Dave Ramsey Reveals How to Rebound from Financial Setbacks: 'If you're over 40 and feeling behind, it's not too late, but you'd better get serious'

Many people encounter financial setbacks on the path to their long-term goals. Accidents happen, and some expenses are higher than others. While everyone encounters obstacles, the way we deal with them determines who we become.

Dave Ramsey has been helping people with their money management for decades. He has encouraging news for 40-year-olds who feel like they're behind. It's actually not too late to reach your long-term financial goals and retire as a millionaire. However, Ramsey says in an X post that these people "better get serious."

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Here's the plan Ramsey recommends for people who want to have large retirement portfolios by the time they leave the workforce.

Don't Blame Anyone But Yourself

Ramsey gives out tough love from time to time. The financial guru says that if you retire broke in the U.S., it's your fault. He asserts that people make fortunes in their working lifetime.

Not everyone takes harsh advice well, but there is value in putting all of the blame on yourself. If you are the sole reason for your current financial situation, then it's easier for you to control. If you blame the stock market, then you lose control over your ability to change your circumstances.

Shouldering all of the responsibility gives you the opportunity to make adjustments to how you earn, save, and invest your money. When you take control, you get more clear on the actions you can take, such as setting a tighter budget and investing more often.

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Get Out of Debt

Investing is a popular path to long-term wealth, but Ramsey suggests that you get out of debt first. Debt can make it harder to invest and keep up with basic expenses, especially if you are stuck with a high APR on your credit card debt.

Following strategies like the debt snowball and avalanche methods can get you out of debt sooner. The debt snowball method focuses on eliminating small balances first, so you have fewer financial obligations. Meanwhile, people who use the debt avalanche method first pay off the balances with the highest APRs.

The debt snowball makes it easier to build up small wins, while the debt avalanche strategy reduces how much interest you pay in the long run. 

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Invest 15% of Your Paycheck

Paying off debt gives you more flexibility with how you use every paycheck. While you have to cover the essentials, Ramsey also recommends investing at least 15% of your paycheck into a good growth stock fund. Doing that over many years can help you build a multi-million dollar portfolio.

The more money you invest now, the more compounding will boost your wealth in the long run. Picking up a side hustle and seeking career growth opportunities can boost your income, so you have more money to invest. 

If you grow your income without increasing your spending, you can contribute more than 15% of your paycheck each month. Then, you can grow your wealth faster and distance yourself from previous setbacks.

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