The Ramsey Show - App - Advice for Graduates on Handling Student Loan Debt (Hour 3)

Episode Date: April 24, 2019

Get Started on Your Debt-Free Journey We’ve made it even easier to get started taking control of your money.  Learn How! How Fast Can You Be Debt-Free? You don’t have to be in debt for the rest of your life! Answer 5 simple questions and our Debt Calculator will show you how quickly you could be out debt!   Get the Complete Guide to Budgeting. Budgeting is often misunderstood and overcomplicated. It doesn't have to be! We made it simple. After 90 days of budgeting with EveryDollar, 9 out of 10 users feel more confident in their financial future. Get the Complete Guide to Budgeting.   Get the Coverage You Need. How does your coverage stack up? This Coverage Checkup will show you what you need (and don’t need), which questions to ask, and where to get the best coverage.   Find the Right Financial Advisor. Finding the right financial advisor doesn't have to be complicated. Our free guide makes it easy to know what questions to ask so you can make a confident choice. Get the guide!    Listen and Watch Anytime, Anywhere.   The Dave Ramsey Show app lets you download episodes for offline playback, customize your content, and see what’s coming up!

🎵 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. We're glad you're here. Open phones at 888-825-5225. Chloe is with us in Indianapolis.

Hi, Chloe. Welcome to The Dave Ramsey Show. Hi, Dave. Thanks for having me. Sure. What's up? I am getting ready to leave my job on Friday, and I have money in a 401k Roth, my current employer.

And I was wondering if I can roll that into a Roth IRA I had several years ago that I've not been able to contribute to because I make too much money. Or if I can put it into a SEP IRA, or since I do have some consulting I do on the side for my own business, or if I just need to create another Roth IRA of some kind. It would just be a new Roth IRA. Okay. Because you don't combine these accounts. You can have them all in one mutual fund, but they'll have different account numbers. Okay.

Let's say you had four different jobs and you rolled them all into the same mutual fund, you they'll have different account numbers. Let's say you had four different jobs and you rolled them all into the same mutual fund, you'd have four different account numbers. They don't stack them into one. You don't roll them forward into one other one. So it's technically a division, but you can put it in whatever you want to put it in. If you like the mutual fund that one of them is in or mutual funds that one of them is in, and a Roth-to-Roth rollover doesn't create any taxes. Did you have any match from your company?

Yes, about 3%. Okay, now that is not Roth. Correct. That's just a traditional IRA? Yes. That portion will go into yet another account, into a traditional IRA. But again, you sit down with like your SmartVestor Pro or whoever you do your mutual funds with, and you pick out your mutual funds,

and we're going to roll the match portion into a traditional. We're going to roll the Roth portion into a Roth, and so on. And they can look at everything with you and pull it all together. I mean, I get one statement that shows all of my funds, a summary statement. But, you know, all the different things I've done over the years end up in separate account numbers, if that makes sense. Yes, that does. Yes, very much. Well, so what are you going to do now?

I'm going to go back to consulting and make a heck of a lot more money. Oh, I hate it when that happens. Yeah, it's a good gig. Yeah. Now, let me give you one other piece of information. When you're meeting with your SmartVestor Pro, they can help you with this. Even though your income limits are over the amount that allow you to do a Roth, there's a way to get into a Roth every year if you want to. In addition to your SEP, you can do your SEP with your consulting, okay? And you can do a SEP Roth with your consulting. But you could do a regular Roth IRA. Sharon and I do them every year.

We're way over the income limits. And it's called a backdoor Roth. Yeah, I've heard you talk about it, but I'm not sure I understood it. Okay, well, if you do it, here's how it works. It's very simple. If you do a traditional IRA that's after tax, not before tax, you also don't qualify for a traditional before tax, okay, because of your income. But you're allowed to do an after-tax IRA. Now, what that would mean if you left it alone would be you put money in

and you don't get the tax deduction. Like with money in and you don't get the tax deduction. Like with a Roth, you don't get the tax deduction for what you put in, right? Right. But it would grow in a traditional tax deferred if you left it alone. And then pay the taxes later. No, no, no, no, no, no, no. We're not going to do that. I'm just teaching you here, okay?

If you left it alone, we're not going to leave it alone, okay? But you're allowed to do an after-tax IRA, not a before-tax IRA, traditional. Then the weird thing is you're allowed to roll, no matter what your income is, you're allowed to roll anything into a Roth, okay? Oh. So you do an after-tax traditional, and 30 seconds later, you roll it into a Roth. Okay? Oh. So you do an after-tax traditional, and 30 seconds later, you roll it into a Roth. Okay. And that's your back door.

That sounds good. And see, there's no taxes because you've already, you weren't, it was an after-tax contribution anyway, and it's an after-tax contribution would have gone into a Roth anyway, and so there's no taxes. You don't get any tax break on what you're putting in, but you don't with a Roth anyway, and so there's no taxes. You don't get any tax break on what you're putting in, but you don't with a Roth anyway. You only get the tax break on the tax-free growth. Follow me?

Yes. So that's how the back door works, and I do one, Sharon and I do one every January. You know, we drop our, this year's $7,000 because we're over $50,000, and you can do $6,000 if you're under $50,000 each, and we drop it in there and then let that grow tax-free every year. And just, you know, it's a set and roll, set and roll, set and roll. And it's a two-step process, but it's a rollover is really what it is.

But it's called the backdoor Roth. Your smart investor pro can help you do it. There's really nothing to it. It's technically a loophole in the law. I still don't understand why they've never fixed it, but one of these days they're going to stop that hole up. But in the meantime, old Dave's going to be putting all he can put in there because it's perfectly legal, and it is good stewardship from a biblical perspective

to not give money to the government. Let that sink in. Kerry is in Washington, D.C. Hey, Kerry, welcome to the Dave let that sink in carrie is in washington dc hey carrie welcome to the dave ramsey show hi dave thank you for taking my call sure what's up so um last month my husband and i we're both um active duty stationed outside of washington dc and we have a rental property um in florida um We were stationed there. Well, the house, everything's paid off for in the last baby step. We have no debt. The house burnt down.

Whoa. And we got a check for $165,000. It was paid for? Yes, sir. We paid it off. Okay. So they wrote you a check? Yeah, I wrote us a check and we cashed, we got it in the bank, but we don't know quite what to do with it.

Okay. We're looking for your opinion. We meet with our financial advisor Friday, but we kind of wanted to see what they would do with it. I assume you're scraping the lot and selling it? We love the area. We do want to go back there. Well, but buy when you go back. Don't buy now.

Okay. I wouldn't buy a rental property in Florida if I lived in Washington, D.C. now. I mean, it can burn or something. It's not funny. But you do have money, and nobody got hurt, so it's okay. I would scrape the lot, sell it, and invest the $165,000, or or use it to pay off your current home or use it wherever you are on your baby steps no we're we're at the end we're seven your baby step seven then it's an investment it's investment money uh how much uh you're in the military how much longer are you going to be

serving um my husband's at 21 years i I'm at 11, so probably nine. So you're probably not going to land. Is that going to keep you moving? Yes. Yes, it will. Okay. And we're kind of interested. We liked having the rental property.

We're actually looking maybe into getting another one. We kind of, we've been doing well with it. We like it. Well, you know. Okay. If you want to do that, the downside is that you're probably going to move off from your rental property. I always recommend having rental property near you. And that's going to be difficult because you can't move the rental property every time you move.

So, you know, if you want to buy another one down there, you can. Long-distance landlording is just tough. It adds an element of risk to rental property, and I don't generally recommend it. But you're 100% debt-free. You've got some extra money. If it's what you want to do, fine. Pay cash for the rental property. And I generally would say,

let's try to get it where you're going to end up or where you live now, one of the two. This is the Dave Ramsey Show. The last thing I want you to feel is buyer's remorse, especially when you offered thousands more on a new home to win a bidding war. If I've taught you anything, it's that blindly throwing money at a problem is a stupid plan and something you'll regret for years. The key to avoiding this rookie mistake is to call Churchill Mortgage and get certified. This easy program puts you miles ahead of your competition because you are pre-underwritten.

Your interest rate is secured, and yes, you can close within 14 days. Don't fall into the trap of offering more money just to compensate for a poor plan. Call Churchill Mortgage today and get certified. Call 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender.

761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Thank you for joining us, America. This is the Dave Ramsey Show. Open phones at 888-825-5225. Michelle is with us in Orange County. Hi, Michelle. How are you? Doing good. How are you?

Better than I deserve. What's up? Wonderful. Honored to be talking to you. Sorry, I'm a little nervous. You too. So my fiance and I got engaged, and so now his home is going to be our home. We bought it six years ago.

We have $350,000 left on the mortgage. And my question to you is the area that the house is in is not a permanent area that I want to live in forever. I want to move somewhere else. It's only a couple miles away because we're in orange county so but um so should we pay off this home it would take about seven years based on your calculator and website or should we sell and buy an area that i want to live in forever and pay off the house then well i'll just go ahead and move what's keeping keeping you from moving it's it's going to be like another 150 to 200 based on the area that I want to move to. And I was wondering would it be better just to pay off this house now or try to?

No, go ahead and move. No? Okay. And I'm assuming you can afford the other house on a 15-year fixed rate with your new combined household income. But as long as it fits all of those guidelines and you're debt free. Are you debt free other than the house? Yes. Okay, great.

How old are you two? I'm 34, he's 40. Great, okay. Yeah. If you can afford to make the move up, then there's no reason to, there's nothing that, there's no mathematical advantage to staying there and paying that one off versus paying the other one off. Okay. My concern was the market, and if the market would go up dramatically in five years, then

it might be more difficult to pay that off than right now. Yeah. I mean, you'd be buying a bigger house, but the house you live in would have gone up dramatically, too. Yeah, that's exactly right. So, you know, there's not going to be a ton of, I mean, it's a percentage game, but there's not going to be a ton of, I mean, it's a percentage game, but there's not going to be a ton of difference in that. But I wouldn't do it because of that.

I would do it because of where I wanted to live, and you can afford to do it, and then get about the business of paying it off. And, of course, we know from the discussions we have here every day that the faster you pay off your home, the faster you enter the world of serious wealth building. Because obviously, when you don't have a $350,000 or $500,000 mortgage, it changes your life. Logan is with us in Phoenix, Arizona. Hi, Logan.

Welcome to the Dave Ramsey Show. How are you doing, Dave? Better than I deserve. What's up? Hey, I graduated high school back in 2014, and your financial peace class was actually a requirement for Gilbert Public Schools in order to graduate. Yay. And me being a kid, went out and bought a brand new Harley,

and I am getting ready to finally pay it off. I'm 23 now. Good. And what I need to know is how to do that. Do I send them a cashier's check, or how does that work? Who has the loan? Harley Davidson. Okay. We'll just call them and ask them for a payoff to the penny.

Or do you have an online app on it where you can just look online and see what your payoff is? Yeah, the payoff is $95.50. Exactly to the penny? Correct. Okay. If you enter that on that website, it's paid off? Through a debit card?

Yeah, you can do that. How do you make your payments now? I do it through a debit card, but isn't there a maximum limit on debit cards? It might be on yours, yeah. You may have to do it in two payments or something. You might want to talk to your bank about that. But if you're using a debit card to make the payments, you can pay it off in a couple payments there. If you've got, like, a $5,000 limit on it or something and it's $9,000, you may have to do two payments

and go ahead and talk to your bank about making sure it clears and you may have to do it and it may be 24 hours apart or something yeah um for sure for sure you can whatever your debit card limit is you could dump that amount in um but you don't want to activate the fraud activation stuff on your debit card algorithm, so go ahead and let your bank know and talk to them. Jump on the 800 line on that and just go, hey, here's what I'm wanting to do. How do I do that? And they'll walk you through how to do it.

That's the easiest way to do it, and then Harley will send you the title. Right, right, okay. And they won't stack interest on top of each single payment, will they? No, not unless you make those payments far enough apart that more interest accrues. But if you make a $5,000 payment today and a $4,322.32 or whatever the number is tomorrow, you're probably not going to have any interest. But when you open the app up tomorrow or open up the website tomorrow, you look at what that balance is and you give that amount if you put the 5 000 in the day but

you may have to do it something like that it may be that may be what your debit card what your bank will instruct you to do on how to use your debit card and not because there's a there's a daily limit and there's a per purchase limit on most debit cards um and, yeah, that's what you'd have to do. All right, Drew is with us in Des Moines. Hi, Drew. Welcome to the Dave Ramsey Show. Hi, how are you? Better than I deserve.

What's up? Oh, I got kind of a two-part here, like a lot of people. Well, I would say we, but my wife's very unenthusiastic um just kind of real apathetic towards uh digging out of debt and we're on baby steps too like i literally paid off our credit card today um thirty seven hundred dollars wipe that out. And then next is her student loans. So just, I mean, I don't know. Do you just keep hammering, I guess, is the only way I can know how to ask it? Just keep hammering the what? I don't know.

Just keep hammering the damn thing. Do you keep trying to get her on board? Oh. Because I just, I feel like every answer I get is, well, what do you think? What do you want to do? You know, and it's always just, well, I don't care. I don't know. Whatever.

How long have you been married? It'll be eight years this July. How long? Eight. Eight years. And so you guys are how old? We both turned 40 this April. I'll be 40 next Wednesday.

Is the rest of your marriage this lackadaisical? Just to preface everything, I lived on my own for about three months last year at this time. So we've had some troubles. Yeah. So there's some other issues that are bleeding over into this subject. Yeah, absolutely. And I know that. We've been through counseling, but part of the trouble is the lack of financial stability.

Lack of financial stability is the trouble. It is one of my troubles. It's very troubling to me. Oh, that she misbehaves with money. She doesn't exactly misbehave, but it's just she thinks payments are part of life. I never had a payment or a credit card or anything until we got married, and then I was stupid and led to believe that that's just, you know, that's how you build credit. And then I got to where, I mean, we don't have a bunch of stuff, but it's just we make no headway.

And we, I mean, for lack of a better term, we fiddle every dime we make away on literally nothing. You know, I haven't been on a vacation in 10 years, you know, just because we never have enough money to go do anything. So I'm just. Okay, so here's what you need to do then. This is not about how to get out of debt or even how to get her on board. You guys don't have any goals together. Mm-hmm. And you've got to set some goals in high definition that you're both excited about in the future,

that you're willing to sacrifice to get to. And then that suddenly has energy to go with it and then you will do a budget together that the money doesn't get fiddled away that we both agree to stick to and the reason we both agree to stick to it is we're excited about hitting our longer term goals than we are whether we go out to eat friday night yeah and only then are you going to fix this. But this is rooted in you guys do not have a shared future. The Bible says where there is no vision, the people perish. And your marriage is perishing. It has no vision.

So if I were you, I'd get back with a marriage counselor and start laying out some visions over my life and over my marriage and over my wife. And what are we going to do in the future and how are we going to get there? And let's get excited again. Something's got to move here. This is not okay. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs?

Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry, a Better Business Bureau-accredited organization CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills.

To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org Dustin is in Nashville. Welcome to the Dave Ramsey Show, Dustin. Hey, Dave. Thanks for taking my call today.

Sure, man. What's up? Hey, so I just reached one year with the company I am at, and they offered me a raise. But they gave me two options. One is a $7,000 raise. The other is $5,500 plus 3,000 shares vested equally over the next three years. And I'd like to hear what your advice would be. 3,000 shares what over the next three years?

Vested. Vested over the next three years. So 1,000 over the next year and then the next and the following. Right. How long have you been with them? Just one year. Okay. And what are the shares worth?

Not much now at the startup. I think the strike price is like only 23 cents a share. But we're growing about 100% year over year over the last several years and exploring some capital investments that would value the company at no less than $8 to $10 a share. But it's not yet? Not yet, no. Okay, so it was $7,5500 plus shares, right?

Correct, yep. So $1,500. Yep. So let's pretend that you had $7,000 piled in the middle of your table in cash. Uncle Benjamin's looking at you, all right? Would you take $1,500 of that and buy a startup penny stock because you think it might go public and go to eight dollars later well if you if you knew it was going to go to eight dollars we all would right but we don't know that because

as many startups fail and never do their ipo is the ones that wish they did matter of fact more of them don't do it than do thought so the chances of this being the reason it's worth 23 cents is because it's worth 23 cents yeah i don't in i don't invest in stuff like that unless it's just i don't invest in stuff like that but the only way i would is if it was throw away money so how old are you uh 31 and do you have other debts and investments and things uh debt free we um have a 401k, and I do have 200 shares in this company. Already? Yeah, I became vested in 10% of 2,000 at the year mark.

So it was like the strike price is so low. Honestly, the opportunity cost is so low to buy the shares that it almost becomes a harder decision, right? Well, it's just, you know, it's a matter of, it's a high-risk roll of the dice in Vegas. Oh, yeah. You know, and it's a, you know, you're betting on does so-and-so make the putt in the Masters, right? This is, you know, This is what you're doing. This is high-risk speculation. And so how much do you want to sit on the craps table in Vegas?

Yeah. At your stage of the life. That's really what it is. And that's not putting your company down. I'm just saying statistically and probability-wise, the number of these things that go from $0.23 to $8, you can count them on a few hands. Now, the ones that do, everybody talks about them for the rest of their life. It's like the big fish they caught once. But lots of people lose lots of money on this stuff.

So, you know, if you would recreationally gamble $1,500, then I would buy this. But that's basically what you're doing. Yeah, I see your point. And so it's okay. It's not a negative thing. I know people that do it. And here's the thing. You're not broke.

You can afford to do it. You've been wise and conservative with money. It's not $15,000. It's not $150,000, which either of those would make me raise my eyebrow and think you're nuts. It's $1,500, so it doesn't break your life. But it's $1,500 every year. Yeah. I'm taking the raise.

Well, that's good advice. You already got the stock. You already got some stock. Yeah. And you'll get some more, probably. But I'm taking the raise. I might even take the raise. Wait already got some stock. Yeah. And you'll get some more probably. But I'm taking the raise. I might even take the raise.

Wait a minute. What would keep... 3,000 shares. How many shares? 3,000. 3,000. So 1,000 a year, which is 1,500 a year. So you're paying $1.50 for them. Right?

Did I do that right? Yeah, yeah. Well, that's not a deal. Not paying a... You're getting $1,000 a year, and you're giving up $1,500 a year. I see, I see. So you're paying $1.50 for them. I'd rather take the money and go buy them at $0.23. I guess that makes sense, yeah.

Yeah, it. Yeah. It's okay. It's not the end of the world. It's an interesting discussion because it makes you jab around on your, me and you both and our listeners while we're doing this, we're jabbing around on our critical thinking skills and saying, okay, let's work this through. And sometimes if I reverse engineer it and I go back as if it wasn't done and I undid it, would I do it? And that's why I put the $7,000 in the middle of the table table that's my reverse engineering question and this is how how does this thing work okay that's how would i do that no i wouldn't do that well then why would i do this so it's yeah i i'm i'm probably going to take the raise and i think you'll get other

opportunities to buy some 23 cent shares and i might do some of that with some small denominations. If you're watching this and you feel good about the leadership team and their competency. Jason is with us in St. Petersburg, Florida. Hi, Jason. How are you? Hi, Dave. It's truly an honor to speak to you. You too. What's up? Okay, so I'm torn between whether I should sell my condo or pay it off. I'm 48.

I'm debt-free, single. I have enough cash, excluding my emergency fund. Without touching the emergency fund, I have enough cash to pay it off. My dilemma is I bought the condo in 2005 for $93,000. Once the market dropped, it dropped considerably. And it's only come back similar units in the past six months have sold between $60, pay it off, and have very low expenses, or sell it and rent and save until I can buy something more ideal. And I just wanted to get your thoughts.

Is there any reason to think it's not going to continue to increase in value? No. Okay. I would pay it off and stay there and let that be your lowered expenses and then save. And when you save up enough to make your move, sell it, put your savings with it into something more ideal. Okay.

Here's a good rule of thumb. You make your decisions about whether to sell something or keep it based on the future not the past understood the past gives us some information maybe about the future but what happened in vegas was it was the fastest growing city in america and when the bubble burst it collapsed and most of that market has 100 recovered now back up to its old values, which were unusually high, by the way, artificially high probably. And they're almost back to that. Now, that's not saying now it's artificial, but I'm saying that market, it took one of the hardest hits in America with the downturn, and it's almost fully recovered.

Yours is not quite, but 80 over 90, you're pretty close. And I think it's almost fully recovered yours is not quite but 80 over 90 you're pretty close and i think it's a healthy real estate market and if i live there i would feel good about the future of it i think unless your condo project is something you don't feel good about the future fine it's it's it's average okay um it's it's i'm fine i've been here 14 years and i'm you know i'm perfectly happy happy. There's, there's nothing. So what I would do is I, I would pay it off, but I would lay out a detailed game plan about what moving looks like and when. Okay.

And say, okay, I'm going to pay it off. But in four years and eight months, I'm going to be living over there because i have saved x plus my condo will have gone up to y gotcha okay whatever by that i mean because i don't want you just languishing there and that's kind of how it feels it feels like you know like the land of mediocre i want out of here you know that kind of thing you're not in Vegas. You're in St. Petersburg. I was looking at the wrong caller. Okay. Well, St. Petersburg's different, but not a lot. It did go down.

But it didn't drop like Vegas dropped. I'm sorry. Wrong city. But it doesn't change the advice. It just changes the dramatic impact of the advice. But, yeah. It helps to recognize what city you're talking to. Dave Dufus.

This is the Dave Ramsey Show. Our scripture of the day, Luke 12, 34, For where your treasure is, there your heart will be also. Stephen Covey said, The key is not to prioritize what's on your schedule, but to schedule your priorities. There you go. Where your treasure is, your heart follows. And where your heart is, your treasure is probably going to follow that's what we're saying tricia from the ramsey baby steps community on facebook says uh dave i want to say thank you to whoever recommended contacting an elp in your area for a car insurance quote i contacted the one

recommended in our area and we're saving saving $2,100 a year in car insurance. Wow! Now I can put even more towards our credit card debt. Touchdown! Way to go, Tricia. Love it. If it's been a while since you checked your insurance, most people don't do a good job of checking it, and all that means is not that you're bad.

You just left money on the table. You're probably giving them too much money. So you can get a property and casualty, meaning car insurance, homeowners insurance, quote, from an endorsed local provider that's an insurance broker, meaning they'll shop several different companies and find you the best deal in your situation. You're not trapped with one particular company and have to just go with whatever they say. That's called being a captive agent in the insurance world. So to find out who your ELP is for insurance, go to DaveRamsey.com slash ELP or go over

on the right-hand side of the homepage and you'll see those ELPs listed out there. Endorsed local providers. They don't work for me, but they do the stuff I teach the way I teach it and give you the best possible service, best possible deal. Ron is in Las Vegas. Hey, Ron, welcome to the Dave Ramsey Show. Well, thank you very much, Dave. And by the way, I do believe that you deserve to be as good as you are.

Thank you, sir. How can I help? Unusual situation. I am a full-time educator at a dental school, and I've been selected from you to present during the convocation with any advice you can offer concerning their very significant student loan debt. Some statistics that I just did. Our graduating class has an average student loan debt of $350,000 at 7.1% per year. When they graduate, their average first-year income will be approximately $80,000 a year. Rules of the loan with respect to is there an end to all of this, if they don't miss payments for 20 years, the remaining balance can be forgiven, but they pay taxes on the balance.

If they are in a teaching position, government position situation, then that is reduced to 10 years, and their loans can be forgiven, and there is no tax consequence. The two choices that I see them make are either living incredibly frugally for the first few years or just servicing the interest and hoping that there will be some changes in the federal loan debt crisis that we're in. Is there any advice that you could offer these students on how to face this mountain of debt that they're under? We talk to them all the time.

I spoke to a group of dentists a while back, and it's shocking how expensive dental school is these days. It's probably the most expensive educational professional school. Yeah, I think it is. It's more than a typical med school, unless you're doing some kind of a fellowship or something, or some kind of a specialization. Well, you even pay for that.

See, the medical residencies, you generally get paid when they go to hospitals. Yeah, exactly. Dentists do not. Anyway, what I teach docs and lawyers, too, for that matter, and dentists would fall into the same equation, is simply this. Number one, you don't want to wait 20 years to have a life. Number two, you don't want to wait 10 years to have a life and hope the government gives it to you.

That's not a bet I want to make, that suddenly the government's going to grow a brain. I really don't want to count on that. So the way I view it is this. This group of men and women that you're talking to at convocation are very unusual in two areas. Number one, they have a high intellect because you cannot get through dental school if you're stupid. Okay. Agreed.

Number two, much more so than the general general population they have the ability to delay pleasure for a greater good in other words they've gone to school a lot longer than anybody else why to get into a career that they desperately wanted to be in obviously and because they thought they'd make a lot of money doing it later and so they they delayed moving into the marketplace by four to six years more than the general population um in order to do a greater good so they have this amazing uh ability to see into the future a good thing and sacrifice to get it that's emotional maturity that's above above the general population because you can't get through med school, dental school, if you don't.

So here's what happens as a result. I've worked with docs. I was with a doctor today, as a matter of fact. I wasn't doing his finances, but we were actually both talking about this. What normally happens is I call it doc-itis. They've been holding their breath for 16, 18, 20 years of school, and they finally ring the bell, and it's game on. Finally, I'm here. I have arrived in the promised land, the land of milk and honey,

and they push their student loans to the side mentally, emotionally, and mathematically, and they go buy a BMW, a house, and many of them will buy into a practice in the dental world within the first three years that they can't afford. Now they've got almost a million dollars in debt. Yes. And that's docitis. It's like they held their breath for so long, when they finally exhaled,

it just went crazy. And so what I say is you have the intellect, you have the emotional IQ that is above the general population. Use it. Don't come out of school and buy a BMW. Don't come out of school and buy a BMW. Don't come out of school and buy a practice. Don't come out of school and run your lifestyle up. You're not a doctor.

You're not a dentist. You're a broke dentist. Very good. And act that way until you get these loans cleaned up, and most of them may make 80 year one, but I think the average out there after about three years is probably between 130 and 150. Would you agree with that number? 150, yes.

Okay. And so if we trend that 80 up to 150 over three years and we keep living like we're a graduate student, 350,000 is almost gone. Three to four years they could be debt-free. Then in three to four more years, we're seven or eight years out. You could buy a practice for cash. That's what I teach them. Now, can I get them all to do it?

I can't get anybody of all to do anything. But I teach them, here's your natural propensity, is you are set on the edge of a major screw-up called doc itis you're about to exhale and it's all going to look stupid that is wonderful advice for them now thank you i appreciate you doing this for them and i appreciate you calling in it's uh because honestly doctors and dentists they're stereotyped financially those of us in the financial world they're they're not all of them but it's a stereotype they're they're laughably broke they're laughably horrible with money for such for people of such intellect they absolutely have no sense when it comes to money and it's almost like it's a football player

that made so much money and ends up broke. You know, how'd you make that much money and you end up broke? Same thing with a doc. But some of them, some of them do really, really well. But most, honestly, they're not very good with money.

And they can choose for that not to be the case. They have the intellect and the ability to delay pleasure. That puts us out of the Dave Ramsey Show and the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace,

Christ Jesus. Hey, it's Blake Thompson, Senior Executive Producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.