Are You ‘Broke’? Dave Ramsey Thinks So and Tells You Why

Personal finance expert and podcast host Dave Ramsey recently taught his audience Why Many Americans are “penniless,” Yahoo Finance reports.

In the episode , Ramsey spoke with a listener from Spokane, Washington, about why he often uses the word “broke” and why many individuals fall into that category. According to the financial expert, the term “broke” is used to explain a one that tends to spend greater than they’ll afford, all to maintain up appearances, saying, “Lots of talk, (but) no money.” “You’re trying to ‘put the dog in,’ as we say in Tennessee,” he added.

“You’re trying to pretend to be someone you’re not… In Texas they say, ‘Big hat, no cattle.'”

A study by CNBC and SurveyMonkey found that just about two-thirds of Americans would fall into the “broke” category. Sixty-five percent of adults within the United States admit to living paycheck to paycheck. Most would blame the rising cost of living, but the truth of lack of economic planning and overindulgence might be considered the true culprits.

Ramsey’s co-host Jade Warshaw picked up on the sentiment, saying that in her opinion, being “penniless” means someone is solely financially irresponsible and their lifestyle and income don’t match up.

Ramsey, who has been open with fans about his past financial struggles, admits that hitting all-time low forced him to do a “CSI autopsy” of his funds, referring to the favored crime-investigation TV show. He then identified the primary reason Americans are struggling: automotive payments. Ramsey said that a ridiculously expensive automotive is a key indicator of being broke. “When you pull up at a stoplight and see five nice cars, you’re looking at five car payments,” he said.

Edmunds, an internet source for automotive reviews, found that the typical monthly automotive payment in the primary quarter of 2024 was $735. The data shows that just over 17% of automotive owners with a automotive loan kept a monthly payment of greater than $1,000 in the course of the same time-frame. Quarterly, Americans are being forced to stretch their budgets to maintain their vehicles.

“In the United States of America, cars are a status symbol,” Ramsey said.

“But stretching your budget to keep a car you can’t afford is a sure sign of poor financial management. They’re sitting in stinking apartment complexes and there’s a $40,000 car sitting there. Those are… 100% broke people.”

The creator said that more Americans have to learn learn how to cut unnecessary spending and learn how to put aside money for investing and saving. Another listener, based on The Street, asked Ramsey about his thoughts on withdrawing money from his savings account to repay a bank card for a complete of $5,000. He told the fan that it makes more sense to simply take a part-time jobespecially because it’s not an enormous debt. “I’d honestly rather you took on a second job, nights or weekends,” he said. “It’s not a huge debt, and you could pay it off in just two or three months with a decent part-time job. Plus, your savings would be intact.”

If listeners don’t go that route, Ramsey offered some helpful suggestions, including not having to empty your savings to make the move. Second, and probably easiest, do away with your bank cards. “Cut up your credit cards, close your accounts, and never go into debt again,” he said.