Recently I had the opportunity to ask Dave Ramsey some questions that have been on my mind during recent months, questions many of you have voiced as well. It’s a pleasure to share with you Dave’s wise, encouraging responses. Our own family has faced some tough times the last few years, and we’re glad to be on the path out of debt—we’ve paid of nearly two-thirds of our debt since our own personal downturn. Dave’s words give me such courage to keep at it until the debt is all gone!

TOS: The economy has hit many families quite hard, and it seems as if few have yet recovered from the downturn. What hope and advice would you bring to those who have been devastated by loss of income as they are slowly beginning to recover? What baby steps would you recommend to them?

Dave: I think the first thing they need to know is that it will get better. Yes, people have lost jobs and money coming into the household may be less, but that just means we have to readjust and make changes to our spending. Our country has gone through worse economic times before and made it through, and we can be just as resilient now.

This is a great time to mentally reset when it comes to our finances and start making a plan for it each month. Making a budget is the easiest way to account for your income and outgo and is essential if you want to make it through the hard times.

You also need to start an emergency fund. This is the first in our Baby Steps that we recommend because it means no surprises. When you have money set aside for when life happens to you, that emergency doesn’t sting as badly.

TOS: At the beginning of the downturn, the number of people who had savings was rather low, while the average debt load was quite high; now the number of people who are saving in the U.S. is notably up, while debt loads are lowering. You’ve stated for years the absolute necessity of this flip. What are your thoughts now, as we are three years into this downturn? Is it enough?

Dave: I do think that people have probably gotten more realistic about their finances than they were before 2008. Back in 2008, however, the use of debit cards was higher and use of credit cards was lower. A new study by First Data is now showing us that people are using credit cards more than they are using debit cards. People are reverting to their old ways of spending, even if their income is lower than it was pre-2008. The banks and credit cards companies make it so easy for people to use credit, and it is hard to resist the idea of no yearly fees or rewards incentives. But the fact still remains that people tend to spend more when they use credit cards, and they statistically don’t pay them off at the end of each month.

TOS: The student loan crisis has been making a lot of news lately. What would your recommendations be for a student who finds himself mired in student loan debt? What steps can he take to gain financial freedom?

Dave: The U.S. Department of Education says that the average student has more than $20,000 in loan debt coming out of college. So, students are coming straight out of college with this huge debt load before they even get a job! For a long time, student loans have been the “norm” in this country. But we don’t want to be normal! While he is in school, a student can get a job in order to start saving money and begin paying off that loan. A college graduate with student loan debt can begin paying off that debt as a part of his debt snowball.

TOS: Many of our homeschooled high schoolers are considering college options. Parents are poring over applications with their older children. What are some of the steps they can take to avoid the pitfalls of student loans and enjoy a debt-free college or university education?