The Ramsey Show - App - Be Intentional About Your Education (Hour 1)

Episode Date: October 4, 2019

Debt, Insurance, Budgeting Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR

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 am Dave Ramsey, your host. We're glad you're here. Open phones this hour as we talk about you right in front of you. The phone number is 888-825-5225. That's 888-825-5225. Jeremy is with us this hour to start off the hour in Abilene, Texas.

Hi, Jeremy. How are you? Doing well, thank you. How are you, Dave? Better than I deserve, sir. What's up? Well, my wife and I have just made it over into Baby Step 3, and so we're very excited about that. And we received some unexpected news in that we are actually expecting twins.

Wow, wonderful. So my stress level has increased a little bit, wonderful. So my stress level has increased a little bit, obviously. But currently, as I said, we're just now starting to boost our savings. We only have about $4,000 with savings right now. In our monthly budget, we're able to free up about $3,000 per month. And now we're wondering, should we try to allocate that extra money we freed up to start feeding our HSA in expectation of these medical expenses that will be upcoming, or should we just try to feed that HSA with the pre-tax wages from my wife's work and free up some of that savings to take home just for discretionary spending? All HSA contributions are pre-tax, whether they run through wages or otherwise.

They're all pre-tax. You can deduct them on your tax return when you file out your tax return. If you don't take them as a pre-tax wage earner. Either one's fine. I would not put more in the HSA than you have actually calculated your out-of-pocket for normal labor and delivery will be. So whose insurance is she under? She is under...

Yours or hers? I'm actually blanking. Yours or hers? I'm actually blanking. Yours or hers? It's hers. Okay. Does her insurance at her company cover normal labor and delivery? I believe so, yes. Does it cover it 100%?

A lot of them do. I believe a lot of it, 85%, I believe. Okay. You need to find out exactly, and let's not believe in guess. Okay? Find out exactly what's covered and multiply that out by real numbers and talking with your OB and go, okay, what's my normal delivery cost? I've got to cover 15% of that.

Put that amount in the HSA, but don't build your emergency fund in the HSA. All right. Here's why. Here's why. Don't build your emergency fund in the HSA. Right. Here's why. Here's why. Your emergency fund will cover anything. HSA has to be spent only on medical, or you're going to get taxed and penalized big time pulling money out of there that you put in there.

And so any expenses you know you're going to have that you run through there, you're only paying for 70 cents of every dollar because the government's, it's before tax, government's taking their taxes off. So by being pre-taxed, you're saving 30 cents on every dollar. But you're not saving 30 cents on every dollar of something else that comes up that your policies don't cover or that doesn't fall under medical heading. So whatever normal delivery cost out-of-pocket would be, given your exact situation, what do you got to pay? Put that much in the HSA. Put the rest of it in just a big pile of money because I want you to use that money on baby step two when she comes home and baby's healthy and you didn't need the money.

But when you get through the pregnancy and you push play again on your total money makeover you push the play button again then you take all the money out of savings down to a thousand dollars again and you can't take the money out of that hsa to throw it at your debt so we're going to start your baby step two and knock out your debt when she comes home and baby comes home healthy babies come home healthy in this case al Alicia is in Wilmington, Delaware. Hi, Alicia. How are you? Hi, Dave.

I'm doing well. How are you? Better than I deserve. What's up? Great. I just have a quick question for you. A couple months ago, I talked to you regarding term life insurance, and I have that in place.

I did all the medical stuff. But over the weekend, I received an advertisement from, let's just say, a roadside service company for group term life insurance application. And basically, it's the same amount of coverage for about $50 less a month with no medical exam. And I'm wondering what I should be looking for to see if this is, like, not a scam. Well, there's something wrong with that. I mean, because if there's typically no medical, you either paid way too much for your term. Did you buy it through Zander?

I did, but the problem is, you know, my way of medication that I take, there was a couple of things that kind of raised my rate a little bit. A little bit or a lot? A lot. It's about $80 a month for only 300,000 coverage. Okay. So you got super rated because of your weight and your medications. Correct.

Because typically a no medical check policy, like, you know, those are, you know, basic gimmick policies, the only time I'd recommend those to somebody that's uninsurable because they're typically so much more expensive than non-rated policies. But, you know, like AAA, if that's what you're talking about, there's nothing wrong with buying a term policy through AAA for the same amount of coverage if it's cheaper. There's nothing wrong with that at all. But what that says is that your health is bad, really bad. Yeah, it's not great.

I'm working on that. Okay, from a term life insurance statistics standpoint, I have no idea. But, I mean, they've rated the crud out of you. Because normally that stuff is double what anybody else would pay. And you're paying more than that is what I'm hearing. Ooh, scary. Yeah, you may have found a better deal and uh you may want to pick up some of that um and i don't know if you pick it up permanently or not but um you

know i i have no experience or no reason to think that a triple a if that's who that is for instance term policy would not pay off but a no a no medical low app low dock type loan is typically a gimmick that is um usually five to ten x what you could buy it for if you were getting premium health rates on term good question thanks for joining us open phones at 888-825-5225 you can join us here it is a free call you can follow me on twitter at dave ramsey like anybody does that anymore but um i think we've got now more on instagram and i don't even know how to turn my instagram on but our folks that work here run that for me and i'm a lot nicer apparently when they run it than if i run it so it's not and instagram's kind of nice twitter's like hateful and trolling and i fit in there better and instagram's kind of nice twitter's like hateful and trolling and i fit in there

better and instagram's like for nice people with pictures of skittles and rainbows and unicorns and it's sweet and people say nice things on there and so my team does that and puts my name after it and no actually i've been doing a little bit of writing. I put some stuff on the blog. I had never done that before, and a couple people read it, and so the team has given me a hard time about doing some more writing because some of those things took off on the blog and on Instagram. Nobody on Twitter cared. They were just mad that I was there. But Twitter's like you turn on your Twitter account,

it's like getting punched in the face now, isn't it? I still check it, though. I'm a sucker for punishment. Anyway, we can help you, we will. And, of course, there is the Ramsey Baby Steps community on the Facebook, private Facebook club there that you can join for free. You can check it out. All kinds of questions and answers going on there, too. This is the Dave Ramsey Show.

Did you know that if you combine the data breaches that have occurred in the past 12 months, almost every American has had their personal info compromised or hacked. Over 50% of our listeners and viewers tell us that they or someone in their family has been a victim. And 70% of those folks have had it happen more than once. See, this is unbelievable. Once thieves get your info, the risk never goes away and they can use it whenever and however they choose. It truly has become an issue of not if, but when.

That's why the only plan I've ever recommended is through Zander Insurance. I actually sat down with them, and we put together a plan that I felt provided the best protection, but didn't waste dollars on things you could easily do yourself, or were just gimmicks. The key is getting protected before you're a victim, and it's too late. Go to Zander.com or call 800-356-4282. We are all at risk, and it doesn't make sense to wait.

Numbers don't lie. That's Zander.com or 800-356-4282. Atlanta, Georgia, Funto is calling. Hey, Funto, what's up? Hi, Dave. Nice to finally be able to talk to you. You too. What's up? Thank you.

So I just have a really quick question about as to just kind of like what direction i could take in my life right now um so i recently turned 25 and i have a roughly 31 000 in debt total did you say 31 000 yeah yes sir, $31,000 in debt. And that's student loans? 3-1. So about $19,000 is student loans, and $10,000 is the car that I'm currently paying for. Okay. So I am working as a bartender, and I get by with my bills and everything, but I really want to start working your steps. Mostly the, I'm kind of stuck between two and three. So right now I'm living, I'm living to take the paycheck.

I would love to go back to school that way I can sort of find a way to increase my income. However, I'm just stuck between whether or not I should work a bit more, pay off some debt and then start saving that way That way I can make the payments for school, or should I just kind of continue doing what I'm doing and budget school payments? How much are you making? On average, about $1,500 a month, average after taxes. Do you live at home? Yes.

Okay, all right. And you have a $10,000 car debt and you make $18? Yes. Okay. All right. And you have a $10,000 car debt and you make $18,000 a year. Okay. No, I would not go back to school until I knew exactly what I wanted to do. And if school was required for that, then I would consider going back to school. But just going to school under the heading of I want to make more money going to school always makes that happen does not work. Because you could get a degree in left-handed puppetry, and that would not increase your income.

Right? So you've got to be very intentional, very goal-oriented about any education steps you take. So not everything requires a degree. Some things a degree doesn't even enhance that much. And other things a degree would be absolutely necessary. So I back all the way up, and I start asking myself, if I'm you, questions like, I'm 25, what do I want to be doing when I'm 45, career-wise? Yeah, it's so hard, yeah.

Well, what makes you happy? People, you like people. Yeah, definitely people. I've been in the industry for quite a while now, just the host service and stuff. Other than you get to interact with a lot of people, what do you like about the industry, the food service, hotel service business, and what do you hate about it? What I like the most is the fact that i have something to do with their day you know i kind of make their day better whether it's by giving good service or good conversations that's kind of like what i like the interaction and being able to

make them feel like they had a great night um what i don't like is just typical things like drama overtime you know help all that stuff benefits or lack of benefits um rather those are the top two that i would okay so i start asking myself a question is there an industry that might not be behind a bar that allows you to serve people have interaction with people and help their day be better that causes you to that that really excites you when you were in a high school were you better at math or science or english chemistry and bio or i would say like the math and science yeah math and chemistry and bio were your favorite no i was gonna like split the two because I feel like chemistry is way different from bio.

Yeah, well, one's more math and one's more. Yeah, I got it. It sounds like you might be a nurse. A nurse? Really? That's what my mom said. Well, you would help people and you would do it with biology and chemistry. And their day would be better because you came in the room.

That's very true. And I am into, like, health and stuff. I'm like, yeah, I think you're right. I should probably. Maybe you're a nutritionist. Maybe you're a nutritionist. Mm-hmm. So you see, all I'm doing here is I'm asking you what are some of the things that you're good at and what are some of the things you're passionate about.

And this is what Ken Coleman does on the Ken Coleman Show. I appreciate the question because it's different when I ask myself those questions. I'm just, like, cracking my brain, whereas when you ask, I can, like, answer it. So, you know, thanks. Yeah. Well, so, in other words, what I want to do is just kind of start doing those kinds of things and maybe talk to some people that you trust their wisdom, not just their intellect, that are 35 years old and older. If you're in a good church, you might talk to one of your older pastors and say,

okay, what do you see in me if you know me? And what would you see me doing when I'm 45? And then if you find out that you get to poking around in this and you get more and more and more excited about a certain subject and that leads you to go to school, well, then you'd be willing to work lots of overtime to pay for the school and sell your car. And your student loans would go on hardship deferral.

But your car is half your annual income right now. Short term, you can get by with that. Long term, that doesn't work. And so we've got to get your income up, and we'll do that by getting a career of some kind. And some people might be 25 and say, when I'm 55, I still want to be a bartender, but most would not. And that's not to put down bartenders.

All you bartenders send me hate mail now. You jump in the creek. That's not what I'm talking about. The point is, if what you're doing right now is you're doing it out of convenience because you can make a little money while you live at home, that's okay. That's not evil. But that usually does not indicate your career path except the things about it that you enjoy. And you, in talking to you, 25 years old, very articulate, you're definitely a people person. You feel things and you react very quickly, very easily,

and I can see how you do make people's day better in your given profession today. So what is it you want to be doing? You want to be running something that is a service industry and you teach people how to make other people's day better and that kind of stuff. You could do all of that. And so that leads you back to school. But don't just say, I need to make more money, so I'm going back to school. That's a really dumb way to lose money right there.

And about three more years of your life to go get a degree in something you hate because somebody told you you could make money doing it. That's not a good idea. Craig is with us in Jacksonville, Florida. Hi, Craig. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call.

I appreciate it. Sure, man. What's up? So my wife and I just recently found out that we're expecting. Yay! Yes, it's exciting but scary at the same time this is pregnancy hour yeah the last caller caller before last was expecting the twins this is pregnancy hour on the day ramsey show so okay what's up you got a first baby on the way so

we just sat down and uh kind of calculated out our debt after reading the total money makeover. We're sitting with about $130,000 in debt. And right now we're bringing in about $54,000 a year. Kind of just curious where to start. What is the $150,000 in debt? Hey, Craig, what's the $150,000? Craig, your phone's screwed up. What's the $150,000 in debt?

So most of it is school loans, about $115,000 of school loans. Who's the doctor? It's split between my wife and I. We're both veterinary technicians. But one of you is not working. No, we're both working. Veterinary techs make $25,000 a year each. So, well, I think it's about about normal is about $34,000.

Um, it's not a ton of money though, unfortunately. Okay. I'm not, I don't have much knowledge of veterinary techs. I know some vets that make really good money. The techs, I don't know much about. It's sad that you guys spent a hundred grand to get $50,000 a year job between you. Wow. Wow. Yeah.

So, well, you're in a big hole, and you have a small shovel. And so we've got to do something to get your income up to be able to see your way through that shovel. But once the baby comes, and not until, you pile up money until the baby comes. But once the baby comes and the baby's okay, mommy's okay, and everybody's's back to work then we're going to see how many hours we can pick up because we gotta get your income up and start throwing some more serious cash at this debt than you've been able to do so far um yeah definitely gonna have to do that that's your issue We'll see you next time. In the lobby of Ramsey Solutions, Brian and Hillary are with us. Hey, guys, how are you? Hey, Dave, how are you?

Welcome, welcome. Good to have you. Where do you guys live? Covington, Tennessee. Memphis area. That's right. Welcome to Nashville. Good to have you come up the road.

Here to do a debt-free scream, how much have you paid off? We paid off $124,698. Good for you. And how long did that take? 38 months. Good. And your range of income during that time? We started at $126,000, and last year we were at $165,000.

Woo! What do you all do for a living? Hillary's an attorney, and I work in the railroad industry. Good. Very cool. Good for you guys. What kind of debt was this $125,000 law school in there? Oh, yeah.

$75,000 were law school loans. $30,000 was a stupid truck and a stupid car. We had a couple of thousand in credit card debt and some miscellaneous other debt in there, too. Okay, cool. So did you sell anything big, like a stupid car or a stupid truck, or did you pay them off? We traded her car in for a cheaper one, so that knocked like $6,000.

Not that much cheaper. We should have gone a little lower. Yeah, we definitely could have. Okay. But then you just plowed through the rest of it. We did. Very cool. And your income went up $40, we definitely could have. Okay. But then you just plowed through the rest of it. We did. Very cool. And your income went up $40,000 during that time, too.

So very nice. Very, very nice. Good. Good careers. Things are going good for you. So how long you two been married? Four years. Four years.

I should have let him answer that. Okay. So four years, but three years and a little bit of it. So you kind of come home from the honeymoon, that first year of marriage. Tell me how this all started. Shortly after we were married, my job sent us down to Florida. So we were at one income for a little while, and we realized how many bills we had. And we had good income, but we never got to see it.

Everything we were making was going out at each month and payments. And we, we didn't understand why we weren't able to, you know, increase our savings. And so I was traveling a lot for work and I was listening to podcasts in the car and I stumbled across your podcast and we'd been talking about, Oh, we need to get on a budget. We need to, you know, get our finances under control. But we didn't do anything about it. So after we heard your podcast, we realized this is what we've got to do. And we listed all of our debts, smallest to largest. And we just started plowing through them.

We never looked back. Just from the podcast info? Yes. Then I ordered your book, I'm an Overachiever. We did the financial piece online because his work schedule wouldn't really allow us to go to a class. And we've been all in ever since then. Wow. So you did you did do everything that you got all the way in. But the podcast was a startup. It was. And we still listen to the podcast every time we're in the car together. Wow. Always. Yeah. Every road trip. Thank you very much. We appreciate that. Very cool. You guys, I'm proud of you. Way to go.

I mean, you're like four years into marriage, three years into doing this, and you pay off everything. How does that feel? It feels amazing. You guys are weird. Yeah, we are very weird. You know, there's such a piece that comes with not having any debt, not having any bills. We know that no matter what happens, we're going to be okay. If he loses his job, if I lose my job, if something happens, we're going to make it. And another, for example, this week our dryer went out,

and all we did was just write a check and bought a new dryer. No stress, no worries. Just like that, yeah. Yeah. Well, you got money. It's not all going to somebody else. Make $165,000, you don't have any debt. That's a pretty good place to be.

Way to go, y'all. Thank you. So who was your biggest cheerleaders? Probably each other. Our family knew it was a good idea, but they didn't understand when we would back out of family trips. We told them it wasn't in the budget. They didn't believe you. It's just a strange concept to pay cash for everything. A lot of they didn't believe you. Yeah. You know, it's just a strange concept to, you know, pay cash for everything.

And a lot of people didn't really understand. But through all of this, our marriage has become so strong. We've worked together. We've achieved something I think is pretty incredible. And I think we were each other's biggest cheerleaders. I mean, people supported us and thought it was a good idea. But a lot of people, you know, they don't like to talk about money or they think it's kind of strange. It is a foreign concept, so I'd say we were each other's biggest cheerleaders.

What do you tell people the key to getting out of debt is if they ask? Holding yourself accountable. I don't think anyone likes to tell their spouse no, but when it comes to money, you either have it or you don't. You can afford it or you can't. So if you just keep it simple, it it comes to money, you either have it or you don't, you can afford it or you can't. So if you just keep it simple, it's, it's easy to do. And I'd say paying attention to your money prior to learning about you, we just bought whatever we want. We didn't pay attention to if we could afford it or not.

But we literally check our bank accounts every single day. We use the every dollar budget. I think that came out the month we got started with this, about three and a half years ago. And I mean, we just pay attention to every penny we spend. And I think that is so important to know what's going on. And also, I'd say having an idea of what is a want versus what is a need. Before we started this program, I thought everything was a need. And if my friends had it, if I saw someone on social media that had it, then I needed it too.

And I've learned through this process that you really don't need a lot of things. Right. Yeah, we often describe things as needs that aren't. Most of us have very few needs. We do. We use that word a lot, but most of us in America, we don't have many needs. We have a lot of wants that we call needs, but you're exactly right. Identifying that is a big deal.

Yeah, we cut off so much for a while. I mean, we were really weird. We didn't even have a TV for several months. We only got one when family would come to visit, and they'd say, all right, what are we doing? We've got to watch some TV. So we finally got a cheap one, but I mean, we just cut out everything. Very cool. Very cool. Well, you can do

this. You can do anything. You've set yourself up for a lifetime of working together and pulling off any goal you decide to pull off. So very, very well done. Good job. And a couple of babies come along the way. Oh, yeah. Names and ages.

They're with you, right? We have Ellison is two, and we have Will, who is 10 months. All right. Fun stuff. Well, we've got a copy of Chris Hogan's retire-inspired book for you. We want that to be the next chapter in your story to be not only debt-free, but now be millionaires and outrageously generous. Beautiful kiddos.

Thank you. Fun stuff. Fun stuff. Brian, Hillary, Ellison, and Will from the Memphis, Tennessee area. $125,000 paid off in 38 months, making $126,000 to $165,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free scream. Three, two, one. We're debt-free. Love it. Well done. Well done. Well done. Oh, man, that's fabulous. Open phones this hour at 888-825-5225. Is your house payment the only thing standing between you and debt freedom?

Did you know that we offer a free mortgage payoff calculator on our website? Just go to DaveRamsey.com. Click on the Tools button. One of the tools is a mortgage payoff calculator. You can enter the info about your loan, how much extra you want to plan to pay on your mortgage, and it'll show you how quick you can pay it off. Pretty simple. If you got too much house and you're looking to downsize, well, our endorsed local providers are some of the top

high-octane, high-protein real estate agents in the nation. They sell more houses than anybody else you'll run into, I can tell you that. They can help you sell your current home. And in this current environment, you might get more than one offer even. You know how that stuff works. And you definitely need a pro in your corner helping you fight through and maximize what's going on there right now. So very, very, very cool stuff.

Congratulations, you. Man, that's incredible. That's absolutely incredible. You're going to get your house paid off. Congratulations, you. Man, that's incredible. That's absolutely incredible. You're going to get your house paid off. Yeah, you. Just go get the free mortgage calculator, mortgage payoff calculator, DaveRamsey.com, and click tools, and that'll get you there. That's fun stuff.

You know, a lot of people think they're going to have payments their whole life. That's hopelessness. Lack of hope. And if you actually sit down and do the math and you just decided to say, we make too much money to be this broke, we're going to change our lives. We're going to change our family tree. Brian and Hillary changed Ellison and Will's family tree before

Ellison and Will were born. Or as they were being born. During that 38 months, they had two babies. I mean, and they paid off $125,000. So I really don't want to hear you whine. You can do this stuff. I'll whine. You can do this stuff. I'll help you.

You can do it. But this belief that you're always going to be stuck, that's just being a victim. You're not a victim. This is the Dave Ramsey Show. Andrew's in Mesa, Arizona. Welcome to the Dave Ramsey Show, Andrew. Hey, Dave. How's it going? Better than I deserve. What's up in your world? Perfect, brother. So quick question for you.

Single family income, or yeah, we make a single family income of $32,000 a year. Me, my wife, and our four, our three kids, sorry, jumping the gun there, ages, we're both 24 with our little kids, sorry, jumping the gun there. Um, uh, ages were both 24, um, with our little ones and we've done through three baby step three. We're now on three B just started three B. Um, question is when I'm a huge car guy, when exactly would I look into the possibility of maybe a thousand dollar like little beater car to kind of work on,

if that's even a possibility? Well, it would be after baby step three, and of course you pay cash for whatever you're doing with it. And your $1,000 is the answer to the equation. It's not $10,000 in your situation. Because with four kids at 24 years old and a $30-something income, $10,000 in your situation because with four kids at 24 years old and a $30,000 income, $10,000 is out of line. You've got some other stuff you need to be doing like kids' college savings and other things, right?

Right, correct. But $1,000 is not a deal breaker. Okay. So it's after... Right, and we do have that in the car payment budget budget and then we do have ten thousand for our three six months and our thousand dollar emergency fund at the moment okay well you just save up and pay for it it's just something you your family you want to purchase and you know when it sounds like you're the kind of guy probably turn a wrench on the thing and then sell it and then do it again

oh that'd be awesome yes yeah make a little money on it move up sell it do it again have a little fun with it and enjoy the process so yeah that's that's the kind of thing i would do but yeah that that price range in your situation does make sense a lot of these answers andrew and other folks you know listening in on stuff like this is ratios is does it do damage does it take up so much of the money that should be used to other things? But when it's a small amount ratio-wise to what you're doing, then there you are. You know, so, you know, you make $150,000 a year. The level of car that you can drive is different than if you make $15 million a year.

I've got a buddy of mine who makes $15 million a year. He bought a $400,000 car. It's kind of weird emotionally to think about. Dadgum, man, that's a nice car. $400,000 for a car? But that's less than ratio to his income than almost anybody spends on a car. It's a very small percentage of his income. He makes $15 million a year.

Think about it. And so it's kind of like a guy making $150,000 buying a $4,000 car. You see the ratio. I mean, that's about what it is. I think unless I dropped a zero there, I might have dropped a zero. But, I mean, the point is that's a way you can decide if some of these things are violating common sense or not is the ratio thing a percentage of your overall world kyra is with us in san antonio hi kyra how are you hi dave sierra I'm so sorry. I'm sorry. My bad.

I couldn't... Kelly even put it on here correctly, and I messed it up. So can't even blame Kelly on this one. We like to blame Kelly, but we can't on this one. So anyway, what's up, Sierra? So my husband and I have $843,000

in debt. Only $20,000 of it is personal debt. The other $823,000 is a loan that he took out before we were married to buy a million-dollar building that he currently runs his business out of. He bought it about six years ago. I have put together a debt snowball plan based on our income of our take home every month between the two of us is somewhere between $10,000 and $15,000. And so I've put together a plan recently that would get us out of that entire $843,000 in five years. Okay, wait a minute. I've got to stop you, though, okay? Yes, sir.

No more than your income is, how does he justify a million-dollar investment to run this business that's underperforming in? I wish I had an answer to that question. That's a question I've asked myself. I don't know. He's not making enough to justify a million-dollar building. No, not even close. Sell it.

Okay. I'll get you out of debt. Well, yes. Well, you're not going to do that. So, I mean, because he's not going to do that, because he's not thinking logically and he's running his business poorly. So I can't really help you in this situation. Thanks for the call.

Andrew's with us in Kansas City. Hi, Andrew. How are you? Hey, Dave. How are you doing today? Better than I deserve. What's up? I have a couple questions for you.

I'll try to make it as brief as possible. Me and my wife are on baby step two. We have $27,152 in debt. About 14 sides of that is a vehicle. We have an annual income of $55,200. And I was wondering if we should sell the car. Do you like the car uh i'm a chevy guy and it's a vault wagon so is that a no yes sir okay well here's the thing okay it's half your dad as you said right yeah yeah and um the rule of thumb that I use is twofold.

If you like the car and you want to fight your way out of debt, can you be debt-free except the house in two years or less? And the answer here is yes. And is the car, all of your cars, all things with wheels and motors added together, less than half your annual income? What's your other car worth? The other car I'm driving is a beater. I think it's roughly...

So your vehicles are considerably less than half your annual income. Yeah, I would say so. Yeah. So, you know, it doesn't meet the guidelines to say you have to sell it or you're stupid. Yeah. But if you want to sell it because i don't like volkswagens that's okay well it'll save us about roughly 600 bucks in the in the long run i'm sorry not 600 6 000 bucks in the long run and that's including if we were to buy something like a thousand dollars

to two thousand dollars just to get out of that loan, out of that vehicle. Yeah, but here's the thing. If you sell the vehicle, then you're out of debt in one year, and in two years you're looking at cars. Yeah. And you're going to move up in cars with cash because you don't need to both be driving a $1,000 car when you're debt-free making $55,000. Right. And so you're going to move back up in car, but you don't like this car,

so you're probably selling it anyway. It's a nice car. Don't get me wrong. Germans make nice cars, but, again, I'm a Chevy man, and I want to get out of debt as fast as possible also. Okay. Well, if you want to, what does she say? Is it her car or yours?

It's her car. She's ready to sell it, honestly, also. We both like the car, but we both want to get out of debt also, you know. The math doesn't say you have to sell it. But if you want to sell it and accelerate it, that's not dumb. It's a good thing to be out of debt. But just know that you're probably going to pay cash for a car in the similar price range within the next two to three years. That's where you're going to be. So that's okay.

That's fine. Nothing wrong with that. Hey, thanks for the call. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. We appreciate you being here. Elizabeth is on YouTube.

How many months does it take the normal person to get the hang of a budget? Three. I've done a budget for two months now. I still haven't gotten it right yet. I feel like a total failure. No, I mean, the first month you completely screw it up, and you have an emergency budget committee meeting almost every night trying to get it adjusted because you leave things out. go over you under gas you think you don't spend

as much as you spend and you're constantly adjusting the first month the second month you have an emergency budget committee meeting about three or four times during the month the third month maybe one or two and by the end of the third month you should pretty well have the hang of it because most of its trial and error on the amounts. Actually, operating the budget is not that difficult, but it's just trial and error on the amounts to get them right, so that you can breathe while you stick to it. That simple. Hey man, thanks for following us on YouTube. We appreciate it. This is 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 Nashville and tell Dave your story.