10 Weird Money Habits That Will Make You Rich, According to Ramsey Solutions
There are plenty of tried-and-true strategies one can follow to build wealth, like staying debt-free and investing early for retirement. But sometimes it’s worth it to go off the beaten path and try quirky money habits.
Are these habits kind of unusual? Yes. Will everyone else practice them? Probably not. Do they work? Also, yes.
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A recent episode of Smart Money Happy Hour hosted by financial experts Rachel Cruze and George Kamel took a closer look at the most unusual money habits worth trying out to get ahead financially.
Here are 10 weird habits that can help you become rich.
1. Working More Than 40 Hours a Week
This approach is not likely to be popular with most people, but Kamel said working more hours every week is something you can control especially if you’re trying to get out of debt.
If you’re unable to increase the number of hours you work at your full-time job, you can take on a part-time side hustle like food delivery to earn more money.
2. Being a One-Car Family
This money habit is self-explanatory: downsize the number of cars in your family until you’re driving just one.
While many families would argue this is not doable, Cruze said you could do it if you had to. Opting to drive one car cuts back considerably on monthly car payments and the cost of repairs — possibly fuel, as well, depending on your circumstances. It just takes a bit of creativity to shift to a one-car mindset and figure out schedules for driving to work and school. Anyone wanna carpool?
3. Using Cash or Debit Over Credit
Most people would not agree that it’s better to use cash or debit cards instead of credit cards. This is because many are used to having credit cards (plural: There’s often a few cards in their wallet) or they want to take advantage of earning cash back or points for rewards.
When you use your own money, Kamel said you spend it differently and enjoy more peace of mind. Think about it. Swiping a credit card means you’re going to receive a statement with the amount you owe. Hopefully, you have enough money to cover the balance. Paying with cash or a debit card, means you have enough money to make this purchase right now and don’t have to worry that you’ll be billed for it later.
4. Throwing All Savings (Except $1K) at Your Debt
This is a reference to Dave Ramsey’s 7 Baby Steps plan where people are advised to set $1,000 aside into a starter emergency fund. Some people have this amount and more sitting in savings, but they’re reluctant to take out the extra funds and use it to pay off their debt.
Why? Because many people feel it’s riskier to have no savings than it is to have debt.
However, Cruze said if an unforeseen circumstance, like job loss, were to happen and you only had a month’s worth of savings to get by on, you’d likely get behind on even more bills in addition to having outstanding debt.
“The faster you can clear out other people having their name all over your finances, that’s the less risky bet,” she said.
Putting all extra money towards paying off debt while existing on the $1k starter emergency fund motivates people to pay off what they owe as quickly as possible. If you’re in debt and have a pile of cash in savings at the bank, Kamel said you’re less likely to be aggressive about paying off debt.
5. Tracking Transactions
Who wants to track transactions for every single thing? At the core, this strategy seems like a lot of work but Cruze said it can be addicting once you get into the habit of checking and tracking every purchase.
‘You’re having to reconcile the purchases you made, which is something we don’t do anymore,” said Kamel. “We don’t have our checkbooks out. We’re just swiping, swiping, swiping and hopefully we make the bill at the end of the month, which is a terrible way to live.”
6. Quitting Toxic Spending Habits Cold Turkey
It’s very hard to challenge yourself to delete any apps on your phone which tempt you to spend money or give up eating out for a month at a moment’s notice.
If you’re not used to making sudden changes in your spending habits, try a no-spend challenge first. Give yourself a timeline, like a week or a month, to go without engaging in a toxic spending habit. You can shop your closet if your no-spend challenge is to try not to buy any new clothes, for example.
Kamel also recommends keeping your credit card out of sight and subsequently out of mind. Hide or literally freeze the card in a block of ice so you’re unable to use it for a month and see how your spending changes as a result.
7. Investing Above the Company Match
How much do you invest in your employer-sponsored 401(k)? Many people will choose to invest the bare minimum percentage — such as 4% — of what their employer matches. When it comes time to retire, however, many find this wasn’t a good idea and that they need a lot more money for a comfortable retirement.
Cruze recommends always going up above your employer’s match (15% for the long-term until your house is paid off) and then opening and maxing out a Roth IRA as another investment vehicle for retirement.
8. Paying Cash for Higher Education
It’s rare to hear anyone say they’ll either pay for college outright or just not go to a certain university because they can’t afford it. Instead, we’re fairly accustomed to seeing students take out hundreds of thousands of dollars’ worth of student loans and parents (often) act as their cosigners.
Education is viewed as an investment and one where there’s (hopefully) a great-paying job offer extended to you alongside your diploma after graduation. But it’s harder to get these jobs and starting salaries, especially if you’re obtaining a niche degree. You'll still be responsible for paying off significant student loans.
To avoid graduating with student loan debt, Cruze recommends checking out avenues of higher education where you can cashflow it. You might decide to attend a community college for a few years before transferring somewhere else or apply for scholarships and grants that can lower or even fully cover your tuition.
9. Using the Debt Snowball To Get Out of Debt
There are two common ways you can pay off debt. You can use the debt snowball method, where you pay off debts with the smallest outstanding amounts first to reduce the number of creditors and keep the motivation of eliminating obligations, or debt avalanche, where you reverse it by starting with the debt that has the highest interest and working your way down to the smaller percentages. Basically, snowball sorts your debts from smallest amount owed to largest, while avalanche organizes them according to their most expensive interest.
While both approaches are arguably controversial in their own rights, Cruze and Kamel said debt snowball has been proven to work time and time again. This is thanks to its encouraging quick wins. Knocking off smaller pieces of debt allows you to keep building momentum and feel empowered to attack larger debt balances with extra margin.
10. Paying Your House Off Early
Kamel cited a millionaire study, conducted by Ramsey Solutions, which revealed the millionaires surveyed paid off their home in 10.2 years on average.
Many people won’t pay off their home early, even if they have a low interest rate. But Kamel recommends doing it if you’re in a position where you can do it. You never know what life will throw at you next and if you’ll have the money to make timely mortgage payments.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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