Facing a tax bill? Dave Ramsey breaks ‘no debt’ policy, says borrowing from bank beats IRS, which he calls ‘KGB’

When you think of Dave Ramsey, you think of financial freedom, debt-free living and his famous slogan: “Debt is stupid, cash is king.” But what happens when… Damn IRS Coming up with a huge tax bill you didn’t prepare for? Surprisingly, Ramsay himself says that borrowing money may be the lesser of two evils in this particular case.

Don’t miss:

on episode On the EntreLeadership Podcast, Ramsey addressed a real-world scenario from a business owner, Ross, whose electrical contracting business faced an unexpected tax bill of $200,000. Ross admitted that he focused all of his extra money on paying off other debts, leaving nothing aside for taxes. Accountant’s suggestion? Borrow money from the bank To settle tax debts. While this may seem like heresy to Ramsay’s usual no-debt philosophy, he agreed.

Ramsay didn’t whitewash the truth: If you owe the IRS, you’re in trouble. “You would rather owe the bank a line of credit than owe the KGB,” he said, noting that the sanctions and interest rates they impose are much harsher than any bank loan. He stressed that the priority is to get the IRS out of your life as quickly as possible.

Borrowing from a bank may be a pain, but it’s a strategic move. Most lines of credit carry lower interest rates — often around 8% or so — which are much more manageable than the penalties and stress that come with unpaid taxes, Ramsey explained. You don’t want the IRS breathing down your throat, he warned.

SEE ALSO: $60K Foldable Home Maker Has 3 Factory Buildings, Over 600 Homes Built, Big Plans to Solve Housing Problem – You can become an investor for $0.80 per share today.

While agreeing to the borrowing strategy, Ramsey Ross didn’t let off the hook on how he ended up in this mess. “You’re running this like it’s a million-dollar business,” he said bluntly, when in fact it’s a $10 million business. Ramsey stressed the importance of monthly tax planning, strong accounting systems and professional oversight for a company the size of Ross. He suggested appointing an internal controller or financial director and promoting entry-level programs such as: QuickBooks To more advanced tools like NetSuite.

The story continues