Americans added $21B to credit cards — now 20%+ interest is crushing budgets. Time to use Dave Ramsey’s escape hatch?

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Debt has become a daily source of anxiety for nearly a quarter of American adults.

About 62 million people “worry about their debt every single day,” according to the latest State of Personal Finance in America (1) report published by Ramsey Solutions, the company founded by financial guru Dave Ramsey. Another 15% worry about it weekly, while 8 in 10 experience at least some debt anxiety.

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“Debt continues to shackle many Americans,” the report says.

Those worries aren’t happening in a vacuum. U.S. credit card balances climbed by $21 billion to approximately $1.26 trillion during the second quarter of 2026, according to Federal Reserve Bank of New York data (2).

The Ramsey Solutions survey also found a stark divide between Americans with and without debt. About 80% of debt-free respondents described themselves as financially independent, compared with 63% of those carrying consumer debt.

Getting from one group to the other can feel overwhelming, especially when prices remain high, and interest keeps adding to the bills.

Ramsey Solutions’ advice is to stop trying to solve everything at once and work through a series of deliberate steps.

Start by saving your first $1,000

Throwing every available dollar at debt might sound like the fastest route out. But without any savings, the next car repair, medical bill or broken appliance can land straight back on a credit card.

That’s why the first of Ramsey’s famous Baby Steps (3) is saving a $1,000 starter emergency fund. It’s not intended to cover every possible crisis, but even a small buffer can go a long way toward keeping your progress steady.

If you can redirect just part of your income to savings, consider keeping the money separate from your everyday spending account so that it’s readily available.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s 10 times the national deposit savings rate, according to the FDIC’s June report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here’s where their money is actually going

Pay off your debts faster

Ramsey also recommends the debt snowball: List your non-mortgage debts from the smallest balance to the largest, make the minimum payment on each one and direct every extra dollar toward the smallest.

Once that first balance disappears, roll its payment into the next debt. The approach may not minimize interest as efficiently as attacking the highest-rate balance first, but Ramsey argues that early victories help people stay motivated long enough to finish the job.

Before choosing a repayment method, write down each balance, minimum payment, interest rate and due date. Seeing the full picture may be uncomfortable, but it replaces a cloud of anxiety with a problem you can actually work through.

From here, there are two common pathways to debt reduction. The first is the avalanche approach, which focuses on paying down your largest debt while servicing your other payments. Once cleared, you can focus on knocking each debt off one at a time. The snowball approach, meanwhile, starts with paying off your smallest debts one by one and working your way to the top of the pile.

Other borrowers may be able to accelerate repayment by consolidating high-interest balances into one personal loan. That way, instead of juggling several monthly bills, you’re able to have one predictable payment to manage.

Through Credible’s online marketplace, you can comparison-shop for personal loans and see prequalified rates from multiple lenders with just a few clicks. In less than three minutes, Credible can show you which lenders may be willing to help you pay off credit cards or other debts with a single personal loan.

If you owe more than you can reasonably repay, you may also want to find out whether you qualify for a debt relief program.

Freedom Debt Relief offers a free consultation with a certified debt relief consultant, who can review your situation and estimate how much its program could save you. If you qualify and enroll, the company works to negotiate settlements with your creditors until the debts included in the program are resolved.

Keep in mind that debt settlement is different from consolidation. It may involve deliberately falling behind while money accumulates for settlement offers, which can damage your credit or trigger collection efforts. It might also create potential tax consequences when debt is forgiven.

Build a 3-to-6-month emergency fund

Once your non-mortgage debts are gone, Ramsey’s next step is expanding that $1,000 cushion until it can cover three to six months of necessary expenses.

Start with the bills you would still need to pay after a job loss: housing, utilities, groceries, insurance, transportation and minimum required payments. Multiply that monthly figure by three for your initial target, or aim closer to six months for a bit more safety.

The portion you may need immediately should remain easy to reach. But if your reserve grows large enough, you could place some of the money in short-term certificates of deposit (CDs) with staggered maturity dates.

This “CD ladder” can keep portions of the fund becoming available at regular intervals while locking in a stated return.

Before opening a CD or renewing an existing one, a quick check on this CD APY Checkpoint Tool by CD Valet can help you see whether you’re getting a competitive rate.

Their platform tracks over 40,000 verified CD rates from FDIC-insured banks and NCUA-insured credit unions nationwide, making it easy to see how your current rate stacks up against the market. Unlike other websites, they give you a broader and unbiased look at the market, ensuring you have a comprehensive view of your options

Simply enter your current APY and term length to compare your CD against today’s market benchmarks in seconds.

You can also see real-time offers of the best CD rates across the country. Many institutions allow you to open an online account, so you can take advantage of a great CD rate without being located in that state.

Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.

Put 15% of your income toward retirement

With high-interest debt gone and a full emergency fund standing between you and the next crisis, Ramsey recommends investing 15% of your gross household income toward retirement.

If your employer offers a matching contribution to your retirement plan, you can start by contributing enough to receive the full benefit. From there, you might want to decide where the rest of your retirement savings should go. Your income and tax situation will help determine whether a workplace plan, traditional IRA or Roth IRA makes sense.

The most important part is consistency. Automated contributions allow you to keep investing through both strong markets and ugly ones without having to decide when conditions feel “safe.”

If you prefer a hands-off, tech-forward approach, Vanguard’s Digital Advisor puts the investing expertise of one of the world’s largest asset managers right at your fingertips.

It takes the guesswork out of investing by building a personalized portfolio using Vanguard’s well-known low-cost ETFs and mutual funds, then keeps it aligned through automatic rebalancing.

The platform also offers retirement-saving guidance and lets you add new goals as your life evolves. It can even help you think through debt-repayment strategies, potentially freeing up more money to direct toward that 15% target.

With a minimum investment of just $100, it offers an accessible way to get started with professionally guided investing. For every $10,000 in an all-index portfolio, you’ll pay approximately $15 to $16 per year.*

You can also test-drive the Vanguard experience with no advisory fees for the first 90 days.

*All investing is subject to risk, including the possible loss of the money you invest.

Turn your freed-up income into lasting wealth

Ramsey’s final step is to keep building wealth and give generously. He argues that your income becomes your most powerful wealth-building tool once it’s no longer being swallowed by monthly debt payments.

Real estate can become part of that plan, but Ramsey recommends waiting until you are on firm financial footing, consistently investing for retirement and completely debt-free. That includes your mortgage.

He also rejects the idea that owning rental properties is truly passive: Finding a suitable home, securing tenants, handling repairs or answering late-night maintenance calls can quickly turn an investment into a second job.

That’s where mogul offers a more hands-off route into the rental market. Founded by former Goldman Sachs real estate investors, the platform lets you purchase fractional ownership in blue-chip rental properties without becoming the sole landlord.

Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% and 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Getting started is quick and easy. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in minutes.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

Ramsey Solutions (1), (3); Federal Reserve Bank of New York (2)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.