Dave RamseyIn a recent post we took a look at Dave Ramsey’s view of credit cards as I debunked his “debt snowball” strategy as well as his quite laughable view that “Responsible use of a credit card does not exist… There is no positive side to credit card use.” (Yes, Dave Ramsey actually said that and stands by that statement believe it or not).

Leaving those two issues aside for this post there is one other thing about Dave Ramsey’s advice that “sticks in my craw” maybe even more than his ridiculous view of credit cards and that is his advice when it comes to debt negotiation and debt settlement (side note: I have no idea what “craw” really means as I have never used that expression before but it just sounds funny so why not – for all of you know-it-all’s out there please do not attempt to describe for everyone what exactly you think a “craw” is as I would rather not know – definitely a Google search that probably falls in the “don’t even go there” category).

All talk of “craws” aside my major issue with Dave Ramsey is that his advice is marketed as being Christian financial advice and yet in the area of debt negotiation and debt settlement Dave Ramsey gets this one so wrong according to Biblical principles that it should bring about some cause for concern.

Dave Ramsey: “Reduce debt by directly negotiating with your lenders.”

If you have ever listened to Ramsey’s TV show on the FOX Business Channel or his call in radio program then you have no doubt heard him counsel many many people to avoid debt consolidation companies, debt negotiation companies, debt settlement companies, etc. (which for the most part is actually really smart advice as the legitimate companies that are out there are few and far between as we illustrate in our feature piece on debt counseling).

This is great advice because there are many scam artist debt negotiation companies out there BUT Dave Ramsey’s solution is just to go directly to your credit card companies and other lenders and get them to reduce the amount of money that you owe.

HOWEVER, Christians can respectfully disagree about many different areas of finances that the Bible addresses in more of a principle form rather than a direct and specific command BUT one area that is crystal clear in the Bible is that if you owe someone money then you should pay it all back.

The wicked borrows, and pays not again: but the righteous shows mercy, and gives. – Psalm 37:21 (NKJV)

Why Does Dave Ramsey Advocate an Un-Biblical Approach to Debt?

If the Bible states that we should pay back all of the money that we owe and not try to weasel out of debts by negotiating or settling with a lender to repay less than what we originally promised to pay then why does Dave Ramsey in no uncertain terms advocate this approach?

The 7 Year Israelite Debt Release

No doubt some Dave Ramsey fans will point to the passage of scripture in Deuteronomy that mentions a release of debt every 7 years for the Israelites:

At the end of every seven years you shall make a release. And this is the manner of the release: Every creditor that lends ought to his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the LORD’s release. – Deuteronomy 15:1,2 (NKJV)

While the above verse does mention the release of debts it is important to note that all of the Bible applies to everyone but not all of the Bible is specifically directed towards everyone (i.e. certain Old Testament passages are directed specifically towards procedural regulations for the nation of Israel and we can all gain practical application today but that does not mean of course that we should trim our beards a certain way or sacrifice goats in a certain manner, etc.).

Additionally, the above verse is directed towards lenders and not towards borrowers. Nowhere in the above verse does the Bible promote backing out of debt that one owes but rather the Bible promotes the principle of mercy and leniency on the part of the lender (i.e. the lender initiates a forgiveness of a debt rather than a borrower attempting to hardball a lender into reducing the debt that is owed by threat of non payment).

Although I love about 90% of what Dave Ramsey says on his show this debt settlement/debt negotiation issue is a big issue that I have with Ramsey as he markets his financial advice as being Christian personal finance advice that is based on Biblical principles.

Ouch the Cognitive Dissonance Has Gotta Hurt!

To go so very wrong in this area is even more unsettling because of the truck load of cognitive dissonance that he brings to the table when Ramsey on one hand preaches the importance of personal responsibility and on the other hand preaches that “it’s the credit cards and evil credit card company’s fault for your debt” as if an inanimate object like a piece of plastic forces people to spend more than they should (this is akin to an obese person blaming their lack of self control at the dinner table on their fork and setting out to “cut up all forks” and say mean things about fork making companies instead of getting to the root of the problem which is of course discipline, self control, wise nutritional choices, etc.)

What do YOU Think?

What do you think about Dave Ramsey’s advice to reduce debt by directly negotiating with credit card companies?

Do you think that Ramsey’s do it yourself debt negotiation advice is in line with Biblical teaching? If so, in what ways? If no, should Ramsey retract certain statements or change the marketing of his financial planning programs?

(NOTE: If you would like to address some of the Dave Ramsey’s statements about credit cards rather than debt negotiation/debt settlement then head on over to the Dave Ramsey and credit cards post to leave a comment there as well)

Similar Articles:

Credit Cards

Do you have a unique story to tell about credit cards or something related to small business/personal finance? If so, contact us to submit your own guest post ideas and you could be featured on our blog!

Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!

42 Responses to “Dave Ramsey on Debt Negotiation & Debt Settlement – Wrong Again?”

  1. Peter says:

    I’m not sure I agree with this completely. I think there’s a difference on backing out on a debt and not paying it, and negotiating with a debt holder to have the amount of your debt reduced. To me the verse speaks to those who borrow with no intention of ever repaying, or knowing that they cannot repay – whereas you’re talking about Ramsey’s advice to people who are actively trying to repay debt, but need help because they’re falling behind. I think the distinction needs to be made.

    • Joel says:

      Good point in that there is definitely a major difference between those people who borrow money with no intention of repaying and those who are trying to repay debt but are unable to. I would still submit that the Biblical principle is for the lender to show mercy and for the borrower to repay everything that they owe. Asking a lender for help is one thing but forcing a lender into a reduced payment by threatening to not pay anything at all is not the right approach I don’t think. I think the key is if the borrower is really trying to pay back all of the debt that they owe or if they are just trying to get out of an obligation that they have as quickly as possible – wouldn’t you agree?

      • Joe Plemon says:

        I am confused. I have never heard Dave Ramsey recommend that the borrower should threaten to not pay back anything at all. This is why he doesn’t recommend debt settlement companies who hold the payments until the lender is afraid that he won’t get paid and therefore ready to settle.

        His recommendation to try to negotiate a debt settlement is simply that. No threats or manipulation; just see if the creditor will consider a settlement. If both parties agree, I don’t see why that is so wrong.

        After his own bankruptcy Dave paid back everyone he owed money to. He believes in paying what you owe.

        • Joel says:

          Dave Ramsey frequently advises callers to try to settle debt for pennies on the dollar by negotiating directly with their lenders and using a “take it or leave it – this is all you are gonna get” approach.

          The reason he doesn’t recommend debt settlement companies is because he has plainly said that he thinks that they are a waste of money (which most of them are).

          The only way that both parties will ever agree to a debt settlement is if the lender is convinced that the reduced amount is the greatest amount that they think that they will ever be repaid.

          Dave may personally believe in paying back what you owe, as he should, but practically speaking that is not consistent with the advice that he doles out.

          • Anne says:

            The only time I have heard him advise this is when the person he is talking to CANNOT afford to pay back the entire amount. Usually the amount he advises the person to offer as a “take it or leave it” is the maximum amount they could scrounge up to pay without leaving themselves in deeper debt than they already are.

            He doesn’t advise bullying anyone into paying less than what they can afford to pay. He always advises they pay as much as they can afford and no more because having food and shelter for your family is more important than paying back all your money and living on the streets.

          • Joel says:

            I certainly see your point and if it truly comes down to either paying all of the debt one owes or being able to eat then of course taking care of one’s family and putting food on the table comes first but I think that one thing that is very telling is found in the comment that you just left over on the other Dave Ramsey and Credit Cards post where you say:

            “Ramsey knows that over time people can learn the benefits of cards, but that is for them to learn on their own. He can’t say those things as a main preaching method because then everyone will justify their own use of cards whether it is legitimate or not.”

            You can’t have it both ways as it appears that whenever Dave Ramsey says to not pay back the entire amount owed, no matter what the circumstances, then people will still justify their own behavior in not paying off their entire debt even if they really could make some sacrifices and do so if they really wanted to (by working a second/third job, canceling cable, eating beans and rice, not going on vacation, etc.) – you really can’t have it both ways with this logic wouldn’t you say?

  2. Katrina says:

    While I’m not sure where I stand with Ramsey’s position — and it’s his presentation of the same-old same-old advice that has resonated with me rather than the advice itself — I do appreciate your biblical connections. I wonder if the seven years’ debt forgiveness passage is where our idea of statute of limitations came from?

    • Joel says:

      Ahh good question as I had never even made that connection with the statute of limitations. Very well could be!

  3. james says:

    i think the guy is kinda right. you have to have patients but you can 100% call your credit card company and work with them similar to the IRS to negotiate down your payments.

  4. Brent says:

    I listen to Dave’s radio show often and also have gone through his Financial Peace University class.

    Dave’s teachings, in my opinion, have been extremely consistent. He states very clearly over and over that if you have the money to pay a legitimate debt, you need to pay. Simple as that.

    I can understand how in soem cases it can be confusing or seem misleading when he tells callers or discusses settling a debt, but this teaching is consistent as well. You can want to pay the money back and have integrity and good intentions, but if you simply don’t have the funds, a settlement may be the only way to satifsy both parties.

    I heard a caller yesterday who had a terminal illness and has a few years left to live. She owed around $10,000 and is living off of disability income. About 90% of her income was going to an assisted living facility. The credit card collecters call every day hounding her. Dave told her to not pay and save up any money she could to settle.

    She really has no other options other than not to pay and eventually get sued (I don’t think she really cared) or file bankruptcy. To me, to save any money possible to try and settle is the right thing to do.

    This is an unusual case, but it is consistent with his teachings. People get so scared by the credit card collectors that they pay them first and leave no money for food and shelter for their family. How insane is that? People are responsible for their own situations, but when they asj Dave’s opinion after the fact, their options are limited at that point.

    Credit card collectors are mean, nasty, lie, and have no concern except their own. Believe me, I know. Ten years ago I was stupid and fell be behind on payments.

    I have also heard Dave say many times, that if you are behind and can not pay your credit card bills that borrowing more on the cards is the same as stealing!

    I have heard Dave say hundreds of times, if you have a legitimate bill and have the money, you are obligated and should pay it. I have no problems with his teachings and the more I understand his principles and philosphies the more and more I agree with him.

    Just my two cents.

    • Joel says:

      My concern would be that Dave Ramsey recommends debt settlement in so many cases that it is doubtful that each and every one of those scenarios are as extreme as the example that you mentioned above.

      This is a great comment that you mentioned from Ramsey though: “I have also heard Dave say many times, that if you are behind and can not pay your credit card bills that borrowing more on the cards is the same as stealing!”

      You mention that “if you have a legitimate bill and have the money, you are obligated and should pay it.” which is very true but it is also true that if you have a legitimate bill and even if you do not have the money, you are still obligated and should pay it.

      Even if one does not have the money then they should still figure out a way to pay the full bill even if that means working a second/third job, working overtime, canceling cable TV, etc. etc. as it does seem that Ramsey’s debt settlement advice to many if not most gives many listeners license to just settle their debt rather than making sacrifices to be able to pay back every penny.

      You make a great point though that “a settlement may be the only way to satisfy both parties” which if true then certainly a debt settlement makes sense. Great comment!

      • Brent says:

        Hi Joel,

        Thanks for responding. I do agree that my example was extreme, but there are many cases where people try to everything they can do, but can make the payments.

        I also agree that if you can work an extra job, make sacrifices, etc. to pay your pill you should do it. If you listen to his show at all, Dave often times tells people to work a second, third, fourth job, and sell everything to pay your bills and pay off debt.

        When people get trapped and have little to know options, I think settling a debt is a fair and practical idea. The usual fallout from this situation is to file bankruptcy (certainly worse for the creditors than settling) or not paying anything and getting sued (sometimes leading to bankruptcy).

        I certainly see your points and I think in essence we agree. Dave prides himself on personal and fiscal responsiblity. I don’t think that telling someone to settle in certain cases is hypocritical. I think it’s smart, practical, and better than most alternatives.

        • Mark says:

          Brent is correct. Ramsey is very consistent in his teachings and advocates paying ALL debt if it is feasible. The second-job and super tight budget is understood. He certainly mentions getting on a “beans and rice” budget much much more than settling debts with collectors.

          Joel, I feel you have misrepresented what Ramsey says in that you haven’t taken the totality of his teaching into account. The settlement process is a last-ditch effort to protect oneself and one’s family. The very first thing DR advises everyone do is to discipline themselves and get on a budget making sure that the “Four Walls” as discussed in Financial Peace University are covered (food, shelter, clothing, transportation). It makes no sense to be making full debt payments if one’s family does not eat. (This is also a much stronger biblical mandate [1 Tim. 5:8] than the oft-quoted and oft-misrepresented Psalm 37 passage). All that to say, Ramsey is big on priorities. And while paying off debt in full is the correct thing to do, there are certainly other issues that must take precedence.

          That being said, if one is in a situation where life circumstances make paying the full debt impossible (which is the situation many of DR’s callers present), a settlement in which both parties are in agreement is the best solution to maintain one’s integrity. The goal, of course, is to avoid bankruptcy in which the creditor would receive nothing at all.

          • Joel says:

            From what I have heard from listening to Ramsey’s show on the radio and to his program on the Fox Business Channel it seems that Ramsey is much quicker to jump on the debt settlement bandwagon than you are mentioning. I could be wrong and what you outlined makes perfect sense to me since obviously a higher responsibility is to take care of one’s family and put food on the table, pay the electric bill, etc. – HOWEVER, I think far too many people in those tight situations totally rule out the possibility of a beans and rice diet and instead insist on continuing to pay for cable TV, only working 40 hrs per week, go out to eat, etc. and then threaten their lenders with bankruptcy to get a debt settlement because they think (maybe rightfully and maybe not) that that is what Ramsey would have them to do (and in fact it justifies their own desire for consumption and a lack of responsibility to pay back ALL of what they owe).

  5. Jenna says:

    It seems like Ramsey is saying to face debt collectors, be honest, humble and ask for help. That can certain help in debt forgiveness, usually debt collectors will help you reach an agreement and to move forward. Thanks for suggesting the two programs as well. I’ll have to look into them.

  6. This sounds good. Directly negotiating with collectors can reduce some amount of payment if not completely. But what this does too is that it encourages people to every time fall on their knees to get some concession in their debt payment.

  7. If the debt is credit card debt, and you bought the stuff and wracked up the bills, you should pay what you owe and not try to get the amount lowered. If part of the amount you owe is strictly interest charges, maybe you can get that amount lowered. I don’t know how companies look on this approach nowadays but I know years ago people would pay whatever they could, even if it was $5/month. When I was very young I knew a family that charged a ton of stuff and got in over their heads and couldn’t pay all the minimum on the credit cards. So they filed bankruptcy! Even as a young person, I was probably 16, I felt that was SOOO wrong! Here they had all this crap they’d bought and now they weren’t paying for it, but still able to enjoy it. That’s just wrong.

    • Joel says:

      I’m with you! It seems so incongruous to hear Ramsey say one minute to take responsibility for your own actions and then say the next minute that you should hardball negotiate with your lenders to get the amount you owe lowered.

  8. Dave’s debt snowball works. Best way to deal with debt is stop borrowing and pay if off. works 100% of the time.

  9. I remember the first time I listened to Dave Ramsey on the Radio and heard him preaching the debt free life. At first I thought this guy was off his rocker, but as I kept listening about paying off your mortgage and actually becoming completely debt free I became a fan. The one thing that I always disagreed with is the fact that he was a basher of credit cards. It is not the credit cards that are at fault, it is the fact that people use them as free money and not within a budget like they would their check books. Personal finance blogs and good advice and education from lenders or in the schools just wasn’t there and people racked up debt never thinking of the consequences. I believe there are many people that do use credit cards responsibly and take advantages to the perks of credit cards. If you dig yourself in debt then you need to dig yourself out.

  10. Denise says:

    Well maybe if we remembered to take Dave’s advice for what it is-the opinion of a human being; as opposed to suggesting it to be the end all be all (as we should the bible), maybe then we’ll realize that there’s no one philosophy for financial management. Who knows?

  11. It is also a good option to explore alternatives to bankruptcy, debt settlement, debt consolidation, ect., by finding out what it would take to make yourself judgment proof. Being judgment proof makes it so you don’t have to payback any creditor a penny unless you want to.

    The term judgment proof is most commonly used in tort law contexts to refer to defendants or potential defendants who are financially insolvent. Even if a plaintiff were to secure a legal judgment against an insolvent defendant, the defendant’s lack of funds would make the satisfaction of that judgment difficult, if not impossible, to secure. In such cases plaintiffs might move for wage garnishment based on the judgment. However, if the debtor is retired or collecting Social security or other social welfare this is not possible, there are also other ways debtors can protect non-exempt wages from garnishment

    Judgment proof is not an official defense. If sued, the defendant does not claim “judgment proof” the same way they would claim assumption of risk or contributory negligence; rather, judgment proof kicks in after the judgment has been rendered, and it is time to collect.

    Once you are judgment proof creditors can sit around and cry all they want and still collect nothing. After enough time has expired you can offer your creditor pennies on the dollar. Eventually the creditors will decide that it is better to take the pennies then to sit and receive nothing.

  12. Tim says:

    I for one have to take up for Dave on this. If you ever listen to his show on a regular basis you will find that the majority of the callers are in pretty bad shape. I thought I could play the credit card game, consolidating to lower interest cards and what it lead to was the misguided belief that if I could make the payments I could afford it.

    This came crashing down when I got lazy and missed that an automatic payment from bank fell after the due date but before the closing date. I had done extremely well, for far to long, in out earning my stupidity. I had a $13000 card go from 5% interest to 32% in one month. My payment went from $246 to $435. It was the straw that broke the camels back.

    I will say I had been trying Dave Ramsey’s plan trying to turn things around. The problem was priorities. I was still try to pay everyone first before me. I felt like I was getting nowhere until this happened. At that point I put myself in the league with the folks who were in trouble on his show. I had been in denial that I was already there for a long time. So what I did was, I started taking care of the family first and paying the CC what I could. This is what Dave’s plan is all about.

    The CC companies started calling in force and after about 4 months I had negotiated 4 out of 6 cards to 0% with affordable payback terms. The other two CC went to 5% This freed up a huge amount of money!

    Dave’s plan is about the fastest way to get out of debt. It is very difficult to follow it but, it does work. When followed I equate it to financial bootcamp. You take everything away from yourself and as progress is made, you you are far more wary of the the practises that put you that situation in the first place.

    Yes, you can use CC responsibly. You can also make the same claim of drugs and alcohol. If you are in a bind with CCs, it is best to go cold turkey and rise above the debt. That is why Dave says not to use CC. You really do not NEED to. More to my point is that you can negotiate on your own.

    I have paid off $70K in two years and will be debt free but, the house, thanks to Dave’s baby steps.

    Thanks for reading my rant. LOL

  13. veedub says:

    Joel, it seems that your disdain for either Dave Ramsey or his teachings has colored what you hear him say. I’ve listened to him for years (and we are debt-free except for the house, have an emergency fund and are investing for retirement, plus saving up for things like cars, vacations, Christmas, remodeling, etc., and putting extra towards paying off the house).

    The only times I’ve heard him advocate negotiation to pay off creditors are when the debtors are unable to pay off the demanded balance and still house and feed themselves (and their family). I’ve heard him many times say that if you can, you should pay your debts in full. He has counseled many people NOT to file bankruptcy (thus avoiding paying off the full debt balances), rather to work on paying off legitimate debts fully, if possible. He has told his story of paying off the full amount of his debts that were legally eliminated through bankruptcy many times, not advocating that as part of everyone’s debt elimination program, but leaving that between them and God.

    I find it strange that you are using a single “proof-text” verse to slam Ramsey’s advice, when there are more scriptures that counsel us to first provide for our own, which is Ramsey’s counsel as well.

    Finally, credit cards are the junk food of the financial market. A quick fix and feel-good security that belie their foundation of sand (or, more appropriately, quicksand.)

    I’d rather sleep with rattlesnakes than get in bed financially with credit card companies again!

    • Joel says:

      I actually like Dave Ramsey quite a bit but that doesn’t mean that I should blindly accept everything he has ever said. This post and the other Dave Ramsey post mentioned explains quite clearly some evidences for why those particular Dave Ramsey statements are not something that should just be blindly accepted as fact.

      “I find it strange that you are using a single “proof-text” verse to slam Ramsey’s advice, when there are more scriptures that counsel us to first provide for our own, which is Ramsey’s counsel as well.”

      This is a good point that you make and I don’t disagree with you at all. That being said, a lot of people use this as an excuse to just not pay off debt because they need to “provide for their own” with cable TV, going out to eat, and other excesses.

  14. Michele says:

    I understood the “settling” to be because of the exorbitant interest rates and fees that companies continually add on??!! Not for the actual debt incurred…

    • Brad Bilse says:

      I simply notice the credit card endorsements at the top of this site and can pretty much take anything said here with a big grain of salt.

    • Deedra Bee says:

      I agree with you Michele. The rates at which fees earn interest sometimes can make it nearly impossible to pay off the entire debt. When we look at the total borrowed vs. the total owed, the difference is astounding. Then add on all the processing fees these companies demand. At that point, I feel it is perfectly ethical to try and settle with the company.

      The cents on the dollar that a person ends up paying could still be more than they borrowed but at least it is an amount that will not make them homeless.

  15. James says:

    You judge a tree by its fruits. Dave is doing a great job by telling people straight up what they should do based on his own experience. Thousands of people are debt free and on their way to a healthy finance future. A couple of things here, I dont agree that Dave markets himself as a “christian counselor”, just listen to his show often and you will see that he rarely, if ever, brings the bible into discussion, and second, amazing how you put your own words when quoting the scripture. You quote “Bible says that if you owe someone money then you should pay it all back.”; and then you quote the bible:
    “The wicked borrows, and pays not again: but the righteous shows mercy, and gives. – Psalm 37:21 (NKJV)”; wow, where does it say PAY IT ALL BACK.
    It really sounds like you dont like 90% of what Dave says. It sounds more like someone trying to demoralize a successful person who’s really not looking to make millions (We paid $100 for me and my wife for Financial Peace Unniversity, a 13 course week with all the material included), instead just teaching common sense.

    • Joel says:

      lol So, just to get this straight: You are saying that when Psalm 37:21 says that “The wicked borrows, and pays not again” (“does not repay” is actually the true passage in NKJV as I misquoted from a different translation I believe: http://www.biblegateway.com/passage/?search=Psalm%2037:21&version=NKJV Sorry about that, my mistake) then in your view that just means that it’s OK to just pay back a little bit but not all of the debt owed? In other words, you are only wicked if you don’t pay back anything at all but if you can scrounge together a few dollars and pay that even though you may owe thousands then – poof, “OK, the verse doesn’t apply to me now. I paid back a little bit of what I owe.” Sorry James, as convenient as that interpretation might be to some, this verse clearly is saying to repay ALL debt owed NOT just as much as you can or as much as you feel like.

      • jamie says:

        Very judgmental. I believe that is God’s place. We are all sinners. If a person has screwed up, that may be sin, though unintentional, which we ALL do. If a person tries to make things right, move forward, and not make the same mistakes again, that is honorable, even to God. A creditor would rather us pay something than pay nothing in bankruptcy court, which is by the way, where most people are ending up these days. So, you can throw morality at us…but isn’t it better to make your best possible effort when you have truly screwed up than to really mess over someone by not paying them anything??? I believe my God, my Daddy, my Father, would pat me on the back for trying my best and then tell me I had learned a good lesson. Isn’t that what a great Father does?

  16. jamie says:

    Debt consolidation companies are a joke! You restate Daves opinion that ““Responsible use of a credit card does not exist… There is no positive side to credit card use.” This is very true and I agree with him completely. In this bankruptcy forged world we have, many people live paycheck to paycheck and don’t pay their debts. For those people I say work it out with your lender. I haven’t seen a lender yet that can’t do for you or better what a debt consolidation company says they can do, but I have seen a lot of my friends be TAKEN by so called debt consolidation companies. If a person has enough money to pay cash they don’t need credit cards, if they don’t, they use them and often end up in BK court. Have you seen our Bankruptcy statistics? It’s ridiculous! Dave Ramsey is right on the money here. Prior to the 60s we didn’t have credit cards, people bought stuff with cash and we didn’t have this amount of bankruptcy. This debt is draining our economy, not helping it!

  17. Debbie says:

    Big Question for me: I have (with my income tax return) paid off the total balance on two credit cards. I am working on other debt (using Dave’s snowball effect) and want to know the following:

    Do I cut these cards (& others I will be paying totally off) up and close accounts as they are paid off OR simply cut them up and let that be it w/o worring about any more activity? (I am trying to figure out if it is better to pay off every debt & have zero balances on each on my credit report OR pay em’ off – cut em’ up & close out each account.

    Is it beter to have 4-5 lines of credit on my credit report with zero balances OR should I totally wipe out everything (zero balances on everything) & cup up all cards & CLOSE all accounts)?

    I feel so stupid not knowing what is best. What should I do – which is best for my credit?


    • Debt Advisor says:

      What is your plan for credit? Do you plan on getting more or are you planning to live on cash? I personally believe he other credit you should ever do is a mortgage. If that is all ou are looking at, closing hem all will not hurt you. Too many open lines of credit makes you look more risky in a mortgage. The reason being, once you get the mortgage you can then go out and run up all the open credit you have available.

      When I did my mortgage last year, the bank manager said I was crazy when I told her I closed all my credit accounts. She then proceeded to pull my credit report and check my job and income. The next day, she said she might have been wrong and I qualified for the best rate. It is the last loan I ever plan to get so I do not need the credit accounts. What you plan for the future is how you answer your question. I planno more credit so I closed them all.

  18. Editor says:


    I wouldn’t cancel your credit card accounts. I would just cut them up and stop using them.

  19. Teagun says:

    Its extremely dangerous to live by one verse and to judge all actions by one verse. While psalms does say to repay the debt, what does it say about quarrels? Aren’t you first supposted to go to your brother and settle the dispute? Then elders, then court? If they don’t settle it face to face, and end up going to court it is biblical. In fact going to directly to a mediator isnt biblical at all. What happens between the credit card company and individuals is no business of yours. If the credit card company has issues, they will deal with it on an individual basis, as they already do. The deals ARE tempting and people obviously fall for it. If the credit card company is finding it so difficult to collect, wouldnt it make sense that they would stop or slow lending? This would help those poor credit card companies so much. I find it interesting that you support the use of cc’s as that is what got all of these “debt settling miscreants” there in the first place. And you miss the entire point on the debt snowball, its not about the amount you spend, or the most inexpensive way to settle your debt, its about the success on the way. The feeling of accomplishing small debts and using that to pay off the next one is additive and almost as addicting as getting the debt itself. If debt management was only a numbers game none of us would be in debt. It is absolutely psychological! That was the whole point if the McDonalds claim. And it is very true. Even with debit cards people are more likely to pay more. You “ah-ha! Gotcha Dave!” When your claims hold even less water. A chair can’t stand on one leg, or even two, which is the whole point of his system. Its numbers, psychology and morality. None of those things are magically gained by using fancy rhetoric and waving amazing exclusive deals with large penalties in peoples faces. While yes it might make sense to get 3% cash back, the odds are most people won’t pay the entire balance off. If we were all as smart as you we would save that 3% and start our own website debunking a financial system that has helped a lot of people and start advertising credit cards. Btw, you could eliminate the risk and get a purk St. Account and get cash back without your two step process.

  20. Debt Advisor says:

    I do not always agree with Dave on the bible quoting. However, with that said, the bible has always been a tool to interpret as you understand it.

    On the point of negotiating the debt, it is better to try to reach a settlement than to default and not pay anything. Truth is, it is much easier now to do it yourself thn to pay others to do it. If you can not pay your bills, even If it is by your own stupidly, your main goal should be to take care of your family. Agree or disagree with everything Dave has to say, his advice is sound on most issues and his advice has helped many get out of debt.

  21. Tony_Latino says:

    I will step back from the flame wars in the comments and comment directly on the article itself. It is OBVIOUS that the author of this article is biased against Dave Ramsey. I think it is kinda low to attack someones religious beliefs and use that persons religious book to try to show hipocracy. I am an atheist, so don’t think for one moment I am an evangelical christian like Dave Ramsey is. Being an atheist, I find the religious crap a little annoying, but his heart is in the right place, and that is all that matters to me. He is giving advice to people that need to change their spending habits.

    To the author who suggests that Dave Ramsey blames credit cards for peoples mis-behaviors – it is obvious you do not actually listen to the program at all. He states clearly time and again that personal finance problems are 80% human behavior problems and 20% not making enough income to pay what you owe. He hates credit cards for one reason – they suck the air out of the economy. How? …

    A person making $46K a year, with a mortagage payment of lets say $785.00 could live relatively comfortbly. BUT if you add in the average american credit card debt of $15,956 and at an interest rate of 12.78%, that persons finances start to get squeezed. Then add on a car payment of $450.00/month and that endangers their retirement savings, food bill, gas bill, and utilities. The money that goes to a credit card company actually SLOWS the economy down folks – do your homework and take an economics class – if a person has no expendable money, then that person will not purchase things, which will in turn suck the air out of the economy.

    Dave tells you not to get a credit card because most people use it as a crutch instead of saving and then spending. Our culture has the idea that credit cards will give you instant satisfaction, but they do not talk about is that their finances blow up because of it and lord forbid you get a month behind due to an emergency – the collection agencies are ruthless and vicious folks. As in my case – they do not care that your child is sick and has cancer – they wanted to auto-draft the account we sat aside for treatment for our kid – boggles the mind really.

    As for his advice on negoitiating the debt – I am all for it. The credit card company lends you $2000.00 and makes (on average) $5840.00 from it. Which is ludicrus! Not to mention the “fees and charges” – which most times jumps your final bill on that $2000.00 loan well over $14,000 when all is said and done. I think if you paid the prinicipal back, you are doing good. I also believe that the credit card companies want sympathy from us consumers, then they need to show sympathy for us consumers that need their help – instead of sending out lawyers to sue people down and out, how about some forebearance? How about the multibillion dollar profits being set aside for once to say “we understand you are in a tight spot, we’ll give ya a year to sort things out, and try again later. They dont do that – they hate their customers and it shows – the credit card industry sues so many of their customers that they actually lobbied the department of justice to set up credit card courts to rush the process of suing customers.

    Why anyone does business with a credit card company, who makes ridiculous profits on you, encourages you to spend to the limit, charges you over the top fees, refuses to help you in a time of need, and turns around and sues you because you hit a bump (no matter if you have been a good paying customer for over 20 years or not) – is beyond me. I cut up my cards and never looked back. I save my money now – BECAUSE I CAN (I AM NOT SENDING IT TO A CREDIT CARD COMAPNY). Example – before I would have had to charged $1200 to a credit card for the new mattress I just bought last week, but saving the money over a year was worth not having the giant credit card bill and potential lawsuit on my hands if I had lost my job shortly after making the purchase with a credit card.

    And I do question a website that is fully focused on promoting credit cards and bashing anyone that wants to pay cash for something outright – could it be because their profits would be impacted? So who is the “evil-doer” – they guy that tells you to pay cash and cut up the cards, or the company that tells you that you must and should pay them over 2.5 times the amount of your money for the same thing? No thanks – I will pay cash – it has the cheapest interest rate of all – hands down. That is something this author missed

    • Joel says:

      “I think it is kinda low to attack someones religious beliefs and use that persons religious book to try to show hipocracy.”

      I am not attacking Dave Ramsey’s religious beliefs. I am a Christian also. I am not against Dave Ramsey at all (I actually like the guy and agree with him 99% of the time). If Dave Ramsey or anyone else says something that doesn’t line up with what the Bible says or is inconsistent then I will point it out. That is what I should do, right? After all, the Christian worldview is that God’s Word (the Bible) = truth. NOT whatever Dave Ramsey says = truth.

      “His heart is in the right place, and that is all that matters to me”

      I couldn’t be more opposed to you. Yes, it’s important that someone has their “heart in the right place” and means to do well BUT meaning well is not enough. You can go ask random people on the street for advice and they may honestly mean well and want to give you good advice but they may or may not know what they are talking about – you are welcome to blindly follow the advice of anyone and everyone that “means well” though. Not me.

      “And I do question a website that is fully focused on promoting credit cards and bashing anyone that wants to pay cash for something outright – could it be because their profits would be impacted?”

      Appeal to motive fallacy.

      “No thanks – I will pay cash – it has the cheapest interest rate of all – hands down. That is something this author missed”

      Credit cards have ZERO interest if you pay off the entire balance each time the payment is due. That is what I am advocating for. This is something that you missed. Please re-read the article. :)

  22. Ron says:


    You may have a point here. Paying back money that you borrowed or making good on debts that you owe is the core of integrity and I do not think Mr. Ramsey disagrees. The problem is the behavior that caused you to get into this hole. In this crazy economy, I hear many people getting out of paying their mortgages, their debts, their taxes — and they feel justified. The evil banks, lenders, IRS.

    But “Render unto Caesar what is Caesar’s — render unto God what is His”. Making good on human debts will develop character — and I think this is undervalued. People tend to look for cheap forgiveness — and I believe this “opportunistic” mindset has infected the Church.

    Even if the CC companies or the IRS or the banks are “evil”, you entered into an agreement with them and you owe them. With honor, pay them back. Likewise, lenders should have a bit of compassion for those in true hardship.

    I think you have a point Joel.

  23. Brianna says:

    My spouse and I stumbled over here by a different website
    and thought I should check things out. I like what I see so
    now i am following you. Look forward to going over your web page for a second time.

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>