The Ramsey Show - App - Borrowing Money from Grandma is Called DEBT (Hour 1)

Episode Date: January 16, 2019

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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. Thanks for joining us, America. As always, the show's all about you.

The phone number is 888-825-5225. That's 888-825-5225. John is with us in Lafayette, Indiana. Hi, John. Welcome to the Dave Ramsey Show. Hey, Dave. Hey, what's up? Well, I have a question for you. So I'm a first-year medical student,

and I'm hoping for some advice on the best way to pay for medical school. I'm pretty blessed, and between my parents' generous support of my college education and hard work I did in undergrad taking various jobs, I got through undergrad debt-free with the money left in my college account from my parents. And that money will pay for most of my medical school education, but I'll be about $45,000 short. And so that's where my question arises. I have about $38,000 saved in a Roth IRA account as well that I contributed to

every year in undergrad working various different employment jobs. And I know your general advice is to avoid debt. So my first inclination is I should withdraw, you know, penalty-free from that Roth IRA to pay for my last year of medical school. But I'm wondering if it might be better, you know, if you might suggest that this is a unique situation just because that is a tax-sheltered account, and if I left it there until I retired and also paid off that $45,000 of student debt aggressively my first year of residency, and if I might be better off in the end there, or if I should just, like you normally say, take care of the debt first altogether. As a doctor, I would be able to contribute to a Roth IRA once I'm out of residency

making too much money. So I'm hoping for your advice as to what the best path forward is. Cool. Well, you've done a great job getting to where you are. I mean, you're within $45,000 of being able to graduate debt-free from medical school. That's striking distance, man. Well done. I'm very blessed. Yeah, you are. You are. Your parents and school. That's striking distance, man. Well done. I'm very blessed. Yeah, you are. You are. Your parents and you and everybody's done a great job. The only thing you did wrong was you put some money in a Roth IRA that you should have held

out for medical school. And if you'd have done that, you'd have been sitting there, you wouldn't even have been calling me, would you? Well, I think if I understand Roth IRAs correctly, I hope that I can withdraw from that penalty for your paper. I know, but you shouldn't have put it in there because you need the money for medical school. That's the bottom line.

Other than that, man, you've done a great job. So what I would prefer is that we scratch around because we're so dadgum close, and it's going to be a few years before this comes up. It's not like next year you need the money. Right, right. right you got a little time here so is there a way between family and uh maybe poking around with some hospital companies for some scholarships or uh even if you get any time off at all working like a maniac when you're

off on something and see if you can scratch some of it together and my preference would be to leave the roth in place now you can do a roth if you make over 200 000 a year the only way you can do that is a backdoor roth and that's not going to make or break your wealth building this 38 000 is not going to make or break your wealth building or putting money into a roth period is not going to make or break your wealth building you're going to have other ways to do that if you graduate with your MD. So you were right in your first assumption. I'm not going to tell you to borrow money. Never have, never will.

And so choice one is scratching the money up from some side scholarships and some hustle. Choice two is cash out the Roth when it's time. I'd wait until it's time. Let it sit there until then and then do that. But no, I never told anybody to borrow money on this show for anything other than a house. And even then I kind of hold my nose when I'm doing it because I want you out of debt because the shortest distance between you and wealthy you is no debt because your most powerful wealth building tool is your income. But you got to say overall, John, you guys, I mean, overall, Craig,

you guys are overall, John, yeah, you guys have done a great job. I mean, fabulous. When you're that close in the phone call here to paying for medical school, you've really done some smart stuff along the way. Very, very well done. Craig's with us in Dallas. Hi, Craig. Welcome to the Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. Craig's with us in Dallas. Hi, Craig. Welcome to the Dave Ramsey Show.

Hey, Dave. How are you? Better than I deserve. What's up? Thanks for taking my call. Sure. How can I help? I do have a question.

My wife and I just finished Baby Step 30, so we have our emergency fund in place. We're ready to go to the next step, which is the investing. But we're getting ready to buy a house in the next couple of years, and we know a car purchase is going to be in the near future, six months or so. So we're wondering, should we hold off on a retirement fund investing and just pile up money? We don't know which way to go from here. We're just wanting to get a little bit of gear. Well, sometimes when people don't own a home and they get through with Baby Step 3,

their emergency fund's in place and they're debt-free, and they're saving up for their down payment, they tap the brakes in between the Baby Steps to save up money for a down payment. And that's what we call Baby Step 3B around here. And that's kind of what you're doing. You wouldn't want to do that for very long, but for a couple years, two or three years or something like that, and save up for a down payment, fine. I would budget the car savings.

I wouldn't say, no, don't save money, don't invest money in order to save up for a car. You can just save up for a car. That's not the end of the world there. But as far as your down payment on your house, if you want to tap the brakes a little bit in between the two baby steps and pile up money for a big, hairy, juicy down payment, I love it. Do it. We call that baby step 3B. Open phones at 888-825-5225.

Jim's in Louisville, Kentucky. Welcome to the Dave Ramsey Show, Jim. Hey, Dave. How are you? Better than I deserve. How can I help? My wife and I, we've lived in the same house for 23 years. We only owe $44,000 on it.

Way to go. Thank you. Our income over the last five years has tripled because of job switching. Yeah, I hate it when that happens. That's wonderful. I do, too. So we went from ballpark $38,000 combined income to, well, over $100,000. For the first couple years, we kind of made up for what we did without to get our girls through school

so we bought a new car first time car payment in 18 years it's going to have a year left to pay on it uh we've done stuff to our house that needed to be done and now we owe 44 000 on the house our payment's 8 49 a month And you owe how much on your car? $5,800. Okay. And how much do you have in the bank? Over $30,000. Not counting retirement?

Not counting retirement. Write a check today and pay off your car. Okay, let me tell you what I wanted to do. My wife's birthday is in March. I was going to buy her a new car. Okay. This car now, we bought it in 2013, so now 2019. The payment on the car is just under $300 a month.

I found a 2018 same model for $256 a month, buying it through our credit union at work. Gotcha. Jim, what I've discovered in studying millionaires for 30 years is they avoid car payments like the plague, and you have normalized them in your life, and that's very dangerous for you. No, you should not buy a 2018 with a car payment absolutely not sorry for your wife's birthday present but no and never buy a brand new car until you have a million dollar net worth which you're getting ready to violate two things there and i wouldn't do either one so you'll move up a little bit in car that's fine i'd write a check

and pay off the car today and i'd begin to work to pay off my house as fast as I could. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees.

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That's puretalkusa.com. John's in Orlando. John, welcome to the Dave Ramsey Show. Hey, Dave. What's shaking there? Thanks for having me. Certainly. How can I help?

All right. So I think it might be best if I give you a real quick insight of what I got shaken up, and then my question will kind of follow there. So I'm 24 years old. I'm making $105,000. I put 21% in my 401K. I maxed out my Roth IRA every year. I got $15,000 in my own mutual fund investments just from listening to you. But then the more I listen to you, I start thinking, okay,

you're always about paying off your house, paying off your house. I got a loan from my dad. I got a good deal on a house. I put down 60,000 of my own money. I got $145,000 loan from him. Three and a half percent for 30 years. Do I hoard my money and put it in mutual funds and just keep paying him the minimum payment each month or should i start attacking that payment more when we have studied tens of thousands of millionaires over 30 years we have discovered one one of the correlating data points is that the average millionaire gets their home paid off as soon as they can, typically in under 10 years.

And so keeping a home mortgage in order to hoard money or in order to invest money is not a data point that millionaires do. And so it's usually, and the other problem is this the borrower is slave to the lender and so thanksgiving dinner is going to taste differently until you have your dad paid off yes sir 100 okay and that's why i wasn't too sure you know i started listening to you recently and i you've said hey you're killing it. What are you doing for a living? I'm in construction equipment sales. You're just stellar, man.

You're knocking it out of the park. Well done, sir. Very well done. Thank you. Well, I think you got a real jump on the numbers here. You're going to be in great, great shape. The fine-tuning that I would do if I were to work if i were to sit down with you and coach you personally which i'm doing right now um the fine the only fine tuning i would do is i would take you through our baby steps and that would involve uh you have uh an emergency

fund of three to six months of expenses and that is all and i think you said you had 15 000 saved yes sir that would be your emergency fund not to be touched for anything except for emergencies. Let's just label it that. The second thing is then once that's done and you're debt-free other than the house, which you are, I would put 15% of my income into retirement, not 22 or 24 or 21. And so I would back that down a little bit so that I could do the next two baby steps, one of which you don't need to do. The next baby step is kids' college.

You don't have to deal with that. I assume you don't have children. No, sir. Okay. And then baby step six is pay off your house early. So I would crank down my investments just a little bit into retirement, and I would crank up and investments just a little bit into retirement and i would crank up and let's beat on this house i'll bet you the house has paid off in like three years

geez okay yeah definitely then you make a ton of money and you're really intentional and careful with it and thoughtful about it that's why you're where you are um i gotta tell you you're pretty unusual because most of the time people that make a ton of money in sales spend it all and then some yeah and the fact that and the fact that you're 24 and you're doing this is super impressive yes sir my dad's been listening to you for forever. So he was frugal and smart, and he started to trickle down and teach me. And I started listening to you more myself, and I was like, man, he's talked about hitting that house payment hard. I want to talk to him and see exactly what he thinks about my scenario. I mean, $50,000 a year, you're done in three years.

Out of 104? You know? I mean, you're the type of guy that can do that. You're sitting there 27 years old, and the house is worth what? House, we had to pay cash for it, so we got it for 205. What's it worth? It's estimated at, like, 242. Okay, so you have a $250,000 paid-for house.

By the time you're 27, let's call it a 300 000 paid for house and you're making 100 plus a year ding ding man i mean you're rocking really that's all i'm doing here is taking the ferrari and giving it a little tune up because you're already you're already a ferrari i mean you're already a Ferrari. I mean, you're already way ahead. You're just doing great, man. Well done. Congratulations. I love it.

Thanks for the call. Robert is in Salt Lake City. Hey, Robert, how are you? Hey, Dave, how are you doing? Better than I deserve. What's up? Well, my wife and I, I'm 22, she's 21. We've got two kids, and we've recently decided,

after making a bunch of mistakes while younger, to get out of debt. Cool. I started listening to you with a recommendation from my dad. And the one big question I have, you know, we're sitting about all in all with school loans and everything else, medical, credit cards, we're sitting probably about $70,000 right now that we're trying to get paid back. Gotcha. Now that we've started, it's like all the problems start to come out.

Of course. As soon as we start trying to set money aside, we get hit with the wave. Of course. How do you recommend going about trying to resolve that, trying to keep putting money in the right areas? For example, I just put a $4,000 repair into my car. Luckily, I didn't have to take out a loan. My grandmother actually fronted the money for it.

But now I owe her that money, and it just added instead of taking away. Let's just stop and think what you just said. I didn't have to take out a loan, but now I owe her money. That's kind of like a loan. Correct. Yeah. So let's just change our words and be in full admission of everything that's going on here. All right.

So what's your household income? About $62,000. And how much do you owe on your cars? My one car outside, I owe $4,000 for the repairs. On mine, my wife's is about $5,000 left to the bank. Okay, good. So what's the bulk of the $70,000? What's the big number?

Student loans? Student loans. I'd probably say about $43,000 in student loans. Okay. Your wife at home full-time with the babies? No, she works full-time, so do I. Okay. All right.

What do you make? I make roughly $36,000 before overtime. What do you do? I run a computer repair shop for an Apple partner. What's your degree in? Accounting, actually. Okay. All right.

Cool. You have your master in? Accounting, actually. Okay. All right. Cool. You have your master's? No. I went to the wrong school, made the wrong, that's one of the wrong decisions. I'm just about to graduate with my associate's. Oh, your associate's in accounting. Okay. All right.

Cool. All right. So here's what we're going to do. The first thing is that all these things coming at you were coming at you anyway, but now that you decided to pay attention, they're more noticeable. And some of them come at you. It's just kind of the law of we used to laugh and say, if you join Financial Peace University, your transmission goes out in your car the next week.

I mean, it's just as if the devil does not want you to win, and he's going to beat up on something that you own, you know? And that's kind of what you've got going here. So I see a couple of things. One is we've got to get you on a detailed plan called a budget, and you and your wife totally focused on that. Two is we're going to sell so much stuff the kids think they're next. Three is we're going to see what we can do to get both of your incomes up temporarily.

It's called the dreaded part-time job or extra overtime or whatever as a temporary measure you're going to work like no one else so later you can work like no one else because here's the deal a thirty thousand dollar change in your household income changes your world dramatically dramatically and that's both of you picking up some overtime or both of you picking up part-time jobs or whatever. I don't know how that works exactly, but you're going to figure it out. People always do. And we're going to stop borrowing money for anything from anyone ever, including grandmother. So I want you to go through our nine-week class called Financial Peace University.

And I'm also going to give you, because when you buy Financial Peace University, the nine-week class, you get given the Financial Peace membership, which is all of the class online. The follow-up class is online on how to teach your kids online, as well as EveryDollarPlus and the whole thing online. So Financial Peace University and the one-year membership to Financial Peace, free. I'm going to give it all to you, but you have to promise you and your wife to go to the class, and we're going to get you on a track, and then you're going to bust it. You call me if you need more help. You can do this. Do you know who is a prime target for identity theft? Your children.

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It's just the smarter, more affordable way to protect your entire family. And it's the only plan I provide to my team. Zander.com or 800-356-4282. Shelley is in Orange County, California. Hi, Shelley. Welcome to the Dave Ramsey Show. I see on my screen you're debt-free. Congratulations. Hi, Dave. Thank Welcome to the Dave Ramsey Show. I see on my screen you're debt-free. Congratulations.

Hi, Dave. Thank you so much. Sure. How much have you paid off? Oh, gosh. I paid off $55,641.62. Love it. How long did this take? 30 months. Good for you. Well done. And your range of income during that time? It was right about 100. Okay.

All right. Good for you. What do you do for a living? I work in the escrow industry. Okay. So that's a whole, you know. Closing houses. Yes.

I don't do that so much anymore. I'm more on the corporate admin admin side now but yes i have closed my fair share of houses gotcha cool what kind of debt was the 56 000 uh well it was kind of a mix of of a bunch of things that uh-oh you cut out it was you cut out all i heard you cut out all i heard was it was a mix of a bunch of things and then you cut out. What did you say? Oh, I'm sorry. It was a student plus loan.

Or, I'm sorry, parent plus loans that were for my daughter's college. And those were about $22,000. I had a care credit card. I call it, Dave, my dead dog card. I don't think you've heard that one before. I had a dog that had cancer and I put a lot of money on this card to try to keep him around as long as I could and so here I am you know still paying on this card after he was long gone. So how much was that? That was about $4,500 when I started the program.

So what happened 30 months? It was probably closer to about six. What happened 30 months ago? You know, it was mostly, it was just at church. We saw the FPU come up, and I thought, oh, that's, you know, that sounds kind of cool. But I don't really want to spend $100 on, I don't think I need it. I don't have very much, you know, I don't really have any debt. And something just, probably Jesus just put on my heart that, no, I needed to do this class.

So even in the first, I think it's the first class or the second class where you have to write down all your debt, I was completely blown away at the fact that I had, you know, $55,000 in debt because I, you know, student loans and a car lease. I mean, we all have that, right? For, you know, so I was really, that really kind of blew me away. And I was like, okay, it's, it's time to, to get on this and get rid of this so that I can get, you know, I want to be able to retire and I want to be able to, you know, retire with dignity and with money and, you know, be able to retire, and I want to be able to retire with dignity and with money and be able to have a nice life once I'm done working. I hear you.

How old are you? 47. Okay. And you're single? I am. Good. Single mom. Very cool.

Well, congratulations. You did it. Thanks, Dave. We've all got car loans, but not you. It's so awesome. Yeah, we've all got car loans, but not you. No, not anymore. Nope. Not anymore. Thanks, Dave. We've all got car loans, but not you. It's so awesome. Yeah, we've all got car loans, but not you. No, not anymore. Nope, not anymore.

Thanks to you. Never, never again. And one thing I wanted to share, Dave, is, you know, you always talk about changing your family tree. And I really feel like I did that with my daughter. She's 22 now. But she's, you know, for a long time there I was making really good money, and I always lived like at or beyond my means. I never lived below my means.

So when my income would go up, we would spend a lot more and do things, and when my income would go down, and I lost a job. And so she kind of watched me go through a bankruptcy, and she went from being pretty much spoiled to, you know, we really had to cut back on things. And so she's watched being pretty much spoiled to, you know, we really had to cut back on things. And so she's watched me go through this program and Dave, she just paid cash in, I think it was December for her very first car that she paid for 6,500 bucks. She paid cash, Dave. I mean, I never pay cash for a car. She's cash flowing her master's and her credential program.

She's listening right now. So hi, Kai. So I couldn't be prouder to have her witness your program and to really change that. So I'm really happiest about that. Absolutely amazing. Very well done. Well, we're proud of you over here girl you did it we got a copy of chris hogan's book for you retire we got a copy of chris hogan's book for you on

everyday millionaires that's the next chapter in your story shelly and orange county's 56 000 paid off in 30 months making 100 a year count down. Let's hear a debt-free scream. All right. Thank you, Jesus. Three, two, one. I'm debt-free! I'm debt-free! Well done, well done, well done.

Wow, that was an amazing job. Well done, well done, well done. Wow, that was an amazing job. Well done. $56,000 paid off in 30 months as a single mom, but her college-age daughter does it, man. She does it. That's amazing. She saves up money. The family tree has changed.

She pays cash for her car. She's paying for her education as she goes this is awesome very very well done shelly congratulations very proud of you amy is with us in uh los angeles hi amy how are you hi i'm well how are you better than i deserve what's up uh all right i uh recently went through a divorce and I am in the process of rolling over the 401k to a traditional IRA. I called the company, and they surprised me and told me that about half of that is coded as after-tax contributions, in which case I have the option to either roll that portion over to a Roth IRA, or I can pull it with no taxes and no penalties. I double-checked that with a tax professional, and they confirmed that I can pull that portion without taxes and penalties.

So given that, I'm wondering if this still counts as cashing out retirement only to avoid bankruptcy or foreclosure, or if because there's no taxes and penalties, should I treat this like a non-retirement asset and use it to pay off a lot of my debt? B, it's a non-retirement asset and I'd pay off your debt. You're coming through a divorce. Everything's changing.

How long were you married? 13 years. And what is your income? Well, I am a homeschool mom, but I'm in the reserves, and I'm also a disabled vet. So I have a lot of different sources. So putting it all together, it's actually pretty good, about $95,000. I've upped my time that I serve. And that includes child support?

That does. That includes my child support, self-support, everything. How much debt are you getting out of this deal? I got, so I actually divorced this final almost exactly one year ago. I came out with almost $57,000, and in the last year I've paid off almost $24,000. And so I've got another $33,000 to go. And how much is that you can pull out that we're going to treat like a non-retirement asset? $22,500. Just about enough toretirement asset? $22,500.

Just about enough to finish it up. $22,500. I'm sorry, I didn't hear your question. That's okay. I'm just thinking. Well, here's the tradeoff, okay? There's nothing wrong with cashing that out and using it to pay off this debt, and I probably would okay the possible

trade-off is is that you're only about 14 months from being debt-free right at your current pace i mean you paid off 24 last year you only have 33 right right and Mm-hmm, right. And so I'm kind of tempted to let this money lay there and make you a millionaire even faster since it's already in a retirement program because once we pull it out of this retirement program, you can't put it back in there other than normal contributions, right? Right. It's an opportunity cost of about four years' worth of contributions.

Yeah, exactly. You've got it figured out cost of about four years worth of contributions. Yeah, exactly. You've got it figured out and you even know the lingo. So it's kind of on the bubble. I. Yeah, I'm probably going to pull it and pay the debt and then I'm just going to use the increased cash flow to load up, get my emergency fund done. Make sure you're stabilized after this divorce. And, yeah, I'm going to go ahead and be debt-free. But there's a real good argument to go both ways here. This is The Dave Ramsey Show. Steve is with us in Lexington, Kentucky. Hi, Steve.

Welcome to the Dave Ramsey Show. Dave, I've got a question around a couple of bills to pay. I've got a car loan at $19,000. I have a 401k loan at just about $14,000. Can't prepay the 401k, but I have about $9,500 to apply. I was wondering if it would be advantageous to pay that on the car loan or just wait. What's your household income and how much debt have you paid off so far? So we paid off all of our credit card debt.

Our household income is about $190K a year. So we're a couple months out from closing both of them, but I was just curious what you would recommend in the short term. Well, you're going to do this in just a matter of months. So mathematically, it's not going to matter much. It's just a matter of how you want to think about it. When in doubt, I stick with the debt snowball, which is the smallest one. And so what I would do there is just, that means $9,500 sits in an account, and you add, you know, $4,000 to it, $4,500 to it until you've got the $14,000. You're going to have that in like a month, and then you pay off the 401k loan, which is good. And then, of course, we're going to try and knock the car out shortly thereafter.

And paying off either one increases your cash flow because the 401k loan has a payment associated with it. So does the car. So but the cash flow on either one of these debts is not the magic here. The magic is the ratio of your income to the remaining debt. And as you said, this is just a matter of months. So I'm going to stick with it and just do the 401k since it's smaller. You're almost there.

You'll be there in a month. And I'm going to set that 9,500 aside,500 aside put 4500 with it pay it off next month and then head on into that car loan man hey thanks for the call congratulations you're almost there i can see the light i can see the i can see the finish line matt is in dallas hey matt how are you oh my gosh dave i am going so fanboy right now. I can't believe I'm talking to you. Well, you're going to be underwhelmed, bro. How can I help? Okay. So last August I got a new job and I'm still doing baby step two. I'm going to be out at the end of the year, I hope, with my student loans, which I just got under $100,000 as of last paycheck.

So I should be out at the end of the year, at which point around the first of the year I can opt into the 401k at my work, but I won't have my emergency, fully funded emergency fund set up. But I'm in a job where if I got fired the next day, I could go do relief work and not really miss a beat. Loss of employment is not the only kind of emergency. Transmissions go out on cars, and people die in other states, and you buy an airline ticket. All kinds of emergencies pop up. And loss of job is only one of the types of emergencies that you can get into.

So now I'm going to finish up and get you. Now, if you get to three months of expenses in the three- to six-month range, then you're there, and you've finished up your baby steps. But you want that emergency fund in place before you start the 401K that'll come back and bite you if you don't do that now here's what here's what i predict though okay i predict that you're talking to me in january and you said by next january you've got to decide to get into the 401k and you're gonna your projection today is you're gonna pay off the student loan in december i predict you're going to pay it off faster oh yeah i hope so yeah i'm tired of it yeah which is going to give you you've got so you've got an emotional momentum i can tell that by talking to you on this whole thing you're game on i mean you're leaning in you're leaning towards the tape and uh so you're going to some things are going to

happen on the positive side of the equation and you're going to knock this thing out, and you're going to have your three months by January. So it's going to become a non-issue. But if I'm wrong and it does become an issue, finish your emergency fund before you start your 401K. I want you in your 401K. It is a leading indicator to becoming an everyday millionaire. Being in your 401k is a big deal.

Doing your Roth IRA is a big deal. Getting in good growth stock mutual funds and making money for your family, long-term, steady, steady, steady. It's a big deal. It's one of the biggest data points in our millionaire study that Chris and the team did for the Everyday Millionaires book. Seventy percent of those millionaires use steady investments and were millionaires because of their 401K, their Roth IRAs, and so on.

So I really, really, really want you there because the goal is to get you not only out of debt, but then to the everyday millionaire. That's the goal. But I also know that when you try to skip a step, you'll get your knee kicked, and you'll have a sore knee. Murphy will kick your knee. So make sure you have your emergency fund before you start your 401K. Really good question.

Thanks for joining us. Corbin's with us in Austin, Texas. Hey, Corbin, welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? Okay, so I have an interesting question. So me and my husband, we are looking to purchase a house, but I have anxiety about it, and he is ready to jump in with both feet.

And our issue is price and what's the best, I guess, most affordable way for us to go about it to secure our future. We have a unique situation to where we are fortunate, unfortunate how we got it, but fortunate enough that we both are medically retired from the military. So we receive $54,000 a year without working. And that's amazing compared to some other people. But with working, we both make about 120 excellent so for me i say let's go more around the 90 range because what i do i'm a licensed massage therapist so my work is in and out but he is a project manager so 90 000 to me is a safe

annual income to judge for the price of a house but he is ready to go for it i don't i don't i don't think that using your entire income is unsafe okay um unless you have a real reason other than vague worries that you actually don't think you're going to be able to do your job okay our plan um we are planning to do a hefty down payment because um right now we are renting but we live so well like within our means we're saving about four thousand a month wow look at you yeah so we're like killing it on the the making sure everything's paid and we have a hefty down payment that we want to do. And I know that you also say 15-year fix, no doubt about it. Absolutely.

Our mortgage broker, because we are going to be VA, has also pushed around the idea, which I think I know your answer, but has pushed around the idea of doing a 30-year, just paying it twice as fast, which is kind of ridiculous to me. It makes no sense. Why wouldn't you just do the 15-year? You would do a 15-year. Exactly. And you really wouldn't do a VA loan.

They're more expensive than a Fannie Mae loan. No, wait a minute. Wait a minute. You're on disability. So they're going to waive the funding fees for you. Yes. Yeah. There's a lot of benefits for us.

So it's unfortunate that we get paid, but it's fortunate for our financial future, I should say. Well, you served your country, and you got hurt doing it. So, I mean, that's what that's for. I got no issue. Exactly. I mean, I'm sorry you went through that, but, I mean, I'm proud as a taxpayer that you're getting that money. So thank you for your service to both of you now a 15 year fixed the va might be cheaper given the fees that are waived due to your disability might probably is

cheaper actually but a 15 year fixed put as much down as you can and the reason for putting as much down as you can is we want to turn and pay it off as fast as we can exactly and um but no more than a fourth of your take-home pay but i I would use your total income to calculate it. You're just really, I mean, you're conservative. You're doing really good. But your personal nature is you're the tightwad in the house, and you're just wanting to pull everything back. But I think you're fine.

I think you're fine. The two of you are go-getters. You watch what you're doing. You're very intentional. I would do that. And then let's turn around and get it paid off as fast as we can. That's the idea, of course, because a paid-off house and the steady use of the retirement plans are what lead to this everyday millionaire, this book that Chris is out touring right now. So very good stuff.

Well, Corbin, thank you again for serving your country. And that's exactly what I would do in your situation. Hey, thanks for the call. Open phones at 888-825-5225 you jump on we'll talk about your life your money free call around here our thanks to james childs our producer kelly daniel our associate producer and phone screener i am dave ramsey your host and we'll be back before you know it. This is James Childs, producer of The Dave Ramsey Show.

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