The Ramsey Show - App - A Reverse Mortgage Is a Horrible Product! (Hour 1)

Episode Date: September 12, 2019

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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. You jump in, we'll talk about your life, your money. It's a free call at 888-825-5225. That's 888-825-5225. Thanks for jumping in.

Steve's with us in Tampa, Florida. Hey, Steve, how are you? Good, Dave, how are you? Glad to talk with you. Absolutely, my pleasure. What's with us in Tampa, Florida. Hey, Steve, how are you? Good, Dave. How are you? Better to talk with you. Absolutely. My pleasure. What's up? Well, I have some lovely in-laws that are reached the age of 70 and they haven't prepared for retirement. They raised five kids and they were in the ministry. So they gave a they gave a lot, but they didn't save a lot. And they have $100,000 in cash and a home that's worth between $280,000 to $290,000, which is paid for. But when they do the math with Social Security and their savings, it's just not there. They've got about a $1,200 shortfall each month on their

budget and the income that they would bring in. So I gave them a recommendation that they should consider working part-time in their field, or I didn't know a lot about reverse mortgages, and I wanted to seek your opinion on that. Horrible product. Horrible product. Yes, very, very expensive fees, and the interest rates that they're calculated on are ridiculous. Really is, it appears to solve the problem, but at the cost that it solves the problem is not, it is not something you want to get into. Okay.

And there's a huge number of them that are ending in foreclosure. The Wall Street Journal just did an article on them, gosh, about four months ago, I guess, the failure rate among them, because what happens is these folks quit receiving the money when the equity runs out, because they only take it about 65% of the equity anyway. And when they stop it, then they can't make their remaining payments, or they can't even pay their taxes or insurance, and they're turning around and getting foreclosed on by the reverse mortgage people for not keeping the taxes and insurance current. And so, yeah, it's just a bad situation.

So the house, again, is worth what? About $290, close to $300. And they owe what again? Zero. And they're in what city? In Tampa. Okay. Unpleasant option, but the best mathematical option is move down.

Yes, correct. Correct, and that's what they would prefer not to do. Yeah, that's huge. I've also discussed that with them as well. It's a huge emotional side of the house. Yeah, exactly. They've been there a long time. They raise the kids there, all that kind of stuff probably.

That's correct. But because they haven't saved any money, they're not in a position to. So they can't, they have no nest egg at all? Roughly about $100,000 in cash. Yeah, but it's not creating any income. No, no, no, no. So they're kind of in a pinch, and I'm trying to in cash. Yeah, but it's not creating any income. No, no, no, no. No, and so they're kind of in a pinch, and I'm trying to help them figure out the best vehicle. So, yeah, I'm probably going to invest, you know, maybe $80,000 of that instead of letting it sit there making nothing.

And so if they had, you said they're $1,200 off a month. That's $14,000 a year. And so if they made 10% on $80,000, that would be $8,000 of it. Then they're only $500 a month off. And have you looked at the budget that is creating that they're $500? So they've got Social Security income, and that's it. He has a small pension from a previous employer. It's like $300 a month.

It's not a lot. So they're looking at like a $4,000 a month income. Yes, correct. Okay. And with the taxes and the insurance on the paid-for $300,000 house. Yeah. on the paid-for $300,000 house. Yeah, I mean, something's going to give, and because they were generous, they gave away their protection on this.

So something's going to give. We're either going to move down or we're going to work extra, and we need to invest $80,000 of that $100,000 and get it producing some income. Either way, by the way. But if they move down to $150,000 paid for property and then they invest, instead of investing $80,000, they invest another $150,000 on top of that, then they're going to be more than fine. Yes, I agree.

But that's very emotional. Very, very emotional. Yeah, it's the emotional type of thing. Very, very emotional. Yeah, I mean, it's devastating. But I don't want to look at my father-in-law, the pastor who served God all his life, and tell him that. I don't want to have that. I'm with you. But the other thing is just reverse mortgage is really what it is.

It's financial denial. I agree. That really what it is, it's financial denial. Mm-hmm. I agree. That's what it comes up. And we just might as well go ahead and deal with this so they don't get in a bigger problem later. But I'm sorry he's facing that. The good news is he does have that large asset, so he's not going to go hungry. It's just a matter of unpleasantness is what it comes down to, and it is unpleasant.

Oh, man. All right. Joel is with us. Joel is in Ohio, Dayton to be precise. Hi, Joel. How are you? Hey, Dave. Thank you for taking the call. Sure. What's up? Well, I am in baby step number two.

I've paid off a little bit over $40,000 of $53,000 in consumer debt. And so I'm being ready to transition job-wise, getting out of the military. And I've come into a lump sum of money, about $100,000. Oh, good. Where'd you get that? I can't really go into detail for like contractual reasons but um but it's you know it's legitimate it's honest it's uh it's nothing and i'm trying to figure

out how to how to best use it so i can finish off my debt with 10 yep uh 10 000 of that and that's an obvious one seems to me i need to put away some for taxes because they didn't withhold any. And then the next most logical step would be emergency funds taken care of. And that one, we figure it is about $30,000 is our goal for emergency funds. So a couple of thoughts here is I have in my remaining months in the military, I have the benefit of like 18,000 of Roth savings I can put away in the thrift savings plan. And so I've only put away three out of that 18 for the year. So part of my thinking is, well, maybe even though it's not technically going to like a 15%, like baby step four, you know, maybe I can catch up on that by diverting a larger amount of my income the next few months to it. Yeah, I would.

And catch up. I would. And cut that out because it's going to grow a ton, you know, by the time I'm ready to take it out. Yeah, and offset it with this – offset the drain on your budget with some of this lump sum. I would do that, sure. Yeah.

The other little wrinkle – I mean, just about every mistake that you've described in Total Money Makeover financially, and one of them is buying a home with not enough down payment. We got into our current house, which is worth about 340 as a 5% down payment, so we've only lived in it for about a year, and so our equity is low, and so I'm paying PMI, and so part of me is thinking... Yeah, i'd want to pay that down but what i would do is just work your baby steps and that's load that load that uh 401k up like you said load that 18,000 up that you can do get that roth full before you leave

and then let's work kids college and then let's work on that house getting it down so the pmi goes away you got it in the right order let's do it that way that's perfect this is the dave ramsey show You got it in the right order. Just do it that way. That's perfect. This is the Dave Ramsey Show. Let's talk about low interest rates, baby. I know right now that Churchill Mortgage can get qualified buyers into a 15-year conventional loan for well under 4% with no discount points or no hidden fees. Listen, if you're even thinking about buying a home or refinancing, do it right now. These rates are incredibly low. Here's what I'd like you to do. Take 10 minutes and call Churchill Mortgage and see what you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can qualify for. So even if you have to get creative and buy something further out of the city

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This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brinkwood, Tennessee 37027. Channing is with us in Washington, D.C. Hi, Channing. Welcome to The Dave Ramsey Show. Hi, Dave. Thank you for having me. Sure. What's up?

So, I live in D.C. I just recently got married about three months ago. Congratulations. Thank you. And my husband and I have really decided we need to be really focused on the same page about our finances. We actually have our first class of financial peace this evening. Oh, cool. But together we have probably just under a million dollars in debt, and we want to know how to get debt-free without filing bankruptcy. Okay. How much of that is a mortgage? The mortgage, about $210,000. So you have $600,000 in what?

$335,000 is about in student loans we both have advanced degrees and then a lot the rest is really credit cards and personal loans so you have three hundred thousand dollars of credit cards and personal loans? We have about 335,000 student loans and about 136,000 in credit cards, 44,000 personal loans, and 35,000 car loans. Okay. How old are you? I'm 29. Okay. So what in the world? So, yeah. I mean, are you both on this, or is this just one of you that's completely lost your mind? Well, I have the majority of the student loans, and he has the majority of the credit cards. My credit card debt is about, it's not great. Okay, so why does he at 29 years old run up $100,000 in credit card debt?

He's 32, but I think it's one of those things where just making really poor financial decisions, thinking, be able to pay it down as you go, and it doesn't happen. You both have advanced degrees. What are your degrees in? We do.

I have a degree in both of our advanced degrees. No, he has an MBA, and I have an advanced degree in policy. I work in the government, and we actually both do now at this point, actually. Okay. So your household income is what? Our household income is about $230,000. Okay. All right.

Is there recognition on both of your parts how absurd this situation is? Yes. Okay. Yes, there is. So I think we're both a bit scared and want to do anything we can to avoid. Okay, great. Then I'm on your team. I can skip that step.

Okay, good. Okay, well, you're scared and you should be um you're disgusted and you should be um you're early in the early stages of being sick and tired and being sick and tired and you should be so here's the thing you you guys have been living at um across the board from your education choices to your car purchases to your whatever, you've been living at about 10x where you're going to get to live for the next three years. Okay. Yep, that's true.

So I'm getting ready to destroy your life as you know it, because your lifestyle is considerably above your extremely good income and has been for a period of time. And so you've gotten used to spending like you're in Congress. Right. This is going to be very emotional for you all. And you're going to have to look at it through that lens and through a spiritual lens or you're not going to make it. You're going to have to not care what anyone thinks, including each other, because you're not going to spend any money on anything ever for the next three years.

Like, let's pretend you're making $210,000, and I know you just got married, but let's pretend you've been doing this as a couple as you went along. You've been making $210,000, spending $310,000. I'm getting ready to put you on $30,000. Okay. You're not going to see the inside of a restaurant unless it's your extra job where you're waiting on some of the people you work with during the day. Okay.

This is how humbling this is going to be. Quite. It's going to crush a lot of crap in your soul that caused you to do this. So the bad news is it's going to crush a lot of crap in your soul that caused you to do this so the bad news is it's going to be really rough the good news is it's going to be great for you guys relationally spiritually and financially but you're not going to make the financial unless you make the relational and the spiritual move because that i know that i know you guys because i was you guys this is exactly what i did This is exactly what I did. It's exactly what I did in my 20s. I bought and purchased a lifestyle that was 5 to 10x what I had.

Yeah. And it was all because of crap inside of me that caused me to do that. Right. And all of that has to be destroyed to fix it. Absolutely. Is this making any sense or is this too brutal? No, it's making a lot of sense and it's brutal. I'm warning you what's coming, okay?

This is not a math problem. The math problem is the symptom. The problem is what's going on inside of you guys. So the great news is you're very smart people and if you will apply that intellect to solving this problem as if it were a policy problem or a business problem you can solve the problem but the lens by which the problem will be solved is through spiritual contentment godliness with contentment is great gain translation you're going to pull up at a stoplight driving a piece of crap car next to people that have a an income a fourth of yours of the nicer car than yours right

right and you're going to you're not going to care that's going to be the cool part okay you're going to reach the point you don't care what other people think and that might be a fur journey for you or him i don't know which one it is but some of you guys have been you've been purchasing a lot of stuff for a lot of reasons that are going to change yep they have to yeah they have to because you're on a suicide mission right now i mean credit cards are actually bundled with one of those like debt relief programs where we put a pot of money with them and then they negotiate on your behalf so we're not even we're not even paying on the bulk 124 000 of the credit cards right now yeah you're

gonna probably have to pull out of those out of that i don't know how quickly but the problem with those people is they don't follow through and they administratively are really really really pitiful they're incompetent and so you're going to find they don't the concept of what they pitched you is not completely bad but you're going to find their follow-through is it will make your bones chill so you're probably going to pull back out of those and then we're just going to list these debts smallest to largest what's the home worth what's the home life you said no what is your home worth oh my home my home worth. Oh, I think that, let's see, according to Zillow, the home is worth about $300,000. Okay, so you have a little bit of equity there, but not enough to save you.

So I always sell the home as the last resort unless it's the problem, and it's not the problem here. Okay. Ratio-wise, it's nothing compared to this other stuff i mean you have 330 000 student loan debt 200 000 on your house right it's not the problem you know and the credit cards are almost as much as a stinking house so right it's not the problem so i don't i don't think we got to sell it you probably need it may need to sell a car um not gonna rush to do that the big thing is is just this shock to the system of your all's lifestyle, where you go from really living what we call in Tennessee high on the hog

to you're going to be living beans and rice, rice and beans. Your friends are going to think you've lost your mind, and your mother's going to think you need counseling. Yeah, and we actually live with my parents now. After we got married, they offered us to stay with them to help us with transitioning to new life, which has definitely been helpful renting out the condo. Who's living in your house? So I put my condo up for rent when I got engaged

because I knew I wanted to save money for the wedding before we got married. So I had a renter in there the last year, actually looking for another renter. Her lease ends in a month. Oh, well, just sell it then. I thought you lived in it. No, we don't live in it. Oh, just sell it and put the $90,000 on your debt snowball. Yeah.

Okay. Yeah, you don't need it. If you're not going to move in it, you don't need to own it. No, we're never going to live in it. It was one of those. Yeah. Yeah, that was my first baby. That's okay. It's gone now. You don't need to own it. No, we're never going to live in it. It was one of those, yeah, that was my first baby. That's okay.

It's gone now. You need the $90,000 to get a jump start on the rest of this. So that just got rid of a third of your deal. Okay. Right? So we're getting started. But did you feel that ouchie? I just pinched you. Did you feel the pinch? Dave's grabbing, pinching me. Don't pinch

me, Dave. Yeah, I'm going to pinch the lifestyle out of you. Do you feel the pinch? Dave's grabbing, pinching me. Don't pinch me, Dave. Yeah, I'm going to pinch the lifestyle out of you. And it's going to change your life for the better. It's going to change who you are in this process. It's going to have to. It's the way you get out. You can do it, though. And I'll help you. You call me if you need more help. This is the Dave Ramsey Show. business leaders if you're not using linkedin jobs you're missing out our ramsey solutions company page on linkedin has over 100 000 followers that's 100000 potential like-minded people our team communicates our current openings to. We also post our jobs on LinkedIn because we know the best candidates already have jobs. And LinkedIn makes it easy by doing the legwork for you.

It's no wonder a hire is made every eight seconds on LinkedIn. And over 600 million members visit LinkedIn to make connections, learn, and grow as professionals, and discover new job opportunities. Get started today with LinkedIn Jobs and get $50 off your first job post. Visit LinkedIn.com slash Ramsey. Terms and conditions apply. Thanks for being with us, America. 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 covering. Site-wide savings are happening right now.

Plus, you can take an additional 5% off at blinds.com slash Ramsey. Blinds.com slash Ramsey. Questions from Dave in Illinois. Chase Bank just came out with a feature on the app to open up a Roth IRA account. Right on the app. My question is, which direction would you go with, a broker or this app? I'm not sure what the differences are when opening a Roth with a bank or with a broker. Well, apps generally don't have any advice for you except stuff that would be set up

on an automated basis. Like there's investing called robo-investing now that is all automated. And it's just there's not a person to talk to involved here. I work too hard for my money to turn it over to an app. I work too hard for my money to turn any amount of anything over to Chase, for God's sakes. What a horrible idea. And I work too hard to allow a bank, which primary job is to get people in debt, to do my investing. I don't go to the transmission shop to buy mufflers.

I don't go to the muffler shop to buy transmissions. I don't go to the bank for investing. Banks are where you have savings accounts, checking accounts, and they loan you money and get you in debt. That's what they do. That's really all they do. They're not in the investing business. Well, they're in the investing business, but it's certainly not their specialization. It's a sidebar thing.

I don't buy my insurance at banks. I don't buy my investments at banks. I don't buy my investments at banks. I don't buy my shoes at banks. But they're apt to sell you almost anything because they just love making money. No. I do my investing with a good investment broker that's an actual human being that I can sit down with who will talk to me and tell me what's going on. I know a lot about investing. I know a lot about investing. I know a lot about mutual funds.

I've been licensed and all of that stuff. I used to sell it years ago. I've been studying it for 40 years. I'm very competent and confident in running my own investments, but I don't. I can, you know, we were driving down the road the other day out in the country, and my wife said, what's that? And this guy with a pickup in front of us had a trailer behind his pickup, and he had the hydraulic item on the trailer that you use to pull an engine.

If you're going to take an engine out of a car, it jacks the engine up out of the car. You have to take the engine loose and take all the parts loose and everything. Then you lift the engine out of the car. If you're going to change the engine out or whatever, I happen to know what that was because I've done that, but I don't do that now. I opened the hood on my Corvette the other day and it looks more like a computer than an engine to me. And so the chances of me doing that are zero, even though I probably could figure it out. I don't DIY my own cars anymore. And I don't DIY, do it yourself, my own investments anymore. I don't even DIY my own taxes. I don't DIY my own estate plan. I have people that are known

as professionals that know what the flip they're doing. They sit down, show me what we're doing. I understand it. And then we do it, meaning they have the heart of a teacher. And that's how you pick investments. You can do it. You can read two books to make you an expert and three articles on Motley Fool. And then you'll be a fool.

You know, and all of a sudden you're about to lose your butt because you don't know what you're doing. And the first time that Donald Trump or North Korea boy burps in the market moves, you're going to freak out and make the exact wrong financial decision at the exact wrong time because you don't have anyone in your corner coaching you through and telling you to slow down. So this is why I recommend investment advisors. I personally use an investment advisor.

And did I mention I know a lot about this? And yet I have people that, but I don't sit and look at mutual funds all day long. You know what this nerd does that works with me on our SmartVestor Pro? He's a nerd. He's one of my best best friends but he is a nerd and his whole job his whole life is look at mutual funds all day long just shoot me no thank you i don't want to do that all day long but he knows more about mutual funds in his pinky than any six of you put together with your theories and discussing them with your brother-in-law

over thanksgiving dinner and two of you hadn't got a net worth of $4 put together. But you got a lot of opinions. See, this is how people do. It's dumb. They take more financial advice from their golfing buddy than they do from a professional. And then wonder why, I lost money when the market went down. Well, of course you did. Your golfing buddy is your financial advisor.

Give me a break. And he can't even play golf. I mean, come on. Gee. So, no, you get a financial advisor, you get somebody in your corner, and the way you do that, you click SmartVestor at DaveRamsey.com, put in your information. It'll drop the list of the SmartVestor pros in your area down.

You get to choose which one. These are the people we have vetted that we feel good about. Our team spends a lot of time and a lot of my money digging in and knowing about these people to make sure they're straight up and that they have the heart of a teacher. And you sit down with somebody like that. You don't use an app. You use an app to play solitaire. You don't use an app. You use an app to play solitaire.

You don't use an app to do your investing. Katie is with us. Katie's in Birmingham, Alabama. Hi, Katie. How are you? Hi, Dave. I'm well. Thank you.

My quick question is my husband and I just really got started on Baby Step 2 and decided, you know, we're going all in. We're getting this done, taking care of it. And so I've been wondering what we should do because we both have IRAs through work. started on Baby Step 2 and decided, you know, we're going all in, we're getting this done, taking care of it. And so I've been wondering what we should do because we both have IRAs through work, and my company matches 3%. So should I keep putting that in there to match 3% or should I hold off on that for now while we're going through Baby Step 2? Okay.

Where did you learn about the Baby Steps? Well, I've heard little bit here and there. I've heard your name and I've seen a bunch of budget stuff on Pinterest because I usually keep a budget for us. Now, when I say that, I keep track of our expenses. I don't really stick to the budget. That's been our problem. And so now we've decided, you know, we're really going to hit this hard and get out from under student loans and my car payment. Gotcha. Good for you.

Good decision. Thank you. Okay. So what I'm going to do is I'm going to send you a copy of the book, The Total Money Makeover. It's got all of the details. I actually got that in the mail yesterday. Oh, okay.

Well, then you're ahead. When you read that, what it's going to tell you is it gives you every detail on the baby steps. OK, exactly what to do, when and why. And it answers questions like the one you asked. That's why I was wondering, you know, where you were in this process. But you're still kind of gathering the information. You've come up with a commitment. We're going to do this.

But you're learning how to do the plan and what the plan is now. So, OK, so the answer to your question is this what we tell folks when you get to baby step two one of the things that gets people out of debt is this extreme amount of focus what you focus on is what you win at if you focus on your career you'll win at your career if you focus on your marriage you'll win at your marriage if you focus on getting out of debt you'll get out of debt and there's something emotional spiritual and mathematical about that but it's not simply math so for that reason because the power of focus is such an element such a data point in whether or not you're successful at working your plan we tell people to stop all saving of any kind temporarily, even if you're going to miss the match.

It's temporary. But the power of focus will cause you to become debt-free much faster than trying to do three things at once poorly. I want you to do one thing well. Yes. And that's great. Is that also applied to no more... Once we have... Well, we already do have our emergency fund, so no more adding to that.

Well, worse than that. We're going to take everything out of the emergency fund down to baby step one, which is $1,000, and we're going to throw it at your baby step two. Right. We actually just did that yesterday. We had a little over $2,000 in there, and so we took it down to $1,000 and paid off the credit card. You're ahead of me. How'd that feel?

It was awesome. It hasn't hit the account yet, but it was awesome. Yeah, that's exactly what we're doing. You see, you're getting traction, and that's exactly the feeling I want you to have. It's like, yeah, we can do this. There's hope in your voice. Your voice changed when you talked about that. You got this.

Proud of you. Well done. You got this. Proud of you. Well done. You can do it. But yes, I would stop investing temporarily until we get back to baby step four. This is the Dave Ramsey Show. Hey guys, at the Dave Ramsey Show, we really value your input. It helps us to know what's important to you so we can deliver relevant content to help you crush your money goals. We just launched a brand new survey, and we'd love your feedback. It only takes a few minutes, and you'll be entered to win a $100 Amazon gift card.

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They're high-octane, high-protein real estate agents. They don't get into our elp program unless they are and uh their level of service is amazing and you'll be able to get a bid in on a house even in this weird market and so it's worth doing go to davramsey.com slash mortgage calculator and on the front page you can can always, at DaveRimsey.com, check out our ELPs for real estate. You click on that, boom, you'll get some help in real estate, just like that. Key's with us in Austin, Texas. Hey, Key, how are you? I'm okay. A little nervous.

That's okay. We've never lost a patient. What's up? I want to know if it's worth it to sell our house to get out of student loan debt. Okay. How much student loan debt. Okay. How much student loan debt do you have? Combined, $285,000. Don't yell.

$285,000? Yes, sir. Who's the doctor? Who's the doctor? No one. No one. Who's the lawyer? No one.

What in the world did you get a degree in? Political science, media studies. My husband makes six figures, however, but I'm a stay-at-home mom now, so there was just a lot of deferring, and that's what amped up the interest. I'm sorry, there was a lot of what? Deferring. Deferring to pay. Oh, so it's been many years.

Okay. So you're a political science degree. Yes. And that's where all this debt came from? From both of us. We both have bachelor's and master's degrees. Oh, okay. And what are your master's in?

Both of them political science? No, he had adult education, and he uses that, and he makes good money. And I was media, but I'm not in the right city for it so yeah because they don't do media in austin well not to i mean honestly a lot of it is volunteer work independent work very small companies um just not a lot of opportunity and i have two young kids oh there's the Okay. So your husband makes what kind of money? $110,000. $110,000. $285,000.

Yep. So we have about $120,000 equity in the house. So that would wipe out his if we sold it and just rented to work on mine. Well, they're both ours uh since we are married um yeah i think you are going to get into media okay um it might be a side hustle it might be some stuff you do on your own um it may be that you're you know doing it remotely for other cities i don't know what area of media you specialize in but i'm very familiar with austin texas and there

is a lot of digital things going on there uh there's a lot of broadcast going on there i mean this is a major national major city in america this is not a you're not living in podunk right but there are companies are leaving they don't have the incentives they used to have yeah but there's media to be done there i mean i don't you know it just depends on how you want to cash flow it the big thing is is you just want to be a stay-at-home mom which i don't blame you for but you got 285 000 in debt so you're going to have to do something to create extra income, $110,000. Even if you only had $100,000 in student loan debt, it's going to take you years. Right.

And so we need to really get our income up to match the fact that we've invested this heavily in education, even if it's a temporary basis. And I don't care. I'm not saying leave it to the kids, but let's at least get some kind of side hustle that where you run the business and you can control your time and because i'll bet you can generate 50 60 50 60 000 a year put that in this equation it changes everything um you know i i want to address that before i give up my home do you hate your house no it's a good area okay i'm probably going to sit on this house for a little while and let's work this plan and let's try to get the income up

and get you guys on a written budget and let's see if we can throw 30 40 50 000 at this if you can now we're on a four-year plan and we keep the house um if you can't and you're stuck and the house solves the problem it doesn't solve the problem is is the issue though you still got a hundred and something thousand dollars in debt after you sell the house so let's try the other for a year and see what we can do get your income up and really tighten up the screws on your budget both of you um and what can hubby do to add to his income as well uh as a temporary measure because here's the thing you guys have invested very heavily in education you have got to get a return on that investment because you've made a mess you do not you gave up your choices when you did that. And so you've got to create incomes for a short period of time anyway. You know, three to five years or something.

You guys are going to have to turn on the midnight oil, so to speak. But you do that, you probably can do it without selling the house. But that causes the house to be a problem. I mean, if you could just be 100% debt-free by selling the house and rent for a few years save up and rebuy yeah i'd probably talk about that but it doesn't do that for you and so i don't like this idea of we're going to sell the house in four years after renting we might talk about starting to save for our retirement i'm starting to save for a down payment to get back in that that one doesn't doesn't sit well it means we're not really addressing the core issue here hey thank, thank you for the call.

Danielle is with us in Boca Raton. Hi, Danielle. How are you? I'm good. How are you, Dave? Better than I deserve. What's up? I'm good.

I'm your biggest fan. I'm honored. Well, my question is, I was thinking about the 7% inflation rate that I heard you talk about before colleges, and I have twins that are sophomore and going to be starting college in three years, so I need to heavily start saving for college. I'm just two months away from finishing Baby Step 3. And I wanted to know if it's wise to start Florida prepaid and lock in the rates for this year.

So it's not, even though there's a 7% inflation on that. Yeah, you're making 7% on your money when you do prepaid college. I wouldn't do it. If you want to start investing for college, here's the thing. With three years to go go no matter what rate of return you get on your money you're not going to get your your your growth on the account is not how the kids are going to go to school the way this account is going to grow that sends them to school is you're going to chunk money in there uh so you know seven percent of a hundred thousand

is seven thousand dollars seven percent of ten thousand dollars is seven hundred dollars twelve of $100,000 is $7,000. 7% of $10,000 is $700. 12% of $10,000 is $1,200. $1,200, $700 does not fix this issue. So the growth, the interest, so to speak, is not going to solve your problem. What's going to solve your problem is you guys are going to throw money at this fast and heavy to build up as much as you can. And if you can't make it all the way and pay cash for everything and in terms of you guys then junior gets to go to work oh well while he's in school and um you know junior is going to pick a school that's very affordable oh well

not a bad thing and so on so uh you know you know, it depends on how much you guys can pile up. But either way, whether you did prepaid or whether you did mutual funds in a 529, it's not going to make that much difference. I mean, go ahead and do a 529 if you want. But there's going to be a few thousand dollars, depending on what you put in there, of growth is all. The biggest issue is going to be how much you guys can cash flow and then juniors selecting a college that is affordable and that makes sense.

So, hey, thanks for the call. We appreciate you joining us. Ben is on Instagram. Dave, I want to sell my car. The payments are so high I can't afford it. I want to pay off my debt, but I need a car for work. I drive client to client homes for my work i'm upside down in the car i have no money to buy a car how do i do it

uh well you start saving and you work extra and you pile up enough money to pay cash for a decent little car and then you can get out of the one that you're stuck in um but that you know that's what you gotta do i understand you got a, but you also have to get rid of this car. It has to go in order to get clear. That's what you're saying, Ben. Hey, thank you for following us on Instagram. This is the Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year.

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