Dave Ramsey Said to Avoid These Debt Payoff Strategies. Here's Why He's Wrong

Listening to Dave Ramsey on this point could make it harder to become debt free.

Whether you have credit card debt or other types of high-interest consumer debt, paying off what you owe may be a priority. After all, if you can get rid of your expensive debt, you can stop wasting money on interest and reclaim the funds spent on monthly payments for other things.

There are lots of different techniques to repay debt, including cutting spending and increasing income to make extra payments -- both of which are recommended by finance expert Dave Ramsey. But, there are also two great approaches to debt payoff that Ramsey rejects -- even though they can be great tools.

Here are the two options Ramsey says to steer clear of, along with some insight into why you may want to use those techniques anyway despite what Ramsey claims.

Dave Ramsey says not to use these debt payoff tools

Debt consolidation and credit card balance transfers are the two debt payoff methods that Dave Ramsey recommends avoiding.

Debt consolidation occurs when you repay multiple existing loans with one new one -- usually, a new personal loan at a lower rate than the debts you are paying off with it. Instead of having multiple monthly payments to different creditors, you're ideally left with just one payment to make when you consolidate debt. The lower rate on your new loan also means more of your money goes to principal, not interest. The result is that your debt consolidation loan can be cheaper over time and each month.

Balance transfers are similar, but you use a credit card with a special introductory 0% rate on transferred balances and you transfer other card balances to it. Although you pay an upfront fee with most balance transfer cards (usually around 3%), the 0% rate means your entire payment goes to principal each month rather than to covering high credit card interest charges.

Reducing your interest rate and making payments cheaper sounds great, but Ramsey suggests steering clear of both techniques despite their obvious benefits because he believes they will "keep you in debt longer" either by extending your payoff time or prompting you to spend the money that these techniques save you on other things.

Here's why Ramsey is wrong about these debt payoff strategies

Ramsey is wrong that you should avoid debt consolidation or balance transfers because both of these methods can really help you save -- as long as you aren't irresponsible about using them.

Debt consolidation and balance transfers are tools and they can be misused. If you consolidate your debt to a much longer payoff time than your current loans or if you transfer a balance and then just charge up your cards again with the credit you've freed up, obviously you'll end up in a worse situation.

But if you are committed to debt payoff and living within your means, you can avoid doing those things. Instead, you can take advantage of your reduced interest rate to pay as much on your debt as possible to reduce your principal balance quickly and become debt free.

Ultimately, as long as you trust yourself not to make a bad financial choice after consolidating your debt or transferring your balance, you should go ahead and implement these methods of becoming debt free ASAP.