The Ramsey Show - App - 4 Things Everyone Needs to Learn About Money (Hour 1)

Episode Date: June 5, 2018

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where 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. I am Dave Ramsey, your host, and it is a free call. Some say the advice is worth what you pay for it. The phone number is 888-825-5225. That's 888-825-5225. Elizabeth is with us in Portland, Maine.

Hi, Elizabeth. How are you? Hi, I'm good, Mr. Ramsey. How are you? Better than I deserve. What's up? Well, thank you so much for taking my call. I'm pretty fortunate in my life, but I have made many, many mistakes, of course.

Who hasn't, I guess? But I grew up in upper middle class family with my family making a lot of the same mistakes as I've made now and never really received a financial education. And I have a young daughter who's just about eight years old, and I want to know, or I'm not sure, how do I start with her? You know, I've kind of dabbled around in allowances and helping her try to save money of her own, but I don't think she's getting it because I'm not teaching it the right way. And what would your advice be for someone like me just kind of starting out with her?

What a great question. What a good mom. Very well done. Very well done. Well, there's two major areas. Number one, Rachel Cruz always says when it comes to teaching kids, more is caught than taught. They're going to see what you do, and they're going to do it. No matter what you teach them.

If you're not doing it, it's not going to see what you do and they're going to do it no matter what you teach them if you're not doing it it's not going to happen and so you know when we were giving and sitting in church and putting a a tithe check in the plate as it comes by we made sure the kids put the check in they saw the family systematically week after week after week being generous they saw the family systematically week after week after week being generous. They saw the family saving up money. Oh, we can't buy the boat yet. We don't have the money for the boat yet. We can't buy a different car.

We're waiting for a vacation. Do we have the money? We're saving up. We are on a budget. Here, look. Watch our budget. Look at our budget. And, you know, as they got a little bit older, I actually helped let them write out some of the checks.

That was back in the day you actually wrote checks out and that kind of stuff. So we involved them in the day-to-day rhythm of us doing money well, not perfectly, but us doing money well, in generous and saving and giving and generosity and saving and budgeting, of course, staying out of debt, those kinds of things. Ramsey's don't borrow money. It was just period. I mean, it was just like a tattoo they had to get or something, you know, so that kind of stuff. So more is caught than taught is one side of the equation. Make sure you guys are living it, but live it in front of them.

A lot of parents do a good job, but they keep everything a secret. And don't keep it a secret. Make it part of the rhythm of life that they see you doing these things. And you point out teachable moments in your actions. And it's out in the open where they see it. And they're not to brag about it to their friends. It's inside the family. It's a private matter.

But mom and dad want you to see that you have a mutual fund. And here's the statement. It came in the mail today. And let's look at it. And that kind of stuff. I'm saving for your college. This is a mutual fund. And here's the statement. It came in the mail today. And let's look at it and that kind of stuff. I'm saving for your college. This is your college fund. Oh, here's how you calculate what it's worth.

The share price times the number of shares tells you how much money is in there. Wow, that much money is in there, Dad? Yeah, we've been saving for you to go to college for a lot of years. Oh, wow. Okay. And so simultaneously, I was brainwashing them that they're going to college. So anyway, all of that, that's just kind of the rhythm of life part of it. The second part of it is the very hands-on tactical part of it. And this is where people think they need to be like super rules-oriented or something.

You don't, but you just need to, again, be steady at it. Ramseys weren't even perfect at this every week, but we were steady at it. And there's four things everyone needs to learn with money. Everyone. And some people haven't learned them when they're 54, some haven't learned them when they're 8. So number one is work. Money comes from work. Now, we don't send a three-year-old to the salt mines, but when they pick up one toy and you pick up ten, we call that cleaning the room, right? Sure.

When they're three, there's a lot of grace involved, okay? Anything they do right, we just go, yeah, you're a rock star room cleaner, you know, right? And you give them a dollar right then, okay? So you get money when you work. I know 50-year-olds that don't know that you get money when you work i know 50 year olds that don't know that you get money when you work and so we quit calling it an allowance allowance sounds like like welfare or something you know we started calling it commission your own commission you work you get paid you don't work you don't get paid we got a little bit more sophisticated as they got older and gave them

like five chores to do and they got a dollar each per chore. Some things you do just because your dad said so and you love your mom. Some things you do because you get paid. But not everything's a paid gig because you're in the family, you're part of the family. But some things you get paid for because we want to teach you money comes from work. Then once you get money that you, in quotes, worked for, because they never really bring enough economic value to justify paying them anything, but we're just trying to create teachable moments, okay?

So they quote, unquote, earned it. But they got money in their little hand that they earned. And then you teach them the other three skills, which is giving, saving, and spending. Wise spending with money that you have. If you don't have the money, you can't buy it. You have to wait. Being generous. And it's not giving all your money away.

It's systematically, steadily making giving part of the rhythm of your young life. And then, of course, saving. And we have to have something big that we're saving for. Eight years old is old enough to start saving for your car. At our big that we're saving for eight years old is old enough to start saving for your car at our house we didn't buy the car we would not buy your car paid for your college education paid for everything else we wouldn't buy your car we did agree to match we laughingly had 401 dave and so whatever you saved up you we would match it and so and i'll suggest from having done this very with experience that you put a limit on that

because some of these kids get a little out of control. One of mine did, and the match was kind of ludicrous. So, you know, put a limit on it, like, you know, $10,000 or something because $20,000 is enough for a 16-year-old car, I'll tell you. So that's plenty. And that's assuming you can do that. But, you know, so you've got a long-term goal to match, a short-term goal to spend, and to give. So when they're giving, they are experiencing what generosity feels like with money that they, quote, unquote, earned.

And that's the basic construct of the Financial Peace Junior Kit that I'm going to give you. And it's got the dry erase board for the refrigerator door. You and the child can figure out together what chores you get paid for and what you do because you love your mom. And there's some of each. And then you check them off and you get paid. If you don't do the work, you don't get paid. And so on.

And it's got the three envelopes in it, the giving envelope, the saving envelope, the spending envelope. They're clear so the child can see the money build up. They're very rote the way they learn this. It's very concrete learning. And so this little kit will really help you do that. I'm going to send you one of those. And then the number one bestselling book is Smart Money, Smart Kids.

And it's also a course that soon will be part of Financial Peace University for teaching kids, teaching parents how to teach their kids how to handle money. So hold on. I'm going to give you a Financial Peace Junior and a Smart Money, Smart Kids book. That's like a college course I just gave you on how to teach your kids how to handle money. But it's really good for our listeners to hear. And I really appreciate your great question. And you can do this when they're 16. It's a little more in-depth, a little more nuanced, a little more layered.

When they're three, it's very primitive, very basic. Keep it simple. It doesn't have to be a lot of money. You just create the teachable moments, and you enforce it. You make them brush their teeth. You make them do their homework. We're going to make you learn about money so you don't live in my basement. This is the Dave Ramsey Show.

One third of American households have no life insurance and half of the remaining households don't have enough. The main reason people don't have coverage is they think they can't afford it. They don't know what kind or how much to buy, and they're afraid of making the wrong decision. Listen, it's not that complicated. If you have a family that's depending on you, you must have term life insurance. Rates are at an all-time low, so price should not be an excuse. Stay away from cash value whole life plans. I recommend 15 or 20 year level term insurance plans and you need between 10 and 12 times your income. I've been sending you to Zander Insurance for almost 20 years.

They shop the top companies to get you the best rates and keep the entire process simple. Call 800-356-4282 or go to zanderinsurance.com. Take the time to take care of your family. Call 800-356-4282 or go to zanderinsurance.com. Travis is with us in Chapel Hill. Hey, Travis. Welcome to the Dave Ramsey Show. Hey, Dave. Thank you for taking my call.

Sure. What's up? I have a question. My wife and I are looking to buy a new house. Currently, I'm driving an hour to work, and we don't live in the best of neighborhoods. We currently have a two-year-old child. So when we purchased our first property, it was kind of just a house for us. But now that she's going to be starting a school in a couple years, we want to go ahead and prepare for that.

So you would move closer to work and in a better school district? Correct. Okay, got it. My wife's only driving 10 minutes right now, so we're kind of looking somewhere in the middle, where it's equal distance. We currently have $60,000 in student loan debt. What's your household income? $110,000.

Okay, very good. Great income. How old are you guys? I'm 34, and she's 30. Perfect. Very good. Well, it depends on what your goals are as to what you do, okay? If your goal is to build wealth, which is what the assumption I always make is in this process,

not at the expense of everything and not at the expense of being completely outrageous, but if your goal is to build wealth, you follow the data points and the processes of people who have actually built wealth not people who are broke and have opinions about money okay correct and so um what what we have found is uh two things that show up in your conversation with the millionaires that we have studied one is the millionaires typically get their home paid off in an average of 10.2 years and from the time they start their financial plan, okay? Now, some of them started at 30, some of them started at 25, some of them started at 40, you know, but from the time they started, they paid off their house in about 10, 11

years, something like that. And that's why we put folks on a 15-year fixed and have Baby Step 6, where you throw everything extra at the money, you know, at the house once you get to Baby Step 6. And that should get you there. The second thing is that we have found that they get out of debt and they avoid debt of all kinds other than that mortgage that they pay off very quickly. Okay? Because the debt is a barrier between you and your ability to build wealth.

So having said all of that, then, what does that lead me to tell you in your situation? If I woke up in your shoes, I would move now. I would sell your house, and I would move to the area that's going to be the area you want to live in, and I would rent. Okay. And I would pay off that student loan. What's your home worth? It's worth $140,000. We owe about $70,000 on it. 000 on it oh ding ding you're out of debt correct if you rent ouch correct uh we he's thinking to himself how am i going to sell my wife on this yeah this is the right this is the shortest path, okay?

The Ramseys did it. We moved for school districts, sold our home and rented for two years. It was very difficult emotionally. I come from a real estate family, and I've owned rental property most of my adult life as a landlord. So the idea that I was a renter just about drove me into the padded cell, baby. But I did it for two years because it was the right thing to do to get on solid foundation it's not going to take you even two years it's going to take you about a year so you build your emergency fund of three to six months of expenses

you build your down payment and a year later you buy your house but you rent something cheap and inexpensive and this is an adventure and then you're doing this the wise way. And if you want to do it another way, you can, but the data tells us, and my 30 years of doing this, coaching people on how to become wealthy, tells me as well that the shortest distance between two points is a straight line, and that's avoiding debt and setting yourself to be in a position to pay off your home in about 10 to 11 years, and that's going to and setting yourself to be in a position to pay off your home in about 10 to 11 years. And that's going to put you on track to you should reach millionaire status in about 14 years from where you are right now. And that's with no raises.

If your income goes up dramatically, you probably make it in about a decade, about the time your house has paid off. But if you keep the student loan around like it's a freaking pet, you're going to limp along and you're going to be a normal broke American that bought a house and kept your wife happy. So that's what you've got to be careful. You've got to be careful. Live like no one else so later you can live and give like no one else. Julie's in St. Louis, Missouri. Hey, Julie, how are you?

Good. How are you, Dave? Better than I deserve. What's up? So we are just starting Baby Step 1. We have about $120,000 in debt. And before we started, I was planning to go back to school. Previously, I was a teacher.

Currently, I have my own in-home daycare, but I don't want to go back to teaching. So I was going to go to school to be a radiation therapist, which would increase my salary. But now that we're starting with steps, I'm thinking maybe I should wait to go back to school. So what is your household income? Before taxes or anything, we're at about $70,000 right now combined. And what is the $120,000 in debt on? I've got $84,000 in student loans. Oh. Yeah. $17,000 on a van that we bought, $17, 17 in credit cards, and then there's about $1,500 to $2,000 in medical bills. Okay. If I'm wrong, you tell me, but I kind of think you're going to be a radiation therapist because you just want to make more money. Well, my original plan was I wanted to get

into something in the medical field. How old are you? I'm 34. When you're 54, what do you want to be doing for a career? For a career? You do anything you want to do. It's America. Travel the world? No, I said your career, not your leisure.

What do you want to be doing to earn money that is going to pay you really good money and that you get up every morning smiling because you get to go do that not got to go do that um i mean honestly i'd like to do something where i was the boss but i'd like to run your own small business possibly any idea in what field not really okay i want you to explore that a little more and not waste your money on radiation school okay because it's not what you want to do yeah you just picked out something you thought you could get a job in and make money, and you decide you didn't like teaching. Yeah. And so I want you to have a bigger view, a more noble view of your life,

and let that inform what classes you need to take. Okay. I'm going to send you a copy of Christy Wright's business boutique book, Equipping Women to Make Money Doing What They Love, because it very well might be that you should spend the money you're getting ready to spend on radiation school on setting up and starting your small business idea that's not a daycare. Okay. I don't know what it is, but I want you to spend a little bit more time and effort on this

than you have in that old bucket of soul searching, searching down in your soul, talking to your husband and say, what would you see me doing that I came home every day smiling because I was doing it? Okay. And that's really, that's by the way where you're going to make the most money because you're going to be the most energetic, have the most passion, have the most creativity around something you actually like. Now, in the short term, daycare is not making you any money.

No. I might go back to school teaching for two years as step one to get to do my dream job and because i can make more money and get our house out hold out of debt faster okay just knowing that it's only for a two or a three year stint because the faster i get out of debt, the faster I'm going to have the money to live my dream job, whether it's with new training or starting a business, whatever it is. But you've got a big weight hanging over your head from the last set of education decisions you made. Yeah, let's talk about cleaning that up, at least be underway cleaning it up, making good money towards cleaning it up while you pursue the next thing and give more thought to pursuing the next thing.

Hold on. Kelly's going to give you a copy of that business boutique book. We'd love to have you enjoy that. Check out Christy Wright, everything she's doing. She's a Ramsey personality. It's a number one best-selling book. Ladies everywhere gravitating to this business boutique movement, equipping women to make money doing what they love.

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That's ZipRecruiter.com. Slash Dave. In the lobby of Ramsey Solutions, Scott and Katie are with us. Hey, guys, how are you? Hi. Good. Welcome, welcome. Where do you guys live?

Eden Prairie in Minnesota. And what's that in here? Minneapolis, a suburb. Perfect. Okay, cool. Welcome to Nashville. Thanks. We're going to get to come to Minneapolis and do an event in the fall.

It's the first time we've been up there. I've been up there. Yeah. First Minneapolis and do an event in the fall. It's the first time we've been up there. I've been up there. Yeah. First time to do an event I've done there. We've had some events there, money and marriage last year. Yep, we went to that one. Oh, cool. Yep.

Welcome. So how much debt have you paid off? About $45,000, and that also includes $15,400 in continuing education that we cash flowed. Very good. Very cool. So like $60,000 out of pocket over what period of time? It took about 30-ish months. Yep, 30-ish.

Okay. And your range of income in the 30-ish months? Well, we started off about $30,000 and then we moved up to $75,000. Whoa, doubled your income. How'd you do that? We graduated. Oh, okay. That's the continuing ed part.

Yep. So money well invested. So what do you all do for a living? I'm a medical receptionist but i'm going to apply to physical therapy school in july all right uh-huh pt and then i'm a structural designer okay very cool very cool and so both of you uh came through a level of training and that level of training whatever it was associates or four-year whatever brought your brought your incomes way up. Yep. Very cool.

How old are you? I just turned 26 a couple days ago. Okay. And I'm 28. Okay, cool. So how long have you all been married? Almost two years. Almost two years.

So this started before marriage. Oh, yeah. Yeah, we weren't even engaged yet when we started all this. Okay, so you're working individual plans and then combine them after the wedding and just game on, right? Game on, yep. Well done. Very cool. So how did this discussion start? You're not even engaged yet and you're both like, we're going to do this plan together. That's wild. Tell me about that. Yeah, so I was studying in Chile to finish off my last year of undergrad and within the last like two weeks before I had left, I had to ask my parents to borrow $180 because I couldn't make it through the whole entire trip. So that

was hard. But then when I got home over Thanksgiving, my Uncle Mike and Aunt Kim, they were the ones who really got us started on this. They gave us the complete guide to money. And then my Uncle Mike told us his plan. He was the guy that was buying all the cars. He was buying everything to impress his wife. And his wife says, that's not what this marriage is about. We don't need to be doing that stuff. So yeah, she told him and he learned the hard way that that's not how we're supposed to do it. So hearing his story and then talking to each other about that, I think really started us off on the right foot, even though we weren't even engaged yet. Wow.

Yeah. Okay. So, Scott, you're sitting there listening to her family tell these stories, and you're dating this girl, and you're going, I think I'm getting sucked into this deal. Most definitely. Yeah, I was alone with all the debt, so he definitely got sucked into all of it. Oh, okay. So the whole thing was you? Yeah, Paul's student loans.

Oh, just you? Yeah, just me. Wow. Wow. Okay. Very it. Oh, okay. So the whole thing was you? Yeah, Paul's student loans. Oh, just you. Yeah, just me. Wow. Wow. Okay. Very cool. And so when you got married, it just went into overdrive, or was it harder after you got married?

At first, it was harder, definitely, to combine everything, because we had been easily making our own budgets and just being each other's partners with that. So when we got married and combined everything, that was hard at first. But then afterwards, you saw, like combining our incomes even, we could see how much more we could pay off and in a faster time. She got a good pay raise. When I married him. That's what he likes to say.

That's true. No debt and an income. You were handy to have around, dude. Yeah, thanks. Very, very cool. What do You were handy to have around, dude. Yeah. Thanks. Very, very cool. What do you tell people the key to getting out of debt is? You cash flowed basically 60 grand, about two grand a month for 30 months. I would say the key for sure was the budget.

I know everyone says that. Because it's true. Because it's true, exactly. And it was probably also being able to talk to each other about everything. Because you see so many people who are going off of two separate pages, and that's what ultimately doesn't work. So when you get on the exact same page, whether it's a paper budget or you're using the EveryDollar app, you're on the same page. You see what each other is doing, and then you talk about it. And that's what the key was, I think.

Okay. Yeah, and staying focused, too. Yep yep that was probably the hardest part in general we had to say no to a few vacations yeah a few paid for vacations oh yeah that you would have had to just pay for or we lost the income while you were gone yeah yeah that was it oh that's tempting it's so very hard that was also probably when you go on vacation. It's so bad. That was very hard. That was also probably. When you go on vacation, you usually want to spend some money. Yeah. I mean, you're just leading yourself down a bad path.

Yeah, and you're not making money while you're doing it. Nope. Usually. Usually. Nope. Well done, you guys. Very well done. Was it worth the sacrifice? Oh, yeah.

Because we're not even 30 yet, and we still have all this stuff to do. Yeah. Which is awesome. Yeah, you're making $75,000 and no debt. No debt debt no debt no payments no nothing i love it yeah very cool very cool well it's an honor to meet you guys very very well done we've got a copy of chris hogan's retire inspired book for you number one best seller and i think he'll be with me when i'm in indianapolis doing that smart conference or smart uh money event in the fall. And so make sure you check it and make sure it's signed.

They're all supposed to be signed when we give you one of those. And that's the next chapter in your story for you to be millionaires. I think that's coming in your future. Yep. You guys have a plan. This is awesome. Yes, it is. And outrageously generous as you go along, too. So well done.

And tip of the hat to old Uncle Mike for telling his story. Oh, he's going to love that you said that. I love you said that i love it that's a proper way to convince somebody don't tell them how dumb they are tell them how dumb you were exactly yeah that's exactly what he did we needed to hear it from someone other than he didn't shame you he just told his story exactly very good very good well done you guys scott and katie min, Minnesota, $45,000 paid off, plus another 15 cash flowed in 30 months, making $30,000 to $75,000. Brand new married. Count it down.

Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! Yeah! This is how it's done, ladies and gentlemen. This is how it's done. Wow. Fabulous.

Marie is in Indianapolis. Hi, Marie. Welcome to the Dave Ramsey Show. Hi, Dave. It's an honor to speak with you today. You too. What's up? Well, I'm actually calling from my mother. She's kind of hard with articulating English, so I wanted to help her. She is 64 years old. She's been a housewife,

like, I would say about 30 years, like ever since we were kids. And she just started working about three years ago. And so we had her start a Roth IRA in the bank and we recently spoke to the banker because she wanted to add up like her tax money into that and they were telling her that she can no longer add to her account they said there was a law or a regulation that has recently changed and they told us that the workaround would be to increase her contribution at work for her 401K. How old is your mother? She is 64 now.

And she has an earned income? She does. Okay, and how much was she trying to put into her Roth IRA? It's probably like $1,000 she was trying to put in there. So basically her IRA is just like less than $1,000 for now. Oh, okay. The banker lied to you. There is no law or regulation that passed that keeps you from putting $1,000 or $2,000 at 64 years old if you haven't earned income into a Roth IRA.

The regulation that did pass is that caused some banks who are doing investments, which is a questionable thing to start with, to be regulated in such a way that they don't want to screw with small accounts like this. And so they were running her off is all they were doing. What you need to do is just go to DaveRamsey.com and click on smart vestor and find a smart vestor pro in your mom's area that will meet with her and help her so what is her her language if English is not her first language what is her main language it's um Tagalog it's in Asian, in the Philippines. Okay, okay. Yeah.

All right. But, yeah, and also I was wondering if there's any, like, as her daughter, is there something I can help her with as far as, like, getting ready for her retirement, for her health care needs when she's older since, like, basically she's just now starting everything? Yeah, I'm going to walk her right through the baby steps like we always teach, which is make sure she's out of debt, she has her emergency fund in place. If you want to check about some of the supplemental health things and health insurance in general, you can check with one of our endorsed

local providers, again, at DaveRamsey.com. We're not in the insurance business or the investment business, but we have those networks set up to endorse people and send you to people we feel are safe because we've done the due diligence with them to teach you and they'll walk with you in the insurance side and then over in the investment side hey this is Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another.

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That's CollectionBully.com. Our question of the day comes from blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure or you pick the wrong color, if you screw up, they still remake your window blinds for free. Site-wide savings are happening right now, plus an additional 5% off of blinds. Blinds.com slash Ramsey. Blinds.com slash Ramsey. Tyler is in Illinois.

Thank you for your guidance in Financial Peace University regarding the different types of insurance. There's one type of insurance I've never heard you talk about that I'm interested to hear what you have to say about self-defense insurance or concealed carry insurance. Well, I haven't talked about it, Tyler,ler for two reasons one is i don't have it personally um i am a firearms enthusiast i uh carry almost a hundred percent of the time that you see me at least where it's legal for me to do so obviously if i'm in californ New York, I'm not able. But otherwise, if you see me, I'm just about always armed. The type of what I have personally done and what I've done with our team here is we've done extensive handgun training, active shooter training, and how to properly handle a firearm and basically how to avoid ever having to use one, like run as an example.

The chances of me being aggressive with a firearm are almost zero after the training that we've had. It will only be to save my life or someone very near and dear to me's life. The chances of me doing otherwise with a firearm are zero after as much time as I've spent on this. So that's the way I've invested in insurance, so to speak. That's not to say you shouldn't do both. Possibly you could do both. The type of insurance, you know, this falls under really the category of gimmick insurance. And with gimmick insurance, oftentimes what you get is the idea of coverage but not actual coverage.

Now, I've not read these policies, so there may be some that have actual, decent, real coverage. But estimates are in the firearms community that if you actually, God forbid, were to have to use your firearm and someone were to lose their life, even if they were a criminal in the process of trying to kill you, it probably is going to cost you a million dollars if you have it in defense. It's the process becomes just unbelievable, even if it's self-defense. And so a clear cut.

So, you know, I don't know if that's accurate, but that's what people talk about in that community that it's, you know, again, as a deterrent to ever use a firearm, if there's any possible way to avoid it. So, but anyway, the, so if you are going to buy it, I would want to go into great detail about what it does cover and what it does not cover, and then are you getting value for that, and are your likely scenarios actually covered? This falls under the heading of stuff like extended warranties and those kinds of things. Usually, I've not had good experience reading through the policies. Again, I've not read these particular policies.

There may be some good ones out there. There's certainly going to be some that are better than others. But are any of them worth it? I don't know. I don't own one. And so that's why I haven't brought it up. I don't endorse stuff or tell people to buy things that apply to my life that I don't buy.

I don't tell you to buy identity theft protection, uh, from Zander insurance unless I bought it, which I did buy it from me, every one of my kids and every one of my employees, 742 of them and so it's um you know uh so i don't you know i could speak very well into that i do know that product line i do know what the competitors are selling and i do know that zander has the best product on the market and to prove that i bought it um so you know that that's how i do endorsements. I don't need advertising endorsement money badly enough to endorse something that I don't personally believe or use. And so since I've not dove into this, there may be some day they may bring me some proposal, and I'll learn about it, and I'll do it. I'm not saying it's evil, but it falls under a heading of insurance that it's not drawn, it's not caught my eye,

and I've not personally done it, and that's my reasoning, even though I am a firearms enthusiast. And I know that some of you are very scared about that, but some of you live in areas of the country or grew up in families or in political affiliations or situations where you, for me, a firearm is more like having a shovel in the garage. It's been a part of my life my whole life. And so I have no fear of that at all.

And so it's just a simple, you know, it's like driving my car to work to put my firearm on in the morning. I don't think anything about it. I'm careful. It's obviously a dangerous thing, and you have to be very careful with it. But some of you don't understand that. And I understand that you don't understand, but that doesn't mean I'm not going to carry one just because you don't understand. So, I mean, it's okay. And I'm not listening to the Dave Ramsey show ever again.

Well, that's okay. You can do that too. That's, you know, free country. Because we have firearms. Oh, not really, but it's a great joke. All right.

Hiale is with us in Los Angeles. Hey, Hiale, how are you? Hi, Dave. Thank you for taking my call today. Sure. What's up? I have a large student loan. It's $ hey, Hiale, how are you? Hi, Dave. Thank you for taking my call today. Sure. What's up? I have a large student loan. It's $52,000 at 6%, and I'm thinking about taking a TSP loan at an interest rate of 2.8 to pay off some of it. I can only take out about $28,000.

What's your household income? $88,000. Mm-hmm. Okay. And how much other debt do you have? I have a car loan that's $10,000 and $500 roughly in a credit card. Okay. So you said $88,000 income and a $58,000 student loan.

It's $52,000. $52,000 income and a $58,000 student loan. It's $52,000. $52,000. I'm sorry. So $62,000 gets you out of debt, and you make $88,000. No, I would not do this. What I would do is get on beans and rice, rice and beans. Don't see the inside of a restaurant unless you're working there. Take six extra jobs, have no life for two years, and become 100% debt-free within two years.

If you do that, the interest rate calculation that you're majoring on in this discussion goes away. It disappears. There's no advantage virtually. It won't buy you a biscuit to have refinanced this loan. The refinance of the loan only makes sense if – it makes the most sense the longer you keep yourself in debt. And my goal would be to turn up the heat to boiling over hot as you can possibly stand it in your life and clear that debt.

And I think you could be debt-free in two years, and that's what I would do. I tell people not to borrow on their retirement account unless it's to avoid a foreclosure or a bankruptcy because if you no no when you leave your company or your position and you will leave your position when you die get a better job or get fired one of those three things will occur when one of those three things occurs not if uh you will have that loan called due in full if you have not repaid it, and it will, you know, you'll have all the taxes and the penalties. You'll be hit with 30 to 40 percent on this thing, and it's just, it creates a disaster

in your life at the worst possible time. And so I would avoid borrowing on retirement, almost at any cost, but certainly unless it's to avoid a foreclosure or bankruptcy. You're not facing that. You're just trying to get out of debt. So that's what I would do. Hey, thank you for the call. We appreciate you joining us.

Open phones at 888-825-5225. Justin is on Twitter. Same question. Would you ever consider taking out of a 401K to put a down payment on a rental? No. Never. We don't cash out a 401k and get hit with a 10% penalty plus your tax rate of 30%. So a 40% hit.

They want to borrow money at 40% interest to put a down payment on my rental. That's what you just said, dude. You didn't realize you were saying that, but that's what you just said. Really, really, really bad idea. No, slow down. Slow down. Build wealth. Build wealth.

Build wealth. Slow down. Get in a hurry. You get in debt. You can't breathe. This is the Dave Ramsey Show. Hey, guys. This is James Childs, producer of the Dave Ramsey Show.

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