I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. All right, guys. Today, I have a bone to pick with Mr. Dave Ramsey. One of the heavyweights in the money expert space is Dave Ramsey. In general, I have a more the merrier outlook when it comes to financial experts. Instagram and TikTok are not finite resources. There can be more than one person giving financial advice online, and there should be. But there shouldn't be people spewing crap advice like having a zero credit score. So today, I want to debunk that specifically. Dave Ramsey has built an empire on advising people to live life completely credit free. He tells people to cut up their credit cards. He shouts out mottos like, Live like no one else, so later on you can live like no one else, which barely makes sense to me. But again, And I'm not here to just be a hater. If you followed a trusted, legit expert on finance that gives you good advice, I love that for you. But this, specifically, is bad advice. So let's dissect it. First of all, if you don't have credit, you don't have a credit score, and your credit score is your financial report card.

In Ramsey's utopia or dystopia, credit scores wouldn't matter because you'd never need to borrow money. But back here on planet Earth, credit scores are crucial. They're not not just for getting loans, they affect your interest rates. They affect your insurance rates, security deposits on rentals, and sometimes even your job prospects or your romantic life in the case of a new dating app that filters by credit scores. I have said this forever now. Well, thank you for doing it. Opting out of the credit system entirely doesn't make you financially savvy, it makes you financially invisible. And let's talk about the supposed evils of credit cards, which is one of Dave Ramsey's biggest gripes against credit. Yes, credit card debt is a massive issue in the US, with Americans owing over $1.13 trillion in credit card debt. Ramsey's solution, though? Get rid of credit cards entirely. But that's like saying, some people get food poisoning. Let's just all Stop eating. Credit cards, when used responsibly, offer a ton of benefits: cashback programs, travel rewards, fraud protection, and hello, building a credit history, to name a few. Ramsey's zero credit lifestyle also completely ignores the nuance of responsible credit use.

Not all debt is created equal. There is a world of difference between high interest rate credit card debt and low interest mortgage debt that enables you to buy a home. By lumping all debt together as inherently evil, Ramsey's advice completely blocks his fans from understanding how credit can be used as a tool for good, and therefore prevents them from navigating the modern financial world successfully. I can't help but think, too, how this advice affects people psychologically. Money is a mind, you know what, no matter what. And Dave Ramsey's fear-based approach to credit can lead to a scarcity mindset, where people are so afraid of debt that they miss out on opportunities to invest in their futures. Education, home ownership, and even starting a business often requires some level of borrowing. By demonizing all forms of credit, Ramsey's philosophy potentially hurts financial growth and personal development. This all or nothing, no credit under any circumstances, stance leaves no room for middle ground. Personal finance is personal for a reason. It's about finding a balance that works for your unique circumstances. For some, that might mean using credit cards for monthly expenses and then paying them off in full to reap the rewards without paying interest.

For others, it might mean strategically taking on a mortgage to buy a home. Absolute rules in personal finance are rare, and Ramsey's zero credit rule is no exception. Ramsey's approach is also just straight up out of touch with the realities of so many Americans. For those living paycheck to paycheck, the advice to just save up and pay cash for significant expenses is not only impractical, it is so freaking patronizing. He completely fails to understand the ways the financial system is broken and the real challenges people face in achieving financial stability. Let's not forget, because I never will, how Dave Ramsey told his audience during COVID that if they needed a stimulus check, they were already screwed. I tore into the guy at the time, and if you really want to hear me pop off again, I link that episode in the show notes. For today's tip, you can take straight to the bank. The reality is that credit, when used responsibly, is a tool that can enhance your financial well-being. And while credit history, which is exactly what you won't get by listening to Dave Ramsey, is a factor in determining your credit score, it only factors into about 15 % of your score.

Payment history, aka whether or not you pay on time, makes up 35 % of your score. How much debt you have accounts for 30 % of your score. The number of times you've officially checked your credit is 10 %, and the mix of credit you have is another 10 %. So net net, the biggest determinant of your credit score is not whether you have a ton of debt or not, it's whether or not you pay on time. So if you're looking to do some credit hygiene and you're down here on planet Earth with the rest of us, put all of your bills on autopay so that your credit score gets a glow up. And I am not saying this to be patronizing because I literally made this mistake today. I thought my electric bill was on autopay. It was not. I have a Jugundo bill that I now did not expect to have to pay. Learn from me, as usual. Did you know that even if you have a 401k for retirement, you can still have an IRA? Robinhood has the only IRA that gives you a 3% boost on every dollar you contribute when you subscribe to Robinhood Gold.

But get this, now through April 30th, Robinhood is even boosting every single dollar you transfer in from other retirement accounts with a 3% match. That's right, no cap on the 3% match. Robinhood Gold gets you the most for your retirement thanks to their IRA with a 3% match. The offer is good through April 30th. Get started at Robinhood. Com/boost. Subscription fees apply. And now for some legal info, Claim as of Q1 2024, validated by Radius Global Market Research. Investing involves risk, including loss. Limitations apply to IRAs and 401(k). 3% match requires Robinhood Gold for one year. From the date of the first 3% match. Must keep Robinhood IRA for five years. The 3% matching on transfers is subject to specific terms and conditions. Robinhood IRA available to US customers in good standing. Robinhood Financial, LLC. Member, Sippik, a registered broker dealer. As a small business owner myself, or as I like to call it, a pre-big business owner, I know how critical hiring is to the success of a company. And when you have a pre-big business, hiring isn't just adding a new employee, it's adding a new family member. The problem I run into is that I don't have the time or the resources to give hiring the TLC it deserves.

That's why I love LinkedIn jobs. Linkedin isn't just another jobs board. Linkedin is a vast network of more than a billion professionals, which makes it the best place to hire. It gives you access to professionals that you can't find anywhere else. Linkedin does all of that while making the process easy and intuitive. Hiring is easy when you have that many quality candidates. So easy, in fact, that 86 % of small businesses get a qualified candidate within 24 hours, and it really works. 2.5 million small businesses use LinkedIn for hiring. You can post your job for free at linkedin. Com/mnen. That's linkedin. Com/mnen. Then, as in Money News Network, to post your job for free. Terms and conditions apply. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your moneyquestions, moneyrehab@moneynewsnetwork. Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram @moneynews and TikTok @moneynewsnetwork for exclusive video content. And lastly, thank you.

No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.