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But is he right?
There are certainly different opinions, as evidenced by a recent video fromThe Money Guy Show.
Certified financial advisors Brian Preston and Bo Hanson help people make everyday financial decisions.
With over 40 years of experience, their guidance is worth quite a bit, too.
Preston and Hanson think differently than Ramsey about debt.
They view it more as a tool that people should use when a situation calls for it.
This article analyzes both perspectives, consideringthe question of debts role in wealth-building.
Dave Ramseys View on Debt
Ramsey takes an aggressive stance against debt.
He says a persons first financial goal should be to create a $1,000 emergency fund.
This essentially means putting all of your wealth toward getting out of debt until you achieve that goal.
Your emergency fund and other savings would remain relatively small until then.
Ramseys views on debt are based on the risks it presents and probably his own personal experiences.
He went bankrupt 30 years ago largely because he had too much debt to repay.
The Money Guy Show also highlights Ramseys perspective.
They say its one thing to advise only paying cash when you already have wealth.
But its an unrealistic standard for people who are still trying to get rich.
For example, many Americans today are unable to own a home without debt.
The pair also say debt can be a tool for making your financial life easier.
Preston and Hanson share an example to illustrate that point.
Most of us would rather have the cash we need to survive than a home thats mostly paid off.
Theres also a timing advantage here.
But it could take weeks or months to see those funds in your account.
With option two, youd have the money right away.
This illustrates how debt can be a valuable tool.
In scenario two, the person held more debt to give themselves more financial flexibility.
This could have a number of other effects, too.
They could find a better role as a result.
An Important Clarification
The Money Guy Show discusses using debt to accomplish financial goals.
Its important to recognize they arent saying all debt is fine.
Feel free to use those tools if you need them.
Just note that you should only do so in service of a bigger financial or personal goal.
You wont get rich using debt in any other way.
This isnt a license to go out and buy your dream car.
Reconciling These Views: Which Is Right for You?
Ramsey and The Money Guys views on debt exist on a spectrum.
There are also people who are even more aggressive about using debt to build wealth, like Robert Kiyosaki.
So, whom do you listen to?
One key consideration will be how you feel about risk.
People like Kiyosaki take on a lot of risk by using debt aggressively.
However, this form of financial leverage can help you build wealth faster as long as everything goes right.
On the other end of the spectrum is Ramsey.
He says to avoid debt at all costs and delay your financial goals until youre out of it.
This approach carries a different risk.
The Money Guys land somewhere in the middle.
They say it can be smart to use debt in specific situations and always with an eye on risk.
That may represent a happy medium for you.
Ultimately, personal finances can get complicated especially when youre trying to build wealth.
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