The Ramsey Show - App - An Emergency Fund is Insurance Against Financial Drama (Hour 3)

Episode Date: February 1, 2019

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Live from the headquarters of Ramsey Solutions, 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 this hour at 888-825-5225. Jay starts off this hour in Atlanta, Georgia. Welcome to the Dave Ramsey Show, Jay. Hi, Jay. How are you?

Better than I deserve. What's up? Awesome. So I have a question. I've had a term life insurance policy for about eight years now, and I received a pension as a widow from my late husband and my daughter has a trust fund. So I was just talking with a friend of mine who is considered, you know, he's a financial guy. And he was telling me that I should get changed my term life to a whole life policy. You know, just whole life in general, not universal whole life.

And so now I'm thinking, what is the best avenue for me, considering I will receive this pension as long as I don't get remarried, but my daughter already has a trust fund. So I'm just kind of confused. I mean, he was telling me that I've wasted like seven, eight years with my term life policy already. He's not a financial person. He's not a financial person. He's not a financial person. He's an insurance salesman.

That's who you're talking to. Because that's the only people that push whole life like that. Nobody else does. All the rest of us in the financial world say that whole life, life insurance is the worst product ever. It's the payday lender of the middle class and so no you should not convert your term insurance to whole life let me explain why okay okay whole life is 20 times more expensive for the same amount of insurance okay that means for 1 20th you can buy the same amount of term insurance if you go into the open

market and just go to somebody like a zander insurance you can get the best prices and get an inexpensive term life insurance policy a 15-year policy okay so what happens to the other 19 times that they're charging you are they they putting it all in their pocket? No, they're not. It goes to build up a savings account inside the whole life policy called cash value buildup. Okay? Okay. Now, what's wrong with that? Well, nothing wrong with saving money, right?

Pay extra for something if it has savings built in. Saving money is a good idea. The problem is that the typical whole life policy has a rate of return of 1.2%, and that's after there's no return for the first three years. The first three years, they keep all the money that should have been going to savings as fees, and then it gives you about a 1% rate of return. And then when you die, the savings account is gone. They only pay the amount of the insurance.

They do not pay the insurance plus the extra that you paid to create a savings account. That money is just gone. So that's why we in the financial world that don't sell this crap call it crap. And so, no, you don't need to do that. That's a bad plan. Now, having said that, let's look at your situation and say, what do you need? In your situation, your daughter is how old? She's 10 now. How much is in her trust fund? About $400,000.

Okay. And how much is in your pension or trust fund that comes to you? For the most part, I will get it indefinitely as long as I don't remarry. And it's just a monthly amount? It's a monthly amount. How much is that? $4,400. Okay.

And do you work outside the home? I have a part-time job. Okay. So you basically live on this pension. Yes, I live on the pension, and my daughter, she receives Social Security. Right, okay, all right. Nothing wrong with that. Okay, so here's the way we look at life insurance.

If something happened to you, who would be left behind that would need to be cared for, and we need to leave enough money behind to make sure that that happens. So this pension would die with you, right? But her trust fund wouldn't. She'd have the $400,000, and she would continue to receive Social Security from her father's passing. But now, in addition to that, her mother's passing until she's 18. Okay?

And so she's going to continue to get the SSI. And so she's got that. She's got the income off of the trust as well. I think she'd probably be fine if she was left nothing but that trust fund upon your death, were you to die prior to 18. Do you think that's right? Well, I guess I didn't look at it like that. That's what it's for.

I mean, that's the only thing life insurance is for, is to take care of people you leave behind. So let's pretend it's a little couple calling me, and they're 32 years old, and they've got a 3-year-old, and they've got a 1-year-old, okay, and he makes $50,000 a year. Well, if he dies, she's got to raise those kids, right? Right. And his income is not going to be there, and there's no trust fund.

So he needs $500,000, $600,000 in term life insurance on him to cover about 10 times his income so that she could invest that money and then that lady in our example would have her own trust fund to take care of those kids, or vice versa. If she died, we'd want about ten times her income because he's got to raise those little kids, right? Well, you've got a child that's got about eight, nine years, and they're going to be an adult, and they're going to have some access varied to this trust fund depending on how it's structured. In the meantime, she's got the income off of that.

So if you want to leave some life insurance to your child, in addition to this, just to be super sure, are you healthy? Yes. Do you smoke? No. Are you overweight? No. Okay.

Those are the things that will get you on life insurance. So you can go to ZanderInsurance.com, Z-A-N-D-E-R, put in your name, put in your information, put in your information, and in just about a minute and a half, you'll have a quote from about 10 different companies, and you can buy a 200. How old are you? 35. Oh, you can buy $250,000 more of 10-year level term, which will make your kid 20 when it's over, right?

Right. And just drop it after that because you're not going to have a need for it. And that would give her $650,000 to make it through up into adulthood and get through college and I think that'll do it. And you can buy that for nothing at your age. Won't cost you hardly anything.

And then you decide later on if you're going to need life insurance or not for other things. But the way you always ask the question is, who am I leaving behind? Because you never, for the reasons I outlined earlier, you never use life insurance as an investment vehicle. It sucks for that. It's only there for, you know, if you die prematurely to take care of your loved ones. And so you only use your car insurance if you

have a car wreck right right same thing we don't have a savings inside of our car insurance and there's a reason because you don't need it so uh be investing and be saving and be getting yourself out of debt and buy you an inexpensive little term policy, and no more financial advice from that particular source. He's not giving you good information. I think you just got a good old whole life agent there that's just pitching you some of his wares. And I suspect the term policy you have might be more expensive than you can buy one for. So go check it out. Go to zanderinsurance.com and see.

Don't cancel the one you got until you get a new one in place. This is the Dave Ramsey Show. Check it out. Go to zanderinsurance.com and see. Don't cancel the one you got until you get a new one in place. This is the Dave Ramsey Show. What will your family do if you die? Did I get your attention? Good. If you're a father, mother, husband, or wife, it's your responsibility to have life insurance. No matter where you are in the baby steps, you have to deal with this right now. How will your family pay for the mortgage, put food on the table, or pay for education? How will they deal with retirement

and stay the course for getting out of debt and accomplishing something with their lives? This is what life insurance is all about. I knew when I started this show it was something my listeners had to have, so I went out and found a company I could trust to offer the plans I believe in. That's why I've been talking about Zander Insurance for over 20 years. If you haven't dealt with this, please go to zander.com

or call 800-356-4282 and let them help. This is a priority. It's not expensive. It's not complicated, and you need to do it today. That's zander.com or call 800-356-4282. Thank you for joining us, America. We're glad you're here. Open phones at 8 eight eight two five five two two five ryan follows us on twitter at dave ramsey do cpas actually work at those tax

preparation places uh that depends on the tax preparation place you're asking about not always no it's not required by law. You can have an enrolled agent if you want, and that's somebody who's another qualification. All of our tax ELPs are either enrolled agents or CPAs, one of the two. If you're talking about our tax preparation places that we recommend, some are CPAs and some are enrolled agents. And both are qualified to do taxes, by the way. Lisa's on Twitter.

How can I explain to my family that a bad credit score and a good credit score are not the same thing? Lisa, if you have to explain that a bad credit score and a good credit score are not the same thing, I don't think we can help your family. How can I explain that fat and thin are not the same thing? Black and white are not the same thing. Good and bad are not the same thing. That doesn't even make sense. So having no credit score versus a good credit score is not the same thing as a bad credit score. Now, if you want to say having no credit score versus a bad credit score is not the same thing, that would – I guess the point is I think we're discussing the wrong issue let me back up

let's just back up for a second so someone wants to talk about credit scores the first thing you have to explain to them is that the only way you have a credit score is how you interact with debt how much debt the kind of debt and whether you pay your debt on time. If you have no debt and no accounts open with debt associated with them, like credit cards that you pay off every month, but that's still showing as debt, okay? If you have no debt type accounts open, which I don't, and I haven't had for decades, if you have no debt accounts open of any kind, you will soon have no credit score. Because your credit score is not really a credit score. It's really an I love debt score.

So when you cease to have a credit score, it's because you've ceased to have debt for a period of time. Now, is that bad? No, that is not bad because you are what's known as debt-free, and that puts you in a position to become wealthy faster than any other method and more likely than any other method because your most powerful wealth-building tool is your income. And when you give all of your income to some stupid bank, also you can have an I love debt score that's high. That makes you a stupid bank supporter, not a wealth builder.

Your goal is to build wealth here, not to make the banks wealthy. So we get our goals confused when we start talking about credit scores. If you have a very, very high credit score, it's because you have paid a lot of interest. A lot of interest over a long period of time. You love debt. The higher your credit score, the more you love debt. And it shows, because mathematically it's impossible to have a high credit score otherwise. It's how the algorithm is set up by the FICO folk.

It's what they do. So, I guess if you want to explain to your family that a high FICO score is not an indication that you are trending towards wealth, as a matter of fact, quite the opposite, that's how you would explain it. Now, that would make sense. But a bad credit score and a good credit score are not the same thing. No credit score and a good credit score are different things. I think a high credit score is a bad thing, is what I'm saying. Xavier is with us in Atlanta.

Hi, Xavier. How are you? I'm doing excellent. Thank you so much for having me on your show. Sure. Is it Javier or Xavier? Xavier. Xavier.

Cool. How can I help? Yes, sir. All right. So just giving you a little background, me and my wife make $45,000 a year. We're currently renting an apartment for $700 a month. We're on baby step two. We're paying off our car debt, which is around $12,000,

and I'm really wanting to just smack it in the face and get it out of here. But right now, we have a four-year-old child, and we've been living in these really horrible apartments for about four years. And so it wasn't that bad when my son was very young and small, but I'm reaching a point to where we either need to find somewhere more suitable or maybe I've had colleagues and friends that have told me about FHA and first-time down payment assistance programs that might help me find some type of property where I can also, kind of like a duplex where I can also rent out and kind of steady my payments. So my question here is, would it be wise with the step that I'm on to continue where I'm at, even though it's really a horrible situation for me and my family, or look for a nicer apartment, or just go ahead and try my,

get educated on home ownership and getting a house or a duplex. Okay. Nothing down and duplexes are a bad plan for you. Okay. You're just desperate to get out of the apartment. You're getting ready to do something stupid out of your desperation if you're not careful. So you need to do this in the right order and in a way that is wise. Now, how quickly are you going to have your car paid off?

Two years. That's too long. You shouldn't take two years to pay off a $12,000 car. Not making $45,000. That's only $6,000 a year. That's lame. Okay, you need to get after it. You need to get out of that apartment sooner than that.

Does your wife work outside the home? Yes. Okay. And your household income is $45,000. Yes, but I'm currently in a trade apprenticeship, and within two years that income will have doubled. Okay, which is when you need to buy a house. Okay.

Now, your son is four? Yes. And you're in a horrible apartment at 700 at 750 dollars okay um is it unsafe uh yes um we've gotten there's there's mold crime yes actually a few a few weeks ago um someone was shot in the apartment complex. Okay. Yeah, it's time to move. And so you need to just rent the cheapest thing you can find that's not moldy and crime-ridden. Okay?

But it's time to move. And the money that you pay extra in rent between now and then is going to have to be made up for by extra jobs. You guys are going to have to work like crazy people for the next two years to make sure that not only does this car get paid off, and not only do you build your emergency fund, and not only do you pay the increase in rent, but on top of all of that, you save your down payment. And then you're going to be ready to buy in about two years. But every dollar you pay out in extra rent to have a little bit better situation is going to slow down how quickly you buy.

Exactly. And so that's the paradox. But if your son is unsafe, your family's unsafe, you're a good dad to look at that and go, I'm not going to, you know, there's no amount of money in the world to put my kid at risk, right? So if it slows down how quick you buy a house, it slows down how quick you buy a house. But buying a house wrong because you're unwilling to pay a little bit more rent to get in a safe situation and get yourself in a mess financially because you just get all jammed up about buying a house and your broke friends at work are now giving you financial advice about how to buy a house,

that's a bad idea, dude. So, no, just go rent you something a little bit better and finish out the plan. Hold on, I'm going to send you a copy of the Total Money Makeover to help you. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged

loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years. Call Churchill Mortgage and get custom solutions from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money. Call 888-LOAN-200. That's 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591.

NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Thanks for joining us, America. We're glad you're here. Open phones this hour at 888-825-5225. Abraham follows me on Twitter. Dave, I'm on Baby Step 3, which means he's out of debt and doing his emergency fund.

And my grandpa just passed away. I'm sorry. Should I pull from the emergency fund to go to the funeral? If you don't have any other money, yes. I would say attending your grandpa's funeral is an emergency. If you don't have the money to do it otherwise, definitely. That's exactly what it's for. And I'm sorry you're facing this.

Financially, when you have an emergency fund of three to six months of expenses, you're sitting there with $10,000, $15,000, $20,000, $25,000, whatever it is, three to six months of expenses, say $20,000 sitting there in cash. Financially what happens is it turns having an emergency fund and being out of debt except your house, baby steps one through three, turns an emergency into an inconvenience. It used to be when we were broke that when the car broke, we had drama. Financial drama because we didn't have the money to fix the car,

and car drama because we had a broken car. Transmission goes out, the water heater blows, the water pump goes out, shreds a belt whatever it is you're gonna pay the tow bill maybe maybe you've got a you know and then you got to pay the repair bill and whatever it is you're facing a mess then financially you got no money and you got a broken car. So it just doubles or triples the drama. But when the car breaks and you have an emergency fund, you know what you do? Fix the car. Yawn.

No biggie. Not a problem. Heat and air goes out. You have an emergency fund. Fix the heat and air. Worst case, replace the heat and air. Here's what's interesting. When you have high emotion around an event,

it's one of the things you can do to activate memory. If you want to remember something, tie something emotional to it, something very powerful to it emotionally. Being broke and highly stressed is very powerful emotionally. I remember when we were going through the bankruptcy, i was broke i mean really broke and the air conditioner goes out on our home we have a brand new baby a toddler my wife is already angry make her hot and angry is not good with two screaming babies that are hot and angry super not good and i got a guy at the church that knows how to sort of work on these things to come

out as a favor and we found a used compressor that he put on that thing and got that stupid air conditioner working again and it was 318 dollars that was almost 30 years ago. And I remember precisely the amount of money it took to fix it. Memory is activated by stress. Fast forward two houses later, a decade later, plus probably about a decade later probably 20 years ago the heating and air system went out on the home we had purchased by then we've got three kids we're doing pretty well financial peace had come out the book and we're making some money off of

that had a good emergency fund and i had to put a heating and air unit on the side of the house. I can tell you it cost a little more than $3,000, but I honestly just don't remember exactly what the bill was. Might have been $3,200, might have been $3,800, might have been a little over $4, over 4000 but i know it was north of 3000 but i know the other one was 318 there was no stress associated with that no freak out associated with that no drama associated with that and so it didn't activate my memory the same way you have a deep memory on things that mean something deeply to you or that are

associated with high emotion of some kind. Stress is one of the emotions. And there was just no problem. I just yawned, wrote a check, put a heat and air unit on the house. It was not a problem. It turns a crisis into an inconvenience. And the weird thing is, not only do you have fewer emergencies when you're not broke, but when you do have them, you don't even hardly emotionally recognize that they're there.

To the point it's hard to call them an emergency, because an emergency sounds like sirens going off and, ah, it's an emergency, you know. It's hard to call it an emergency when you just yawn and write a check and buy a $3,000 heating and air system or a $3,500 heating and air system or whatever, right? It doesn't feel like sirens going off. So it doesn't feel like you're having emergencies, but you don't have as many emergencies. And there's several reasons for that.

One is your budget has more margin in it because you're not broke, and you're picking up little things that used to be emergencies, but you're picking them up as budget items. The second thing is when you're not broke, you do proper preventive maintenance on things like cars and heating and air systems so stuff doesn't break as much. Plus, as you're not broke anymore, you buy better heating and air systems and better cars so they don't break as much.

And so you do have fewer emergencies because you're dealing with better quality stuff. And the number of times I've had a breakdown on the side of the road in the past 20 years is zero. Prior to that, I mean, Sharon and I are on our third date. I'm driving a Monte Carlo in college. I had $1.16 in my checking account, right? And I knew how to turn a wrench on that car because I had to keep the stupid thing running, right? I'm in college. I'm so broke I can't pay attention.

We're on our third date. I'm explaining to her how someday I'm going to be a millionaire. I got $1.16, literally, in my checking account. $1.16 was the balance in the checking account. Someday I'm going to be a millionaire, I'm telling her. And about that time we went across a railroad track and the muffler fell off my car. This is how it works.

I mean, when you're broke, your life looks like a country song. You know, everything that can go wrong will. And so that's the advantage of the emergency fund sometimes we don't stop and say hey grandma's rainy day fund the god only knows fund we don't stop and say the importance of that as a foundational element in your financial plan to allow you to build wealth because until you stop giving your money to repairmen all the time, it's difficult to build wealth. And that comes with the quality purchases of better items. You're upgrading in some things.

It comes with margin in your budget. So you're covering these things without hitting the emergency funds, certainly without hitting the investment accounts. And it comes from, I don't know, it's just like when you're broke, it's hard to have good luck. And when you're not broke, you seem to have more good luck. It's not really luck, but you see what I'm talking about? Life variables in your life change. And even when something does come at you,

I did blow a tire the other day on the interstate. Hit a pothole. I haven't done that in a long, long time. But I've got these low-profile tires on one of these cars, one of these fast cars, and they don't take a bump real good. And I hit a pothole the size of a crater and blew a tire off of it. You know what? I can't tell you what that tire cost. I just, you know, I got in another car and went on to the airport.

My son came and helped me get the car. You know, one of my guys helped me get the car off the road and got a tire put on it. I don't even remember. Buddy, I remember those retreads. Y'all ever buy retreads? Or you got tires that had new treads put on them? In college, I used to buy retreads. I don got tires that had new treads put on? In college, I used to buy retreads. I don't even know if they make those anymore. That was the ultimate in poor for

me, buying retread tires, man. See the difference? An emergency fund turns a crisis into an inconvenience. An emergency fund turns a crisis into an inconvenience. It's worth getting one. Our scripture today is 2 Timothy 3.17 That the man of God may be competent, equipped for every good work. Napoleon Bonaparte said, Nothing is more difficult and therefore more precious than to be able to decide. Making a decision. A lot of power in that.

Hey guys, listen up. I get countless stories of how people are either screwing up with money or winning with money big time. I hear them every day. The key difference really is this. Are you being intentional with your money? Are you telling your money what to do instead of wondering where it went? Be the person that wins. And you know what the correlation is?

You tell your money what to do. You give every dollar a name. That's how we came up with the name for our multimillion-dollar investment called the Every Dollar Budget. It's not a multimillionmillion dollar investment by you. It is by me. We spent millions of dollars developing the world's most robust, elegant, and awesome budgeting app. And it's free for your iPhone, your Android.

And every dollar budgeters, there's now millions and millions and millions of people, over 3 million people using this. And it's working. It's easy. It takes about 10 minutes to set your budget up, and millions of people, over 3 million people using this, and it's working. It's easy. It takes about 10 minutes to set your budget up, and it's free. Create your free every dollar budget at everydollar.com. Use your desktop or use your phone. I don't care.

It's 10 minutes to set up, and it's free, every dollar. Get on the budget. Richard is with us in Baton Rouge,isiana hi richard how are you hey how's it going dave better than i deserve what's up so meanwhile i just started the total money makeover and we are still in maybe step one but we don't know if to shoot we've never tied before because we because we're young, 26 and 25, and we're just trying to get started. You know, we have about $52,000 worth of debt that we're trying to get out of with three kids.

So we have a question. Do we start tithing now, take the first 10% out of every check, or do we wait until it's not as tight? I was hoping you could help us with that okay so you're regular church attenders yeah well i wouldn't say that work shut down so whenever i'm not working then yeah we're church attenders but when i'm working at 7 12 okay all right but i mean it's part of the rhythm of your all's life. It's part of your faith is an active part of your life. Yes, sir.

Okay. All right. Well, evangelical Christianity, which you and I are a part of, basically has taught for 1,500 years that the tithe is a tenth of your income from the Bible. It goes off the top before you do anything and goes to your local church. And that's what we believe that God teaches. that goes off the top before you do anything and goes to your local church. And that's what we believe that God teaches. Now, does God get mad at you if you don't tithe?

No. He's your father. He loves you. This is not a salvation issue. It's not a sin issue. You're not going to be blessed issue. It's your dad, your father, who is infinite in love and knowledge, looking at you and saying, Son, I love you.

This is the best way to live your life. Give a tenth of your income off the top before you do anything, and then you and I will work on the rest. And that's what he says. It's real clear in Scripture that that's the indication for those of us that are people of faith. And so I tithed all the way through bankruptcy court and all the way out. By the way, it's no guarantee you're going to get rich, because I didn't get rich. I went into bankruptcy court. So tithing didn't keep me from losing my butt when I was stupid.

So it's not a magic pill. It's not anything like that but it does change your perspective and it reminds you reminds you when you do that every week who's in charge and where your money really does come from and who really owns it and there's something about that the nobility of that in our spiritual walk that gives us a higher higher probability of actually winning because we're less selfish. We've got giving as part of our rhythm. And so not out of compulsion, not because you're a Pharisee or a little Christian Boy Scout performance-oriented Christianity

or not because you're a rule keeper or something like that, but just because you say, hey, my Heavenly Father in his love letter to me called the bible says to do this and he knows more than i know and he's got my best interest at heart he loves me and i'm going to give a tenth off the top before i do anything that's what i believe that's what i've done that's what i would recommend but if you don't do it you and i'll still be friends i'll still help you and for that matter i think God will. So he's just saying, look, there's some principles here for handling money. Get out of debt.

Borrow or slave to the lender. Get on a budget. Don't build a tower without first counting the cost. Live on less than you make. A foolish man devours all he has. Save money in the house of the wise or stores of choice food and oil. There's some basic principles here of common sense money management that come straight out of the scriptures and straight off the tongue of your heavenly father who has a plan for you to give you hope and not to bring you harm. And that's his instruction to us. So if you can kind of get comfortable in that, it's a strain. But the 10% is not going to keep you from winning.

The 10% of your income is not going to keep you from paying off that debt. One way or the other, it's not going to cause you to pay it off if you don't tithe. Mathematically, it's almost irrelevant. And mathematically, when you're on a budget, if you can't make it on 90%, you can't make it on 100%. There's something else going on here. There's some other things you need to move around anyway. So that's how I look at it. Again, you do whatever you want to do.

You and I will still be friends. Brandon is with us in Sacramento, California. Hey, Brandon, how are you? I'm good. How about yourself? Better than I deserve. How can I help? All right, so I've been using the Smart Dollar. Our work actually gave us the Smart Dollar and the EveryDollar access.

Wonderful. They brought that to my attention. Wonderful. It's pretty cool. Who do you work for? I work for Battery Systems. Cool, yeah. That's one of the bigger accounts. Yeah, good. So I've been, you know, really trying to get after it this year.

Good. And looking at my tax return, I mean, I work part-time, and I'm a student. So, I mean, I'm making maybe about $1,200, $1,300 a month. And I'm trying to get out of the credit card debt that I've put myself into, as long as it's a motorcycle that I'm trying to sell so I can not make payments on that anymore. Good for you. Thank you.

So what I'm trying to do is I'm going to get back the $1,500 roughly for taxes, and I have a credit card that's one's $1,500 and the other one's $2,000. So would it be smarter to kind of skip the first baby step and get that card taken off? I mean, I have about $200 or $300 saved. Nope. You need $1,000 in baby step one. Okay. So I have $1,000 saved.

Yeah. Now, I will tell you this. We say if your household income is under $20,000 a year, which yours probably is, then I might make that baby step one $500. Okay, and I'm close to that. I do put away $50 every paycheck. Yeah, so you can't quite knock that credit card out, but you can get really, really close to knocking it out after you've polished off.

I can get really close to it. Yeah, you can get within a couple hundred. You can get within $300 of doing that, and the next check you'll probably do that right now here's the other thing go ahead and change your w-4 at work and claim more dependence because there's no reason for you to be paying any taxes you don't pay taxes because i'm single well because you don't make any money okay there's no taxes on so by the time you pay standard deduction at your age with your end well not your age but based on your income you don't have federal income tax you might have some california tax i don't know but you don't have any federal income tax uh because

i don't make enough yeah you by the time you claim your standard deduction you're going to be you know you're going to have no taxes so um okay you you know at this stage of the game and that's because you're a student you know you will someday you'll have your opportunity to pay taxes believe me but uh but right now you know so let's go ahead and and bring home another 125 dollars a month which is 1500 a year and um that that you use that to speed this process up as well so that's two things to do then yeah let's use five hundred dollars since you're under twenty thousand income we'll use that as your as your baby step one which is how we it's what we do tell people to do in the total money makeover book and then once you've gotten that then we'll move up from there and head on

out and change that w44. Good question, sir. I'm glad your work's furnishing this information to you. That's a great company that does that. We've got a lot of great companies in America that do that with smart dollar. That puts this hour of the Dave Ramsey Show in the books. We will 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 Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to National and tell Dave your story.