- So I've been traveling the country,
and writing about money, and talking about money,
and been in this world for over a decade now.
And there's a couple of subjects in personal finance
that I talk about that I get a lot of pushback,
and a lot of people are like,
"Wow, Rachel, that's weird.
You're a little too extreme."
And one of those subjects is credit cards.
So people are like, "Okay, so what's the best credit card?
Because I can get cash back.
I can get travel points.
I can get airline miles.
I mean, there's just so many perks to using a credit card.
So, like, what's the best credit card?"
And my answer always is, "There's not one."
Yeah.
I know.
And people think that I'm weird.
So let me just start with that subject.
So, a lot of what we talk about
here at Ramsey Solutions, it is weird.
We talk about no debt at all.
We won't yell at you for having a mortgage.
That's like the one type of debt I'm okay with,
but I want you to pay it off in 15 years.
And people think that's weird too!
But yeah, no debt at all.
Buy your car,
pay for everything with cash or a debit card.
Don't use debt, like any form of debt.
Budget.
If you don't have the money, don't buy it.
Talk to your spouse about money.
Actually, have the same checking account
(gasps) as your spouse.
I mean, all of these things, that again,
people are like, "That is so weird!"
But let me tell you, America, right now,
the average American, they're broke, okay?
78% of Americans live paycheck to paycheck.
That means almost 8 families on your street
out of 10 houses.
If they don't get the 15th paycheck,
or the 30th paycheck, they're screwed.
They're like, "Okay, what do we do?"
America has a negative savings rate right now.
That is normal.
So it's like, "Yeah, I would rather just be normal.
Everything you're saying, Rachel, it's weird.
Not using a credit card, that's weird."
What? You're gonna spend the money anyways,
might as well get some airline miles with it.
Like, that's so weird that you're not
even using a credit card."
Yeah, I know.
And I'm weird.
And I'm like totally okay with it! (laughs)
I really am!
I'm so comfortable with it because you know what?
Winston and I, we've been doing this plan for over,
literally, for over a decade.
So we are on Baby Step 7, and I'm living life.
Like, after I film this,
I'm gonna go hang out with my debt-free family,
pet my debt-free dog, eat a debt-free dinner,
and I'm gonna go to bed, and I'm gonna sleep great.
I'm just not concerned what people think.
I'm really not.
Actually, that's a lie.
Why did I say I'm not concerned?
I'm not concerned what people think about me with my money.
I'm an Enneagram 3, we're always a little concerned
what people think about us. (laughs)
But overall, when it comes to finances,
I really don't care what people think of me.
So, yeah, is it weird that I suggest
that you shouldn't have debt?
Yeah, it is weird. But guess what?
Weird is what's going to cause you to win with money.
Being normal and being broke your whole life,
if that's what you wanna be, go be normal.
I'm not mad at you.
I'm not pushing you, okay?
Go, go be normal.
That's fine.
It's great.
I choose to be weird and do weird things,
because you know what?
Weird people win.
When you do normal, you become broke.
When you do weird people stuff,
you actually build wealth, and don't have debt,
and don't owe anyone anything.
And if you lose your job, you have an emergency fund,
because you actually have a savings account,
not a negative savings rate like the average American.
Put me on the weird spectrum, and I am good with it.
So I'm saying all that to set up the idea
of not using credit cards.
I admit, I know it is weird, but again, I'm fine with that.
So, when you look at money, there's so much that,
oh my gosh, there's so much we could talk about.
But with credit cards and debt specifically,
you're looking in the rearview mirror
for your entire life financially.
Your paycheck comes in,
and you're paying for things in the back.
You're throwing it at the past.
Food you've already eaten, movies you've already watched,
clothes you've already worn
and you're probably not even gonna wear again.
I mean like that kind of stuff.
You're throwing money at the past decisions,
instead of saying, "No, I'm gonna pay for my decisions
in the present with a debit card or with cash,
not with a credit card, and I'm gonna keep up with that."
And then, really, the only perspective I have
is to look through the front windshield and say,
"I'm gonna look at my future."
The only time I look in the rearview mirror
is when I think about my kids
and the day they're born and the memories.
That's all my rearview mirror is.
Kids and memories
of the past, but no financial!
Nope, no financial decisions am I having to
look in the rearview mirror.
So looking through the windshield, there is so much power.
So there's the emotional side and the mathematics side.
Okay?
So the emotional side is when you don't
owe anyone anything and a freakin' pandemic hits,
and maybe you're furloughed, or maybe you're laid off,
you're having to change jobs.
Something happens in life, you're just not freaked out.
Like yeah, I'm sure, yeah, there's things to worry about.
And it's like, "Okay, are we good?"
Yeah, yeah.
But you're not losing sleep.
You're not worried because you don't owe.
You have no bills.
You don't owe anyone anything.
You're just, you got nothing, nope.
Bills? No, don't know what those are.
I don't have them!
Like, it changes the emotional state of who you are
because when you don't have payments,
even credit card payments you guys, you have options, okay?
That's the big part.
That's the emotional side.
And then you look at the mathematical equations
of wealth and how to build wealth.
The most powerful wealth building tool
you have is your income.
So when your income comes in, and you get to keep it,
and you get to say,
"Okay, I want to give some of this away.
We're gonna spend some extra here.
We're gonna save a bunch here.
Maybe we have something we're gonna buy the next year.
We're gonna invest a ton here."
You get to choose what to do versus saying,
"Here's my income, two car payments, two credit cards."
Because the credit card bill thing, it's real, okay?
1 out of 3 Americans are behind on their bills,
and the average American owes $6,500 on their credit cards.
Okay? So like, there are credit card bills out there.
"I pay mine off every month."
Are there some of you that do?
Sure.
Are there some of you that don't?
Most of America. Yeah, that's right.
Buying stuff that you don't need.
Okay, back to my equation, the mathematical side.
So instead of, again, getting your paycheck
and it's going to two car payments,
three credit card bills here, student loans.
Okay, we're...
Okay, we're spreading everything out.
The mortgage, don't forget the mortgage.
Everything is spread out.
And then you're like,
"Okay, well we have this much to live on.
Okay, well, we don't have enough here.
So we'll have to charge more on the credit card
for that for next month, but we'll catch up next month.
How many?
Yeah, we got no money to give.
Giving?
Well, I don't even know how people do that!
Can't do that!
Invest in retirement?
What?
I mean, there's not really much left.
Okay, well I think we're good."
That's what it is.
That's what life is for majority of America out there.
And, again, buying stuff that you really
don't even need, you guys.
Now do some people use credit cards out of necessity?
Sure, where they're buying food,
they're having to pay their rent on it sometimes.
And, again, we're in a pandemic.
So sometimes people are in a really, really tough spot.
But a lot of people, it's out of lack of planning as well.
It's out of not budgeting, not planning,
not seeing, not being intentional.
Their credit card is like the safety net in their life
instead of their money in the bank.
And so, I'm just telling you,
I don't think there's a good credit card out there.
So again, is it weird?
Yeah, it's weird.
But I'm about to go have a...
make a homemade debt-free pizza.
It's gonna taste really good.
And there is something about it you guys,
when you just say, "You know what?
I'm not gonna depend on Visa.
I'm not gonna try to play their game
with the airline miles and the cash back."
Because there is a psychological aspect
when you are swiping a credit card.
7 out of 10 times you're gonna end up spending more money.
I had a great friend who did this program
all the way, right?
They had no debt, completely debt-free.
And they decided to get an airline credit card.
And they were like, "You know what?
I mean, I'm fine.
We're not out of control people.
We budget. We're gonna just do it."
So they had it for about four months,
and then they were telling me over dinner.
He told me they had it.
And I was like, "You know what?
I'm friends with you, I'm not mad at you."
But about four months later we talked,
and they were like, "Oh yeah, we totally got rid of it."
And they were like, they both said, they were like,
"We didn't realize how much extra we were spending.
We would go and buy something at Academy Sports
and be like, oh yeah, I'll just throw in
an extra here or there.
We'll just swipe it
because we'll get some extra miles that we'll use."
You do end up spending more money.
That has been researched, and that has been known as a fact.
Okay, so that happened.
So when you're using your own money,
there is something about it that you're like,
"We really don't need it."
You second-guess it. You really, really do.
So there's all my thoughts on credit cards (laughs).
And oh,
I hate it.
I freakin' hate it because they are, they're winning.
It feels like they're winning in America.
Their buildings are huge.
Their companies are massive.
They make so much freakin' money off of you.
So, until you realize that, and realize,
"Wow, I actually don't have to play this game anymore."
Let freedom ring!
That's when freedom comes.
But I know it can be hard to control your spending.
So the more you know about yourself,
I think the better this process is gonna be for you
to live this completely debt-free life.
So if you go to daveramsey.com, I have a new quiz,
and it's called "What Would You Do?"
And it really helps you understand yourself
a little bit better in this process.
So hopefully that'll be your jump start
to living a completely debt-free life.