DAVE RAMSEY, Personal finance expert
Posted: Sunday, January 3, 2010 8:34 am

When training for my first career in real estate, I remember being told that debt was a tool.

“Debt is like a fulcrum and lever” allowing us to lift what we otherwise could not. We can buy a home, a car, start a business, or go out to eat and not be bothered with having to wait.

The myth has been sold that we should use OPM, other people’s money, to prosper. We are told with sufficient snobbery and noses in the air that sophisticated and disciplined financiers use debt to their advantage. Careful there, you’ll get a sunburn on your upper lip.

There are many lies that we are told about debt and the need for credit. The academic garbage is spread really thick on this issue.

Myth: You need a credit card to rent a car, check into a hotel or buy online.

Truth: A debit card will do all that.

The Visa debit card or other check cards that are connected to your checking account give you the ability to do virtually anything a credit card will do. It’s as simple as that. Of course, you must have money before you can buy something with a debit card, but paying for things with money you have now is part of your Total Money Makeover. Remember, there is one thing the debit card won’t do: Get you into debt.

Myth: The debit card has more risk than a credit card.

Truth: Nope.

Supposed financial experts have spread this myth to the point that it is virtually urban legend. The fact is, Visa’s regulations require the member bank to afford the debit card the exact same protections in cases of theft or fraud. The Zero Liability policy covers all Visa credit- and debit-card transactions processed over the Visa network   online or off.

Myth: If you pay off your credit card every month, you get the free use of someone else’s money.

Truth: CardTrak says that 60 percent of people don’t pay off their credit cards every month.

I have heard the bait put out there to lure the unsuspecting into the pit. A free hat, airline miles, brownie points back, free use of someone else’s money, a discount at the register   the list goes on and on to get you to sign up for a credit card. Credit card companies work really hard to get you involved because you lose and they win. An American Bankruptcy Institute study of bankruptcy filers reveals that 69 percent of files say credit-card debt caused the bankruptcy. If you play with snakes, you will get bitten.

Myth: If no one used debt, our economy would collapse.

Truth: Nope, it would prosper.

What if every single American stopped using debt of any kind in one year? The economy would collapse. What if every single American stopped using debt of any kind over the next 50 years, a gradual TOTAL Money Makeover? The economy would prosper, although banks and other lenders would suffer. Do I see tears anywhere? What would people do if they didn’t have any payments? They would save and they would spend, not support banks. Spending by debt-free people would support and prosper the economy.

Saving and investing would cause wealth to be built at an unprecedented level, which would create more stability and spending. Giving would increase and many social problems would be privatized; thus, the government could get out of the welfare business. Then taxes could come down, and we would have even more wealth. As that great philosopher Austin Powers said, “Capitalism, yeah, baby!”

Are you beginning to understand that debt is NOT a tool? This myth and all its little sub-myths have been spread far and wide. Your largest wealth-building asset is your income. How much could you give every month, save every month, and spend every month if you had no payments?