The Ramsey Show - App - A Credit Score Is NOT an Indicator of Financial Health! (Hour 1)

Episode Date: November 5, 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, Rachel Cruz, Ramsey personality, number one best-selling author, and my daughter is our co-host today here on the air. Open phones at 888-825-5225, 888-825-5225. Joseph's going to start us off this hour from Washington, D.C. God help you, Joseph.

How can we help? Yes, thank you so much, sir. Um, so COVID blessing had an opportunity to kind of restart, re reflect my finances. First time really ever did it in my life. My credit, you know, not where I wanted to be like around 600 and encouraging my wife with the extra unemployment money that government was adding on. I put it towards, you know, paying off a lot of past debts, you know, hoping to have an increase to the leverage to finally start making some things happen. Spent about $2,500 and had a legal membership at LegalShield.

The attorney helped me negotiate and make some deals with the creditors and got it cleared off. They're off the credit report. So here we go. Maybe we'll start to get some traction and I'm just disappointed after 30 to 45 days, zero increase in the credit score. And I just don't know what else to do. What part of the the fact that your credit score is going down would be an issue. Obviously, if you went to go buy a home and they pulled your credit score and it's not good,

or you're trying to go get into more debt, then they pull the credit score. And if it's going down, obviously, that's not good. But we teach people to get out of debt. So actually, as you're getting out of debt, your credit score will lower. And within around 18 months, it becomes basically a non-issue because it's there's not enough information there to calculate so long long answer around is we don't really we don't really care about the credit score very much around here the reason is this okay joseph what we're trying to measure here is and the way you're stating your question is you're

using the credit score to determine if you're winning financially and um it's not designed to do that the algorithm that is built that that the fico folks put together to build your fico score 100 of the mathematical variables that go into developing your credit score have to do with how you deal with debt. Okay? Okay. So point being, if your family attorney called you after you got off the phone with us and said, hey, that uncle you never knew just left you $10 million, your credit score would not change one point, and yet you just got $10 million. So it's not a good indicator of financial health, because obviously your health would have increased. Or your boss called and said, you know, Joseph, you've been really kicking it.

We're going to triple your income starting next week. It would not change your credit score one point. And so if you have assets, stuff, money, real estate, those kinds of things, and you have a great income, it does not affect your credit score. The only thing that affects your credit score is when you borrow and pay it back on time, the type of credit, how much credit. It's basically, mathematically, the truth is it's an I love debt score. And so the reason we hate it around here is we hate debt. And so we want your credit score to be zero because that means you have no debt and you

have no interface and you have no interface with debt at all and but and it's a false measure of whether you're winning so a different way of looking at winning is this did you pay off a bunch of debt yes you're moving into the winning column when you did all that negotiation and you use that unemployment money great job are you building up some cash for your emergency fund? Yes. Check. You're winning. I think we're going to develop a Ramsey score that actually measures whether you're really winning with money or not, not just a debt score. Okay. But that's the kind of thing that you're looking for is you want to look at income and net worth and cash position. Your net worth is what you own

minus what you owe. So if your debt's going down and your 401k is going up, you're winning, but that won't affect your credit score one point except for the debt going down part so what rachel's referring to is after you pay off all of your debts you don't have a single debt anywhere and all the accounts are closed about 12 to 18 months later your credit score will be zero understood mine's zero. Well, it's not actually, well. And I'm a multimillionaire. I do have a follow-up question.

Okay, jump in, jump in. Well, because in my situation, I want to make sure, you know, I do agree with you. I hear you. I want to be out of debt. I'm starting from ground zero. My hopes and my credit score is just to qualify to get into a new apartment or to be able to, you know, access a new cell phone plan, just the basic building blocks of next step. And I was under the impression that, hey, you pay off your credit, they remove it from the credit score, equals a nominal increase, just so I can be a range of having access to. Well, if you had an old bad debt and you cleared it within three to six months,

you should see a bump, but it wouldn't be instantaneous. Got you. So, okay, I'm just trying to get proper expectations. I wasn't sure if I needed to start opening up one or two credit cards. No, no, because the point is you don't want to go in debt so that later you can go into debt so that later you can go into more debt. It's a dog chasing its tail. And, Joseph, what you're saying, though point is you don't want to go in debt so that later you can go into debt so that later you can go into more debt. It's a dog chasing its tail. And, Joseph, what you're saying, though, is correct.

Like if you go to rent an apartment, they sometimes will pull your credit score to get a new cell phone plan. They sometimes use that credit score. Insurance does as well. But here's the deal. There's ways around all of that. It takes time. It takes effort to get around each of those processes. But I've done it.

And so what you have to do is you have to figure out okay what's another apartment that i can go rent or talking to the manager and saying hey i can pay first month's rent and last month's rent and cash here there's ways around the system and is it inconvenient at times it is inconvenient joseph i'm not gonna lie to you sure if you're in the 500s and you paid off thirty thousand dollars worth of debt and you sit down and tell an apartment manager that hey i'm getting out of debt and my credit score is low right. But the reason it's low is I've been paying off this debt like crazy. And I can show you where I paid off $30,000 worth of debt. If they won't rent to you then, then they're a no-brainer and you need to move away from them anyway. But most apartments will rent to you with a low or no credit score.

Yep, or an insufficient credit score is what it ends up being. Yeah. Yeah. Zero. Yeah. So, Hey, hang on. I'm going to send you a copy of the total money makeover, which is, uh, the baby steps that we talk about what to do first, what to do second, why to do it in that order, because it sounds like you're just getting started on all this stuff and we want to give you a, a way of looking at it you know what's interesting rachel is so much of the financial world is built around making banks richer and you know the credit score is the greatest scam to have been placed because most people think like he thinks they think you know i ran into a guy the days you're like dale dave you're in the financial world yeah my my credit score is 780 and i went god i'm sorry that probably

cost you 100 grand in interest because it's about the you gotta you gotta make a lot of payments to get a 780 over a long period of time on time i mean you gotta screw around with a lot of debt to have a 780 and so that's cost cost you, I mean, it probably literally cost him $100,000 in interest. Yeah, and I think people's mindset, when you shift to see that the financial industry, banks, credit card companies, all this, they're not caring about you, the person. They're making money. Like, they want to make money, and they make lots of money because off of you. And so shifting that mindset to what the enemy is, is a, is a

good mindset to have. You know what the interest rate on my credit card is? Oh, I can't wait for the joke. What's the punchline? Zero. I don't have one, but I'm okay. Oh, okay. I could have guessed that. I thought there was going to be like a, I've charged up or something. I don't know. This is the Dave Ramsey show folks I love telling you about well-made well-thought-out products today I'm talking about grip six belts I don't know about you but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern minimalist belt made of high quality materials with no holes, no flap, and no bulk.

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Hi, Joelle. How are you? Hi, I'm doing well. Thank you so much for taking my call. Sure. What's up? So basically, I am debt-free as of July. I am almost done with my six months of emergency funds.

And I am at a job that I love the company, but I don't want to be in the position I'm in for another one to two years. And as well as the location I'm in, because I'd like to start my family with my boyfriend in the future somewhere close to where his business is. And so I just don't know whether I should keep going in this company and see what opportunities are there or if I should be looking for another job probably after this next year. Joelle, do you have anywhere you want to go to? Is there another company or another industry or something that you're interested in? Well, I'm an assistant manager working as an acting manager right now. So I'm in sales.

I just don't want to be in the retail environment for very much longer. It's just very tiring. I've been in for like five or six years. And so I want to be teaching something more, but I don't really have a degree. I don't really know what I want to be doing, and I make pretty good pay, and I love the company. I just, I guess it's just this big unknown as to whether the company is going to be able to have other opportunities, or what am I going to do if I decide to leave. A good rule of thumb is not to run from something if it's not toxic.

I mean, if it's an abusive environment, you run from it. But just general dissatisfaction, you don't run from, you need to run to something. And you've not identified what you're running to yet, and that's what's giving you angst. Yeah. How old are you? I guess I'm 24. And where does your boyfriend live? He lives in Long Beach, California. He has his own business. Right. So he's a good ways from you.

Yeah, he's about an hour away. Yeah. So you need to identify what you want to do, identify that you're going to get married if you're starting a family, and we're going to have a schedule and a process and a calendar, and as a part of that, you're going to move to that area and start your new career, which you've not figured out what that is yet. You're right. Okay. That's pretty simple.

There's a lot of reasons for you to not stay in Palm Springs. If you're going to get married and start a family, you would want to be with the family, not an hour away. Okay? Number one. Number two, you don't like the thing that you do, even though you like the company you do it for. But it's time to start thinking about that.

So I think you're right on track to be a little frustrated, a little dissatisfied, because that's pushing you towards these things. And hopefully it's pushing him towards putting a ring on your finger and these kinds of things. And so, yeah, you know, because we're going to have to get all this stuff lined up here. And so what I'll do is I'll send you a copy of Ken Coleman's book, The Proximity Principle. Ken is our career expert here among the Ramsey personalities. He does the Ken Coleman Show book, The Proximity Principle. Ken is our career expert here among the Ramsey personalities. He does the Ken Coleman Show every day. And it's all about finding out what you are wired to do, what your natural giftings are, and what you're passionate about. And then you look

at, and even some of the training that you've had. You've got good experience in retail. Now, what are some things, some places you might apply that that don't have anything to do with having to deal with the crazy butt public, which is what you're tired of. I actually love the crazy butt public because I'm one of them, but some people just get sick and tired of dealing. And some retail situations require that you put up with abuse from the public, we don't require that here if you try to abuse our folks we fire you as a customer uh and we let you spend your money somewhere else like on counseling and so um you know we're kind and nice and sweet to you but you don't get to yell and

scream and cuss at the people on our phones well yeah and some people require that you do that yeah but she's not in a toxic situation there's no urgency here but you know where you're going to be moving towards and i think having a timeline joelle it's going to be really smart to say okay you know what it is november so by march of 21 i would love to be living there or whatever it is january i don't care but we have a may wedding planned and so i'm going to make my move in march and start getting my new career started get our money and even if apartment there i mean yeah for sure and if you yeah whatever it whatever the time frame is but yeah i think these things can sync up and lay out a process here that um that makes a lot of sense and um you know and you being having your career figured out as a part of the

all these moves and these relationship moves is going to help you make better decisions in that. You don't get sucked into a bad relationship because you're financially needy. That's the other thing. So you're being very wise in how you're approaching this. You're doing a great job. And so I think you just get at the beginning stages. So hold on. Kelly will send you a copy of Ken's book, The Proximity Principle.

Jump on kencolman.com. There's all kinds of wonderful free resources there to help you find the career that you love, help you interview, help you get your foot in the door, all those kinds of things. Laura's with us in Austin, Texas. Hey, Laura, welcome to The Dave Ramsey Show. Thank you very much. Good to talk to you and Rachel. You too. what's up my question is we have uh our daughter who is 30 will be 32 next week and we put her through the financial peace university at her church and uh she has she picked me to be her financial coach so i had to do the hard words of saying no when she wanted things but she has paid off all her debt.

She has her six-month emergency fund. She has about $2,200 that she's saving for a house. When she started the program, she literally cried at the thought of having to buy a house. It was so far away in her scope and now she can't wait that's awesome good for her it is awesome it is but our question is as her parents at this point of her you know reaching towards the house purchasing a house we'd like to contribute to that process. And we were wondering whether it would be a good idea to maybe throw some money in her birthday card and, you know, designate it for a house. I'm actually holding the money right now in my account just to ensure that she wouldn't

spend it. But, you know, that would encourage her to keep saving and not lose sight because it's a big nut to crack a 20% down. Or do we just continue to let her do that savings process, which might take her a year, might take her two. We don't really know depending on her job and how many raises she gets um laura are you that's my question are you guys you and your husband are you married yes okay are you and your husband i'm assuming the answer is yes but just making sure are in a good financial position are you guys out of debt emergency fund funding retirement all of that yes we are we are retired We are retired, and yes.

I've always been a non-debt person all my life, so Dave has always been my idol. That's awesome. Well, I think that this is a great question because we talk about changing your family legacy, changing your family tree, and I get this question a lot about when can parents insert themselves? When is it healthy and when is it not healthy?

So there's a couple of filters I would run it through. Number one is, could she do this on her own anyways? Meaning you're not enabling laziness. You're not enabling bad behavior. You're not enabling her in any way. She's perfectly capable of doing it herself and she's willing to, I think is a great filter to run it through. Also, is she being wise with her money in general? Is she living on principles that you feel like are going to set her up well? I think that's another filter. And if a lot of those filters seem kind of clear, I think a gift is not a bad thing. I think some people cringe at it because they're like, oh gosh, parents shouldn't help that much. But listen,

if there's a place that she's responsible, and again, she doesn't have to have this gift, she'll be fine on her own. I think it's a beautiful thing to be able to bless her because you guys have done well and helped yourself. And I think you're helping advance her as well. The only part of the story I don't like is her money still in your account because you're afraid she's going to spend it. That's a bit controlling. She needs to be standing on her own and handling that and not spending it on her own and uh but the rest of the story sounds exactly like rachel's describing i love every bit of it and yes i would help her but i'd put the money in her name she's 32 freaking years old she needs to be grown up enough to not spend her own money this is the dave ramsey show One of our favorite things to do on the Dave Ramsey Show,

Rachel Cruz is my co-host today here on the Dave Ramsey Show, Rachel Cruz is my co-host today here on the air, Ramsey personality. One of our favorite things to do is to do a debt-free scream. It's always made even better when a debt-free scream is in our own lobby on the official debt-free stage so we can see the people, and you guys on YouTube can see the people. And then it's made even better when it is one of our own family members, one of our own team members here. The great news is we have a building full of millennials,

and many of them are getting out of debt, and they do great work. And some baby boomers. A few boomers. I think I might be the last one. But anyway, we have a young crew, and they're all working to get out of debt. And we've got oil spots in the parking lot, and it's awesome. I mean, driving old cars to get out of debt, whatever it takes, right? They're all doing good work.

We've got an incredible, incredible, passionate team. And so one of our own is with us. Andrew Taylor is with us to do a debt-free scream. His wife, Morgan. Hey, guys, how are you? We're good, Dave. How are you? Congratulations.

So you've been with us how long? About a year and a year and a half I think yep just at a year and a half and what tell everybody what it is you do at Ramsey yeah so I'm a coach on the ELP team I work with almost entirely with SmartVestor Pros okay so you coach the SmartVestor Pros so that they know how to do stuff the way that we teach here that's exactly it so our listeners when they go to SmartVestor Pro get the same answers they would get here on the radio. That's exactly it. Very cool. Morgan, what do you do?

I work on the communications team at a financial technology company. Oh, both of you are in financial stuff. Look at this. Very cool. Very cool. All right. So how much have you two paid off? We've paid off $75,000.

And how long did this take? 20 months. Good for you. Well, we won't ask your income. That's our only rule because we've got your team members standing around and that's completely unfair. They all came out to cheer you on. But way to go. So 20 months and you've been here a year and a half. So you started the journey just before you came on board? Yeah, probably, I don't know, six or so months beforehand is when we started this whole thing up. Okay, so tell us the story.

How did you end up deciding to get out of debt? It actually started a little over two years ago. We got married in April of 2018. And around that time, because I didn't have enough to worry about with planning a wedding, I started worrying about retirement of all things. Well, why not?

Right? Why not? Wondering if we're doing enough, should we even be doing? And so I think I Googled how to save for retirement and I found Chris Hogan's website. A lot of great information on there. Mentioned it to Andrew. But like I said, we were getting married, so we kind of put that on the back burner. And then a couple of months later, we were visiting his parents and they had a copy of Total Money Makeover on the coffee table. And I said, oh, I think Chris Hogan works

with Dave Ramsey. We should probably borrow that. And I don't know, save money because we didn't have a financial plan or goals. And so we did borrow it. And I read the entire thing out loud as we drove from Andrew's parents' house outside of Dallas to our apartment. That's my favorite on road trips. I will always just read. Read out loud.

It's like an audio book, but it's coming from your spouse. Isn't that nice, Andrew? It was great. It was the best audio book I've ever heard. Yeah, I was going to say, I think they ought to change the woman that gives me directions on my phone to my wife's voice and then i would do what it says right way to go guys that's cool so you get home from that and you're like okay game on pretty much yeah pretty much we we bought in right off the bat so the total money makeover book if somebody actually reads it all the way through and their spouse all somebody actually reads it all the way through and

their spouse reads it all the way through, generally gets everybody going. Yeah. It shows you what to do. It makes you believe you need to do it. Yeah. Very good. So what was the $75,000? What did that make up?

What kind of debt? Yeah. So $10,000 of it was an auto loan, car loan. And then the other $65,000 was student loans. Yep. Absolutely. Okay. So you guys were young.

I mean, you were newlyweds when you went through this process. So you're, I mean, you are in the thick of learning to be married, living with each other, figuring out all those routines. Plus on top of that, making sacrifices and totally changing the way you view money.

So what would you say to a young couple out there who's like, man, that sounds nice. I don't know. It's just a weird world out there right now. It's just crazy. I don't know if we can do this. I would say just don't give up.

That was the main thing for us. I will never forget what it felt like to stare thousands of dollars of debt in the face and think, oh my gosh, we're never going to be able to do this. But if you make a plan, if you make a budget and you stick to it, you absolutely can do it.

Yeah, way to go. It's awesome. Cool. What was the hardest part of this for y'all? I would say, honestly, getting going in the beginning, not so much in terms of working the plan, but communicating around personal finances was the toughest part. We just had no idea what we were doing. And so our first couple of budget meetings were kind of ugly. We had to figure out how to actually talk about all this kind of stuff. Um, and it was tough. Uh, I was very excited about it. Uh, Morgan was, you know, a lot more analytical than I was and wanted to understand things. And so, um, working through that was a challenge once we

did get on the same page. I mean, it's just made all the difference. And you know, one thing we've wanted as a goal in our marriage is to not have to bite about money, worry about money, all that. And this has allowed us to do it. So. Yeah. Very cool. It's awesome. Who was around you in your life that was cheering you guys on? So the whole team who's here today was cheering us on. Being here was the best cheerleaders we could ever have. And our friends and family were on board with it too. We had to say no to a lot of things and all that, and they got it and they were with us and it was great. Okay. What was the hardest no? What was like the thing you said no to they're like oh oh my gosh um probably we

watched a lot of our friends go on a lot of fun trips and make fun impulse purchases and just learning to say no mostly to myself because i can justify a lot of purchases amen sister and um yeah so just learning to say no yep that's good that's really good you know there's a lot of power in what you've done learning to work together at the beginning of your marriage on a big project whatever it is in this case getting out of debt and handling money together learning to work through your differences and get on the same page and combine your value system and uh and and then you you ring the bell i mean you climb the mountain and ring the bell and so that sets you up for anything that comes at you.

You now know we can work together. That's right. It might be tough, but we can work through whatever it is. And a lot of couples don't have that at the beginning of their marriage. A lot of them never have it in their marriage. So I'm so proud of y'all. Well done. It is.

Well done. I think that is a great point, though, because I'm like, there are so many, and even more and more that I feel like couples specifically, they start off kind of on two separate lines and they just kind of like almost live. It's almost like to become roommates or something in marriage. And what this does, I mean, you pinpoint one of the hardest, hardest subjects in marriage to get on the same team. I'm like, you've accomplished that. Like you said, you've accomplished how to communicate. So you're now, you don't know just how to communicate well about money, but that filters into so many other conversations. Having a healthy level of communication now is going to be in so many parts of your marriage like you got it's

like the money stuff i'm like yes the debt-free stuff absolutely but honestly like what changes in you guys as a couple and that unity is it's almost even greater like that's what's going to last you for for decades and stuff in marriage and i think it's amazing absolutely amazing very well done rock stars way to Way to go, heroes. Excellent job. Well, I'll give you a copy of Chris Hogan's book. You probably already got one, but you work here. We'll take another. Give it away for Christmas.

You know, whatever. Everyday Millionaires, because that's the next chapter in your story. So when you pick up the phone and you're talking to one of the SmartVestor pros, a guy or a gal that is in the financial world, and they're there to advise people with investing, and you're coaching them, and you don't have any debt, it puts you in a completely different headspace, doesn't it? We've had a lot of fun conversations here over the past couple weeks. I bet. It's been a good time.

I bet. That's perfect, man. Well done. Very well done. Andrew and Morgan, wow, $75,000 paid off in 20 months count it down let's hear a debt-free scream three two one we're dead free this is how it's done i love it very well done you two very well done it's done. I love it. Very well done, you two. Very well done.

It's about as good as it gets. Open phones here at 888-825-5225. Rachel, it is amazing, including the stuff in your new book, Know Yourself, Know Your Money, how important it is to understand your differences and be able to to work through those respect that and get on the same page yes because you even heard them on there were opposites when they sat down to budget she was more analytical he wasn't as much and he's like no we can just do this and it's like you have to empathize with the spouse okay this is what she needs from me and out of loving her well he did that and she had to give him something else i mean like it

it literally just forms a healthy marriage and you're using money as the avenue to do that. But it's such a beautiful thing. Yeah, very, very well done. And, Mom and Dad, way to go. Great coaster you had there on your coffee table. Oh, yeah. The Total Money Makeover coaster. It's sitting there on the coffee table, real subtle.

Let's get that out and put it on the table when the kids are coming. Let's make sure they see that. They might pick it up and read. You never know. Never know. Yeah, that's pretty cool. Way to get that out and put it on the table when the kids are coming. Let's make sure they see that. They might pick it up and read. You never know. Never know. Yeah, that's pretty cool. Way to go, Mom and Dad. Very good.

This is The Dave Ramsey Show. Thank you for joining us, America. This is the Dave Ramsey Show. Rachel Cruz, Ramsey personality and number one bestselling author, is my co-host here today. It is a free call at 888-825-5225. If you haven't heard, we are giving away $500 a week between now and Christmas, our annual Ramsey Christmas giveaway. You can enter daily to increase your chance of winning, and of course, no purchase necessary. There's a $5,000 grand prize we'll be giving away sometime between now and Christmas. Just go to DaveRamsey.com slash giveaway.

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So enter to win some cash, get some serious deals at DaveRamsey.com. You know, getting books cheap and giving them away makes a great Christmas present. I was just talking to a guy at the break. He said he bought five total money makeover books at a used bookstore for $2 apiece, and he cheap and giving them away makes a great Christmas present. I was just talking to a guy at the break. He said he bought five total money makeover books at a used bookstore for two bucks a piece, and he's giving them all away. There you go. There you go.

Great deal, man. That's cool. Very good stuff. So that's a good, I mean, $10 for a brand new one, or you can get a used one for $2, whatever. I mean, spread the love, baby. Spread the love around. That's what we do. Our question of the day comes from blinds.com.

Find out for yourself why blinds.com is the number one online retailer of custom window coverings you get free samples free shipping new promos they run all the time you save money all the time always use the magic word the promo code ramsey to get the best deal our question rachel yeah today's question comes from aaron in mississippi hello my husband and i are on baby step two and are excited to keep the ball rolling. We see our six-year-old one to two times a week. She has chores she's expected to complete with us. We've just given her a dollar here or five dollars there, and I've not implemented the three envelopes you suggest yet. My question is, how do we teach financial peace and money management to a child we see

so infrequently and whose mother is not on the same page as us financially. Yeah, this is always a hard one. When the house is split and the children go back and forth, it's not uncommon we hear this, right? That one parent, we call it the Disney World parent, the kids go over to their house and everything's like a party all the time. And then they go back to the house where they actually want to teach money. And it seems so rigid and strict. But I

would say for you guys, Aaron, to control what you can control. So when your daughter is in your home for those times, those, what was it? One to two times a week, then implement it. You can say, hey, this is what's going on and make it fun too. I mean, I have a five-year-old. So the six-year-old, Amelia loves it. Like, she loves making money. She loves doing chores around the house because she loves to buy stuff after that, like a Polly Pocket or like whatever the little thing is that she buys. But it's really become this game to her. And at this age, you know, you're not worried about doing crazy stuff.

I mean, even the three envelopes, you can start it. But you could even wait till she's seven or eight to do that. Like, you're not in an urgent rush but i think the because it is so infrequent doing something small at first by having something consistent is what i would do so the dollar here the five dollars here have a system and say okay here are the chores you have here's how much we're going to pay on it and just be consistent with that amount so we were keeping the cruise kids the other day oh and um i haven't heard the story and uh the mail came and it's got the toy catalog from the department store in time for christmas in the mail target yeah yeah that's the one and um department store mimi hands out the catalog to the kids and says start picking

out stuff for christmas so lord amelia the one, is sitting down with Caroline, the little one, and they're going through it. And Caroline goes, I like that. And Amelia says, you can't have that. You can't afford it. It's $90. So she's already figuring this stuff out. Anything over $10 is very expensive to Amelia. That's so great that's perfect

yeah so the answer to the question aaron from uh from my perspective is when you're at my house you're going to speak to the adults in the house a certain way you're going to use language a certain way you're going to uh behave in a certain. And it's all because I'm training you on how to become a great adult. And that includes handling money. I can't control what happens over there. But you, you know, you couldn't say, well, her mother allows her to cuss and, you know, a seven year old dropping the F-bomb over there at the other house. But so what do we do when she's at our house? Well, you don't let her do that.

We don't do that at our house, right? I mean, that's a bizarre example. No, but I hear what you're saying. The point is that, you know, like you said, we can't control what happens over there. But as for me in my house, when you're here, this is what you do. And, you know, that's even the way it is with the grandbabies visiting when you're papa dave's there's certain things you do and you can do those you can do something different at home with mom and dad and say it's okay but at my house this is what you do stay up till 9 p.m and eat snacks at 8 30 you know that kind of stuff you

know go to dunkin donuts for a donut run and And yeah, when you're at Papa Dave's house. That's the rules at Papa Dave's. That's it. That's how it goes. That's how we roll. How does that always happen? Yeah, it's just so funny. But thankfully, our kids manage their kids well, so we don't have any misbehavior we're

having to correct at our house. But, you know, I just tell them, look, we don't do that here. Yes. We don't do that here. Yes. We don't do that here. And it's a parenting thing, but Meg Meeker has said this before, that kids, they do, and I experience it with ours, they thrive on boundaries. When you put boundaries in place, there's a safety that they have. There's something when they know there's a limit, there's a level of safety.

And even if it's subconscious, so even you putting, you know, things in place with the money that the six-year-old is interacting with, there's a level of safety there that over time she'll be able to see. And so I think that that's a cool way of looking at it as a parent. Agreed. All right. We're going to go to Rudy. Rudy is in Corpus Christi, Texas. Hi, Rudy. How can we help? Hey, Dave. Hey, Rachel. So I just wanted to say that you've taken my call. Last week I went ahead and got laid off from my job. I work in the sports industry. And

so we're, you know, in the very beginning steps of baby step two. And I've got a severance package kind of coming my way after working at the organization for 10 plus years. And I do also have some 401k kind of coming my way after working at the organization for 10 plus years. Um, and I do also have some, um, 401k kind of stashed away. Um, the company was matching, uh, 4% for every 5% we put in. So, um, I know, uh, things anyways, I had the money there. My question is what should I do? Um, kind of leading up the next couple months, leading up to the holidays and after?

You know, the sports industry is not very – not going to probably bounce back overnight or anything like that. So between the severance and my 401K, should I cash that out and try to pay off some more debt? No. To see what me and my wife should do? No. We're going to stop everything.

Stop your baby step two. You roll your 401k of the direct transfer rollover into another IRA with a SmartVestor Pro, and you don't touch that unless it's to avoid bankruptcy or foreclosure. You don't pay off any debt. You pile up cash as high as you can pile it until you get the other side of the storm. Then you push play again on your debt snowball, and you start off once you're settled again. And so what did you do for the sports organization? I had many roles. Lately, over the last five years, I was the retail manager there. Okay, so those skills are transferable outside of sports. You don't have to wait for sports to kick back off. No pun intended.

Yeah, 100%. I've got a couple. I just finished my resume today, actually. I'm sending off a couple job applications today. Perfect. Obviously, with the retail industry, just kind of period, the economy is just a little down. But there are places that are booming.

I mean, it's just segments of the economy they're nuanced i mean if you worked in a plexiglass store things will be going good for you because everybody's putting up a plexiglass shield over everything for god's sakes so um you know that kind of stuff right so there's stuff that's boat boat business and atv and motorcycle business is booming. Car business is booming. Real estate business is booming. So there's all kinds of things you can move towards. And if you land something very quickly, all that severance becomes a signing bonus.

And you'll be in a great position. So I'm sorry you're going through this, especially at this time of year. But just stop everything. Pile up cash. That simple. That puts us out of the Daveave ramsey show in the books this is james childs producer of the dave ramsey show on your smart speaker you can add our skill by saying alexa open the Ramsey Network skill. From there, you can listen to all our shows.

Ask Dave money questions like, how do I invest my money? Or what is the debt snowball? Find out more at DaveRamsey.com slash smart speaker.