've never met anybody that built wealth because of a credit card,
and I've seen people lose marriages, lives, businesses, and everything else because of credit cards,
because of their misuse of them.
And so, I think they're stupid.
Especially with a debit card, that will do every single thing.
It has the exact same fraud protections that your credit card has.
The exact same fraud protections your credit card has.
There's just no use for the dumb things.
Unless you get some frost on your windshield and want to scrape it off.
That's about the only thing I can think of.
This is the Dave Ramsey Show.
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