Why You Should Stop Investing if You’re in Debt 

“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.” - Robert Kiyosaki

2023 was a challenging year, but I managed to make $100,000 before taxes as the sole breadwinner and head of household. It's a good starting point, but I'm always looking ahead on how to improve. I have 2 autoloans and hoping for a miracle to offset them as refinancing is more expensive in the long run.

Dave’s steps helped us get to where we are today. The power of focus is real. While we were in steps 1-3, we still got our company matches and still got out of debt. The free money plus compounding is too powerful to leave on the table. Looking back on the process I’m glad we made the choice to continue with getting the matches. Had we stopped investing as Dave says to do we would have only shortened steps 1-3b by 6-8 months but would have lost out on 3 ish years of compounding in our 20s, which precisely the time when compounding is most powerful. Personal finance is personal and nuanced. Do your math. Learn all you can. Winning with money is possible. Be patient and work hard. You got this.

Never, never give up the company matches, NEVER

I encourage everyone to look into the math before they stop their retirement. I stopped mine because Dave said I should do so, but I eventually sat down and did the math and found out that it was making virtually no difference in my average paycheck, so I cost myself a year of company match and growth. Not everyone will have the same experience but it’s worth looking into.

Dave's advice is typically sound but his 401k company match stance is something that I can't get on board with. If the company matches, you take it every time and then you adjust your budget from there. He most likely has a spending problem and doesn't stick to a budget hence why the CC debt. No reason why you can't invest while still paying off debt.

Sell the cars, keep the match. Next caller.

No way would I give up a 6% match

That credit card debt and the car repayment debt is so frustrating! His family could be in a far better financial position if those debts were not there. It's far better to get a reliable, cheaper car until you're in a better financial position.

Good point Jade, yet simple.

No CC has a 100% interest rate. You invest the amount it takes to get the company match no matter how much CC debt you have!!!! The CC debt is second to getting your full company match.

I drive a $4000 2004 Honda CRV after my 2007 dodge avenger that I paid off was totaled and my bargain $1800 2011 Chevy Equinox with 130k miles engine died after 3 months. You dont need a "newer" car until you get rid of then debt and can afford it.

I invest in a lottery ticket occasionally

I made a similar video on why this kind of thing doesn't make sense. Whether its making money on tax savings or wanting growth through positive compounding on savings and investments, you can't do this until you remove the negative compounding from your life

Thanks to the “nightmare-ish” calls that this show gets and the financial mentality of the Ramsey team I have officially paid off my students loans. It’s a great feeling, $17,000 in 7 months, I could have done it faster, but went at my own pace. Dave’s advice to many where “you don’t have an expense problem you have an income problem” was exactly where I was, I got a new job but didn’t live outside of my means, my wife and I can now save up to build our future together, thank you Dave & the team!! 😊

It's not a math problem, it's a behavioral problem - a me problem. Among my favorite Ramsey quotes.

"Smart Ankle" 😂😂😂

I don't understand how Amercians get 60 k in cars ? I bought my first used car recently, 4 years old with 60000 miles for about 10k. Why on earth would you pay triple that when you've got massive student debt already ? Is it some sort of social pressure thing ?

Palantir stock is stuck in a debilitating downtrend and looks just attractive for a long-term investment once the short-term volatility and smoke settle. Right now i'd appreciate suggestions short-term opportunities that could fetch $50k or less..

What about low interest car loans and Helocs?

I am earning 12%-14% with my ETFs. My car loan interest is 3.5% ... I'll keep investing.

Do not stop retirement. You are robbing your future. It's called compounding. Like Dave love's to say, you are jumping over a dollar to pick up a penny. So what if it takes 3 years to pay off instead of 2?

Is the household income net or gross income?

I had to stop investing in my 401K after acquiring debt (a mortgage) unless you turn the tables around and consider the mortgage a different type of investment (real estate)?🧐

I live in Northern California, expensive area, trying to invest in the south part of bay area with the program Housekeys, if you know something about that or any advice will be appreciate it, thank you.

Great video 4:53

Dude...KEEP THE 6% MATCH THAT IS AWESOME!!! As usual you fell into the same middle class trap as everyone else, your emergency fund, retirement fund and kids college fund is sitting in your driveway. Just work the baby step after your match you will fine if you tighten up your spending only needs and no wants for a few years. Dave never counts opportunity cost with his stop investing advice....you are making 100% return on 6k every year!!! The $36k you invest with match over the next three years will be almost a million dollars in 40 years if you don't do it you will never see that money.

I understand his point about going super intense to paying off debt and stopping all investments... but if they arent going to be gazelle about it, they should keep the match.

I like these two

I'll be honest I didnt follow this rule exactly. I cut investing so long as the tax savings was less than the total interest I was paying on my debts. I.e. I would have saved $2000/yr on taxes but I was paying $3000/yr in interest on the debt. Once the interest was below the tax savings I did start investing again at the bare minimum to get the match. It worked well for us but we were finished with the debt life and knew we werent going back.

This advice should only apply to debt with interest higher than 8%, so credit cards and certain car financing - otherwise it's unwise to not invest while in debt; especially for a 401k match since it's a guaranteed 50-100% return on investment. There is an argument to not to fund a Roth while being broke/in debt

How can these folks be on 6 figure salaries yet they lack the intelligence to stay out of debt. Can't feel sorry for them, no sympathy what so ever

But you miss out on compound growth

Ramsey completely blows past the match

I have $50k debt. I want to invest in a new business that can generate big money. I have $80k to invest. I have $0 savings. What should i do?

Schools need to teach this

Stop a 6% in with 100% match? 😂 That's like if the caller said if I buy lunch at my office cafe they give me a take home dinner included for free. Response: Nope! Seriously, only 6% in getting another 6% in free money, not taxed, compounding. That 6% isn't his issue nor the solution. Treat it like a life tax. To pass on it is nuts.

Unless you're in debt with a very low interest rate to acquire investments. I took $20,000 at .9% from my credit card to buy stock. Worst thing that can happen is I sell investments to pay myself back.

Not a single thing he listed is an appreciating asset. Everything is a liability so get the interest monkey off your back first, then start saving. I’m guessing he is loosing more than that 2k every year in interest penalties.

Once had a guy tell me I could take out $80K in debt and he could promise me I'd be able to borrow $1M in 60 years. I saw no upside and passed on that. Couple years later, we had that big market dip of 2007/2008. So, yeah, don't borrow to invest.

Couldn't owing the federal government even a small amount be a good thing? We borrowed money from the feds interest free for a year

If the interest is > than what your make through investments then pay down your debt

People who contribute the minimum amount necessary to the 401k to get the company match are delusional. Keep an eye on the yearly IRS contribution limit and make that your goal. $23k for 2024. Probably not do-able the first year or two working, but get there or as close as you can as soon as possible. The earliest dollars saved work the longest.

How do I get this guy off my feed ? ?? 😮

I hope the caller listens to their advice. The program works! BS6

Oh, I absolutely disagree with that. You have to be able to do both. Invest and pay off your debt. GO MAKE MORE MONEY!

The student loans bedroom has a beautiful bath with Italian tiles and a deep jacuzzi tub.

I'm 47yrs old. $73,000 biweekly and I'm retired, this video have inspired me greatly in many ways that I remember my past of how I struggled with many things in life to be where I am today!!!!❤️

12,000 was my last month's credit card bill. I always pay it off in full. It's called a 6 month emergency fund.

Why are people spending 60k on a car when their income is 130k? Man I know car prices are more expensive but cmon

Thank you❤

I think he's embarrassed by his debt and him wanting to keep investing is his own way of saving face. Because if he goes full-on Baby Steps, he has to admit his way of doing things is NOT working.

When will people learn that until you learn to live withing your means that your are a slave to the debt you create?

He should keep making the 401K contribution to get the maximum employer match. That is free money. The tax savings is an illusion, it's just deferring the tax. Of course, they should stop spending and get those loans paid off.

Need more calls from everyday people who make $50k a year (single income household).

16 vehicles.

Everybody should have to pay cash execept for a house. Then this wouldnt be an issue

Yeah lets miss out on 100% return because we have credit card debt Lol Lol Lol Lol

$60,000 in car debt? WTF

Take the match, but get serious. Your $6,000 - much less $2,000 in taxes - is a joke compared to $120,000. You have far larger problems than you can solve against 6k in 401k.

It’s simple math, paying off debt earlier is a guaranteed saving / return.

It’s amazing the stupid crap people will do just to not pay taxes which is typically pretty minimal in the first place. Trading a dollar for a dime.

Belief in free trade is free . It’s your duty to pay as little in taxes as possible . Funny thing about people who believe in giving 35% of literally everything to somebody for literally nothing is they can’t possibly ever give enough in their mind . You don’t owe anybody anything unless you work for the government dude .

60k in vehicles?

Wrong priorities!

Sir, your issue is not taxes, with that salary, you should be investing 20K in 401K and not 6k. And if you are not doing that, you need to look at where your money is going and control that. You should still be able to get the match and pay off the debt but with expensive cars etc, I feel that the lifestyle is also out of control.

Did he say 16 vehicles????

Does Dave really think a 130k salary in Richmond, VA a lot of money? Jsut asking

First, the caller could reduce the car debt by half, maybe more. Then, the majority of his debt ends up being student loans. Ramsey never recommends borrowing on the a 401k but It WORKS and it worked for me over 25 years ago. I never got stuck in heavy debt again. Trading down on the cars and then borrowing from the 401k can work. It requires discipline. It also requires that the person borrow a little bit more than the total amount of the debt so that emergencies don't pull him/her back in to debt again.

Investing as a federal employee gives you up to 6 percent of your salary for free. On top of that the return is 10 percent. Dave is wrong here

At my job I'm not allowed to not invest part of my paycheck into retirement each month. It's pulled automatically and can't be turned off.

I'm doing Roth 401k and Roth IRA max with my wife and I because tax rates will go up in 2026 and even higher in the future. I want to minimize taxes after age 75 (if I live that long). yes, the debt crisis will be real. as you can tell there are certain congress people who want to break the system and don't want more federal debt.

I don’t know why, but the me, the lady is so attractive

Here's a question for Dave or anyone to answer along these same lines... After graduating, I had some student loans to pay off and got a job at a major broker dealer. I was working about 58 hours per week to make money and get things paid off. I'd hear people at work talk often about investing in their 401k to take advantage of the matching contributions our employer offered. I'd hear them say "it's crazy not to make that percentage contribution, otherwise you're just leaving money on the table." Which is 100% true. I was just leaving money on the table that my employer offered if I would have simply made that minimum contribution. But all I could think of was getting student loans paid off. I could have afforded to make that contribution and get the match from my employer, it just would have taken longer to pay my student loans off. I wonder what Dave would have suggested if I was a caller back then. What do y'all think Dave would have recommended?

The only reason to forego your 401k match is that you are so far underwater you cannot pay rent or put groceries on the table. This caller is not in bad shape financially. Yes, the car purchase wasn't the smartest thing to do and they need to eliminate the credit card debt, but nothing in this call screams "oh my God, we're broke and must drink the Ramsey koolaid". This caller needs a "financial tuneup" and asked a legitimate question: "why do you advocate stopping the company match?". Ramsey, of course, goes to the only thing he knows which is "muh baybee steps" and "you're broke". It's "behavior AND math", they are not mutually exclusive. You need to understand and use both to your benefit.

100k in debt and calling in to save 2k on taxes, just how dumb are these callers?

Why can’t we get real calls where people are making more average incomes instead of these people that make 6 figures

In this case, Dave is correct to have him stop investing (Dave is often simply wrong here though). Dudes finances are a mess and he is approaching this like a tax planning issue…tax planning is advanced personal finance. If you’re stretched to the max like this guy and decide to manage around tax planning….his issue is he sucks with money, cart before horse. He needs to go to basics, get the stressor debt cleaned up and reset his approach.

Government deserves 0% of anyone's paycheck

Nah, you should keep investing and then do some gig work or a side job to quickly pay down the debt. do Uber 10 hours a weekend with that nice expensive car and use every dime you make to get rid of the debt. But don’t stop investing because investing is a habit.

I agree if you’re paying 23% interest, do not invest. If you’re paying 2% on mortgage, it’s okay to invest. My opinion.

I understand Dave here. Stopping the 401k savings will direct the full attention to the debt. The loss of the 401k match should motivate them to pay it faster so they can get back to the match.

Borrow at all costs to put it in AMC and GME 🚀

One month of missed student loan payments will wipe out that 2k dollars 😂 What a maroon.

I have no sympathy for people like this.

Comes down to stupid choices. Anyone making that kind of money can make it.

#1 cut spending #2 pay down high interest debt #3 short term paying debt vs saving does not matter, but long term you need to be investing Thats it folks.

I’m buying bitcoin

the credit card interest enough should be a reason

You guys are wrong about money. It’s the person. Not the cash. A higher income will not fix the symptom. I make 62k, live in Chicago and have 1,000 left over after every month.

Thosw credit cards are more interest than he saving in taxes thsts simple math

His tax reason is stupid. That said, nothing he would pay with that 6,000 is losing more money than that 100% match will make him, not to mention the fact that 6,000 plus his 6,000 match, he will be mathematical ahead. Dave can say all day that it isn't a math problem, but it is a fact you will be further ahead in 10 years if you don't stop investing and follow every other one of his steps than you are stopping the investment. A match is a 100% return, and if invested like Dave recommends, it is Even more than that.

Best thing anyone can do, is leverage real estate debt. Invest in rentals. Nothing better than buying a few rentals and growing the portfolio one rental property at a time.

JOHN 14:6😊❤

Dave's blood pressure went up so much his ring won't come off 🤣

Income tax is 30% and cc interest is 22-24%. Which ones better?

This is what you call "ass backwards" all these degrees but no common sense 🤔

Where's Dr. Baloney with "You're scared, you can't breathe." Followed by a psychology exercise.

no debt, paid for house. ready to retire. cashed out of the market. i have enuf, and ss will be government annuity gravy.widower, no kids, no legacy. stopped voting after trump lost. sleep like a baby.

The match is bad. Every dollar your company matches means a single mother's child doesn't eat. Oh wait, that's just CC rewards.