The Ramsey Show - App - Basic Transportation Needs to Be Reliable, Not Pretty (Hour 1)

Episode Date: February 12, 2019

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Live from the headquarters of Ramsey Solutions Broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Crystal starts off this hour in Austin, Texas. Welcome to

the Dave Ramsey Show, Crystal. How are you? I'm so good. How are you, Dave? Better than I deserve. What's up? Okay, Dave. First off, I just want to tell you, you are seriously one of my heroes, and me and my husband are just so grateful for you. We saw you guys in January at the SMART conference, and it was so awesome. So I just wanted to tell you that, and thank you so much. I'm being a girl right now. Thank you, darling. How can I help? Okay, Dave, I need your help so much. So I'll start off with my question. So my mom and I, I've owned a catering company with her for now, now for three years. And I know what you said about partnerships

and I totally get it now. But if you know, it's just gotten to the point where it's really difficult. It's kind of taken a hit on our relationship also. And I really don't like that because we've always been very close. So the backstory is, you know, she's always had the catering company, but it's always, she's always had a full-time job also. So it's been kind of more do a few events a year, word of mouth, that type of thing. And several, I have my business degree, finance degree, was also a teacher. But when my little ones were born, I was like, hey, mom, like, you know, what would you think about me joining your catering company and really just, you know,

revamping it? I rebranded it. And honestly, it just blew up. And it's been very successful. But the problem is, is that I literally, she still works a full-time job now. And I just, I do like 95% of the work and you know for 50 percent pay you know whenever it's time to get paid i get 50 percent and um so when it stops have you um have you sat down and talked to her about this discrepancy i have um and honestly it's just like oh you think you do more of the work like you and it's just like no like i do like i i do everything so she does she disputes she disputes that you do 95 of the work yeah it's just like kind of like ungrateful too okay um it's like this month this company makes so much more money than she's ever made on it because you know she just didn't work it. So how much are you making on it? Probably about $45,000 a year.

Each? No, no, no. That's total. Okay. So for me, it's like, okay, I've got all this work. Wait a minute. So you have a full-time job that you make $22,000 at? Well, it's not full-time. I mean, I stay home with our little ones.

But for me, you know, it's mostly weekend work, right, you know, because it's catering and some things throughout the week. We do, like, a lot of big weddings, lots of big events and stuff, but, you know, we'll make, you know, maybe $5,000 to $10,000 sometimes on those weekends. But it's like I did all the work for it, did all the contracts, did all the meeting with the customers, and, you know, then I only got 50% of what our profit was for that week. Who did all the cooking and the serving? Both of us. Both do.

I'm also a trained chef like she is or a home trained chef. So what do you want to do? I want to continue doing it because I love doing it. It uses, you know, my passion for cooking, and it also uses my business. So I love it. It's just I want to – I really feel led to just have the company on my own, and that's what I wanted to talk to you about. Like, how do I talk to my – like, how would that look like?

Because what I was thinking is just sitting down with my mom and saying, look, Mom, love you so much. Thank you. Not even bringing up all the bad stuff because i'm sure i borrow money from our account it's like she doesn't do well with money either and i hate even having her on that bank account because sometimes we'll have money missing stop stop stop so basically this partnership is coming to an end yes it needs to yeah and if it doesn't there's going to be big problems and so um you know there's a couple of ways to do that one is the business just closes two is you could buy her out um three is you could just go start your own thing and hand her the hand her the keys to this and start start again start again from the ground up yep and i'm prepared to do

the second or third option um but i was just going to say let mom like here's our assets we probably have about five thousand dollars worth of assets and be like here's twenty five hundred dollars and i'm just going to continue but i still want to hire her and i would pay her really well you know and if she wants to if she to do that, she may not want to do that. Yeah, she may not. And that's what I was going to say. What do you think would actually be fair? Would it be fair to say, hey, Mom, we have $5,000 worth of assets.

I'll pay you $2,500 today. You have a business that's worth more than $5,000. Mm-hmm. You know, at this stage of the game. So, you know, the question is just talk to her and say, listen, I'm either going to buy you out or I'm going to start my own and give you the keys. So, but this working together and going forward is not, it's not working for us. The, you know, for all the reasons that she already knows.

And she knows the same things you know. And so, Mom, six months from today, we'll take some time to work through this. There's no rush. There's nothing on fire. But six months from today, I'm no longer going to be in the catering business with you. Now, how do you want to handle that? Do you want to continue to own it and and me just give you the keys do you want me to give you some money and buy you out and if you wanted to keep doing some work from

time to time i pay you for that um or uh you know i can go start on my own i mean what do you want to do because i'm not going to continue past six months with the existing situation and then just you know you don't have to deal with all the emotion then. Because she's going to feel like you're ungrateful. And, you know, you're just going to have to be real calm and quiet. And just, you know, this is the situation. Six months from today, I'm not going to be in this business anymore. And there's one of a couple of ways we can do it.

We can close it. And I'll start my own. I can buy you out. I'll just give you the keys. Whatever whatever you've invested just let her have it and you go start your own thing from the ground up on the side as your own side hustle or i can buy you out and you can work here some maybe and i'll pay you excellent to work here but um you know it's this no longer feels like it's a good deal and i'm out of it and you just tell her and that's you know uh again it's nothing personal now again she's not going to accept that she's going to put on her mother voice and you need to be prepared for that

and you're not allowed to react like the teenage daughter you're going to react like a calm classy business person that's having a negotiation that just says i'm not going to do this anymore this is now coming to a close but she's going to put on her mother voice and she's going to activate your teen your teenage self down inside of you if you're not very careful. So just be prepared and be prayed up about that. And just sit down very calmly and kindly. Say, you know, my husband, we've talked about this. We've prayed about this. And we're not willing to go forward.

We take a little time to wind it down. But we're not willing to go forward past this contract six months from now. Whatever that is. Whatever the number is. I mean, if you've got a wedding book or something that's seven months, I don't care, whatever. But you need to put a set deadline on it out there a little bit so it's not sudden and it takes a little time

and we're going to wind it down together. And then you've just got to, she's got to do what she's got to do after that. This is The Dave Ramsey Show. Do you know who is a prime target for identity theft? Your children. Kids have no debts or credit history. Their personal information is just as easy to get, but the theft could go completely undetected for years. Every day all over the country, young adults are starting down their own path in life by opening a bank account or renting their first apartment,

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Chris is with us in Memphis. Welcome you're here. Open phones at 888-825-5225. Chris is with us in Memphis. Welcome to the Dave Ramsey Show, Chris. Hey, how's it going, Dave? Better than I deserve. What's up? So, I'm in a little bit of a weird situation here. My parents, they did your course and did all the baby steps and everything, and now they're worth several million dollars,

and they own several houses and stuff. So me and my wife recently got married, and my dad sold us one of his houses, did sort of an owner's finance type deal, and he did it at interest free. And the house is worth about $140,000, and he gave it to us for about $115,000. And so he sold it to us for about $115,000. And so he sold it to us for about $115,000. And so I currently owe about $100,000 on it, and it's not exactly the house that we want to live in for the rest of our lives. He was just trying to help us out, you know,

kind of give us somewhere to start out and everything. And so we're looking to move to another neighborhood where that price range for houses are around $100,000 to $130,000. So I was wondering, with the equity that I have in the house at about $140,000, should we go ahead and sell the house and just throw that equity at our next house and only owe about $70,000 to $80,000 on our next house, or should we just stay focused and pay off the house right away? Why are you moving down in house?

Well, it's not necessarily moving down. You're moving down in-house? Well, it's not necessarily moving down. You're moving down in price. Right. It's a, what we want to move is a historic district, and we're really kind of into more of the older houses. And I actually do a lot of construction stuff, and so I can fix up houses pretty well on my own. And so, you know, we just really like the style of the older houses and stuff.

And we kind of figured that it would kind of be our forever home if we moved to this neighborhood. Well, I'll help you with that. There's no such thing as a forever home. Right. Very, very few people, less than 5% of the people stay in one house. The average house sells every six years. So, anyway, how old are you? 22.

And how long have you been married? Six months. And what long have you been married? Six months. And what's your household income? So right now, my wife doesn't work. I make $75, and then she's going to start working soon, so it'll go up to about $100. Okay, good. And so she's going to be making $25? Well, I'm guessing on the low end.

You know, she's about to graduate with a natural science degree, so I imagine she'll make more than that, but I'm just guessing on the low end. Okay. And how much debt do you guys have, not counting the house? So I have a $10,000 student loan that she took out before we were together, and we don't take out student loans now, and so that's the only debt that I have outside of the house. Good. Okay.

Before I moved, you guys are – I would get her settled into her job, and I would be debt-free. Okay. And then if you made a move – You're talking about outside of the house? Yeah. Yeah, I'd pay the student loan off. Mm-hmm.

And that should only take you, like like six months or something, max. Right. And then make your move. And if you move then, you put it on a 15-year fixed, where the payments are no more than a fourth of your take-home pay. And, see, that was kind of what I was wondering is, should I even move when I would have interest on the next house when I don't have interest now?

Well, it's not the end of the world. I mean, this isn't the house you wanted. It got you started. You've been there for, what, a couple years, it sounds like. Yes, sir. And you're going to stay a little bit longer and make sure you're debt-free before you make the move. And, you know, you can move into the historic property and so forth. I will warn you, having owned and renovated a bunch of historic properties, uh, you might end up in a movie called the money pit.

Right. Um, and you know, I know, you know, construction and you can do some of the work, but I would not recommend that you, uh, get in a real, real heavy rehab with a young marriage and young careers that you're living in. I think that if you want a few little odds and ends things and you do them with cash, that's fine. But this move is being pushed by your wife more than it is by you. And she thinks the historic property is cute. Yes, they're cute when they're done. There is nothing cute about them while you're working on them.

They don't build them like they used to. Thank God, because they were horribly built compared to the construction technique that we use today. So I've done a lot of 1900 to 1920 renovations, done a lot of renovations from every decade, for that matter. And honestly, I'll never do another one. They're just a pain in the butt of that era. The cute is far outweighed by the trashy construction technique and the fact I have to rewire, replumb, you know, everything.

It's just you can build a house a whole lot easier. So be careful with that. Don't get sucked into some kind of vortex there that you can't get out of. Maria is with us in New York. Hi, Maria. Welcome to the Dave Ramsey Show. Hi, Dave. How are you?

Better than I deserve. What's up? A's at the truth. Well, I'm calling because I need some financial advice. I feel like I'm stuck in a jam. I'm a single mom, and my overall monthly income is $3,000. I get $1,000 a month for child support, and then I bring $1,000 every two weeks.

I do have a rent of $1,000 a month for child support, and then I bring $1,000 every two weeks. I do have a rent of $1,200. I pay child care, which is $200 a month. My utilities and phones don't over exceed $200. Stop, stop, stop, stop, stop. What's your question? Sorry. My question overall is I really need a car, but I don't believe this is the best financial decision for me to take.

And I don't really see my money stretching for the long run. I kind of see myself going paycheck to paycheck. So I just wanted to know what would be the best way to avoid that and, like, begin a savings and stuff like that. Gotcha. Okay. Well, you started giving me your budget. And if I were you, I would take those numbers and put them in the every dollar app it's free to use and begin to build lay your budget out and begin to squeeze it and squeeze it and then work extra and work extra and squeeze it and work a side job and let's put together a

couple thousand dollars cash to buy a car with in cash and get a $2,000 paid-for cash car. Now, let me tell you what kind of car that is. That is a car that is so ugly you have to give it a name. It's not a pretty car. It's a low miles. It's a car that is not pretty, but it is mechanically sound. So you're looking for low miles, mechanically sound, not pretty, but it is mechanically sound. So you're looking for low miles, mechanically sound, not pretty, because you're looking for basic transportation that is reliable. We are not

trying to impress people with your cool car. As a matter of fact, quite the contrary. We're going to impress people with the fact that you don't have any car payments, and that's going to be your first step up and out. If you take on a big car payment because you get car fever, you're going to get yourself into a mess here. So avoid that, but take the child support, the income that you've got, anything else you can do to create some income on the short term. Very, very, very quickly squeeze every drop out of your life and out of your budget

and get you a couple thousand dollars in paid cash for a starter car. And then we'll keep working through this, keep working your career, keep growing your career, move up, move up. And every time you do that, you start working those baby steps and you start to build wealth and have savings at that point. This is doable, but it is not easy. It starts, though, with the budget. Starts doing the written budget

eddie is on twitter dave can i negotiate a credit card debt do i keep it open or should i close my accounts um well you can negotiate any debt just about other than student loan debt that is but has gone bad meaning that think about it in reverse what if someone owed you money and they hadn't paid you for a while at that point you would go yeah I'll take 50 cents on the dollar if you give it to me in cash, I can go away, and I'm just going to consider myself lucky to have gotten anything. And if you've got a debt that you haven't paid on in a while, that's where the credit card companies start to get to.

But if you have a credit card debt that is current, no, they don't just suddenly go, no, we'll take less than what you owe. You borrowed the money. You're paying us. We like you. And they're going to keep you around as long as they possibly can. And so that's, yeah, that's how I would do it. This is the Dave Ramsey Show. 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. 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 prepackaged 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.

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Redwood, Tennessee is with us. Hi, Kat. How are you? Hi, Dave. How are you? The same. Welcome, welcome. Where do you live?

Columbus, Ohio. Originally from Edinburgh, Pennsylvania. Got to throw that in there just in case people are listening. Cool. And all the way to Nashville to do a debt-free stream. Yes, sir. Well, welcome. How much did you pay off?

$115,000 in four years and three weeks. Four years. Good for you. And your range of income during that four years? I started off around $65,000, worked my way up, and I pretty much made the proverbial little kid like payday dance. I made $101,000 this year. So that's like my little kid version of me being super wealthy, which we know isn't the case. Hey, that's pretty cool, though.

You broke the six figure. Good for you. What do you do for a living? I am a nurse. Oh, good. You've been working your tail off. I have. Thank goodness.

I didn't have to go the delivery pizza route because they have plenty of overtime and I was more than willing to take it. Yeah, you've been working a lot of hours. Yes, sir. And you've been averaging over $25,000 a year to get this pay off. Yeah, the first year I let my snowball just take effect, see where I was going. I originally had the plan of doing this in five years. I had $1,200 in minimum payments to start. Yeah, which is pretty steep. And I thought, wow, I really don't want to be paying that for 20 or 30 years. And so the original snowball got me $13,000 paid off the first year.

And I was talking to my friends. I'm like, really? I have this plan to be debt-free in five years before I'm 30? And she said, there's no way you're going to make that. And I said, you don't know me. Because if you knew me, you would know that if you say I can't do something, that's pretty much the only way to guarantee that I will do something. So the second year, I pretty much let it snowball. I thought, well, let's see what it does on its own, just with the snowball. So I went from $13,000 to $16,000 that year, paid off the second year. And I was like, okay, that was good. But I'm like, all right, there's no way it's going to make it if, if in time with just that. So, um, luckily my job offered a bonus program. Um, you pay,

or you, you work so many bonus and they give you the time and a half plus a bonus, some lump sum. Yes. and so they originally had that and i was like okay cool i'll do that for half a year because i don't want to do that in the summertime no one wants to work all that overtime in the summer um so with half half a year of that um i went from 13 to 16 to 30 and then the last year i was like oh well if i can do that good that well i'm gonna i'm to make this a full-time thing. And so I did a whole year. In the last one year and four weeks, I paid off $56,000.

Whoa, half of it. Yes, sir. In one year. Yes, sir. So when I say I made $101,000 in a year, I really didn't retain any of that. No, you don't want to the debt. Yeah, I know. But I'm more than happy to say that that's where it went.

Absolutely. You're done. Yes. So what got you started on this whole thing four years ago all right that's an interesting story short answer is pizza and i'll explain myself um so when i was about 19 years old i was taking a road trip with my second family at the time the plaskies wonderful. And instead of listening to music on the radio, they popped in your CDs. Forced listening and forced learning. Very fun, especially in the financial sector. But, you know, there was always this distinctive difference between me and my family and the wealthy, right? I mean, there's just this distinctive difference. And you came on this CD and you said, you were explaining the envelope system. You said, I won't buy my family a pizza if it's not in the envelopes. If it's not like, if there's nothing

left in that spend envelope, I'm not going to buy my family a pizza. And I thought, okay, all right. So this guy, I mean, if he's giving financial advice, he's probably pretty low. I mean, let's be real. He's probably doing pretty well for himself. And I thought maybe the difference would be, okay, we're not going to go to Europe this year for spring break. We're going to slum it in Martha's Vineyard or something like that. But no, it was pizza. And so I thought, okay, all right, that's kind of cool. I didn't really think about it that way. My family, proverbial farmers. So I grew up the 5 a.m. to 8 p.m. lifestyle of working, school, sports work. Real work. Real work. And i was very fortunate for that um so what got you

started four years ago four years ago um i got my job my first job so you're out of college yeah so this was like a decade ago when i first heard about you and then this the um i pretty much shelved you because i was gonna do me i was gonna go into debt to do it well i mean you're a college kid yeah exactly so I'd already started. I did my first degree and they didn't have nursing and I stayed to do sports of all things because I love my team. But I did an accelerated second degree program for nursing.

Oh, okay. Yes. So I did two degrees. I have two bachelor's degrees for that whole 115. Yeah. So as soon as I got my first big girl paycheck, I remember that crazy guy who talked about pizza. And so I went ahead and bought your book, and it went from there.

Look at that. So Total Money Makeover reengaged you. It did. From the memory of the distant CD on the vacation. Yes, yes. And here we go. So what do you tell people the key to getting out of debt is? You did it in four years.

You really have to be dedicated. The big thing for me is I would literally fall asleep thinking about numbers. I would think about I couldn't wait for the next paycheck just so I could give it away. And that persisted for all four years. I mean, I just could not wait to give it away. I'm very focused. And I'm very, very goal-oriented, I believe, in writing down your goals. And you're way more likely to succeed if you write them down.

Amen. Who was your biggest cheerleader? Actually, I'm going to go ahead and give it to my coworkers, 7th Tower, 4th Tower, Mount Carmel West Hospital. Thank you so much. Because they are always engaging me. They're always asking me, hey, what are you doing? Where are you at?

This is so exciting. And then, of course, my boyfriend, Cody, of the last eight years. Wonderful support and family. Very cool. Well, good for you. We're proud of you. Well done.

Well done. How does it feel to have no payments? Wonderful. Wonderful. You're free. Yeah. Yeah. And I hope to never make $100,000 again.

Just so long as it's not, you know, as long as I didn't get a raise to get it. Yeah, absolutely. I hope you don't have to work that hard to make it. No, that's exactly right. I hope you can make it without working that hard. But the good news is you've got a wonderful career where you can move up. And anytime you want to hit a goal, you can just reach over and pick up some hours. Correct.

So you can just do whatever you need to do. Well done. Very well done. Thank you. We've got a copy of Chris Hogan's Everyday Millionaires for you because that's your next chapter. We want you to be an everyday millionaire now coming up, and you can. I mean, you have the ability to make $75,000 to $100,000 a year pretty easily, and no payments in the world. You are on your way.

Way to go, Kat. Thank you. Congratulations. $115,000 paid off in four years, making $65,000 to $101,000. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free!

There we go. I'm dead free! There we go. I love it. Congratulations. Proud of you, Kat. Very, very, very well done. Open phones at 888-825- 5225.

Renee on Facebook says, Dave, everyone in my family has whole life policies. Is this something we should get rid of and open up term life policies? Sure. But you should open up your term life policies before you get rid of your whole life. Never cancel life insurance unless you have your replacement policy in place first because you don't want to die in the middle of this transaction and have no insurance. So we don't leave any gaps there. Get your term insurance in place

and then drop the whole life life insurance. Listen, the whole life policy is the payday lender of the middle class. It is the worst financial product that hits the middle class. It's the most devastating because people pay five to ten times too much for life insurance in order to get a savings buildup inside that is absolutely horrible. The rate of return is horrible. The terms on which you interact with it is horrible. It is just a really expensive, bad way to try and create wealth. You just don't meet wealthy people that say, you know, I made all my money because I put it all in a whole life policy. Zero percent of the 10,000 millionaires that we interviewed said they became millionaires because of whole life.

Not one of them. This is the Dave Ramsey Show. We'll be right back. Thank you for joining us, America. We're glad you're here. How often do you look at your bank account and wonder where all your money went? All the money comes in, all the money goes out. Only the names are changed to protect the innocent. It's just gone. Well, if you're tired of living like a rat in a wheel where you're getting no traction,

you can take control of your money. We'll show you how with Financial Peace University. Not only will you learn how to spend wisely and live on a budget and save for purchases and for emergencies and get out of debt, but we'll show you how to start investing so that you become an everyday millionaire. And if you start today and work through Financial Peace University on your schedule, just go to DaveRamsey.com or call us at 888-22-PEACE, 888-227-3223. Chris is in Hartford, Connecticut.

Hey, Chris, welcome to the Dave Ramsey Show. How are you, Dave? Better than I deserve. What's up? So my wife and I, back in 2013, bought a condo for $133,000. And in the recent years, about 2017, we found out that our complex had a crumbling foundation issue, which seems to be kind of Connecticut and Massachusetts-wide now, where they're kind of fighting against, I guess, the builders and the people and the insurance companies for some mineral that's in it.

So it seems essentially worthless. In the meantime, we then bought another house in Connecticut and started renting out the condo. We owe $270,000 currently on our current home that we live in, but it's worth $345,000, but the condo is now essentially worth probably about $25,000 to $35,000, and we still owe about $72,000 on it. We have no other debt, and we're just looking to see what we should kind of tackle first, if we should see if we can wait around for the state or anybody to help us out with that or possibly walk away from one of them since the condo is in my wife's name

and the house is only in my name, or kind of how we should handle that. What's your household income? It's about $147,000, including the rental income. Yeah. I would just go about the business of getting the condo paid off as soon as you can, put it first in line. You don't owe that much on it, and compared to your income and compared to your situation, you're in a really good position.

You've done a great job handling money is the hoa uh is there not a a group effort of the owners to come in and fix the thing so there is but our savings account only has about a hundred thousand dollars in it and for each building that our complex has they're estimating roughly two hundred thousand dollars to pay each building off and building off. And our building itself doesn't even have any issues yet, but the first building in our complex does, and it has an immediate issue. We had, I guess, a surcharge over the last two years of $100, so we're paying like $367 in HOATs currently, which should come off the books at the end of the year,

but the association is kind of just throwing their hands up and saying, you know, what will happen will be. So it's a tough spot. Okay. So there's no group effort with the association management to do a process to go through and fix the foundations and assess everyone? Not at this point. There was kind of a push, but it kind of just fell through

and there's just not enough and people were being foreclosed on and whatnot. Okay. So I'm going to get it paid off and I'm going to rent it. I'm either going to keep it rented until it just falls over or I'm going to look up and things stabilize and i can sell it for some amount of money 25 35 55 whatever um and then i'll try to get some of my money back but i'm just going to get it paid off once it's paid off you're going to view this situation differently what do you what do you say you owed on it again uh 72 000 and you have a hundred

thousand dollars in savings uh no we have 25 000 currently in non-retirement savings right now we just paid off our student loans that we had remaining of 25 24 000 i thought you said you had a hundred thousand dollars somewhere okay you meant that i guess you meant the hoa did oh yes yes yes okay yeah. Okay. All right. Yeah, well, yeah, I'm just going to use your fabulous income and the great position that you've gotten yourself in to go ahead and clear that $70,000. Hopefully it won't be a 100% loss at the end of the day when you do sell the thing or it just falls over or whatever it does.

But in the meantime, keep it rented and get all the income off of it you can and then let's turn around and right now it's still standing right now it's not your particular building's not got any issues um and then turn around and i think the thing will stabilize and come back up in value some some there's going to be some fix that's put into place at some point here but um i'm gonna to, yeah, that's what I'll do. I would get it fixed, and I would, I mean, I wouldn't get it fixed. I would get it paid off, and then I would keep it rented until either the thing comes to a point in value that you just go, well, I'll take that much of a loss and dump it, or it just falls over, and, you know, the money you put into it, you got back out a lot of it in rent.

And then the next step is to keep working your baby step six and pay off your home after you get all that done. So good question. Sorry you guys are facing that. Todd is with us in Sacramento. Hey, Todd, welcome to the Dave Ramsey Show. Hi, it's great to speak with you. You too.

How can I help? So I'm completely debt-free minus my mortgage. And right now I'm focusing on pouring a lot of my money into paying off the mortgage. But I have a question for step three. I have two months worth of savings for emergency funds, but I also have about three to four months worth of leave credit that work. Can I consider that part of the emergency fund? You could if you want to be at three months in the three- to six-month range. But we have emergencies sometimes that have nothing to do with work.

Yes. Car transmission goes out, family member dies, things come up, right, that have zero to do with work. And your work leave, anything having to do with work, it would, you know, if you got laid off or you got fired, you'd get all that leave, right? So, you know, that lowers your risk. So when we say three to six months, you could be on the three-month side, but I wouldn't count it below three months. No, you need at least three months in cash, and that's what I would do. Hey, good question. Thanks for calling in.

Open phones at 888-825-5225. Joseph is in Chicago. Hi, Joseph. How are you? I'm doing well. How are you doing, sir? Better than I deserve. What's up?

Well, it's a pleasure to talk to you. So a few months ago, I did stupid, as you say, and I bought a $23,000 sports car that was kind of a dream of mine. And after listening to your show for some time, I knew I needed to get that off my hands if I wanted to, you know, have a future. So basically, I ended up losing $7,000 that I had saved up over the past few years, which was a really big hit. But I wanted to know, now that I have $2,000 back in my savings, what should I do looking ahead at the next three years of my college education to avoid student loans or any debt at all so I can start a life on the right foot?

Cool. What are you studying? It's kind of undecided right now, but I'm starting to kind of like the economic side of things. Good. Okay. Fun. Well, you obviously can add up what your coming expenses are going to be

over the next three years. And we say, you know, per semester, here's my tuition, here's what it takes me to live, and here's my cost of books, and so forth. And then we have to go about earning that amount, enough to live, pay tuition, and books. Bare bones. And so do you know how much your tuition is? Well, right now I'm a freshman, and then next year as well I'm going to be, I'm at a community college, so tuition is running me about $2,300 a month, or not a month, $2,300 per semester.

And you're going to do sophomore year at community college to that tune, right? Yes. So that's going to be $5,000 a year, plus your living expenses, and that's a good value, by the way. That's an excellent job. That's a good way to do this. And then you get about the business of working your tail end off to create that amount of money, and you'll be there. You can do this.

But lay the goal out in numbers and solve the problem with numbers, with work and income. That puts us out of The Dave Ramsey Show in the books. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen

to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.