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Across 32 years of giving people financial advice on the airwaves, Dave Ramsey has probably seen it all. But on an episode of "The Ramsey Show" earlier this year, he called out financial mistakes callers frequently make as “Dumb! Really dumb!”
He added: “These things baffle me, that’s why I’m hitting them,” he said. “Because they’re just illogical.”
However, some argue that economic and social trends may have made some of these mistakes unavoidable. Here’s a closer look at three of Ramsey’s top “dumb” money mistakes and why they’re so common.
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1. Co-buying property
Ramsey despises the prospect of buying property with anyone besides a spouse. He advises against this even in long-term relationships.
This advice is rooted in the fact that separating assets between an unmarried couple can be complicated. They do not always share the same property rights as married couples.
However, the housing crisis has pushed more people to consider co-ownership of property. A report by Co-Buy, a platform that helps multiple buyers share a property, says 26.7% of home purchases in 2023 were co-purchases, while 30% of those co-purchases were completed by unmarried couples.
If you’re not in a position to purchase a home — whether on your own or with a spouse — you can still take advantage of real estate’s income-generating potential.
You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
2. Wasteful spending on education
Investing in your education, Ramsey believes, should yield higher earnings. Otherwise it’s a wasted pursuit.
"Don’t spend $250,000 getting a master’s degree in sociology so you can be a caseworker for the state making $38,000," he said.
He believes students should realistically consider their career prospects and future earnings before going into debt for college.
You can also minimize the impact of paying for education by saving up for it ahead of time — whether for yourself or for your children — by using a high interest savings vehicle such as a certificate of deposit or other high-yield savings account.
A certificate of deposit (CD) pays a fixed interest rate on money held for a set period of time. CD rates are usually higher than other savings accounts, but if you withdraw your CD funds early, you’ll be charged a penalty fee.
But since this is a long-term savings play for your or your kid’s education, they are a strong option you’ll be less tempted to dip into.
If you’re looking for safe, high-return options, certificates of deposit (CDs) are a great choice, and SavingsAccounts.com makes finding the best ones easy. Their comparison platform provides real-time data on CD rates and terms from various banks, offering tailored recommendations to maximize returns.
Ideal for conservative savers and long-term planners, this tool simplifies the decision-making process, helping you grow low-risk, high-return investments without the stress.
One thing to note about CDs: If you withdraw the money before the end of the term, you’re likely to face penalty fees.
For those who already have student debt, it can be a daunting task to tackle it. Americans are collectively sitting on $1.6 trillion in student loan debt.
If you’re in this boat, it is possible to make that debt pile more surmountable by refinancing your student loans. Through Credible — an online marketplace of vetted lenders — you can browse the best personal loan rates for you and opt to consolidate your student debt.
With interest rates as low as 3.85% and repayment schedules ranging from 24 to 84 months, you’ve got time and flexibility.
3. Upgrading cars
Ramsey says a totaled car is not a reason to upgrade.
“You were driving a $6,000 car,” he said. “Your car gets totaled, you get a check for $6,000 and, suddenly, $6,000 cars aren’t good enough for you. That’s dumb!”
However, the high cost of vehicles could make this financial error difficult to avoid. The average cost of a new car in May was $48,389, according to the Kelley Blue Book, while the average used-car listing price was $25,670.
If the cost of a new or used car has you worried, you can save on auto expenses by finding better car insurance rates using OfficialCarInsurance.
Simply fill in a bit of information about yourself and OfficialCarInsurance will generate a list of the most affordable car insurance options near you so you can ensure you’re getting the lowest price for the coverage you need.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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