The Ramsey Show - App - Boom! Debt Free, Just Like That! (Hour 2)

Episode Date: November 19, 2018

The show about you

Music Music Music Music Music Music Music Music

Music Music Music Music Music Music Music Music

Music Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in. We'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Claudia is with us in Sarasota, Florida. Hi, Claudia.

How are you? Hey, Dave. Doing well. Thank you so much for taking my call. I'm excited to talk to you. You too. What's up? Awesome. All righty. Okay, so i just started listening not too long ago i kind of uh

catapulted myself into i guess baby steps 3b um i have about 10 000 for emergency fund savings 37 000 just regular savings um i make about 75 a, it looks like. What is regular savings? Oh, just my savings account, rather than money in anything else like a mutual fund or anything like that. Okay. And what's that being saved for? So basically a house. Oh, okay. You get your 3B.

Okay. Yeah, 3B. So that's your house savings fund. That's your 3B. Okay. Yeah, 3B. So that's your house savings fund. It's not regular savings. And the other one is your emergency fund. Okay. Because every dollar really needs a name in savings, too. Because if you have a regular savings account, that means it doesn't have a job.

And you know what it'll do? Nothing, because it doesn't have a job. Okay. How can I help? That makes sense. I got you. Okay. Love it. Okay. How can I help? That makes sense. I got you. Okay. Love it.

Okay. So I'm just wondering at this point, just because I have a lot of unknowns as far as if I'm going to be moving in the next year or two, being that is house savings, wondering, not sure if I'm going to stay renting or if I'm going to even get engaged or have to save for a wedding, wondering if I can kind of budget myself so that i can save start saving for retirement and then also be keeping putting money into the house savings and all that sure you can do whatever you want to do you're you're at baby step 3b and 3b involves saving for a house but some people stop all retirement and save for a house and and some people put some into retirement and save for a house, and some put 15% full baby step four and still save for a house.

So you can do any of the three of those as long as it's a temporary thing. You just don't want to permanently, you know, stop your retirement. It's a temporary thing to stop your retirement and so you're fine there and and it's okay to say this money is in limbo right now uh as on the short term uh because it might be wedding it might be house depending on what happens because basically we could say there's a lot of change coming in my life i may move i may get married and i'm going to need money for all that change. Yeah, that's kind of where I'm at. I'm like, I just was figuring out what the best thing was for me if I can kind of budget myself where it's like, all right, keep stocking away the money.

Here's the thing. Let's say you piled up 50 grand, not 37, and then you spent a little on the wedding and you put the rest down on the house and five years from now, you just have your emergency fund and you're doing 15% of your income income into retirement that's exactly where you'll end up but this money causes you to walk through the transition of marriage and house buying and those maybe city moves and those kinds of these that might be moving all that kind of stuff because you'll walk through that without any uh possibility of debt so just pile it up it's a temporary fund though it's not a it's not a permanent methodology for handling money. It's because you've got these transitions

coming up. Sarah is in Calgary. Hi, Sarah. How are you? I'm good. How are you, Dave? Better than I deserve. What's up? It's a pleasure to talk to you. I just kind of have a general everyday kind of question for you. And actually, I was wanting to talk to Christy but you'll do um so how do I find okay so I'm a very timid and shy person by nature and I'm trying to grow like my side business and I just find myself sympathizing with like say my client and then ending up forgiving them like and it'll work for free.

And it's just this really silly habit that I have, but it's my nature, I guess. No, it's not your nature. It's not your nature. You just don't care enough. Do you have children? I don't, no. Okay. Do you have a pet?

I don't. Okay. Do you have a pet? I don't. Okay. Are you close to your mom? Yes. Not geographically, but emotionally? Yes. Okay. Let's pretend you were standing beside someone in the mall.

And as you're walking to the car, a guy walks out with a knife. And he's moving towards your mother. You would not call me up and say, it's just my nature. I'm not assertive. No. You would start throwing crap at this guy and screaming and kicking and hollering because he's getting ready to kill your freaking mother. You care. All of a sudden, you would care.

You just don't care enough. You think this is a game. You think it's a hobby. It of a sudden, you would care. You just don't care enough. You think this is a game. You think it's a hobby. It's a business. And these people are mistreating you when they don't value your product. You need to put a little more value on you. And then you'll get assertive.

Then you'll get assertive. You know, you got to value you. Let me just tell you, I view this stuff that we manage around here as I am a manager for God. And so when you try to screw this business and steal something here, I think you're trying to steal God's money. And I will rain hell down on you if you think you're going to steal God's money from me while I'm managing it. I will bring the heat. I will bring the wood.

Why? Because I care. I care. I take my stewardship seriously i am given this to manage when someone works on my team i got their back because they're in my life for a reason i got their back and you come after one of my people i won't come after you why because i care not because i'm a jerk and not because it's my nature to be assertive I won't come after you. Why? Because I care. Not because I'm a jerk and not because it's my nature to be assertive. Actually, it is my nature to be assertive. I mean, conflict is my spiritual gift.

But aside from that, the thing is, if I don't care, I don't care if my football team loses, then I'm not mad when they lose, right? I just don't care. I'm ambivalent because they lose all the time. What is it? I mean, where is it that you do that? Where is it you reach the point that you're ambivalent? It's because you don't value the thing.

And if you value it deeply, like if somebody comes after one of my grandkids, let me just tell you, there's going to be harm, and it's going to be them, not my grandkid. It's not because I'm a BA or something or I view myself as that, but because I care so deeply about it. So I want you to care deeply about you. Care deeply about this product and service that you're taking to the market to the point that you view anyone that's trying to take advantage of that as, oh, you shouldn't have gone there. You shouldn't have gone there.

You'll be instantly assertive when you care. And all it is is you're just playing with this. It's like you're playing a hand to go fish and you lost a hand to go fish. Oh, well, it's no big deal. Well, it isn't a big deal if it's not a big deal. But if you want it to be a big deal, it's going to have to be a big deal. And that's where that comes from. So you're just a sweet person you're a very sweet person and there's nothing wrong with being a sweet person and caring deeply which will make you

place value on what you do how you do it and whether or not you get paid because that's where the value comes from is you actually have to believe it and care that you're worth it. I'm worth every penny when you advertise on this show because I make these companies millions of dollars, and they pay me millions of dollars but slightly less than they take in. I'll tell you that. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry.

A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thanks for joining us, America. This is the Dave Ramsey Show.

Frederick is with us in Wisconsin. Hi, Frederick. How are you? How's it going? Good. How can I help? I'm just wondering if me and my fiance should file bankruptcy. Okay. Well, I don't know why both of you would. Who's in debt? Well, we both are. I think I'm a little more with my student

loans. How much do you have in student loans? About $74,000. And what other debts do you have? I have current two credit cards, or right now two. I've been listening and following the steps. I've wiped out one. So I have two left, about $2,000, and then about $15,000 in other debts, which is collections and whatnot. But we also have a cosigner for her on her Jeep, which is a $5,000 collateral loan. And that's kind of the question. If I file or if we both file, would she lose the Jeep?

Okay. And how much debt does she have? That's kind of a mystery right now. We're trying to get all that together through the credit bureau. Why is it a mystery? Well, she knows a little bit of it, and she's told me what she knows, but there's medical stuff that I don't know from the past that I'm not really sure what she has. Okay. What do you know about? Right now, I just know she's been through a divorce. There was this loan that I know and then some student loans.

How much is her student loans? Roughly $7,000, $8 seven eight thousand and what's the loan that you know uh it's through one main the collateral loan that i co-signed for oh the jeep okay yep and but and then you think there's medical but you think it's two hundred thousand or ten thousand or two thousand not sure i'm guessing it's a guess um I know she said she has a lot of medical, so I'm thinking probably 50 to 100, anywhere in there. You don't have any idea, though? You don't have any idea? Yeah.

She said a lot, and you don't even know what a lot means to her. Right, yeah. Okay, what does she make a year? Roughly 32. And what do you make? roughly okay all right no you would not file bankruptcy and let me tell you why okay okay there's two things that are going to happen here number one student loans are not bankruptable so you would be filing on two thousand dollars worth of credit card debt and fifteen thousand dollars worth of stuff that's in collections that could be settled for $2,000 or $3,000 probably. It's ludicrous for you to file bankruptcy.

You cannot keep the Jeep unless you pay the bill in any form of bankruptcy. Chapter 7, Chapter 13, period. If they have the title, you will pay the payment or you will lose the Jeep. Bankruptcy does not keep you from doing that. Bankruptcy can allow you to slow down and deal with the back payments in a chapter 13 if you're behind on the jeep uh it can do all that but you're monthly going to pay the bill or you're going to give up the jeep how much is the monthly payment on the jeep uh we've been paying 600 no what is the monthly payment on the Jeep that they dictate? It's like $285,000.

And why can the two of you, between $70,000 worth of income, not find that and keep it current? It's not that we can't. We've been paying on it. We were just wondering if it would be taken away if we did. No, it's not. The Jeep will be taken away if the debt is taken away. Okay. Besides that, you don't file bankruptcy on $5,000, man.

You do not have enough debt that is bankruptable to cause you to clean up anything. So you're looking for an easy way out here, and there's not one. You need to get on a detailed written budget, and she needs to get on a detailed written budget, and she needs to get on a detailed written budget.

Separate budgets. You are not married. Okay? Right. And you can look over each other's shoulder and cheer each other on and coach each other regarding the budget, but your $36,000 should be simply going to pay off the credit cards, which you've already started doing, and then let's get those collections cleaned up, and then let's start that long slog through the $74,000 worth of student loan debt.

It's going to take a while. You're going to be in debt a few years until you're married. All she's got today is to pay this Jeep off and the student loan off. $12,000 makes her debt-free, not counting the mystery medical debt that we don't know what it is yet, which, if it's really old, can be settled for 25 cents on the dollar. Right. So it's just bankruptcy.

If she's got $200,000 in medical debt, she might be bankrupt. But you're not bankrupt with a $5,000, $280 Jeep payment when, between the two of you, you've got $70,000 coming into this house, especially given that you're going to lose the Jeep. So thanks for calling. Folks, that's how collateralizing a loan, taking a lien on something works. When they take the title to your car, when they take a lien on your house called a mortgage, when they take a UCC-1 is typically how it's done on a boat. When they take a lien on an asset, what that means is you stand good for the loan and the asset stands good for the loan.

And they're going to milk both of you, you and the asset, until they get their money, meaning that they're going to take the car and sell it if you don't pay the bill. It's called repossession. And whatever it brings on the repo lot, they're going to chase you for the difference or whatever you still owe. So both of you, the car and you, are standing good for it. And that stands true. Those liens are not taken off of stuff in bankruptcy.

In a Chapter 13, you can pay payments on things that are secured creditors, or in a Chapter 7, you can reaffirm in most cases, meaning you agree to pay the payment and all the back payments to get to keep the item, or you can give up the item in a Chapter 7 and give up the debt. But you never in bankruptcy get to keep the item that has a lien against it, and the debt goes away. There's not a single instance in bankruptcy court of that happening. Okay? And that's assuming the lien is perfected, meaning it's properly filed and all that.

But, you know, I'm not talking about nuances in legal theory. I'm talking about the practical fact is you have a car payment. You're going to keep the car payment until you get it paid off or you sell the car. You do not get to keep the car without the car payment. You do not get to keep the house without the house payment. And that's how that works. And that even works in a fire. Your house burns.

Your mortgage company has as much rights to the insurance check as you do until the mortgage is paid. So the first thing they do is they take all of the insurance check when your house burns, they pay off the mortgage. If there's anything left called equity, you get that money. And if you want to rebuild, you get to do that either in conjunction with your current mortgage company and the checks are used directly for the rebuild. But you don't get the money. If you have a $600,000 house and it burns and you owe $500,000 on it,

they're not going to give you a check for $600,000. They're going to give the contractor a check for $500,000 to rebuild, or they're going to give the mortgage company a check for $500,000 and give you one for one, and you own a burned-out lot then. But you don't get to keep the house and keep the money. You don't get to keep the house and do away with the mortgage in any scenario. That's why bankers, why these companies put liens on stuff, and there's two types of credit that you have, secured and unsecured.

And so usually when you look through it through that lens and you realize that the IRS and child support and criminal restitution and student loans are not bankruptable, you're not getting rid of the IRS, you're not getting rid of your student loans, and if you have criminal restitution, you're not getting rid of that, and you're not getting rid of child support, and you're not getting rid of alimony and bankruptcy court. All of those are staying.

So what are you left with? Well, and the guy I was just talking to's case, he's left with a little bit of credit card debt and a little bit of stuff in collections. And she's left with a little bit of something on medical. We don't know what it was because he didn't know what it was. You see how this is working? So all of that to say that people say Dave Ramsey is against bankruptcy.

I'm against divorce, too, but good people do it sometimes, and I'm not mad at you if you do it. But if you're going to do it, don't file bankruptcy on $10,000 worth of debt. For goodness sakes, that's just silly. Because all the rest of it is not bankruptable if you keep the asset and the rest of it's student loans. If you keep the Jeep and the rest of it's student loans, narrows it way down, the list that's actually bankruptable is so small it makes it not worth it. That's the summation of this story. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance?

Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of.

I can give you the advice and I can tell you where to go. But it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282. Thanks for joining us, America. Justin and Brianna are with us. Hey, guys, how are you? Hey, Dave, we're doing great. Welcome. Where are you guys from? We are in Chilhowee, Virginia. Love it. And I see on my screen you're debt- great. Welcome. Where are you guys from? We are in Chilhowee, Virginia.

Love it. And I see on my screen you're debt-free. Congrats. Yes, sir. Love it. How much you paid off? So we paid off right around $35,000. Cool.

And how long did this take? It took us roughly 14 months. And your range of income during that time? So, yeah, we started off around $45,000 and ended up right around $100,000. Whoa. So how did your income over double in 14 months? Yeah, so right around the start, I had just transitioned out of the Army and started college full-time. And also around that time, my wife, Brianna, started working as a schoolteacher. And during college, I got the GI Bill and also worked full-time.

So we just had multiple income sources coming in that kind of helped us out. Got it. Perfect. Well done. Well, thanks for your service. We appreciate it. And what kind of debt was the $35,000? Yeah, so it was broken up mostly student loans.

Oh, Sally Mae, we had about 20,000 student loans, and the rest was car loans. So how long have you two been married? Yeah, so we've been married since 2014, so four years now. Okay, so what happened that got you on fire to clear this up 14 months ago? Of course, yeah, Dave. So we started, when I was transitioning out of the Army, I've always been into personal finance and investing. And so I was looking for new podcasts one day and came across your podcast. And Dave, I just consumed every single episode that I could.

I mean, I listened to it almost 24-7. And one day I came home and talked to Brianna about it. And when you mentioned Dave Ramsey, I was already familiar with you because my dad and stepmom had actually taken Financial Peace when I was younger, and my mom had several of the DVDs from you. So I was like, oh, I know who that is. I was immediately on board. So we went and got the DVDs from my mom, and we started watching. And that kind of started our budget system.

Love it. Very cool. So once the two of you locked in on it, it sounds like the two of you when you zone in on something, it gets done, huh? Yeah, that's exactly right. Yes, sir. Just boom, just like that. I mean, 14 months, $35,000.

Now, I'm looking at my youtube channel and they're flashing pictures of you all up did you sell a house in this process too no no we actually just bought a house oh that's our first house oh i see okay that's even better all right so that's the house the new home you got after you got out of debt and got your emergency fund yep so we just closed on the house fr. Well, congratulations. Yes, sir. Very nice. Your very first home.

Yes, sir. And how old are you two? I'm 22. And I am 24. 22 and 24. You have no debt. You have your emergency fund in place and you bought your first house. Yes, sir.

Touchdown, baby. Woo! I love it. Well done. Man, I i love this i didn't do any of it you did it all i'm proud of you guys well done so i'm guessing if mom and stepdad had the cds they were some of your cheerleaders who else were your cheerleaders really each other yeah yeah we've really just kind of relied on each other and we're big in church so our church family um was was a part of it as well okay very cool well congratulations you guys we're proud of you well done very very well done it's incredible you guys are so far ahead

you are anything but a victim you just just go get her done, man. I love it. Very, very cool. All right. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired. That's the next chapter in your story. The debt chapter is closed. Now we're going to open the wealth chapter and the generosity chapter.

And you're in a position to do both at a crazy rate. You're going to be everyday millionaires by the time you're 30 if you keep this up. My gosh, this is killer. Way to go. All right, Justin and Brianna from Virginia, $35,000 paid off in 14 months, making $45,000 to $100,000. Count it down. Let's hear a debt-free scream.

Three, two, one, we get paid! And that's how they do it. I love it. Woo-hoo-hoo! Boom! Just like that. Well done, you guys. Very well done.

Man, that's fabulous. Well, it's the week of Thanksgiving, Black Friday, Cyber Monday, and all the other ways that people get your money is going to be hitting your inbox before you know it. And you better be ready with your Christmas budget, and you better have an idea where your money is going to go because there's a whole lot of people who want your money right now. And a whole lot of them are going to be closed at this time next year if they don't get your money right now. They are desperate for your money.

Retailers make the vast majority of their money in this 45-day period of time. So if you don't have your Christmas budget, I've got some help for you. And I'm going to charge you a thing. It's called free. It's every dollar. It's free. Now, we've spent millions of dollars developing this. It is the world's best software.

The world's best app when it comes to doing a budget. It is robust. It is elegant. Those are Internet words, if you didn't know. My Internet guys told me that. My tech guys, they told me to use those words. It makes me sound like I know what I'm doing. Hey, you're being good with money.

It's not an accident. You've got to win on purpose. You've got to give every single dollar a name. So check out EveryDollar. Download it. Get your Christmas budget ready to go. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee.

Even if you mismeasure, you pick the wrong color, they will remake your window blinds for free. Site-wide savings is happening right now. Plus, take an additional 5% off if you use the code Ramsey. Yeah. Joy is in California. Dave, I have life insurance for myself and my son, and the life insurance is built into an index universal life, so it also builds cash value.

I'm so sorry. I have contacted them to end the policies and start term life insurance, but do I take the cash value, which is about $9,700, and put that toward my credit card debt? Yep. Immediately. The best thing you can do when it comes to a cash value life insurance policy is to get term life insurance in place,

which is usually about 1 20th as expensive, about 5% the cost for the same amount of insurance, and then do anything with your money except leave it with an insurance company. You never use an insurance company to save money with or to invest money with. Why? They suck. The rates of return are horrendous. When you die, they keep your money.

And these index universal life policies, they're getting sued left and right over these things. There's three huge class action lawsuits against three of the name brands right now on these things because they self-destruct the way they built them out. The insurance cost goes up, so the amount of what you pay them going to premium won't even cover the insurance,

and then it eats away your savings. And then when the savings is eaten away, they jam the insurance cost on up. So you don't have anything except five different ways to get screwed with this deal. The best thing you can do is just get your money away from them as fast as you can. Whole life life insurance is the payday lender of the middle class. Cash value life insurance is the payday lender of the middle class. Cash value life insurance is the payday lender of the middle class. People are paying fees like there's no tomorrow in these things, and they don't even know what they are.

That's the same thing as a payday lender. When you add up the fees in the payday lender, it's about 840% interest. When you add up the fees and net out the cost of insurance versus the actual growth of the average whole life policy, it is a 1.2% rate of return. You can do better at a stupid savings account at your bank than you can with this. And yet they have the unmitigated gall on their advertising on television as they paint stripes on the walls or whatever crap they're doing to say that this is an investment. It is not an investment. You get away from it as fast as you can.

Now, if you're sick and you're stuck with it because you're uninsurable, you're stuck with it, probably. But go check Zander Insurance and make sure. If Zander Insurance can cut you a deal of any kind and get you in some term life insurance, you're going to come out better off 100% of the time. Well, you're a one-size-fits-all. Yes, I am. There is stupid and there is not stupid.

That's one-size-fits-all. This is the Dave Ramsey Show. Helen is in Virginia. Welcome to the Dave Ramsey Show, Helen. Hi, Mr. Ramsey. Thank you for taking my call. Sure. What's up? Yeah, so I have a question for you.

I just started your program, and I'm currently on baby step two. And I have $36,215.26 in debt. What kind of debt? So I do have a $23,586 for school loans and $12,000 for a car loan. Okay. Got it. Yeah. So my question to you is I do have the $1,000 emergency fund.

Good. And I do have an extra $5,000 that I keep on the side because I have to take care of my family back in Africa. And I'm a little hesitant to take that one and put it towards my debt because you never know when they will call or need something. So that was my question to you because I take care of my mom. She doesn't work and in that part they don't have any health insurance or anything. They have to go to the hospital or anything. They have to stay out front before they will take care of them. Which country is she in? This is Ghana. Okay. Did you say Botswana? Ghana. Ghana. Oh, okay.

Yeah. All right. And so her and her neighbor's average annual income is what? She really doesn't make anything, and I'm the one who gives her money for it. So you give her money for food? Yeah. And shelter? Basically. Okay. Yes, and everything. And how much money So you give her money for food? Yeah. And shelter? Basically. Yes, and everything.

And how much money do you give her a year? So every month I usually give her about $400 or $500. Okay. And that's just part of your budget? Right. Yeah, and what is your annual income, your income? I'm a nurse. I make about $65,000.

Okay. All right. If I were in your shoes, I would do exactly what you're doing. Okay. You didn't tell me you're giving your mom $50,000, and you don't have $50,000 sitting there. You have $5,000 sitting there. But $5,000 in your mom's world is like $50,000 in your world. Isn't it?

Right. $5,000 will go a long way doing a lot of stuff around your mom. I mean, $500 a month has got her in a pretty decent life, doesn't it, compared to her neighbors? Right. Yeah. Because the average household income in Ghana is probably about $5,000, is what I'm guessing. Correct.

Annually. And that's about what you're giving her to live on. Okay? And so it's a little different than living in Manassas, Virginia, to say the least. And so, yeah, I think $500. What do you make a year? I forgot to ask that. $65,000.

Okay. Okay. So what we're saying is I'm not going to increase the $5,000 savings for your mom, and I'm not going to use it for anything else. It just sits there. It's your mom's emergency fund that you set aside and you're managing for her, and I am going to continue to take $500 a month. I would put it on a steady amount, and let's put her on a budget, a steady amount,

whether it's $400 or $500 or whatever. I don't need it going from $200 to $700 and back and forth. That'll drive you crazy. So let's just set her up. Mom, you're going to get $500 a month. And you and I can figure out together, Mom, we'll do the math on how you want to make sure you've got food, shelter, clothing, transportation. I want to make sure you're taken care of.

You've got water to drink and so on, right? Right. Okay, and if you can do that, you lay all that out, and if that's $525, then make it $525. If it's $425, make it $425. I don't care what it is, but let's set up a fixed amount, and then you just put that in there as if that was your rent because you're keeping your mom alive. Okay. Okay.

Now, I don't want you raising the $5,000 up to $50,000 on a motion, and I don't want you raising the $500 a month or whatever it is up to $2,000 a month on a motion. We've got to lock this down and say this is an absolute need, but beyond this, you've got to get out of debt. You can't send any more over there right this is it because you can't afford it you got a mess of your own to clean up right does that make sense yeah it does so let's take care of mom but let's put a lid on it and have some have some guardrails for it and then let's get on with the business of cleaning up yours working your your debt snowball

how long have you been in the u.s i've been here for seven years okay and where did you get your nursing degree uh 2017 here then okay all right and you'll be staying here obviously right good good very cool well it's awesome what you're doing for her. And that's how I would help you to give you some guidelines. The thing that happens with family is emotion gets in, and sometimes we go too far up. And I want to keep that boundary. But I also agree with you that there's a floor that we're going to do at least this amount. And let's just set that up. And I think then you've got some guidelines.

And that allows you to plan and work hard and take overtime and work the ER and everything else to get your other goals hit. Renee is in Fort Smith, Arkansas. Hi, Renee. How are you? Good. Thank you for your show. Thank you. How can I help?

Yes. When, you know, mutual funds, you can stick in about $6,500 a year. No, that would be a mutual fund with a Roth IRA. Okay. You can put more in mutual funds. You just can't put it in a Roth IRA. Okay, so you suggest the Roth, right? Yeah, I would do a Roth for the first $6,500 each,

and that's if you're over 50 years old. Are you over 50? Yes, I'm 51. Okay, and I assume you're out of debt and have your emergency fund in place. Yes, sir. Okay, good. Okay, so we've assume you're out of debt and have your emergency fund in place. Yes, sir. Okay, good. Okay, so we've got $6,500 each going into a Roth, into mutual funds, and then your question is what? And then after I top out this, okay, first of all on that, the fees.

Do you do the 1% fee or do you do the upfront fee? Either one is fine if you're working with a SmartVestor Pro. Okay, I am. Okay. And then after we top out the 65 each, what is your suggestion from there? Either one of you have a... And how aggressive because we're 51 and 56. Gotcha.

And do either one of you have a 401K available at work? And he has a 401K, and then he just left his job after 26 years, so he has another one. So we're looking at rolling that one over, working on that now. Good. And I'm a schoolteacher, so I have the teacher retirement. You also have a 403B probably. Yes. Okay, look for mutual funds inside your 403B.

Look for 401K at his work. And if either one of you have a match, take it up to the match. But I want you to get the $6,500 each plus some 403B or some 401K, the total of all of that up to 15% of your household income because you're at baby step four. And then do you have children that you need to pay for college? No, sir. Our kids are grown.

Good, good. Then we're going to move on to paying off the house. How much do you sir. Our kids are grown. Good, good. Then we're going to move on to paying off the house. How much do you owe on the house? Nothing. Oh, good. Well, this is really easy. So you max out 403Bs, and you max out 401Ks, and you max out Roth IRAs, all in mutual funds, the best mutual funds you can pick in any one of those

with the best track records. And we always suggest you spread it across four types, growth, growth and income, aggressive growth, and international. Now, once you've maxed out your 403B, maxed out your 401K, and maxed out your Roths, if you want to do more, then I would start with just probably a simple no-load mutual fund that has a low turnover ratio, because that's where I used at that point in baby step seven, which is where you are, way to go. I'm going to start building that mutual fund up to buy some real estate as an investment that I pay cash for.

But that's above maxing out 401Ks, 403Bs, IRAs, anything else you can max out because all of those are ways that mutual funds are treated for taxes, and it allows to grow tax-deferred or tax-free, one of the two. So really, really good question. Open phones at 888-825-5225. Twitter, Alyssa says, Dave, we only have $20,000 left on our mortgage. Can we put that in Baby Step 2 so we can get it paid off sooner? We are gazelle.

We just want that mortgage gone. You can do whatever you want to. Depends on your income. If you have a $200,000 income, it's gone before you finish typing this tweet. But if you have a $20,000 income, then you're going to be there a while and know it would be baby step six. I mean, if you can do it in like three or four months or something, knock it out.

That's fine. But otherwise, it needs to be sitting in baby step six, and really the only difference is you need your emergency fund in place and you're putting 15% of your income towards retirement. That does not slow down knocking off $20,000 that much. This mortgage is going to be gone in 12 to 14 months, no matter what, unless you just have a very low income, regardless of where you put it in the baby steps.

So you don't have to change things around. It's that small. You just look at it and do stuff. You're grown-ups. You're doing good work. Things are going good. This is the Dave Ramsey Show. Hey guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show.

This hour's up, but you'll find more on our YouTube channel, where we have over 6 million YouTube views each month. You can find debt-free screams, millionaire hour clips, Dave rants, and so much more. Go check it out.