6 Dave Ramsey Money Myths To Stop Believing (Because He Never Said Them)

Even if you don’t follow Dave Ramsey or listen to his radio show, you probably get some of his money advice secondhand from online and social media sources discussing and disputing his money philosophies. If you think some of the advice you’ve read or heard from these sources seems unrealistic, you might be right — because it might not be accurate or even true.

Find Out: I’m a Self-Made Millionaire: Here’s the Lightbulb Moment that Helped Me Make My First Million

Read Next: 7 Reasons You Should Consider a Financial Advisor — Even If You’re Not Wealthy

Does Ramsey really advise people to work 80 hours a week or eat only beans and rice while paying down their debt? Let’s take a closer look. Here are six Dave Ramsey money myths to stop believing .

Sponsored: Protect Your Wealth With A Gold IRA. Take advantage of the timeless appeal of gold in a Gold IRA recommended by Sean Hannity.

1. Only Eat Rice and Beans

When Ramsey says to switch to eating beans and rice, he doesn’t mean it literally . He uses it as a metaphor for what he calls “broke people food,” or the food you should buy if you’re deep in debt or want to pay off your debt quickly. His point is to stop eating out, reduce your grocery budget and use the money to pay down your debt instead.

Even if you aren’t buried in debt, reducing your food budget is good advice if you’re trying to reach other financial goals. It’s often an easier budget category to trim than housing or transportation, so it’s an excellent place to look for savings. If your grocery budget is feeling the pinch from inflation, Ramsey recommends cutting back on meat and eating more beans since they provide a cheap source of protein.

Incidentally, research by Ramsey Solutions on the cheapest grocery stores in America in 2024 revealed that WinCo stores are a great place to get bulk bean and rice savings. So maybe Ramsey does mention beans and rice frequently, but he doesn’t think you should adopt a rice-and-beans-only diet.

Check Out: 6 Things the Middle Class Should Sell To Build Their Savings

2. You Have To Pay Cash for a House

Ramsey’s advice on homebuying is sometimes taken out of context. Yes, he does think paying in cash is the best way to buy a house. Buying a home with cash can save you tens of thousands in mortgage interest. However, he doesn’t say you should put off homeownership until you can do this.

Ramsey’s recommended path to homeownership if you can’t pay in cash is this:

1. Save enough to put 20% down and avoid private mortgage insurance.
2. Get a 15-year fixed mortgage with payments that are no more than 25% of your take-home pay.
3. Pay off your mortgage as quickly as you can.

Ramsey Solutions says a 5% to 10% down payment is OK if you’re a first-time homebuyer as long as you understand that a smaller down payment means you’ll pay PMI on top of the higher mortgage payment. So while Ramsey says the best scenario is to put 100% down when buying a home, he doesn’t believe it’s the only path you should follow to homeownership.

3. A $1,000 Fund Is Enough To Cover All of Your Emergencies

Building a $1,000 emergency fund is the first of the seven baby steps that Ramsey teaches for getting out of debt and gaining control of your money. Steps two and three are to pay off your debt and build an emergency fund that covers three to six months of household expenses, in that order.

Ramsey doesn’t believe, nor does he tell anyone, that $1,000 is enough to cover all of their unexpected expenses. The $1,000 emergency fund is intended as a starter emergency fund to help you cover small expenses during the debt payoff process.

“If you wait until you have $10,000 saved to start getting out of debt, you’ll never get out of debt,” he said. You should build a full emergency fund once you pay off all of your debt besides your mortgage.

If you’re following Ramsey’s baby steps, there are two scenarios in which you should forgo the starter emergency fund and save as much as you can: when you think you may lose your income, such as a job layoff, or when you’re expecting a baby.

4. Getting Out of Debt Is a Math Problem

Ramsey says getting out of debt is a behavior problem, not a math problem. He believes “financial change is 80% behavior and 20% head knowledge.”

So what does he mean by a behavior problem? Ramsey once shared in a Facebook post , “Financial success depends much more on what you DO with your money than what you know about money.” He went on to explain that gaining money knowledge is easy. You need the discipline to take the steps that will change your financial situation.

Ramsey’s philosophy may be right, but don’t underestimate the importance of financial literacy. The National Financial Educators Council estimates that Americans lost $388 billion in 2023 due to financial illiteracy.

5. You Have To Work 80 Hours a Week — Forever

No, Ramsey doesn’t want you to work 80-hour weeks for the rest of your days. Ramsey’s quip, “If you work like no one else, later you can work whenever you want,” was a take on his motto from his best-selling book, “Total Money Makeover.”

The motto and more widely known quote is, “If you will live like no one else, later you can live like no one else.” His point is that if you work hard now to get out of debt and achieve financial freedom, you’ll have the resources to work however much or little you want later.

Ramsey advises anyone working their way out of debt to generate additional income, whether it’s through a second job or a side hustle . To Ramsey, it’s a short-term sacrifice for a long-term gain. The number of hours you work is up to you.

Ramsey suggests creating passive income opportunities to generate extra cash without working additional hours. Passive income may require an initial time investment, but the right opportunity will eventually require little daily effort to keep the income stream flowing. Some passive income examples include creating and selling digital products, renting out your car or earning interest with high-yield savings products.

6. You Have To Pay Off Your Home Before You Start Investing

Ramsey does recommend doing a few things before investing, but paying off your home isn’t one of them. If you’re carrying debt other than your mortgage, he advises you to do three things before you begin investing:

1. Save up for a $1,000 starter emergency fund.
2. Get out of debt except for your mortgage.
3. Build an emergency fund of three to six months of expenses.

When you’re saving for retirement, he recommends investing 15% of your gross income. Ramsey reasons that 15% will leave you with enough resources to save for your other financial goals simultaneously. This percentage aligns with what many other financial experts recommend for younger investors. The older you begin saving for retirement, the greater the percentage of your income you should save, since your savings won’t have as many years to compound.

Watch Out for Dave Ramsey Money Myths and Other Financial Misinformation

These are the six most common Dave Ramsey money myths and misconceptions, but there’s a lot of financial misinformation on the internet. According to a Nationwide survey, more than 34% of investors between 18 and 54 years old have acted on financial information they found online or on social media only to find that the information was “misleading or factually incorrect.”

To avoid a costly financial blunder, you should act only on money advice provided by people or sources you know and trust — and get the information directly from the source.

This article originally appeared on GOBankingRates.com : 6 Dave Ramsey Money Myths To Stop Believing (Because He Never Said Them)