‘I never said that’: Dave Ramsey busts 6 popular myths about his money advice — did you fall for any of them?

Myth #1: "Only eat rice and beans"

Ramsey said that if you thought he literally meant your diet should be strictly limited to rice and beans as a money-saving hack, you've got "other issues." It's a metaphor, he explained.

What Ramsey actually meant by using this expression was for people to spend wisely when they’re broke or in debt. Instead of putting yourself into further financial straits, tighten your wallet, even if it means cutting back on some of the things you love.

Cooking inexpensive meals at home versus spending a couple hundred dollars going to a restaurant, for example, is an easy and effective way to save money when you’re struggling to make ends meet.

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Myth #2: "You have to pay cash for a house"

Ramsey acknowledged that he does actually believe paying cash for a house is the best thing you can do — but he also understands it’s not necessarily feasible for the majority of Americans.

Ramsey himself doesn't borrow money — period. He hasn't borrowed money in 30 years since he first went broke in his 20s, he revealed.

But he also doesn't need to borrow money to finance a home, whereas the average buyer does. So, to clarify his no-mortgage stance, Ramsey said, "That is a best-case scenario, but it's not the only thing we say to do."

Ramsey clarified that, if you're going to finance a home, aim for a 15-year mortgage with monthly payments that come to no more than one-fourth of your take-home pay. In addition, put down at least 20% to avoid the cost of private mortgage insurance.

Myth #3: "A $1,000 emergency fund is enough to cover all of your emergencies"

A $1,000 savings balance is a good starter emergency fund, Ramsey said — “starter” being the key word here. However, it's not enough money, in general, to dig you out of a hole if you find yourself weighed down with a sudden medical bill or home repair charges.

Emergency funds are essential for covering those small unplanned expenses so you can stay on track with paying off debt — or staying out of debt to begin with. But it’s something you gradually add money to over time.

Ideally, Ramsey said, you should have enough emergency savings to cover three to six months of expenses. This can also act as a buffer in case of a sudden job loss.

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Myth #4: "Getting out of debt is a math problem"

Ramsey quickly clarified that he’s never made this statement in his life. In fact, he pointed out that he’s said getting out of debt is a “behavior problem.”

Personal finance, he insisted, is 80% behavior and 20% head and knowledge. Adopting smart habits, such as paying credit cards off every month, can help you avoid debt altogether.

Prioritizing existing balances can make them disappear faster. One option is the snowball method, a debt-reducing strategy where you pay off the smallest debt first while only making the minimum payments for any other outstanding debts.

Paying off the smallest debts first, and relishing those small victories, will give you the motivation and momentum to power through those other bigger debts.

Myth #5: "You have to work 80 hours a week — forever"

Sure, putting in extra hours at work can ultimately earn you more income or land you a higher-paying job, but Ramsey acknowledges that working an 80-hour week isn’t sustainable.

"If you work like no one else, later you can work whenever you want," he said. As his grandmother used to say, if you're broke, there's a great place to go — to work.

However, Ramsey isn’t saying you should put in hundreds of overtime hours and work yourself down to the bone. What he does suggest is finding other sources of income — by taking on overtime hours or getting a second job (at least temporarily) — if you find yourself in significant debt.

Myth #6: "You've got to pay off your home before you start investing"

Ramsey insisted that he's never once said this in his 30 years in the finance world. He clarified that you should get out of credit card debt before you start investing, since the interest rate you're charged by credit card companies could well exceed the returns you'd generate with a stock portfolio.

However, you definitely don’t need to wait until you’re mortgage-free before you start investing.

After all, if you wait roughly 30 years (the average length of a mortage) before you start investing, you may not have ample time to build a retirement nest egg — and that’s the opposite of what Ramsey would want for his listeners.