The Ramsey Show - App - A Crash Course in Supply and Demand Economics (Hour 2)

Episode Date: April 20, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-825-5225. Chris Hogan, Ramsey personality, number one bestselling author, the trusted voice of finance in North America, joins me to answer your questions. Chris, oil has taken a dive down to a penny a barrel,

and it's dragging the stock market down today as we sit here. It's exciting. A penny, Dave. I don't recall that happening. I haven't gone back and looked at any historical data, but I just emotionally don't recall that happening ever. And I think it's a good time to stop and use this as an example. A, it'll be fine.

It's temporary. Why does it drive the stock market down? Because it affects Exxon. It affects Mobil. It affects all the big oil stocks, the stock market down? Because it affects Exxon. It affects Mobil. It affects all the big oil stocks, and they're part of the Dow Jones Industrial Average. So the market's down as we're sitting here right this second by 500 points and losing a little bit of ground. It had regained as people started gaining confidence that someday this whole thing's going to be over with the coronavirus shutdown. But here's the lesson, folks.

Oil is a commodity. why has its price dropped a commodity works like this a simple in seventh grade you should have been taught this but some of you weren't it's called a supply demand curve and when supply crosses demand, that's where price is established. And so if you think of an X, one line going one direction, one line going the other direction, that's a standard supply-demand curve. Now, what this sounds like is common sense if you think about it. If there is a huge oversupply of things, prices go down. If there's a shortage of things based on the demand, and that's the only way there would be an overage or a shortage that's right is based on demand then prices go

up okay so why is oil down everyone's sitting at home you're not supposed to be out there driving your car. And so the largest consumer of gasoline in the world, the largest consumers of gasoline in the world, the developing countries, the developed countries, if we call them that, the United States of America, by far the largest, China the second, and the United States of America is sitting at home. Yeah. And so consumption is, you know, there's a huge oversupply. The old saying, you can't give it away. Right. And they're trying at a penny a barrel to give it away. Now, translation is that should show up in gasoline prices after it's refined, after the oil is refined in 30 to 90 days. You should see some of that happen.

The oil prices also dove when Russia got in an argument about oil with Iran a few weeks ago. You guys remember that. It was in the news. It was way down below in all the coronavirus panic stuff, but it was in the news. And what happened was, is they couldn't come up the cartel says we're going to control the spigot we're going to control the supply and we're always going to have enough of a shortage that we keep the price up there so we turn the spigot down and don't let

as much out or we let a little more out they control the price with the supply based on worldwide demand what they couldn't control was that worldwide demand came to a screeching halt, and Russia and Iran get in this little argument and decide to throw a bunch of oil on the market. So we've got double dips on extra supply, supply on supply on supply on supply on supply. And so it would be like if we overbuilt houses and there were houses sitting everywhere for sale and there were no buyers guess what house prices would do welcome to 2008 that's right they went down yes so commodities are homes are a little different but commodities like oil around the stock market uh this is why we tell you not to buy gold okay the the demand for it drives the price and not the actual oil doesn't actually create

money the barrel of oil doesn't it eventually does once it turns into gasoline and or an oil refined product of some kind but the barrel of oil is traded based on supply and demand gold is traded based on supply and demand and there's a higher demand when people are greedy or afraid for gold. And that's the only thing that drives gold prices versus a share of Dell or a share of McDonald's stock or a share of Home Depot stock or a rental property actually creates money. They actually create money. They're not a fixed item. And so diamonds are a gemstones are a fixed item a supply shortage of those drive the rarity of them drives the price up yeah well i can remember in 07 through

09 the whole talk of gold okay that that became you know people were you know i need to buy gold i need to buy gold i'm thinking no you don. I'm thinking, no, you don't. The value is man-given. There you go. It's not math. It's not math. You could not roll into a grocery store with a gold nugget and get anything. No. Except arrested.

But it's interesting. I've never heard of oil being at almost zero. That blows my mind. Yeah. It's probably going to take some of the folks you work with on Fox Business, Maria and those guys. Their heads are probably exploding right now. Oh, yeah. Because it's a very unusual anomaly.

But it has to do with the supply, extra supply. The spigot got turned on by Russia and Iran because they wouldn't observe the cartels limitations and um the uh uh but they control the supply and demand and so you know and then everybody quit driving so there's this huge oversupply of oil it's everywhere versus a shortage of it would drive the price up i mean i've seen oil prices approach 200 a barrel and now it's down to a penny i mean it usually hovers around 100 or so you know in that range in the last few years anyway but oh my gosh i mean just supply supply supply supply i wonder what else we're not using that there's a huge oversupply of or a shortage of that we are overusing right now.

You know, I mean, the things that Americans are consuming because they're at home, the things they aren't consuming because they're at home, what else it's going to do? Because that's really what this is. It's a supply-demand curve. The demand has either greatly increased or greatly diminished. It's greatly increased for delivering things to your home. It's greatly diminished for eating in a restaurant. None of them are open. That's right. You know, and that's going to impact the restaurant market severely. And, you know,

those that are out there that are smart enough, I talked to a few of them, Dave, that are plugged into our Entree Leadership, which is our leadership and business owner information at EntreeLeadership.com. But these restaurant owners have been smart. They've pivoted where they can't have people eating in the restaurant, but they're delivering food to people that they can cook in their homes, and that's necessary. Several of my friends that own restaurants and are chefs and so forth are doing all kinds of stuff right now, pivoting to cause that to happen. So that's what's happening with the market out there.

There's some other things in the news Chris and I will get to today. A lot of the people having their stimulus payments scarfed up by debt collectors. Hmm. Something we probably ought to talk about. I don't think that was the intention of the

American taxpayer going another $2 trillion into debt for the American taxpayer. I don't feel stimulated just not feeling stimulated it's a problem it's just a problem this is the dave ramsey show Business leaders, hiring right now may be the furthest thing from your mind, but the fact of the matter is we will recover. One of the smartest things you can do for your business is to be prepared. I want you to know that my friends at LinkedIn are ready to help you find the right

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Terms and conditions apply. Panar joins us from Arizona. Hi, Panar. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. How can I help? So I want to ask you whether it's smart to take a personal loan to finish a backyard with a pool or pay cash for it or not even do it.

I started to follow your steps last year and we make decent money. And my next goal is to nail down the house. That's the only that we have. But then I forgot we actually have a backyard, and it's not finished. We have $15,000 cash between me and my husband. We can use it, or because we have separate financial account and everything, I do have some extra cash I can do pool, but it's a lot of investment, a lot of money, so I want to hear what you think

the only way i would do it is if you pay cash for it otherwise you need to just landscape the backyard and forget it uh and the only reason you would put in a pool is twofold one is you would enjoy it and two is there's enough pools in your neighborhood that it raises the value of your home close to what you spend on the pool it almost never raises it what you do spend yeah but it will raise it some in some neighborhoods but if you're if you're the only home in a mile radius that has a pool um it won't raise it at all but if most homes in your area have a pool and you don't you may see a kick of what you spend if you keep a reasonable budget on a pool um i mean you can spend 300 000 bucks on a pool you have to be careful yeah

uh and so you know what you know i would talk to a good real estate agent and say okay how much of this can i plan on recouping and then you say okay the amount above that i've got to enjoy it that much while I'm here, which is $1,000 an hour to swim in this thing, or what is it? I mean, what's it cost you? And you've got to look at the joy of it as part of it. But I would never do any of it without paying cash. Chris?

Yeah. But now, how much are you planning to spend on this pool? What's the budget? We're hoping to do $45,000 to $55,000. It's a pool and a spa. We want to stay in that budget, but I think after tax and everything probably it's under $60,000. I think $60,000

is my limit. My home is $380,000 to $400,000. So you're going to increase your home value by 15% with a pool? I doubt it. Yeah. Okay. How much longer are you're going to increase your home value by 15% with a pool? I doubt it. Yeah. Okay. How much longer are you all planning to stay there?

I want to stay as long as we can. Yeah, I want to stay until we retire as grandparents having a pool. Right, right. But now you said something else that caught my eye. You know, Dave and I, we listen and pay attention. Why do you and your husband have separate finances?

You know, this is his preference. Unfortunately, we don't have a perfect marriage. I don't feel like we have, I don't know. I don't think we have the trust. And, you know, there are some cultural issues, too. I'm not, I'm originally from china i'm a big saver um and me and my family were very close and we helped support each other we never take loans um we try to pay cash for everything um and um yeah i at the very beginning of our marriage

i wanted blending everything but he didn't want to. So we kept it that way. It hurts sometimes, you know, when you have to talk money with your spouse. While I was listening to your shows, one of the biggest things, you know, you guys value family a lot. And unfortunately, we're just not a couple that are getting on the same page all the time.

And you guys have been married how long? Nine years. Okay. Three children. And how much debt have you all paid off together? Ballpark. I don't have any debt when I stepped in this marriage. I encourage him to pay off his car loans and his student loans and everything,

and we just refinanced our house. Unfortunately, we cannot do 15 years, and you cannot imagine how long it took us to refinance because he doesn't want to. Yeah, it took us almost five months to refinance. Well, I think all of those issues are much bigger issues than the pool, and it's something, if I were you, I would be working on. But aside from that, the pool answer is cash or don't do it. And B, I would talk to a real estate agent and say,

if we spend $50,000 on a pool, which is, you said, $45,000 to $60,000, if you spend $50,000 on a pool, what is it going to increase the value of our home? And if they say $10,000, then you know this is a bad idea. If they say it will increase it $30,000 and you're going to be there a few years, then maybe you get $20,000 worth of enjoyment. But that's something you guys just need to say. We're going to, the amount that you call enjoyment, we're going to blow that money. Just blow it.

We're just going to consume it. It's like going on a vacation for $20,000. Right. We're just going to consume it. It's like going on a vacation for 20,000 bucks. Right. We're just going to blow it. And that's an okay thing to do if you have the money, number one, and if you're paying cash for it, and if you've actually said it out loud. I mean, Sharon and I look at doing some things. We've lived like no one else now. We live and give like no one else.

And so there's times that we look at a trip and we go wow that's super luxurious super expensive i grew up in antioch tennessee that feels very weird to spend that much money on that and then we go well here's how much we gave last year you know ministries and here's how much we spend on other parts of our life and here's what our income is and it's really a small amount of all of that so it's okay yeah you know but we have to say out loud we're life, and here's what our income is, and it's really a small amount of all of that. So it's okay. But we have to say out loud, we're blowing that, and that's emotionally weird. We're just consuming that money.

You do need to enjoy some of your money, though. Well, you really do. And Dave, you've taught me and years ago talking about ratios, and it is important. And unfortunately, you know, a lot of people in our society, they will look down upon people who have worked hard and sacrificed hard and enjoy. And, you know, that's where you have to really and truly understand that opinions are like yesterday's. Everybody's got them. And so what you have to do is really stay focused and true to what you're doing and your goals. Cool. All right.

Jeremy's in South Carolina. Hi, Jeremy. Welcome to the Dave Ramsey Show. Hey, Dave and Chris goals. Cool. All right. Jeremy's in South Carolina. Hi, Jeremy. Welcome to the Dave Ramsey Show. Hey, Dave and Chris. Thanks for taking my call. Sure. How can we help? So I've been listening for a while, and I feel a lot better, more confident, and control

my money, and I just want to avoid being stupid in the future, so I'm giving you a call but um I uh need a truck for work and I am kind of ruining the car I have right now using it for work and I'm wondering you know amidst the corona season if it'd be a good time since I might be able to save a good bit of money in the long run on getting a truck if I should go for it right now. I have about $10,000. The car I'm driving is worth about maybe $8,000 to $10,000. And $8,000 to $10,000 that I have right now, I'm going to put in my emergency fund. And my parents said they might be willing to help out

due to the season and give me a loan to them. I know you hate the term loan, but I'm wondering, since I'm kind of destroying this car so rapidly because I'm in home building, I'm wondering if it would be a good time to try to go get a truck. Chris? Well, I mean, as I hear it, Jeremy, you know, one of the things you said was you've been hearing this information and you're wanting to avoid stupid. And so, you know, and I like it, Jeremy, you know, one of the things you said was you've been hearing this information and you're wanting to avoid stupid.

And so, you know, and I like that, man. I like it. Your age. How old are you? I'm 25. Yeah, you're 25 years old. See, you've learned some stuff, you know, right now. Do you have any other debt at all right now, Jeremy?

No, sir. See, that's great. And so what I would do if I'm you is I would look to go buy an eight to $10,000 truck. Okay. Okay. And then in your mind, as you're working and making an income, what's your household income right now? Um, I'm single. So it's, you know, I make about probably I take home about25,000 a year. Okay. So what you have is an opportunity. If truck is something you're serious about, I would get a truck.

I'd pay cash for it. I wouldn't go into a loan with anyone. Or you can wait and keep driving your car and save up to get a better truck. But I wouldn't go down that path of borrowing. I really wouldn't. Agreed. Certainly not for mom and dad. The borrower is slave to the lender and you change your relationship with anybody you borrow money

from. Chris is exactly right. Your emergency fund, any cash you have above that, plus whatever your car is worth, is your truck budget. And by the way, that's about half your annual income and so that's about all you need in a car anyway. I wouldn't have a $20,000 truck when you

make $25,000 a year. That's a bad idea. This is the Dave Ramsey Show. Folks, since you're spending more time at home these days, why not make the most of it? Now, I know not everyone has the means to do a full renovation, but thanks to our friends at Blinds.com, there are some small changes you can make to help improve your home. Blinds.com makes it incredibly simple to shop top quality blinds, shades, and interior shutters from home with easy online ordering and free shipping right to your door. Listen, window treatments are a simple project that you can do that really benefits the look and feel of your home. And if you're nervous about doing it yourself, well, don't be.

Blinds.com has helped millions of homeowners through the process with free design help by phone or online. Plus, they guarantee the perfect fit for your windows. Go ahead and get started today. Go to Blinds.com to take advantage of this week's special offer. Rules and restrictions apply. Joshua and Rebecca are on the phone in Phoenix, Arizona. It says on my screen, you guys are debt-free.

Congratulations. Thank you, Dave. Well done. How much did you pay off? We paid off $42,000 in 15 months. Perfect. And your range of income during that time? It was $49,000 to $59,000.

Cool. What do you guys do for a living? I'm a police officer for the city of Phoenix. And I work for a nonprofit pregnancy support center. Very cool. Very cool. What kind of debt was the $42,000? Dave, we had $30,000 in student loans.

We kicked Sally Mayo and then $12,000 in a car loan. How cool does it feel in the middle of this weird corona crisis to not have a payment in the world? It's awesome. Definitely your plan works in moments like this. It's very evident. We've got our debt paid off. We've got our emergency fund in place. So this didn't really hit us hard at all, to be honest. Of course, we're sad it's happening, but financially, we're set. That's a good way of saying it. It really is. And I am proud of you, too. Rebecca, what was the biggest sacrifice you all made during this debt-free journey? Lots of no's. We both had just graduated college and gotten married when we started this debt-free journey. So a lot of lifestyle changes, especially I wasn't the one coming in with debt. And so learning that we're a team now, this is our debt. And that means we're not entitled to anything and just we we learn to really

appreciate everything we do have um yeah lots of no's to each other what started what started the process 15 months ago is that when y'all got married um no dave we got married about about a year ago in may oh so you started before you got married good okay yes well actually we're engaged at the time. I received a book from my buddy, Cody. He gave me total money makeover. I read it in a couple of days and I was on fire, Dave. I joined the police academy. And during that time, while we're engaged, I was working baby step two, cause I was paying off my car and then the student loans. We pay, I paid off all the car loans, $12,000 in about seven months,

paused a couple months, and then Rebecca and I got married. Ah, very good. Okay. And then we started the journey together. So were you all dating when he found this book, Rebecca? I think we're dating or engaged, about to be engaged, and I was not on board at all. Money to me was just stressful.

That's all I thought. I don't want to talk about it. You didn't have any debt, though. Yeah, that's true. But I had very, very bad spending habits. So that's kind of where this journey was challenging for me. I didn't have debt, but I came from a very blessed family, so my spending habits were not good at all. So I was not on board, and he slowly started, when we were in the car,

hey, can we just listen to this little podcast for a couple minutes about Dave Ramsey? And I'd roll my eye every single time. Not bad. All right, okay. And then we were on board with everything when we were getting married. Morally, our goals in life, but this was the one thing that we still had some differences. And then we got married, and two weeks later started FPU. And all it took was one class, and I was sold.

Wow. I was going to say, you sound too sweet to be a real princess. She's very sweet. She's very sweet. She's very sweet. And Chris, I'd like to just mention something that you always talk about is dreaming together with your spouse. And that's something that I did while we're engaged to try and get Rebecca on board. And that was, we're like, okay, let's dream together. Let's dream about our future. Okay. We want these things for us and our family. All right. Now, how are we going to get there? The budget, the roadmap, the plan. So that's how I told Rebecca on the idea of

working for us. That is fantastic. And Joshua, you sound like a goal-driven young man. What is your dream? What's your dream for you and your wife? My dream is to be debt-free, house and everything, to have a nice, beautiful family and be a loving father and just guide them to heaven. That's what's most important for us. That's good stuff, brother. That is good stuff. Well done. I'm glad you're protecting the city of Phoenix, sir.

Yes. It's good to have people like you two out there. You two are rock stars. Way to go, heroes. We're very proud of you here. So what is the number one key you two learned about getting out of debt during this 15 months? For me, it was knowing that we are capable of doing it. We had a lot of people just talking in our ears saying, oh, you'll never be debt-free,

or, oh, you're not going to enjoy life if you do this. And so knowing we are capable, I think society kind of feeds us these lies that we're not capable of these amazing things. And so I got the motivation from a lot of the debt-free screens, seeing people who are in a lot worse situations than we are, and saying, you know what, we are capable of doing this. It's not an excuse because we want to be lazy and don't want to. We actually are capable of this.

That is fantastic. As you all are, you know, this debt-free scheme you're about to do, you're getting ready to motivate a lot of people. It's amazing. And I want you to just, you know, continue to talk about it with people. I'm proud of you and the sacrifices that you've made. I want you to be proud of what you've done and let people know and keep spreading the word. Great job, you two. We've got a copy of Chris's book for you, Everyday Millionaires, signed by him, because, of course, that number one bestseller will outline your next chapter, what things are headed for you, and that's definitely where you guys are headed.

You're going to be in a position to not only change your family tree, but also to be outrageously generous because you've learned how to handle this stuff. So very, very well done. Joshua and Rebecca, Phoenix, Arizona, $42,000 paid off in 15 months. Oh, while they were getting married, too. $49,000 to $59,000 income. Count it down.

Let's hear a debt-free scream. Three, two, one. We're going to win! income count it down let's hear a debt-free scream three two one there you go baby oh that little lady has got some lungs she meant that scream boy i tell you man i'm free. That is fantastic. You know, whether you're 25 or 28 or 48, there's a process you go through from not handling money to handling money that forces you to emotionally grow up. It forces you to not only believe you can do it, but you have to do it or no one's going to do it for you. And I can't just do whatever I want to do without any repercussions. Yeah, that's growing up. No, it really is, Dave.

And I'm going to tell you something, you know, every time and time again in the 15 years I've been connected with you, people keep talking about the total money makeover, the power of reading the stories of other people that were in worse shape and that they did it. And that that continues to remind people that you can do it too. And so I hope as you listen to these debt-free screams that it just moves you just another ounce of being motivated toward you achieving that for yourself. And I'm not worried about what your family members say or your doubting friends say i want you to be so connected to your dream that you see it in high definition and you refuse to be denied because you can do it too our question of the day comes from blinds.com with a 100 satisfaction guarantee that means even if you

mismeasure you pick the wrong color they'll remake your blinds for your windows for free free samples free shipping new promos all the time. Use the magic word, the promo code Ramsey. Question comes from Aaron in Pennsylvania. Dave and Chris, my wife and I have completed Baby Step 1, our $1,000 starting point, and we're working on Baby Step 2. We cut up all our credit cards except our main bank credit card. My question is this. If we cut up our main bank credit card and then have an emergency such as a major HVAC repair that costs much more than $1,000, where does that extra money come from? Well, first and foremost, it's going to come from work, W-O-R-K.

And so you would lock down the budget. You would take on an extra job. Listen, when you get committed to being debt-free, you don't go backwards. You don't have that just in case. You get to work, and you walk through the process, and you understand debt comes off the table. It doesn't become an option, and you don't ever go back. As long as you leave it on the table as an option, you'll go back. Yep. You have to draw that line in the sand and say, this is the last time I'm ever borrowing money for anything. And until you do that, you may get out, but you'll get back in.

You won't permanently change until you do that. This is the Dave Ramsey Show. if you do this one simple thing that we all do you are literally at risk of being hacked and someone stealing what you've worked so hard for. Do you ever use public Wi-Fi? I'm talking about getting online at a coffee shop, a store, the airport, or even at home. Hackers can use a simple $100 device to mimic Wi-Fi and with just a little bit of skills, they can take over your financial life. This means you may think you're on your bank's site or app or securely making that purchase online, but hackers could see and steal that information. That's why I trust CyberGhost VPN.

CyberGhost thinks about cybercrime so you don't have to. You can try it for free for seven days, protect up to seven Internet devices and keep all of your Internet connections secure. That's CyberGhost VPN. Download it today from your app store and be secure in seconds. thanks for joining us america this is the dave ramsey show chris hogan joins me this hour answering your questions at 888-825-5225 if you haven't heard for the first time ever in 30 years that we've been teaching financial peace university,

I used to teach it live with an overhead projector and then on VHS and then on DVD. And now all the videos are reshot fresh and new are just about all of them are. We've redone a bunch of them in the last 18 months and it's all available online and we're doing something for the first time ever. We're allowing you to do a 14-day free trial. You can get in there and learn how to do the budget on every dollar. You can watch the nine lessons.

You can get involved with some of the communities in Financial Peace University. You can get plugged in to some of the other lessons that are on there. This is the premium product, and because of the shutdown, because a lot of you are at home, we're trying to do something different to be helpful. And look fear straight in the face and say, I got this. You don't get to win. I'm going to take control.

And a 14-day free trial for Financial Peace University. Go to DaveRamsey.com slash hope and get signed up while you can. Almost 50,000 people have signed up for the 14-day free trial in the last, what has it been, three weeks we've been doing this? Oh, yeah, Dave. And I'm telling you, the feedback I'm getting, I do my Instagram Lives each day at around 11 at ChrisHogan360, And I've heard from 20 people that are plugged into the Financial Peace University free trial, and they are absolutely loving it.

They said, instead of us watching four hours of TV, they're like, we're going to get situated and start to get ready for our future. And so I'm loving that people are taking that initiative and really digging in. And so don't miss out out on this don't miss out on an opportunity where you've got more downtime than you've ever had you don't have an excuse now it's time people are people are reading books they're doing their wills they're getting their term insurance they're they're getting all their boxes checked that's you know getting everything in order and that's a smart time because you know what happens in a situation like this whether it's on a personal level or a whole national level like we've gone through in the nation, is you have this reset and you say, all right, how much of this pain and angst and fear was in my control? And I don't ever want to have that again.

Next time something happens, and that's not to be pessimistic because there will be a next time something happens, and that's not to be pessimistic, because there will be a next time something happens. Next time something happens, like there's an opportunity to become wealthy, I will already be wealthy and I'll be wealthier. Or next time something bad happens, I won't have any debt and I'll have cash called an emergency fund. And that's just a normal process. And so next time is now. That right you said this last time that's right and so this time next time's now davramsey.com hope and that'll get you on the page with all the specials and deals that we have including the 14-day free trial don't miss it michaela is in kentucky hi Michaela. Welcome to the Dave Ramsey Show. Hey, Dave.

Thanks so much for taking my call. Sure. How can we help? So I'm 21 years old, and my husband is 25, and we've been married two years, and I graduate college here in a couple of weeks. Cool. What's your degree in? Accounting.

Good for you. You finishing your degree in? Homebuyers. Accounting. Good for you. You finishing your master's or just your undergrad? I'm going to be doing my master's after I graduate and then also studying for the CPA exam full time and hopefully pass all exams by October. Awesome. Good for you. Yes. Wow, you're killing it. Thank you.

We found a home that we love because it's move-in ready and it's right in our price range of nine to six thousand dollars and our realtor says that it's going to sell fast so we want to jump on it um and we're doing really great financially right now but we're really worried about number one not being ready and number, a possible recession hitting and not leaving us with a lot of cash. Hmm. Mikayla, what's your all's household income right now? Right now, $35,000 with my husband, but then when I get a job, hopefully another $40,000.

Right, and that's in October, right? Yeah. Okay, all right. And so do you all have any debt right now? Just student loans, $25,000. All right. So $25,000. And do you have an emergency fund or anything yet?

Yes. We have a $4,000 emergency fund, and then we have $9,000 set aside that we just got recently from all of the refunds and stuff that we were going to use for the home. Okay. All right. Now, I'm going to use for the home. Okay. All right. Now, I'm going to tell you something, Michaela, because you guys are planners and you're walking through and you're looking at things right now and you're seeing it for what it is. I think buying a home right now would be a two-step far ahead.

I don't think you all are ready for that just yet. Okay? And I'm saying financially because you want this home to be a blessing, not a curse. OK, so you guys have around you said you got four thousand. You got around fifteen thousand, about thirteen thousand dollars right now. If you're serious about it, if I'm you, what I would do is I'm going to stroke a check of thirteen thousand toward that twenty five thousand in student loan debt. OK, keep your thousand1,000 emergency fund. And you guys keep renting and stay focused, and it's just too soon to buy a home right now.

Okay, based off just that one income. However, once you're done with school and you guys now, you've got other income coming in, and you clean up the rest of the debt and have a down payment, then you're going to be set. So it's just going to be about pausing and delaying it just a little while. And I don't care what that realtor said about it's a great deal and it's going to be set. So it's just going to be about pausing and delaying it just a little while. And I don't care what that realtor said about it's a great deal and it's going to be gone. Young lady, you're going to hear that about a lot of things. You don't want to make emotional decisions. You want to make a business decision.

So here's the thing. Everybody tells you to buy a house, aren't they? Buy a house, buy a house, buy a house, buy a house, buy a house. No one, no one has told you not to buy a house have they my mom doesn't think so we should because of the recession possibly coming okay all right but in general yeah i mean i don't think there's a recession coming it's going to affect your house so i disagree with her on that but in general everybody's a fan of you buying a house but what we figured out with 30 years of sitting with couples just like you guys

is that if you will be debt-free, have your emergency fund plus a down payment, and you buy the home, your story when you're 35 is completely different than it is if you've got $25,000 of student loan debt hanging around your neck, and then you go buy a house. So I do want you to buy a house. I just want you to buy a house i just want you to own the house i don't want it to own you what's it going to cost for you to finish school and do you have the cash for that um so we could use the cash for my masters instead of to pay for that up front instead of putting it towards the towards the there we go that That's what I'm going to do. The first rule of getting out of debt is don't take any more out.

And then the second rule of getting out of debt is to pay it off smallest to largest in that order. So let's stay out of debt in the future, not add any problems to this. And so really what we're saying is that in a sense you would be borrowing on student loans in order to put a down payment on this house because you used your money that you should have used to finish your master's to buy a house you couldn't afford because you're jumping the gun. You're going too soon out of the gate.

Now, nobody else is going to tell you that, but Chris and I are going to love you enough to tell you the truth. We want you to have a house, but you're going to make a completely different house decision when you have no student loans, both of you are employed, and you've got your emergency fund in place plus your down payment. You're going to just feel so much wiser because you will be. That's so true, Dave. I mean, and it's amazing. And we do have to be careful because people's opinions can try to get in the way, you know, and you want to be clear about your game plan and

about what it is you're tracking down. And I'm proud of what you guys are doing. You're very young, but you're focused. And that kind of focus is what's going to lead you to progress financially down the road. I mean, when you're 27, the two of you are going to look like you're 37 or 47 in your finances because you're so you're going to be so far ahead. Now, what I do want you to do is this, Michaela, I want you to stay on the line and Kelly,

I'll help you. I want to make sure you get signed up for that 14-day free trial in Financial Peace. As a matter of fact, I'll just give you a one-year membership to that. It won't be a 14-day free trial. Let's just give you the membership because the two of you are starting out together. And if I had known the stuff we teach in that class when I was 21, I could have avoided a lot of pain because every time i did something stupid it brought pain into my life yeah you and me both uh matter of fact i was talking to a a

school teacher message me uh one of her other students had gone through foundations and so she's teaching her fourth grade class wow you know and so she's like we got to start these kids off young that's i love that. Love it. That puts us out of the Dave Ramsey Show and the books. Thanks to James Childs, our producer. Kelly Daniel, back in the seat. Associate producer and phone screener. She's part of the skeleton crew here.

No skeletons in this crew, but it's a skeleton crew. Getting the Dave Ramsey Show off the ground in the middle of the coronavirus. That's what we do, baby. Touchdown. This is the Dave Ramsey Show off the ground in the middle of the coronavirus. That's what we do, baby. Touchdown. This is the Dave Ramsey Show. In the middle of these uncertain times, Ramsey Solutions wants to give you some hope. For the very first time ever, we're giving you Financial Peace University free for 14 days. Go to DaveRamsey.com slash hope so you can watch from home. Folks, I love telling you about well-made, well-thought-out products.

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