Rachel Cruze has a perfectly plausible reason for not owning a credit card.
She’s a Ramsey.
As in the 23-year-old daughter of Dave Ramsey, the nationally known lecturer, author, financial education guru and founder of Financial Peace University.
If you’re not familiar with Ramsey’s mantra, it can be boiled down this way: Don’t use credit cards. Don’t pile up debt. Don’t live beyond your means.
No doubt about it, those principles have rubbed off on Rachel. And like father, like daughter, for she is now traveling the country talking to teenagers and young adults about the importance of sound money practices. She’ll be in Kansas City on Tuesday to speak at a free public event at Country Club United Methodist Church.
In a telephone interview from her home in Tennessee, Cruze talked about the money lessons she learned from her parents and why she believes it’s so important to share that information with young people.
It’s no surprise that Cruze’s biggest worry about her generation is the appetite for borrowing.
“There are good reasons why this generation is called Generation Debt,” Cruze said. “Debt has become more acceptable.”
Consider, she said, that the average college student will graduate today with about $27,000 in student loan debt and $3,000 in credit card debt. Throw in a car loan and rent for an apartment after getting out of school and many young people will never know what it’s like to live debt-free.
Cruze said she wants to “break that (debt) bubble,” but to do so requires discipline and a mindset that often goes against the grain of our instantly gratified society.
Take paying for college, for example. Rule No. 1: Go to a school you can afford, she said. Then, if necessary, get a job or apply for work study assistance to help cut the costs of tuition.
“Pretend that student loans don’t exist,” said Cruze
Then have an outcome in mind. Where do you want to be and what do you want to do after college?
Cruze is equally adamant that you can survive without a credit card and that going into debt just to build a credit history “is insane.”
She has never owned a credit card, choosing to pay with cash or use a debit card.
People who go into debt to buy more stuff end up on a financial roller coaster, Cruze said. It’s fun to have a new big-screen TV, but the pleasure drops when the bill arrives.
But what about the protections that credit cards offer?
“A debit card provides the exact same protection for theft and fraud as a credit card, if it is a Visa or MasterCard,” she said. “Remember that your debit card can be processed as a credit card and those transactions are 100 percent protected like a credit card transaction. The only thing a debit card can’t do is get you into debt.”
But plastic’s perks?
“If you go into debt just to get an extended warranty,” said Cruze, “then you need to rethink the way you’re handling your money.”