Dave Ramsey Says You Have to Take This Crucial Step if You Want to Get Out of Debt for Good

You need to read this if you want to be debt-free for good. 

If you have credit cards or other loans, then borrowing may be a way of life for you. Paying interest may seem normal, even if it is frustrating to see your hard-earned cash go to your creditors. 

If you don't want to keep wasting money on financing charges, though, you'll need to find a way to pay off what you currently owe and avoid borrowing more going forward. This can be easier said than done, but finance expert Dave Ramsey provides advice on one crucial step you'll need to take in order to make that happen. 

Here's how to get out of debt for good 

If you want to become debt-free and stay that way, Ramsey believes you will need to do more than just sending extra payments to creditors and paying down your current balance.

"If you truly want to get out of debt and stay out of debt, you have to treat the root of your money issues, not just the symptoms," Ramsey said. "Even though your choices landed you in a tough spot, you have the ability to fight, kick and claw your way out of debt. You just need a game plan."

To treat the cause of your money troubles, Ramsey suggests steering clear of quick fixes for debt such as using a debt settlement service. He even advises avoiding common (and effective) debt payoff approaches such as refinancing and reducing your interest rate using a balance transfer or a personal loan.

Instead, he believes you need to change your habits and your mindset by embracing his debt snowball method of debt payment and getting help from a financial advisor. The debt snowball method is meant to keep you motivated because you work on repaying your balances from smallest to largest so you see immediate progress. And the financial advisor is intended to help you develop a debt payoff plan and set goals for the future.

Should you follow Ramsey's advice? 

Ramsey is right in that there is no quick fix for getting out of debt and remaining that way. In fact, many people make extra payments to creditors, pay off some or all of what they owe, and then end up back in credit card debt if they haven't also made changes to their underlying spending habits.

If you don't want to be in debt anymore, you'll need to do things differently. Typically, the best approach is to work on paying off what you owe, but also save up an emergency fund to cover surprise expenses and make a budget so you ensure you are living within your means.

However, some of Ramsey's recommendations with regard to how to pay off debt aren't necessarily the best advice to follow. Refinancing, for example, can be a great way to become debt-free faster because less of your hard-earned money will be going toward interest. When each payment reduces your principal balance by a larger amount since your interest costs are lower, then you naturally can repay your loans more quickly and easily. 

Swearing off all debt for good also isn't necessarily a goal you want to set. While you should avoid high-interest consumer debt, some kinds of loans such as a mortgage or a business loan may actually help you improve your finances in the long run.

Still, if you are finding yourself trapped in a cycle of borrowing, repayment, and then borrowing again, then you definitely need to listen to Ramsey's suggestion and treat the root cause by changing your financial habits. Only then can you get on the path to becoming free of bad debt for good.