Yes, Dave Ramsey recommends having full coverage auto insurance (liability, collision, and comprehensive) to protect your assets. He advises against relying solely on state minimums, recommending at least $500,000 in liability coverage, while using a high deductible ($1,000 or more) to keep premiums low.
Dave usually recommends full coverage for car insurance, which includes both comprehensive coverage and collision coverage. These are often purchased together since they provide similar protections, but are actually distinct coverages.
If you could pay for repairs or a replacement vehicle out of pocket, paying for the extra coverage may not be worth it. You wouldn't repair your vehicle. If you wouldn't repair your vehicle even if it was damaged, maintaining comprehensive and collision may not make sense.
Ramsey's car-buying rule is that you shouldn't buy a brand-new car unless you have a net worth of at least $1 million. Also, the total value of all your vehicles shouldn't be more than half your annual income. This is because you don't want too much of your money tied up in something that depreciates so fast.
Dave Ramsey strongly advocates for term life insurance, calling whole life insurance "overpriced, overcomplicated," and a poor investment, while term provides simple, affordable coverage for a set period (like 15-20 years) to protect your family until debts are paid and kids are grown, allowing you to invest the significant premium difference for better returns. Whole life bundles insurance with a low-performing, confusing cash value/investment component that he argues costs far too much for what you get.
Depreciation. Cars reportedly lose 20% of their value in the first year of ownership and retain just 40% of their original value after five years. Clearly, that is not a good investment. “Your goal should be to buy the least expensive car. Period,” said Orman. “That should steer you to a used car rather than a new car. ...
The Ramsey 25% rule is a personal finance guideline from Dave Ramsey, stating that your total monthly housing costs (mortgage principal, interest, taxes, insurance, HOA, PMI) should not exceed 25% of your monthly take-home pay, preventing you from becoming "house poor" and allowing for savings, investing, and financial freedom. It's a guideline for building a strong financial foundation, not a strict rule, though some find it difficult in high-cost areas.
You should consider dropping comprehensive coverage when your car's value is low (roughly less than 10 times your annual premium), you've paid off your loan/lease (lenders require it otherwise), or you can comfortably afford to pay for repairs or replacement out-of-pocket, balancing the cost of coverage against the risk of not having it. Dropping it saves money but leaves you responsible for damages from accidents, theft, or natural events, so assess your financial ability and risk tolerance.
It's financially smart to keep car insurance that includes comprehensive and collision coverages on vehicles that are younger than a decade. The cost of insuring a 5-year-old car equates to 27% of the car's value. After 10 years, the annual cost of car insurance represents 35% of a typical car's value.
Zander Insurance is Dave Ramsey's choice for top-quality insurance plans and services. Dave trusts them because they're good people.
And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.
Dave Ramsey's Rule of 72 is a simple mental math shortcut to estimate how long it takes for an investment to double: divide 72 by the annual rate of return (as a whole number, e.g., 8 for 8%) to get the approximate number of years for your money to double. For example, at a 12% return (Ramsey's often-used figure), your money doubles in 6 years (72/12=6), while at 8%, it doubles in 9 years (72/8=9). It's a motivational tool to show the power of compound interest, though his use of an optimistic 12% average return is a point of debate.
When you make an extra payment or a payment that's larger than the required payment, you can designate that the extra funds be applied to principal. Because interest is calculated against the principal balance, paying down the principal in less time on your mortgage reduces the interest you'll pay.
He has blamed politics for what he considers Americans' economic dependence, and has said presidents should do "as little as possible" about the economy. Ramsey supported Donald Trump in the 2024 United States presidential election.
Dave Ramsey believes you can retire with a $1 million nest egg. Suze Orman recommends saving $10 million. Both experts may be right depending on your retirement timeline and spending needs.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
You must gain control over your money or the lack of it will forever control you. For your own good, for the good of your family and your future, grow a backbone. When something is wrong, stand up and say it is wrong, and don't back down.