The Ramsey Show - App - An Explanation of How a 401(k) Works (Hour 1)

Episode Date: May 4, 2020

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Music 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 with you. We're going to do this together. You're going to make it.

Open phones at 888-825-5225. Some of you are starting to come out of your homes. Some of you are back to work. Depending on the state and the area that you're in, you're starting to feel a slight bit more normal, and it's weird out here. We've been broadcasting this show with a skeleton crew for many weeks. Last week, our governor allowed us to return voluntarily, and this week, our entire team rejoined us in the building. And, of course, we're in an area that has a very low infection rate.

And so with proper safety precautions, that's perfectly normal nowadays. So thanks for joining us. We're glad you're here. Some of you are at a different place, and we're here to help you. We're not here to tell you I told you so. We will never do that. Every one of us has our moment in time where we say, hmm, I'm going to have to do stuff different. For some of you, that was the corona shutdown. You lost your income, or you lost your business, or you lost whatever. You lost your side hustle. You lost some of your value in your retirement account,

and you're learning, you're thinking, I've got to get this money thing straight. I've been kind of dancing around the edges of it, and this is my come-to-Jesus moment. I had one of those when I was 28 years old. I lost everything because I was stupid. It was my fault, and I got the opportunity to start again, and that was many years ago, of course, and we started learning God's and Grandma's ways of handling money. Common sense, it's called. But common sense is so rare that having it is like having a superpower. So we're here to help you.

If you've got troubles with debt or the different things going on out there with the coronavirus shutdown that have affected your economics. I can't help you with the medical part. I don't know anything about it, but I can help you with the money part. I can help you with the economics part, and we'll walk together, and you're going to get through this. You're going to be okay. Open phones at 888-825-5225. Tim is on the line in Florida. Hi, Tim. Welcome to the Dave Ramsey Show. Thanks for taking my call.

How are you doing today? Better than I deserve, sir. What's up in your world? I'm doing great. I had a question about my retirement. My company puts in 18% of my gross into my 401k each pay period. And I'm just kind of wondering, my wife and I are kind of working through Baby Step 2 right now. When we get to Baby Step 4, should I go ahead and put the 15% in also?

Your company puts in 18% for you. Correct. Whether you put in any money or not. Correct. I got 22 years with the company, so that gives me 18%. Wow. Once I get to 30 years with the company, so that gives me 18%. Wow. Once I get to 30 years with the company, it's 21%. Wow. And it's going into a 401k that you control the options on?

Correct. Wow. So you should have some pretty serious money in there. We just recently renegotiated a contract. I work for a local utility that's a union job. So it's only been in effect about maybe about six or eight months now. We just recently renegotiated a contract. I work for a local utility that has a union job. So it's only been in effect about maybe about six or eight months now. Oh, okay. So this has not gone on for years. Okay. Well, here's the thing.

Normally when we get to Baby Step 4, I tell you to put 15% of your money into retirement. And if a company has a pension plan, I say i say well if you want to lower that a little bit that's fine but i still want you to put in money because with a pension plan you don't have control of it right you probably got a pension plan left over from the old deal right at this place uh and so i don't i don't use that to offset the 15 much because you don't control the options on it. But in your case, 100% of this is going into a 401K, and you're in, wow, and you're controlling the investments. And so if you leave them, you can roll that to an IRA, right? Correct.

You're vested in it from day one, right? Correct. Wow. Well, if you want to do very little or nothing on Baby Step 4 until you get your house paid off, that'll be cool. Perfect. I appreciate your time. Thank you very much. Thank you, sir.

Open phones, I've never heard of that. That's the first time in 30 years I've heard of a company putting in 18%. But it sounds like the union negotiated away the pension, and in return they're getting this 401K, which really is a great deal for that employee. That is amazing. That's a wonderful job. All right, Brandon is in New Jersey. Hey, Brandon, welcome to the Dave Ramsey Show.

Hey, Dave, thanks for taking a second to talk to me. Sure, man. What's up? So right around the whole time this COVID pandemic panned out, my wife and I, after a year and a half of trying, found out that we are going to be blessed with a baby. Yay! Yeah, so excited, so excited. So my question being, we were doing our debt snowball, but given the state of the economy and given that this is our first kid and I'm a little nervous, for the past month and a half we stopped paying in excess. We've been still paying the minimums.

Good. But my thinking was to squirrel away all the cash that we could. Exactly. Yeah, and I also just took a temporary but a 12% pay cut because of everything going on. Yeah, that's exactly what we tell people to do. When you're facing a pregnancy, we tell folks to stop and you're in baby step two is stop working the baby steps stop your total money makeover push pause push the pause button and pile up cash then when baby comes and mommy and baby come home from the

hospital and everybody's fine and there was no hiccups no issues that you needed money for any money that's in that pile, we push play again, and everything above $1,000 goes on to your baby step two, and you will have just lost the interest on some of your debts over this nine months. That's all you will have lost, which is not much. Understood. Okay. Thank you very much.

So your plan was my plan. We're on the same page, brother. Congratulations on the baby. That's awesome. Open phones at 888-825-5225. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every

month you'll save even more always use the promo code ramsey i'll just tell you i've been doing business with blinds.com we've been endorsing them and i've bought blinds from them and window shades and different things for a decade plus this is an incredible company today's question comes from veronica in ohio my husband just received a temporary 90-day salary cut from his employer do we continue with baby step two we were planning on paying 14 000 this month to kill one credit card uh putting 600 back into our budget or do we save the cash to prepare for the salary cut coming in May? There's no downside to saving it.

If you run your budget out, can you make it with this cut? And if you can make it with this cut and still make that payment, you could do that in late May if you wanted to, after you kind of prove it out by getting the money home. It doesn't cost you anything hardly to wait a few weeks, and let's just see how some things fly through here. It's kind of like just tap the brakes a little bit, and before we go over the speed bump, let's see what it looks like. You know, the speed bump is no big deal.

Then you can step back on the accelerator, right? This is The Dave Ramsey Show. Business leaders, now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. To help, LinkedIn is offering free job posts for healthcare and essential service organizations that need to quickly fill critical roles with the people who help us all. If you are hiring for one of these organizations, free job posts on LinkedIn can help you quickly find the right people for your frontline. LinkedIn jobs can help by screening candidates for skills and experience you're looking for and putting your job post in front of qualified people who have what you're looking for.

So you can find the right person to quickly fill critical roles. To post a health care or essential service job for free, or if you're in another industry and have hiring needs, visit LinkedIn.com slash Ramsey. LinkedIn.com slash Ramsey. Terms and conditions apply. Sometime in the next few weeks or days, we're going to be doing a generosity theme hour. If you have stories of giving, but more importantly, if you have stories of receiving generosity around the coronavirus shutdown time. Maybe you received generosity of some kind. We want to celebrate generosity, especially during coronavirus. Email us your story at DaveOnAir at DaveRamsey.com.

Put generosity in the subject line. Kelly, our associate producer, will get in touch with you and make you part of this generosity theme hour. Lots of people have done lots of wonderful things for other people. If you were on the receiving end particularly, we need some stories about generosity. Dave on air at DaveRamsey.com. Melanie is in New York. Hi,anie welcome to the dave ramsey show hey babe thanks for taking the call sure what's up i'm currently on babysat too i finally as of the first i paid off all my credit cards my debt credit debt free on my credit cards good for you

right now thank you um i do still owe on my car i have a lease on a jeep about 22 grand um the jeep will be over in october of 2022 and i wanted your best opinion on whether if i should aggressively snowball it and okay so i want to get rid of this car so i wanted to get another car but my options were either to snowball this and then go into another payment into a new car, or by the time October of 2022, I can pay off this car and purchase a brand-new car with also doing baby step number three and having my three in six months. Okay. baby step number three and having my three and six months okay well we don't recommend people buy a brand new car unless they have a million dollar or more net worth because a brand new car

loses 60 to 70 percent of its value in the first four years so we want you to buy one two three year old car until you've got at least a million dollars in your nest egg, okay? But other than that part of it, what is your household income? Right now I'm with my father. Right now you what? I'm with my father. You work for your father? No, no, I'm with my father. I live with my father.

You don't have an income? Oh, my income, yes, $65,000. Oh, okay. All right, cool. All right, and so you're wanting to trade cars. What you would do is you can call whoever holds the fleece on the Jeep and ask them for the early buyout amount. That's your payoff if you want to pay it off today okay then you can compare that to the

value of the jeep and that'll tell you how far upside down or in the hole you are okay and so if we find out that the early buyout is twenty thousand dollars and the value of the jeep is seventeen thousand that means you're $3,000 in the hole. Does that make sense? Yes. Okay. So if you were to trade cars down to get out of debt, not up, but down, lesser amount of car, then that $3,000 hole that you're in would be added to the new loan,

and then you would get in the business of paying that off as quickly as you can you cannot prepay a lease unless you pay the full amount and so if that if that early buyout is 20 000 you need 20 000 in your hand to prepay it because that buys the title out and everything not just runs the thing up to october of 2022 that's just your that's just your rental payments that run until then at the in october 2022 if you're going to buy the car there's a residual value at the end of the lease that they're going to charge you to buy the car at the end of the lease you know that right no actually i didn't know okay so at the end of the lease you're either going to turn the car in or there's a value on your lease if you pull it out and look at it called the residual value that

tells you what you can buy the car for at the end of the lease after you've leased it all these years because you're just rent you're just renting the car is what you're doing and so uh you know yes i think i probably would trade down find out what your early buyout is, and buy a car, compare it to the value. You can go on kbbkellybluebook.com and get the value. The value versus the early buyout, again, tells you how far upside down you are, and then that'll tell you what you've got to move to another loan. Now, if you go get another loan, get a loan move down in car and then start if you take a loan rather than a fleece that's something you can pay off early and you can start chunking on it hard and since you don't have any expenses you're living with that but you make 65 boom you

can hit this thing really really hard and be out of whatever you move down to very very quickly or you can just save up the twenty thousand dollars if that's the amount i'm making that number up might not be that far off but i'm making it up find out what that early buyout is and you just write them a check and then you own the jeep free and clear uh either one but in a sense you'd be paying extra on a debt but with the lease you just throw it all into savings until you had enough to knock it out in one check because they will not accept extra payments on the principal because it's not because you're renting the car cole is with us cole's in michigan hey cole welcome to dave ramsey show hey dave thank you taking my call. Sure man, how can I help?

I just wanted to get your thought on something. My wife and I just started FPU back in January. We're doing it really intense right now. We should be all paid off in October for our one year anniversary. Great. We've been doing a lot of research

trying to come up with a game plan so we can hit the ground running when we get out of debt. Our thought between her and I, we were thinking we should, in the area we're living in right now, we want to buy our first home, save up for our first home with the intent of paying that home off early and then turning it into a rental property. Just want to get your thoughts on that. I've had resistance from friends of mine that have told this idea, too,

and they've said paying off your mortgage early is stupid. You know, there's much better investments to be made. I'm pretty confident in what I've been learning from listening to you. I just want to get your thoughts on that game plan that we're trying to formulate for when we get out of debt. If broke people are making fun of your financial plan, it means you're on track. Okay? If fat people are making fun of your diet, it means you're on track.

And that's what you're talking about here. So who gives a crap what broke people think about paying off your mortgage? They're ridiculous. I own several hundred million dollars in real estate, and I pay cash for every bit of it. Okay? Now, would I do your deal? Would I pay off the house? Yes, I'd get the house paid off. Then the second step is where you may have a problem, because I don't want you to go back into debt once you've done that in order to get a rental. Because let's say you pay this house off

and then you save up a down payment and buy another house and then you have a mortgage on your personal home but you have a paid for rental. If you had sold the paid for rental you probably could have paid cash for the personal home so it in essence is if you borrowed on your personal home to buy a rental in that scenario. So if you can save up enough to pay cash for the new house and keep the paid-for rental, game on. But once you get that sucker paid off, we're going to sell it and roll it into the next house unless you can pay cash for the next house. Because the number one thing we found, number one and number two things we found in the millionaire study, and I found this long before the millionaire study was done,

the study we did for Chris Hogan's Everyday Millionaire book, our RMSE research team, airtight research, found that the two primary ways that people became millionaires was their 401K or Roth IRAs and their paid-for house. It wasn't borrowing on your home to buy rental real estate. That was not one of the ones that was, that was not even in the top 20 reasons that people became millionaires. And so this idea that borrowing, let me think about it. If you had a paid for rental right now and a house payment versus a house that you lived in that was just paid for in the middle of all this COVID garbage, how much differently you'd feel.

100% debt-free with a pile of cash right now looks pretty dadgum good. This is the Dave Ramsey Show. Thank you. folks i love telling you about well-made well-thought-out products today i'm talking about grip six belts i don't know about you but i'm not a fan of traditional belts they never fit right and they're uncomfortable grip Grip 6 belts are unique. Owner BJ designed a truly modern minimalist belt made of high quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable. I personally own these belts in different styles and talk about affordability grip six belts come with a lifetime guarantee and that means if you no longer like or fit the style of your belt you can replace them

for free plus i like the way these guys do business grip six is determined to help build and modernize american manufacturing to learn more and get this month's Dave Ramsey special, visit GRIPSIX.com. That's GRIPSIX.com. Rolando is on the line in Florida. Hi, Rolando. How are you? Pretty good. How about you? Better thanolando. How are you? Pretty good. How about you? Better than I deserve. What's up?

So, I will tell you everything, pretty much. Okay, I have a house, but too much of a mortgage. I pay $2,000 in my mortgage. I have a car, $13,000 loan. Credit cards, $1,500, $1,600, and $4,000.

I'm out of a job because of the coronavirus. What were you doing? Okay. And how much were you making? Okay. All right. And how long have you been out? Okay. Okay. Okay. Have 16th, at least. Okay.

Yeah. Have you been collecting unemployment? I tried. For some odd reason, I don't know why, I probably did something wrong, but I got uneligible, so I reapplied again. Okay. Does your wife work outside the home? Yeah, she works.

And a behavior therapist she makes around $2,500 per month Ouch Have you been doing any work since you got laid off? I work on my I tried to apply to a few places

but nobody really hired me I really tried I literally applied to people everywhere a few places have called me but then i i really tried i literally applied for people everywhere nobody has called me a few places that's called me but then they said oh you know qualified i'm like okay thank you i worked for my friend for a little bit but he was thinking really really bad and i am now i'm trying to look for another job that pays a little bit better at least something to bring in um oh and my wife is pregnant she She gives birth in three months. And she's taking maternity leave in two months. Yeah, I'm pretty brutal.

Oh, the good thing is I have an Airbnb in my house, a tiny house in the back, and that brings in $1,000 per month at the moment. People are renting it? Yes. Right now? Yeah, right now. I got really lucky. I got rented out for three whole months.

So I'm lucky enough for that. Okay. Very good. Well, that's good news. Okay. So really what you have is a career crisis more than anything, right? Yeah, yeah. Yeah, pretty much.

You've got to find some work. Yeah. You've got all out, no income. I'm going to school in one month, and I don't know if I should go because I have to pay like $3,000 cash. No, you're broke and don't have a job. No, I have $15,000 in my savings account. Okay.

But you don't, I mean, you've got a car debt that's equal to that, just about, and you've got a $2,000 a month house payment and you've got no job. How are you going to survive if you go to school? I don't know. That's all I need your advice. I don't know what to do. I have no idea. I've been wanting to go to school and I finally could go and all of this happened and I'm

just, I'm devastated, honestly, and I'm stressed out. Well, I'd love for you to go to school if you want to study something. What are you going to study? Well, I'm going to EMT school, and then after that I'm going to firefighter school. So that's what I did. I'm doing a five-week course for EMT, and I was hoping to get a job right away after that. And then after that, in August, I was starting firefighter school.

Okay. Well, the five-week job makes sense. And if you're an EMT, you can go to firefighter school while you're an emt right yes while you're on the payroll yeah yeah you need to get payroll coming in and so if you isn't is that what you want to do with your life uh yeah i should do like that um i really do like firefighter i do like i would like to take life honestly okay well i mean that's okay i thought you were going to a four-year college or something but if you're going to go for a few weeks you're going to spend three thousand dollars of your 18 and go for a few weeks and that gets you a job

in the area that you want to be in anyway then that makes a ton of sense yeah now when does the emt school start uh in one month exactly okay so you need to be working your butt off delivering pizzas or working for amazon delivering stuff or shelving putting groceries on the shelves at publics or whatever those people are all hiring every one of them are hiring right now they're all overwhelmed and they need help uh construction site i don't care go work for a month about 80 hours a week you got a baby on the way and you don't want to be burning up this 18 000 bucks it's precious money right now uh you don't be burning it up with living with two thousand dollar house payments because there's no

income to mount anything coming in the house and you can't live on your wife's 2500 not with a two thousand dollar house payment and a car payment that money's gone poof just like that so you got to do something to get your income up until you get into EMT school and then head into that, and then you can survive through that one month and get your training or that six weeks and get your training and then come out. You better have a job lined up on the other side of that. And if you do, then this is going to be a good plan by this time next year, and you're going to be in a good place.

Hey, thanks for the call, brother. up next is mario in uh alaska hi mario how are you hey dave thanks for taking my call sure what's up so first i'm caller and i currently am in danger of getting myself back into another financial mess without some solid financial advice and direction. So that's the reason for my call this morning. So a little bit about myself. I haven't worked in the past two years due to a work-related injury, workers' comp. Also going through a divorce. It's actually a dissolution with child from my wife of 19 years. At the point where my workers' comp lawyer

had negotiated a settlement for me. And now I got the settlement amount, and I need to – I was advised to go to school and use the money out of the settlement to do that for my future. But I also need to take care of my responsibilities with my soon-to-be ex-wife and also set up account for child support. I'm new to your program and I was kind of looking at your the seven baby steps. So with settlement, I think I'll be able to set up from, you know, start up with the emergency fund and begin to pay off all these debts and hopefully be able to set up the three to six month expenses for the fully funded emergency fund. How much settlement are you getting?

Probably around $75,000. And how much debt do you have? Oh, I believe around $28,000. Okay, and how much child support do you have? That hasn't been determined yet. I'll know here middle of the month,

but I want to say a little over $300 a month. $300 a month 300 a month yes that's all okay yeah and um what are you going to study in school uh construction management i come from a construction backfill uh background and um what was the nature what was the nature of your injury shoulder okay all right two back-to-back shoulder surgeries so you can do supervisory things in the construction world that's what you're saying yes sir and you think you need a four-year degree to do that no it's a two-year associates do you think you need a two-year associates degree to do that no it's a two-year associates do you think you need a two-year associates degree to do that possibly because a lot of the stuff that they offer i have been around but i have not had firsthand uh experience with so i've experienced in the field but now with like

estimates cost of estimating and that type of stuff. Yeah, a two-year associate you can do at night while you're working an entry-level construction management job during the day, and they might even pay for it. And they were, but the lawyer had advised not to because in case someone had to. No, no, no, no, no. Your new job might pay for it. Right, okay. You've left the pay for it. Right, okay.

You left the job where you got hurt, right? Yes. That's in the past, but you've got to get a new job, right? Yes, sir. And you need to get a new job in the construction business. And then let them pay for it. As an employee benefit, let them pay for your two-year degree at night while you work during the day. If you do that, then the $50,000 that's left over after paying off your debt is clear,

and you don't have to use it to live on to go to school and do nothing but go to school for two years. I think you're in a position you can work while you're going to school, and I think that's going to put you in a lot better condition financially when you come out the other side. And, of course, you can cover the child support as well. That'll be done easily at only $300 a month. This is the Dave Ramsey Show. Business leaders make your life easier with FreshBooks. Whether you're starting a business or you've been at it a long time, FreshBooks is one of the smartest decisions you'll make this year.

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Better than I deserve. What's up in your world? I need to ask you a two-fold question. I've worked at three companies, and they did have 401ks, but none of them had a match. And the people, I've been in the one, I was in one for a little bit, and then I got out of it. I didn't think it was doing real well. And some other coworkers said the same thing, and they dropped theirs. And I was just wondering if it's always a good thing to be in a company 401k that maybe doesn't match or you don't feel that the performance is good. And my second question is, is government's always in our business, but what happens if the government offers some type of retirement where we were able to put something in tax-free, tax-deferred,

and we had a guaranteed 4%. I know that's not, you know, a 6% to a 12% that maybe after a historical return of, you know, over years, but it always tucked away at never lost, and it would give people confidence to put something in because they would see it maybe always growing versus that it's up one month and down the next. Well, that doesn't exist unless you're talking about some kind of insurance. I mean, today the government doesn't have that. And besides that, you really don't.

If you just pull up a calculator online and put in $100 a month at 10% or 12%, and then put in $100 a month at 4%, and you'll see real quickly why you don't want to do that. It's a bazillion dollars difference. I mean, it's not four times as much. It's 100 times as much it's a hundred times as much because when you're talking about compound interest it works on a curve it does not work on a straight line and so in other words 12 is not three times as much as four percent it's more like 30 times as much and so it blows your mind how much a few percentage points makes. So you would never take

that low percentage. As far as the 401k goes, here's the thing to remember. The 401k itself is not an investment. It is how the investment is treated under section 401k or section 401 subsection K of the IRS code, meaning that you're allowed to have money taken out of your check and put into an investment pre-tax and then it grows tax free if it's a roth 401k tax deferred if it's a regular 401k now what's been underperforming is not the actual 401k it's more like the coat that is keeping the investment warm. It's the investment inside the coat that sucked. If you had an underperforming 401K, what you really had was an underperforming investment in your 401K.

Does that make sense? Sort of. And what do you mean by that? Okay, pretend like there's a cookie jar, and that's the investment with the cookies. The cookies in the cookie jar are either good or bad. The jar doesn't determine that. The jar is just where you park the cookies.

Does that make sense? Yes. You could have peanut butter cookies, you could have sugar cookies, you could have chocolate chip cookies, and they could be good cookies, or they could suck. But the jar didn't cause any of that to happen. The jar is just where you have them. The 401K is the jar. The investment is the cookies.

So we basically, at the three places I worked at, they didn't really have the right investment. Or you didn't pick the right ones from the ones that they offered. Right. There was four on each one of them. No, there was four general portfolios on each one of them, and you picked the wrong portfolio, but you probably could have gone even inside of those four portfolios, meaning they had a low risk, a medium risk, and a high risk,

or something like that. And that high risk would have had a group risk, a medium risk, and a high risk or something like that. And that high risk would have had a group of mutual funds in it that would have sounded a lot like what we tell you to do. And you would have done a lot better had you been in that versus the one you were in. And so what you're looking for is you're looking for mutual funds inside the 401k, whether there's a match or not. A match is helpful, obviously, because it's freaking free money. But you're looking for mutual funds inside the 401k that have a good long-term track record. And I personally, in my 401k here at my business, do this, and I recommend that other people do the same thing,

that you put it in four types of mutual funds. Growth, growth and income, aggressive growth, and international. And that's the cookies, okay? That's the, you summon a chocolate chip cookie, you want some peanut butter cookie, you want some sugar cookie, and so on, right? Some Oreos or whatever. I'm just making this up as I go here. But the bottom line is that you're trying to get different kinds of investments that have good long-term track records,

and they fall under the heading of growth stock mutual funds inside the 401k. You can also do that inside a Roth, and if you don't like the options that your company has available to you to invest inside the 401k and there's no match then you could go to a just a roth ira do the exact same thing and pick from any of 8 000 mutual funds so certainly you could get a good one that way and if you need some help doing that or even selecting the stuff inside your 401k the people we recommend in the investment world we call smart vestor pros. And if you go

to smart Vester at Dave Ramsey.com, click on that, it'll drop down a little, uh, fill in the blank thing. You fill in your stuff. It'll drop down a list of the people that we recommend in your area, the smart Vester pros, and then you can sit down with them. They'll have the heart of a teacher, not the heart of a salesman. And you'll hear stuff very similar to what I just outlined to you here. And, you know, the different types of mutual funds that have long track records, growth, growth and income, aggressive growth, and international. Jamie is in South Dakota. Hi, Jamie. How are you? Hi, Dave. How are you doing? Better than I deserve. What's up? All right. So I'm pretty much at a crossroads with a career decision right now. I'm a single mom with three kids.

I'm a psych nurse, and I also do behavioral coaching on the side. I'm bringing in about $80,000 to $90,000 right now yearly. Baby step two, I'm trying to pay off debt right now. But my question is, I just got accepted to a bachelor's to doctorate program, which would eventually have me earn my nurse practitioner degree. Do I wait and pay off all my debt, all my student loans, everything like that right now and get gazelle intent? Or do I go to school right now while also continuing paying off my debt how are you going to go to school while paying off your debts what's it going to cost you and and are you going to be working while you're doing this i'll be working both jobs um yep

and going to school and going to school. And how much does school cost? It's about $7,000 a trimester, so it's about $21,000 a year for three years. Out of $80,000 and you're going to eat and make progress on your debt? Not much. Right. Okay. So do I wait? How much debt do you have i have about 130 000 105 of that is my undergrad debt 21 000 is my car and i have about 8 000 in uh lawyer fees. From a divorce? Yes. How much is your child support and alimony? I get $1,400 a month. Okay. So you got $100,000 of your income between the two? Right.

You put student loans on hold while you're back in school, right? Yes. And you can sell the car and move down. You get an awfully expensive car for someone trying to accomplish all these goals at once. Yes, that's my other issue. I'm trying to figure out. Yeah, I'd move down to about a $10,000 car, $8,000 car, $7,000 car, something like that. Yeah, I'm just such a fan of a PA.

I think it's just a wonderful degree field. What you're paying for, it sounds like a reasonable bill. It's going to be a long three years, and it's going to be a long three years after that to clean up the mess from your undergrad. But PA is a great field to go into. And if that's where you want to go, I probably would. This is the Dave Ramsey Show. In the middle of these uncertain times, Ramsey Solutions wants to give you some hope.

For the very first time ever, we're giving you Financial Peace University free for 14 days. Go to DaveRamsey.com slash hope so you can watch from home.