Being a Dave Ramsey fan and a credit card churner

Dave Ramsey has a devout following by giving no nonsense advice on how to get out of debt and stay out of debt. As he puts it “The paid off mortgage has replaced the BMW as the status symbol of choice.

His advice boils down to six “baby steps”

1. Save up $1000 as an emergency fund.
2. Get out of debt as fast as you can by listing your debts smallest to largest. Pay off the smallest first while paying minimum payments on the others. Then as you pay off the smallest one, roll that payment in the next highest one, etc. until you have them all paid off.
3. Create an emergency fund of 3-6 months of expenses
4. Invest 15% of your income towards retirement
5. Create a college fund for your kids
6. Pay off your home early
7. Never borrow or go into debt again

I must admit – as simple as his plan is – it resonated with me to help me get my financial life in order. I started looking at my incoming and outgoing and realized that I was spending as much or more than I was making. I also had no real idea what it was all going to. I had never really done a proper budget but generally knew where everything was going and had never really set aside money for an emergency fund.

So my wife and I sat down in 2007 and did our first proper budget. It was an interesting exercise when you realize how frivolous some things were. We cancelled some unused services and looked for ways to cut expenses.

Dave teaches that you should cut up and cancel all of your credit cards with the idea being if you don’t stop charging and exceeding your means by buying things on credit, you’ll never turn things around. So we looked at all of our credit cards that we had and the annual fees we were paying and started to cancel them right and left.

We made some real traction and started to get things in order. I then started to become a little bit more active reading about this miles and point hobby and started to read the Frugal Travel Guys blog. He talked how to apply for credit cards over and over in order to get a lot of points and miles. So in October 2008 I wrote him an email and he helped me do my first churn. I think I applied for like 9 cards at the time and was approved for all of them.

Since then I’m done a pretty substantial amount of credit card applications here and there in order to score some significant bonuses. But always in the back of my mind, I’m thinking about what Dave says that you’ll spend more on credit and it’s true to some degree especially now with minimum spend requirements. With the US Mint deal dead, you have to put actual spend on the cards and sometimes you can justify this by hitting a spending bonus all the while perhaps charging more than you intended.

In total, we’ve paid off high five figures so far and are much better off that we were long ago but I just can’t seem to pass up the lucrative credit card bonuses. So in that respect I’m a Dave Ramsey fan but also a serial credit card churner – and so perhaps my debt snowball is going to take a longer time but we’re going to see some incredible places in the meantime with all of these miles and points.


  1. A great idea that we’ve been able to implement is to save at least 50% of any pay raise you get…unless you’re already over spending then that’s money you don’t really know you have.

    Some people look at a 401k contribution as a bad investment, but if your company will match a contribution then max that out, it’s free money. Not to mention that your contribution is a pre-tax deduction so your tax burden will be less (don’t worry, you’ll pay later 😉

    Credit card users that see the most benefit are those that pay off balances every month, that way your bonus miles are really ‘free’, otherwise you’re paying interest for them.

  2. Thanks for the mention in your piece and glad you did so well with cards. It takes discipline to use cards for all purchases and still pay off the balance IN FULL each month. I hope you get back there as soon as possible


  3. I’m with you. I love Dave Ramsey, but also love big credit card sign up bonuses.

    Another thing Dave Ramsey emphasizes is often forgotten in these credit card/miles blogs. When you use credit cards versus only using cash, you will spend a lot more money. It is psychologically much easier to simply swipe a card than to actually hand someone cash. So even if you pay your balance off every month, you are still probably spending more than you would with cash alone.

    Bottom line–If you are going to use credit cards, make a budget and stick to it.

  4. @rick – thank you for helping me out. I don’t carry balances on any card – sorry if my narrative made it sound like all this debt was because of that – it wasn’t

  5. It’s another Dave Ramsey saying that has kept me from churning.. “when you play with snakes eventually you’ll get bitten”.. I get tempted by the Delta Reserve card every year end as a way to maintain my Delta Platinum status but luckily the last time I went for it the rep lied to me about the medallion miles I was eligible for, so i cancelled. I do all my spending (including work expense account) via 3 debit cards. I had to come to the realization my points were mainly going to come the old fashioned way (stays and flights) but I’ve been debt free, including my house for 18 months!

  6. I’m a Dave Ramsey follower and a cc churner, too. We all have to strike the balance that works for us. We pay our cards in full each month. I’m sure I do spend more on cards than with cash, but I’m a frugal person either way so a little extra on a card still doesn’t put me in a financial bind. IMO you have to have your financial self in control before you start playing the “luxury” cc game.

  7. I agree with the 6 steps you listed. However, I would suggest a tweak to #2. Instead of paying off the smallest, pay off the ones according to the highest interest rates. There are many calculators online and even some iPhone apps which will show you can save more money by doing it that way.

  8. @Serion – thanks for the comment. Even though mathematically you would be correct, Dave’s philosophy is that by getting some small “wins” by paying off cards is better than tackling according to interest rates.

  9. Jason – love the blog – thank you!! I’ve been a Dave Ramsey enthusiast for only 18 months (love the podcast), but I’m fortunate to have been at step 5 for some time already, and I’m now accelerating the pay-down. I’m also a stubborn credit card user, with about 15 new accounts in my family since I starting following your blog and others about a year ago. Dave’s plan may be the simplest path, but it’s not the only one. The seven baby steps are not the ten commandments. 🙂 I believe budgeting is the key for people like me, and perhaps you. Congratulations on your progress, and keep your eye on your own ball, not his. You’re doing fine.

  10. I found a balance by using cards for the perks, but paying them off to $0 every week (not just once a month) to make it feel more like a debit card. Also, I only use one at a time (meet the spend requirement, then shelve it) to keep things simple. I am also on baby step 5.

  11. Spending on credit cards for points makes me nervous too but then I think of all the utility I get out of it. I’m so excited when I sign up, get approved, and then spend and earn points. It’s like that psychology study that says people get more utility in the days leading up to their vacation than the actual vacation. It’s like paying for fun (i hope)

  12. I pay off my cards each month and really only signed up for them so I could take a month long trip to Europe for almost free. My question is – when can I cancel them without losing the points? Sometimes the yearly fees add up after year 1!!!! HELP!!!

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