<div id="readability-page-1"><div>When you think of Dave Ramsey, you think of financial freedom, debt-free living and his famous mantra: &#34;Debt is dumb, cash is king.&#34; But what happens when the dreaded IRS comes knocking with a hefty tax bill you didn't prepare for? Surprisingly, even Ramsey says borrowing money might be the lesser of two evils in this specific case.<figure><div><blockquote>Debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.— Dave Ramsey (@DaveRamsey) March 25, 2022</blockquote></div></figure>Don't Miss:<ul><li>The average American couple has saved this much money for retirement — How do you compare?</li><li>Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.</li></ul>On an episode of the EntreLeadership Podcast, Ramsey tackled a real-world scenario from a business owner, Ross, whose electrical contracting business faced an unexpected $200,000 tax bill. Ross admitted he had focused all his extra cash on paying off other debts, leaving nothing aside for taxes. The accountant's suggestion? Borrow the money from the bank to settle the tax debt. While this might sound like heresy to Ramsey's usual no-debt philosophy, he agreed.<h2>Why Borrowing Beats Owing the IRS</h2>Ramsey didn't whitewash the reality: if you owe the IRS, you're in trouble. &#34;You'd rather owe the bank on a line of credit than you would the KGB,&#34; he said, pointing out that their penalties and interest rates are far harsher than any bank loan. The priority, he emphasized, is to get the IRS out of your life as quickly as possible.Borrowing from a bank might sting, but it's a strategic move. Ramsey explained that most lines of credit carry lower interest rates – often around 8% or so – which are far more manageable than the fines and stress that come with unpaid taxes. You do not want the IRS breathing down your throat, he warned.See Also: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — you can become an investor for $0.80 per share today.<h2>The Real Problem: Poor Planning</h2>While agreeing with the borrowing strategy, Ramsey didn't let Ross off the hook for how he ended up in this mess. &#34;You're running this like it's a $1 million business&#34; when it's a $10 million business, he said bluntly. Ramsey stressed the importance of monthly tax planning, robust accounting systems and professional oversight for a business of Ross’ size. He suggested hiring an in-house controller or CFO and upgrading from entry-level software like QuickBooks to more sophisticated tools like NetSuite.&#34;You can't outearn stupidity,&#34; Ramsey said, telling Ross that he needs systems that match the size and complexity of his business.Trending: Many are using retirement income calculators to check if they’re on pace — here’s a breakdown on what’s behind this formula.<h2>What This Means For You</h2>Ramsey’s advice is clear for anyone facing an unexpected tax bill: handle the IRS immediately. If you don't have the cash, a bank loan or line of credit is your best option. But the real lesson here is about preparation. Regularly set aside money for taxes, especially if you're experiencing rapid growth or success in your business. Work with a qualified accountant who understands your needs and can help you stay ahead of tax liabilities.If you're growing fast, it's easy to overlook the administrative side of things. However, as Ramsey pointed out, neglecting your financial systems can result in disaster. &#34;Congratulations on killing it,&#34; he told Ross, &#34;but now your lack of systems and sophistication is going to cause you to lose it.&#34;Read Next:<ul><li>Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.</li><li>I’m 62 Years Old And Have $1.2 Million Saved. Is This Enough to Retire Stress-Free?</li></ul></div></div>

DAVE

Dave Ramsey, known for his 'no-debt' philosophy, suggests that borrowing from a bank may be preferable to owing the IRS when faced with an unexpected tax bill. He emphasizes the importance of settling IRS debts quickly due to their harsh penalties. Ramsey advises business owners to prioritize tax planning and maintain robust financial systems to avoid such situations. His key takeaway is to prepare for tax liabilities and work with qualified accountants to manage financial growth effectively.

Benzinga

Facing A Tax Bill? Dave Ramsey Breaks His 'No-Debt' Policy, Says Borrowing From The Bank Beats Owing The IRS, Which He Calls 'The KGB'