The Ramsey Show - App - Advice on Treating Your Family to Expensive Vacations (Hour 1)

Episode Date: March 6, 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Elmer is with us to start off this hour in Harrisburg, Pennsylvania. Hi, Elmer.

How are you? Hello, Dave. Thank you for taking my call. Sure. What's up in your world? Hey, I have a question. I'm a solar contractor, and I need some advice on how to speak wisdom

into, like, a situation when a potential client is looking to accrue large debt to install their system. Is it better for me to just stay out of that discussion, or is there a way that I can kind of nudge someone

into considering the, you know, the challenge that they're about to face. Well, I think the thing to do, you know, ethics is often solved by simply treat other people like you don't want to be treated. That solves a lot of ethics questions. And so just switch seats, okay? If you're sitting, how old are you? I'm 28. Okay. And so just switch seats, okay? If you're sitting, how old are you? I'm 28. Okay.

And so if you're sitting there looking at a 21-year-old just married couple who's about to buy $30,000 worth of solar panels on payments, and you know that that's a really stupid idea, you would say, don't do that. Because that's the right thing to do. Not because solar panels are bad, but because I'm guessing that this 21-year-old couple does not need $30,000 worth of debt on solar panels. They probably don't have the income to even discuss supporting that, right?

Yeah, most certainly. Yeah, so you would just look at them and go, if I was 21, how would I want someone to treat me that was honest? Switch seats and treat them that way. Let's change the scenario scenario you're dealing with a 70 year old multi-millionaire who wants to finance it because he believes dad is okay and he doesn't really want your freaking opinion right yeah this is a crotchety old 70 year old guy who's got serious bucks and he's going to finance it because he wants to.

And he didn't know. He didn't want your opinion. So how would you want to be treated if you were him? You want a 28-year-old telling you how to finance your stuff? No, you don't. So you would be quiet, and that would be within the bounds of ethics, right? And so the point is that, you know, you can look at minor things. Here's an example, okay?

Churchill Mortgage, we tell folks, never under any circumstances to take an adjustable rate mortgage out, ever. Churchill Mortgage does some adjustable rate mortgages. They don't suggest them to people that Dave sent over there because that would be inconsistent, correct? But if one of the people that we sent over there wants an adjustable rate mortgage, I haven't told Churchill Mortgage they can't sell it to them. These are all adults. They all get to make their own decisions. And it's kind of funny. I hear occasionally from one of the Churchill guys,

some guy in Minnesota will take out an adjustable rate mortgage, and he'll say, but don't tell Dave, as if they report every freaking mortgage to me. You know? I mean, it's hilarious. It's like, Father, forgive me for I've sinned or something, you know? So you guys are all adults. We get to make our own decisions, and you can treat your customers like they're adults.

But if you see someone doing something that you wouldn't do if you were them, I think you're honor-bound, ethics-bound to say so. Yeah, very well. That answers my question. I appreciate that. We do that with a lot of stuff around here. I tell people what they're supposed to do, what I think they ought to do, but I leave you room to go do what you want to do. You know, you get to do it.

All I can do is present to you the facts and love you enough to tell you what I would do if I were you. And that's how we answer questions here on the show all the time. It's the same thing. But then you get to pick. You get to choose. You have the dignity of being an adult and choosing your own way. Lots of Dave Ramsey listeners do everything I say except cut up all their credit cards.

They still carry a credit card. Lots of them. I know you're out there. I know about you. I probably have your home address. No, I'm kidding. But, I mean, you know, it's like it's funny, isn't it? It's almost like you have to hide it from yourself.

I don't care. I do care because I think you're stupid. I think you shouldn't do that. But I'm not going to insult you and steal your dignity as an adult unless you're just so far out of bounds, you're so far off the ranch that you're going to hurt yourself. And then I'm going to scream at you, you're going to hurt yourself. And that's just ethics. Do unto others as you'd have them do unto you.

It solves almost all your business ethics questions. Good question. I like that one, Elmer. Good lead off for the hour. It solves almost all your business ethics questions. Good question. I like that one, Elmer. Good lead-off for the hour. Brenda is with us in Washington, Vancouver, to be exact. Hi, Brenda. How are you?

Hi, Dave. Thank you so much for taking my call. Sure. What's up? I appreciate you. So my husband and I are in our late 40s, and in our mid-20s, we found you. We followed your plan. We paid off everything. We paid off everything.

We paid off our house several years ago, and we're basically what you'd call millionaires. Yeah. You're everyday millionaires? You're everyday millionaires? Way to go. And you're how old? In our late 40s.

Good for you. Well, how can I help today? Thanks to you. Well, so we have six children. Three are married. Three are still at home. And it's been kind of my dream that I want to take Thanks to you. Well, so we have six children. Three are married. Three are still at home. And it's been kind of my dream that I want to take everyone to Hawaii for Christmas. Oh, you definitely should do that. You see, my husband feels like we can afford it, and that's not his issue.

He feels like the kids would be spoiled. It's spoiling our children. Oh, if you take over their lives and you spoon-feed them half their dadgum disposable income, that's spoiling our children. If you take over their lives and you spoon feed them half their dadgum disposable income, that's spoiling them. But if you take them on one trip to Hawaii, they're not spoiled. They were raised by you people. Okay. You people are responsible people.

I'm guessing most of your kids are fairly functional. Yes. Suddenly one trip of injection of Hawaii into their veins is not going to destroy all of the character you've built over the last 25 years. Take your kids to Hawaii. I love it. You did it.

I do that. Hey, I do that. We just got back from over Christmas. We pay for everything. We take our kids so that the grandbabies come. It's one of the tickets you pay to get the grandbabies, right? So we pay for everybody. we pay for the house we took everybody down to uh mexico down at tulum and rented a house on the beach and you dad gum right we live like no one else we work

like no one else and we're gonna live like no one else and give like no one else and that's what i told him yeah and our kids our kids are our kids all make good money they make enough money to pay for their own dadgum trips, and they do when they go on their own trips. But if Papa Dave is calling up a family trip, he's going to write the check. Everybody goes. Let's do it. I like it.

I love it. It's one of my favorite things to do. One of the things we found about people who build wealth from scratch is they value experiences more than items. Once you reach a certain point in your wealth, you value experiences more than items. Once you reach a certain point in your wealth, you value experiences more than items. And so I got pictures with three-year-olds wandering around on the beach, stumbling around. It's awesome. It's absolutely awesome. Playing in the waves, those pictures will go. That'll do me for a long time. And yeah, that's why we do this, folks. This is why we do it. Yes, go, go, go, go,

go. Tell your husband, quit being such a cheapskate. You're supposed to do three things with money. Invest it so that you build wealth. Give it with outrageous generosity. And enjoy it, for God's sakes. This is the Dave Ramsey Show. See you, Chef. 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. Coming up at the bottom of the hour, Ramsey personality Rachel Cruz will join us.

If you've got questions for Rachel, she'll be with us for a couple segments. A lot of things going on in the Rachel Cruz world. Two times number one best-selling author a video project on youtube called the rachel cruz show that continues to just explode with millions of viewers and of course the podcast series now going ding ding so you check out the new podcast for the rachel cruz show as well all these things going on plus a lot of other things with rachel we'll be here talking to her about that and your questions coming up so we'll open up a couple lines for her right now the phone number here is 888-825-5225 larry's in san francisco hi larry welcome to the dave ramsey

show hey dave how are you today better than i deserve what's up excellent so let me give you a spread of so what i'm looking at is net worth around 3.8. And my question was, most of it is all in equities. And I have a condo in Florida that was purchased around for about 400, value maybe 540. But it's been rented out for the past 15 years. But it's not really getting a great return. Maybe renting it out and getting, let's see what I get, about $2,900. The HOA expenses on it is close to $1,100.

So you're roughly, between that and netting out $1,800, then real estate taxes maybe netting maybe, you know, a thousand, well, maybe about a thousand, three hundred. And so it's not really a great return, and there's no mortgage on it. So what I was thinking is whether or not you think maybe I should sell it, take all that equity, put it back into the indexes, which is averaging anywhere from seven to nine percent returns, or that or just pay off my mortgage, which is basically around that amount.

And the interest on that is about 3.4% on a 30-year. All right. Well, way to go. Did you start with nothing, or did you inherit all this money? No, I'm a horrible student and inherited nothing. Okay. So how old are you? 45. Wow, you killed it, man. 3.8 at So how old are you? Forty-five.

Wow, you killed it, man. 3.8 at 45. Good for you. What's your household income? I graduated college. What's your household income? Just under 500. Okay.

Oh, you're killing it. That's the variable right there. Okay. No debt. Yeah, well done. Zero debt. Okay, well, no, not zero debt. You have two mortgages.

No, no, there's no mortgage in Florida. I thought there was a mortgage. Oh, that's right. There's a mortgage on your house. Correct, and that was what I was saying. The question is, do you think that I should pay off the mortgage? Yeah, I heard you. It's about $400,000 on your house, right?

On the mortgage, it's just under $600,000, so it's like $580,000. We'll separate the issues to the side. Number one, I'd pay off the mortgage immediately with something. You decide what. I don't care. Now, when you're measuring real estate returns, you don't measure just cash on cash. Cash on cash is your net operating income, your NOI, against the value. And that's your rate of return.

And that's what you're looking at right now. And that is one type of return in real estate there are three pieces of return in real estate that put together is called an internal rate of return an irr and the other two pieces are the increasing in value increase in value and the um third piece of course is that you're depreciating this condo i'm sure and so there's a some tax advantage as well. Those are two things you don't have in equities unless you're buying some kind of a drip account or something where it's going up in value very rapidly or over time, and you're counting on that more than you're counting on the income that this equity is creating.

But there's income, there's increase in value, and there's the sheltering aspect. All of those three have a mathematical figure put together. You're probably getting a decent rate of return, but it doesn't sound like that condo is performing very well. Most of my real estate has an IRR up over 15, approaching 20 when you put all three things together. That's how much it went up in value this year, how much cash on cash I got out of it this year, and how much actual taxes I did not have to pay because I own this property. And that's an actual dollar savings. Those three things put together on most of my properties will be between 15% and 20%, somewhere in there.

And that's a lot more than equities produce, and I've got a lot in equities too. I've got a lot in mutual funds, as you know from listening to me. But the difference is there's a hassle factor with real estate that there's not with mutual funds. I thought a mutual fund, all I've got to do is open an envelope occasionally. I don't have to deal with a renter. I don't have to put carpet in. I don't have to buy

a new roof or whatever, all this crap you deal with with real estate. You're subject to corrections with the market. Yeah, well, so is real estate somewhat, but it's not as volatile as the market is. So you have a less risk ratio. So I probably would sell the condo because I don't like the rates of return I'm hearing on it just with the numbers you gave me.

I don't think you're going to have an IRR even equal to equities even after that because your cash-on-cash sucks really bad on that thing. And it's because the HOA is out of control. The HOA is what's killing the value of this property in terms of its rates of return. $1,100 a month on a $500,000 property? I mean, somebody's got a little mask on because they're a bandit. Unbelievable, man. So, I mean, I'd be having a fit. Somebody's, geez, man, poorly managed, can you say?

And so, yeah. So, anyway. It's on the water. Yeah, I'm getting out of there. So, I'm with you. I'd get out of there. So I'm with you. I'd get out of there. Personally, I'm averse to having all of my money in one type of an investment, even if it's diversified across those investments. In other words, I wouldn't want to have 100% real estate, and I love real estate.

I'm heavy real estate, mainly because real estate has gone up faster than equity sale. But if I were you and I had 3.8, I'd probably want probably a million dollars of that or at least a half million dollars, three-quarters of a million dollars of that in real estate somewhere. And so I'd sell it. I'd pay off my mortgage. And then in some of your future investing, I'd buy some cash paid for real estate that you can get a good ROI on. It might not even be residential real estate. With your net worth, you might want to step into a little million-dollar strip center or a little million-dollar office building or something like that. And in your world, that is little.

And most people are going, little? But, I mean, I'm looking at your ratios. And that's what I do, and I pay cash for it. No rush, but long-term, I don't want to be 100% of my net worth in the market or 100% of my net worth in a given thing. You know, that's it. So anyway. Hey, thanks for the call.

It's a good discussion. And congratulations, man. You're killing it. Proud of you. Open phones at 888-825-5225. Rachel Cruz joins us at the bottom of the hour. If you want in, dial right now. Wesley's with us in College Station.

Hi, Wesley. How are you? I'm doing good, Dave. I want to start off by saying I'm a graduating senior in college here at Texas A&M, and I just read Total Money Makeover, one of the first financial books I've ever read, and I think it completely revolutionized the way I'm going to attack my money after college. So I thank you for that help. Thank you.

Congratulations. What's your degree in? Construction science. Fun. Fun. How can I help? So actually, I'm calling to ask about job opportunities. I'm interviewing with seven different companies right now,

and I'm likely to receive multiple job offers. And one of the factors I'm considering in when I pick my employment is if all other factors are considered equal and I'm between one company or the other, is it going to be more conducive to building wealth if I work for a private company that doesn't have any employee stock options or anything, but gives bonuses to its employees depending on how well the company performs or would it be better to work for a public company that offers i mean a public not a publicly owned but a employee-owned company that offers stock gifts and uh options to purchase stock within the company but doesn't offer bonuses to its employees uh neither one of those are going to work if you're not there for five years.

And whether you're there for five years is going to be dictated by another factor, and that's the culture of the company. So if you've got a particular – Absolutely, and I'm saying the factors are contributing. If you smell toxic on either one of these, it invalidates it. I'm ambivalent other than that. I probably wouldn't choose it based on that. I would choose it based on what's the environment I'm going to be in, what's my potential for going up,

do I like the people I'm hanging out with there, has it got the right kind of feel. I mean, you know, I'm going to look at that kind of stuff. Is the 30-year-old you going to be mad at the 22-year-old you because you took this job just for the stock options stock options later and that's the thing you're going to feel like you sold out for the wrong reasons and very seldom there's almost always more than one variable you have to consider in this at one time it's very seldom down to just i get to choose between two perfectly equal things except for that almost doesn't exist. Hey, congratulations. You're doing well. Joining me this half hour, Rachel Cruz, Ramsey Personality, number one best-selling author and the host of The Rachel Cruz Show, very popular on YouTube, with another episode dropping this week, right?

Yes, that's right. It dropped on Monday. There we go. See, that's industry terminology. I'm getting this YouTube stuff down. It dropped. It dropped. We dropped a new episode. I'm going to be cool for it's over.

I can just tell. So this episode is about what? Traveling. Oh, that would be like pizza for you. Two of your favorite subjects, traveling and pizza. I know, I do. It's a spiritual gift of mine. I'm really good at planning trips and taking vacation.

I told the story in the episode, we were on a big family trip that you and mom actually took all of us, which we're very thankful for over New Year's. And there were two people in the family, I'll not name names. And they were like, I'm so ready to get home and get back in routine. I was like, y'all are crazy. I could do this all the time. I love it. I love to travel.

So all that to say, it is a place that you can be discontent while you are getting out of debt, you're funding your emergency fund, you're sacrificing things in your life so you may not be able to travel. So there's some discontentment in this subject for people. But then also there's going to be travel that's inevitable. Like there's going to be your sister is having her first baby shower and it's three states away and you're having to do

a road trip over the weekend to get there. Or there's a wedding or things are going to happen that you are going to be traveling for. So how do you do it wisely and how do you save money while doing it, whether it's travel that you kind of have to take or it's just for a vacation? The top ten travel hacks that will save you money. Yes. What's the one that saves you the most money? I would say when it comes to traveling, especially if you're flying somewhere, picking the days of the week

that you actually book the tickets and then the days of the week that you actually travel can save you a ton. So, for instance, actually traveling on Tuesdays, Wednesdays, or Saturdays actually are cheaper. But when you book the ticket,

book it on Tuesdays and Thursdays. We found through our research. Yep, it's the lowest days for airline tickets. So, airline obviously is going to be more of an expensive means to travel versus, you know, doing a road trip or something. You're probably not in baby step two unless you've got an emergency. Right, exactly. So, but yeah, but those things. And then we had for the vacation section, actually one of our friends, Rachel Lackey, who is a travel agent and walked us through some mistakes that people make as well.

So travel and vacations, it's just a place that you can make some big financial decisions if you don't plan ahead, if you don't think through these things. So these kind of tips and tricks is good. And we also had a couple on that was actually, they got married and they delayed their honeymoon for a year because they wanted to pay off debt. Hardcore. Hardcore. Yep. So that was fun talking to them because I was like, what did your in-laws say? their honeymoon for a year because they wanted to pay off debt. Hardcore. Hardcore, yep. So that was fun talking to them because I was like, what did your in-laws say?

And they all thought that they were crazy. Some of their friends were like, don't understand. Because you just assume when you get married, that's what you're going to do. You go on a week-long honeymoon. It's like this assumed thing nowadays. And so talking to people that kind of think outside the box and do things differently, I don't know. It was cool. Very cool to hear their story.

Very neat. Very cool. The Rachel Cruze Show on YouTube. You can sign up there and subscribe to it. And any video that drops on there will land in your email and let you know if you select that anyway. Mine has that set up, so I know when she has a new email or has a new a new video come in uh certainly a new show i know that long before it hits i get to see them uh ahead of time because i'm kind of on the inside of this thing so this works but anyway yeah so check it out you got to check it it's once every

two weeks and then you guys are also posting a podcast version of that it's the audio off of that plus commentary right yeah so there's some extra content, and then every now and then we'll just drop a fun podcast for fun. That's not the actual show, but it's just you've got something you want to talk about. Exactly, yeah. So it's been fun. Turn on the microphone. It's been great. I'll say, you know, I lived in the Dave Ramsey show world last week.

Yeah, I heard about this. For an hour by myself i heard you sat here at the desk i got a picture of you sitting right here you know contemplating a question looking very thoughtful that was probably freaking out i don't know it didn't look like you were freaking out you look like cool and luke and i'll tell you what man social media said that you need to replace me well we won't get ahead of the game here but the dave ramsey show world and the rachel cruz show world are a little different worlds but there is there is some similarity so if you enjoy the show i'm sure you would enjoy the rachel cruz show as well it's a little different but

it's fun well the podcast the podcast has gone zoom zoom so you sign up on itunes or google play or spotify anything like that you can find the podcast. Arizona, all of those. And it has become one of the top podcasts in the world already pretty quickly, kind of really, really quickly. But all kidding aside, you really apparently – I wasn't here. I was obviously skiing, and I was on vacation. I was wondering, was I allowed to say that? Because I have like an intro written out that that I was sitting in for Dave Ramsey.

I'm Rachel Cruz hosting this hour. And I kind of be like, because Dave's on vacation and I'm working. But I didn't want to say that. That's okay. You can tell the truth. Our audience can handle the truth. So, yeah. But I mean, all the feedback we got, not only from James and Kelly, which are very harsh critics.

James Childs, he's no joke. He's no lightweight. He'll take you down if you mess up on the air. Especially with 15 million people listening, he feels the pressure. All kidding aside, they said you did a great job. And everybody on social media, I did not see. I don't know when we've done anything that we don't get one negative. Usually we get some negatives. I think there are some negatives. I you might be having your dad's glasses on rose colored oh no i may not well my twitter maybe i blocked all those people i mean it's

possible because i my twitter didn't show a single one they really don't like me i've blocked 12,000 people so it's okay but um i mean if you cuss or don't like us there's no point in you following us it's kind of dumb and if you're that dumb I can fix that for you so anyway yeah but anyway yeah it worked

you did a great job money and marriage is coming up in two three weeks now Kansas City April 1st and that's not April Fool's we're really doing it that's right that's right

we have to clarify it because it is on April Fool's yes so Kansas City and then we go on to Des Moines April 15th April 15th i mean you get april fools and tax day i just thought of that when you said that i was like i'm speaking on tax day and may 16th that must be the day the titanic or something i don't know that was an

april random day but it was an april too how do you know that? I think. All right. So anyway, Dallas, Texas, May 16th, Des Moines, Iowa, April 15th, Kansas City, Missouri. Money and Marriage with Les Parrott, Rachel Cruz. There are tickets on sale now at rachelcruz.com and at daveramsey.com. And you do want to join these things. They are not yet sold out. All of these have been selling out. A couple thousand, 2,000 to 3 three thousand in each city has been showing up. And you do want to get your tickets ahead of time.

What are you all talking about at the Money in Marriage event other than obviously Money in Marriage? Dr. Les Parrott does a fabulous job talking about communication within marriage. You know, I feel like that's thrown out all the time. Like, how do I have a better marriage? Well, you need to learn how to communicate better. I feel like that's thrown out all the time. Like, how do I have a better marriage? Well, you need to learn how to communicate better, right? I feel like it's always thrown out, but he breaks it down in such a tactical way that you can understand it. And it's funny. He's so, he's a great storyteller. He's been doing this for like decades and travel the world, written many books. I mean, like this is like his world he lives in as this marriage

space. So he's so great at it. And so you'll take what you've learned from him. And then I pick it up toward the end of the event after the break and talk through six money conversations to have with your spouse. And so we talk about all the time around here, you know, money is it's 80% behavior, it's only 20% head knowledge. So you can understand how it works, but actually living it out and your behavior is huge. And so how do you do that when you're married to your opposite? Like if one of you is a spender, one of you is a saver, one of you is a free spirit, one of you is a nerd. One of you grew up in a house where money was fought. There was fights and tension, and it was insane.

And then you grew up in a house where money was never talked about, and you didn't know good money habits were important. I mean, there's so many dynamics around these two subjects. So we break them on down in these six different money conversations, and it's been fun. This is, I guess, going on two and a half years of doing this event. So, yeah, it's great. So come out and see us. So this is a good opportunity to do it.

Kansas City, April the 1st, Des Moines, Iowa, April 15th, Dallas, Texas, May the 16th. Check out YouTube for The Rachel Cruze Show. Check out the podcast on Apple, Iowa, April 15th, Dallas, Texas, May the 16th. Check out YouTube for the Rachel Cruz Show. Check out the podcast on Apple, Spotify, and Google Podcasts. We'll be back with Rachel taking your calls and answering your emails here on The Dave Ramsey Show. Thank you. Join me this half hour answering your questions. Rachel Cruz from The Rachel Cruz Show. Ramsey personality. You can learn from learn from her and about her on youtube just subscribe to her youtube channel her podcast and itunes spotify

or google play and of course at rachelcruise.com two times number one best-selling author maureen's in your uh official rachel cruise community and says, I've been doing the envelope system for a while, but I hate it that the envelopes wear out. I know you do the same thing, but with clips. But what do you do with all the coins you get? When you said, I hate it, I thought you meant she hates the envelopes. She hates that the envelopes wear out. Yes, and the clip system. So what I did is kind of take the envelope system and give it a little twist where I have clips, color-coded clips for my categories instead of envelopes yes and the clip system so what i did is kind of take the envelope system and get it a

little twist where you i have clips color-coded clips for my categories instead of envelopes so i can actually use a wallet that i love instead of a big you just clip the money together yes okay it's like a colored binder clip i mean you put the dollar bills or have a little clip okay so the coin thing honestly maureen i'll be honest the coins just go in the coin thing, honestly, Maureen, I'll be honest, the coins just go in the coin thing. Like at that point, I'm like, eh, 12 cents. Like I'm not worried about that part. What's the coin thing? You store them in a jar?

When you have coins, yeah. And my wallet has a middle section that has a zipper that I just put my coins in there. Okay, until it gets too full and then you dump it out into the coin jar. Yeah, totally, totally. I don't literally nickel and dime every little thing. Okay no i don't i don't either yeah it's not gonna make that much of a difference yeah i quit i quit carrying coins in my pocket years ago yes years ago i empty them out into something when i get home um and just so that what that ends up doing is kind of rounds down your envelope system a tiny bit right right technically speaking from a math standpoint yes a very very small small shot a is with us in new york city hi shot a your question for rachel hi um hi dave i'm rachel i'm a new listener so thank you for taking my call um this

question is actually more um directed at you today but r, you can jump in. I just got a new job. I'm very excited. I'm a 25-year-old grad student in school right now. I'm trying to figure out if I should put money in my 401K while I'm in school. They match at 3%. My company does. Or should I just focus on paying off my student loan debt that I have right now? The loans are in deferment, so no interest is being accrued.

So I'm thinking this is the best time since I'm finally making like actual money. This is the best time for me to pay off the loan. So by the time that I graduate, I won't have any loans and I'll be debt free. Right. Well, mathematically, it's going to seem like, okay, I should be investing, letting the money work for me, all of what you just outlined. But when it comes to personal finance, we just said on the segment earlier, it's 20% head knowledge, it's 80% behavior. of debt and having no payments is going to be your largest wealth building tool when you have no payments. Because not only do you have your income you can actually use, but I think we lost her. We did.

Go ahead. Answer the question. Yeah. So yeah, when you have no payments, it's actually your income that you now get to use versus obviously when you're in debt, you're just constantly paying, even though the interest and all of that, it's not the math. Math isn't the issue. It's the debt.

And so getting that out, not only are you lowering your risk, but you're focusing all of your efforts and everything on one thing. So becoming debt-free and then building an emergency fund and then investing. She's 25, so I'm like, she has time on her side. You need to be getting intense about it, but it's not like you're 65. So there is time to make up when you do start investing. But getting that debt and that student loan out of your life, it frees up not only your choices but also your money. And also, first priority is finish grad school with no debt, no additional debt.

That's right, that's right, yes. So while you're there, make sure you're cash-flowing that. That's priority one. Two would be to clear debt and then once it's clear then build your emergency fund of three to six months of expenses and then and only then start investing here's what happens folks you win at what you focus on and if you try to focus on three things at once you don't win at any of them and so you have to put that that's the illusion of balance you know know, people say, how do you have a balanced life?

Well, you can have over the scope of a period of a year or something, but in a given moment, you're not focused. I mean, you're not balanced. In a given moment, if you're going to win at your marriage, you better be focused on your marriage and not your career and your physical fitness and your spiritual life simultaneously, instantaneously at the same time, because you're not going to be good at any of them. You've got to focus on something and get that, and then move to the next thing,

and then focus on the next thing, and then focus on the next thing. And over the scope of time, you achieve a balance. And that's true with money. It's true with your life. It's true with everything. So really, really good question. Thanks for joining us. Sorry we lost the call.

Open phones at 888-825-5225. Jordan is in the official rachel cruz community and it says i'm a stay-at-home mom my husband is self-employed so we pay quarterly taxes when calculating a mortgage payment of 25 of income we calculate that from take-home pay or take-home pay minus the taxes that we pay quarterly well take-home pay is the taxes that we pay quarterly. Well, take-home pay is after taxes, Jordan. That's what it is. And so you would simply do that. And you need to make sure you're setting the money aside for your quarterly.

And when you set that aside, that is your take-home pay. What's left over is your take-home pay. And then that is what you calculate 25% of your income on because you don't have that money. That money is going to the IRS. And so if you calculate it on a pre-tax thing, we would use a different factor than a fourth, than 25%. Anything you want to add to that? No, I was going to say that would be very discouraging when you're using. I feel like I get in trouble with that sometimes.

I'm like, what am I going to make this year? And I'm like, oh, you hear the gross number and you're like, nice. And you're like, oh, no, no, no, no. That's not what you're seeing. Taxes are being taken out. So, yeah, it is. It's a hard reality. And so it's always discouraging to start calculating on things when it's before taxes are taken out.

So that includes your mortgage. Yeah. Yeah. I mean, because it's just the reality of what's going to be in your pocket. Yeah. They're going to get their pound of flesh in the process for sure. So the Rachel Cruz show on YouTube this Monday came out and they're talking about travel. And so what's the biggest money mistakes to avoid when you're planning a trip?

These came from a travel agent. So I'll give her the credit. But the one she said that she sees people screw up their trip the most, that costs them the most money, is they don't book enough time in between connection flights for international trips. So if you're going somewhere on vacation, it's like you've saved up, you paid for it, but then you just block 30 minutes in between your connection or something yeah and then you miss your flight and then you miss a day at what you've paid for for the hotel or wherever you're going and all that so she said that's like one of the biggest mistakes people make and it ends up costing you so much money so it's that time yeah i have traveled so much that um i'm like weird i will get there hours and hours and hours and hours early to avoid the possibility of somebody being late, which they're always freaking late.

Because I don't run through airports. Screw it. There was an old commercial back in the day. O.J. Simpson, way back, was running through an airport to get a car. It was like a Hertz commercial or something. That's my generation. Running through an airport to catch a car. It's like Home Alone. It's like a Hertz commercial or something. That's my generation. Yeah, that's your generation. That's my generation. Running to an airport to catch a flight.

Yeah. And I'm done. I'm not doing it. It just got screwed up. Oh, well, next thing. Yeah. And so I just book so much time, particularly if your mom and I are going on international like that.

That's a good point because I see people do that because what happens is if you book those flights closer like that, tempt you to do that it's a pretty substantial savings and you can fly through four cities instead of one you know and they'll you can cut you can save some money that way but you just destroy your life in the process the whole point is you're going on vacation yep you know and so it's supposed to be relaxing take a a book, sit in the lounge, wait on the plane. You know, I mean, it's just that's a good point because I used to do stuff like that to save a penny, say $4 or something. You know, I mean, we did all kinds of stuff like that. And you just put yourself on the line and you can pretty much depend on the airlines being undependable.

Right. I mean, you can pretty much depend on, you know, airline service is an oxymoron. They're just not going to get there on time. I mean, if you look delta up in the Greek, it means you're not going. That's what it means. Oh, yeah. Southwest. Southwest.

Southwest now. Southwest is good. Okay, I'll give them a plug. Yes. But, you know, I have missed so many connections because they're sitting on the tarmac waiting on the pilot to get a sandwich. You know, it's just unbelievable. We need them to eat. Yeah, you got to do that.

That's it. It's there. So, all right, Rachel Cruz Show. Fat tips for traveling. Check it all out on YouTube. Good stuff. Facebook and YouTube. Be sure and look it all up.

Rachel, thanks for stopping by. Yeah, thanks for having me. That puts this hour of the Dave Ramsey Show in the books. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave rants, death-free screams, and the very popular Everyday Millionaire segment. Go to The Dave Ramsey Show YouTube channel and click subscribe.