The Ramsey Show - App - Buckle Down, Budget, and Pay Off that House! (Hour 3)

Episode Date: April 17, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. It's a free call at 888-825-5225. That's 888-825-5225. Andrew starts this hour in Nashville. Hi, Andrew.

Oops, I might have pushed the wrong button. Let me try again. There's Andrew. Hey, Andrew, how are you? Doing well. How are you? Better than I deserve. There's Andrew. Hey, Andrew, how are you? Doing well. How are you? Better than I deserve. What's up?

So I am 29 years old, and my wife and I just celebrated our six-year anniversary on the third of this month. Congratulations. Thank you. And we currently have, well, over the last seven years, we've worked really hard and kind of invested in ourselves, and we have both gone into real estate careers. She's a real estate agent and I flip and do the management of our investment properties. So my question is, we have four rental properties that are equivalent to roughly $475,000 that are paid for free and clear. And we owe a little bit on our current home as well as to vehicles. And we were wondering if it's a good idea to sell these properties or a couple of them

to pay off our home mortgage, our vehicles, and start investing in other retirement, such as a SEP, and start taking advantage of the Roth IRA because we haven't done so yet. What's your household income? It fluctuates pretty drastically. It's currently in the range of $225,000 to $400,000. Okay. All right.

And what is the balance on your home mortgage? The balance on our home mortgage is about $175,000. Okay. And the balance on your vehicles? My truck is $28,000, and her car is $30,000. Okay. All right. I grew up in the real estate business, Andrew.

I used to do for a living what you're doing. Okay. At the high point, I was 26 years old with $4 million worth of real estate, $3 million in debt, a million-dollar net worth, and I made $225,000, and that was 1986. Okay, a long time ago. So that's probably the equivalent of $400,000 now. And I went broke the year after that because I had a lot more debt than you've got. Okay?

But all of that to say I've lived exactly where you're living you are doing a really really good job um you've avoided debt by and large here uh but you have to be very careful in your world to make sure you become numb to the risk of what you're doing if you're not careful. Are your flips paid for, too? Yes. So, well, we have some lines of credit open. Essentially, as far as debts and equity, we currently have roughly $1.5 million in real estate with right around $370,000. So you've got another $200,000 in addition to this on flip debt, in addition to your mortgage?

Yes. Okay, so you weren't even counting that. So what happens to those of us in the real estate business is something happens and someone walks along with a hammer and breaks our risk meter, and we no longer perceive the risk associated with that so knowing what i know and i own today uh tens of millions of dollars of paid for real estate so i still love real estate and um uh knowing what i know now being an old guy who's seen a whole bunch of people doing what you're doing and what i did go

broke what would i do if i woke up in your shoes? I think you've got the ability to make $200,000 to $400,000 a year doing flips and owning these rentals and do it with no cash. I mean, do it with no debt, only cash, but you're going to have to concentrate to do that. You're making so much money that to not run this thing debt-free is ludicrous. Slow down, do a few fewer deals, and do them all with cash because if this interest rate environment ticks up 1% on you, this market's going to freeze like a deer in the headlights and you're going to be sitting on this flip debt because you're going to be sitting on these flips.

Okay? Yeah. So, yeah, I usually only do one at a time it was just there was yeah at the same time that's what i'm talking about that's exactly what i'm talking about man i've been reading your mail for the i've been reading your mail for the past three minutes listen to me okay your risk meter is broken and you get i i that it's the thrill of the deal the donald trump book and the art of the deal, you know, and nothing, nothing referencing Trump except that. But there's the art of the deal.

There's the fun of the chase. When you're doing what you're doing, you're turning over rocks till something runs out. When something finally runs out, you jump on it. And it's just, it's a blast. It's a fun business. It's an adrenaline rush. But you got to be really careful and you got to stay within cash. If you'll stay within cash, you can do this for the rest of your life if you keep screwing around running up lines of credit this economy is going to take a sidestep and take you out at some point

and you're never going to see it coming so yeah that's what i would do i would get your flips to where they're paid for uh the next time you roll out of them, roll out and then go slower, pick fewer deals and do them all with cash and do all cash, all cash, all cash, all cash. And then I would use your income. I wouldn't sell your rentals. I would use your fabulous income to pay off your house and pay off your truck and fund your Roths. If you make $200,000 to $300,000 to $400,000 a year and you can't pay off a $28,000 truck, you aren't running a budget. Yeah, well, I can pay cash for it now. It was how we ended up structuring it.

You just asked me do I sell my rentals to pay off my truck. Well, I was dumping all debt into the category. I know. You just did, my truck and my house. And listen, how fast can you pay off $175,000 and $28,000 when you make $300,000 a year? Really fast. Yeah. But now your income's volatile, and that's going to mean you maybe don't do that flip,

and instead you pay off your house. That's going to mean instead of doing six flips in a year, maybe you're going to do three or four. And it might actually slow your income down just a little bit, but it's okay to be a half step slower and stay on solid ground. So I'm going to use your fabulous income to clear your debts. I wouldn't sell your rentals. I like them. I like them sitting there.

I think they're a good stable part of your world and your portfolio, and then I'm going to move away from lines of credit on the flips and start paying cash for them as you go. You are actually doing this. You're not one of the people that this is a theory. You've actually pulled it off. You've managed to do flips and make money. Not everybody can do that.

That means you know how to buy. You know how to manage the construction project, the rehab process. I've done 2,000 of those, roughly. So, I mean, I know you know what you're doing. I can feel it. You'd be gone already when you called me. You'd be calling me bankrupt if you didn't know what you're doing. So it's not theory for you.

I'm not saying you shouldn't do it. I'm slightly adjusting how you're doing it to take you to a debt-free status, and you'll still be in business 20 years from now take you to a debt-free status, and you'll still be in business 20 years from now if you'll stay debt-free. But if you keep screwing around and edging up and edging up and edging up and edging up into debt with those lines of credit, the economy's going to take a sidestep and take you out, and you're never going to see it coming. Don't let that happen to you.

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That's puretalkusa.com. Thank you for joining us, America. We are glad you are here. Melody is next in Austin, Texas. Hi, Melody. How are you? I'm well. Thank you, Dave. Hey, okay, I have a wonderful friend, 20 years old, just got accepted to a college. I have been saving for his college fund since he was in kindergarten. So he will be graduating from school debt-free.

The other thing is that I am debt-free myself, and I also have the finances available to basically I could foot his bills for every year, but that's not the way I was raised, and that's the part that I'm struggling with. It's like how do I set a budget for him where he, in other words, how much responsibility should he have for his expenses in college? Okay. Did you say a friend? No, backup.

I'm sorry. Who is going to college? Your child? My son. I'm sorry. Yeah, I'm sorry. My son. Oh, okay'm sorry. My son. Oh, okay.

I misunderstood. Okay. All right. So this is you have saved enough for your child to go to college debt-free. Yes. And because you had to work way through, you're struggling with that a little bit. Yeah, exactly. I mean, I'm a child of a large family, and my father was a teacher through principal,

and they very much set out this is the budget, the rules. But it was also very hard. It was incredibly hard. And if I would have had a little more money, honestly, maybe I could have been a little more successful at college too. So this is what I'm struggling with my son. Okay. How much do, i don't know there's not there's not a uh in my opinion

there's not a morally wrong or right answer okay i'll give you some guidelines and some things to think about i i think i think you're bad parent if you participate financially in their stupid decisions if they're misbehaving and you're financing it you're endorsing it okay and so if they're you know some of their personal behaviors or their character or something like that's out of whack and they're you know they're not getting good grades and you just keep writing checks that makes you an enabler that doesn't make you a parent okay so that's that's not on the table okay but uh this idea that they have to work or they're a bad kid i didn't do that with our kids i i made our kids work a lot when they were at home when they went to college we paid 100 of their college okay and uh but i'll tell you this. It was contingent upon their behavior.

They were on my payroll. And so they're going to graduate in four years. They're going to make the grades. Today at school, they're so sensitive. These are adults, and so you can't share their grades with their parents. Bull, I'm paying for it. You sign that piece of paper, Bubba. I'm going to find out what your grades

are and so so that stupid little school can tell me what's going on because i'm the one writing the dadgum check so you're going to behave you're going to live in a place i tell you to live and i'm going to participate in that i'm going to give you x number of dollars it's not a lot of money but enough money to eat with and you're going to live on a budget and you're not going to bounce checks and you're not going to run up a credit card debt, and you're not going to go borrow money, and you're not going to get a student loan on the side, and you're going to study in a degree field that you and I talk about and are reasonable so you don't get a Ph.D. in underwater basket weaving.

Right. You know? And this kind of stuff, right? So, in other words, their job was to do college wisely and be walking with the Lord and stay out of substance abuse and not be sleeping around all over the place while they're in school. They're under my roof in a very real sense. And when they quit doing that, they quit getting my money. Okay. So that's how I end now.

Now, I will tell you, my youngest, who graduated magna cum laude, worked because he wanted more money than was in the budget. And he's always been entrepreneurial, and he worked at a mattress store selling mattresses, which was pretty funny, actually. But anyway, it was good for him, right? We still gave him a hard time about being the family mattress expert. But many years after college, he's still the family mattress expert but anyway it didn't hurt him you know but that was a choice but i didn't the budget you know was was did not have any room in it for a bunch of goofing off there was enough there to eat and have a reasonable life while you're in school but i mean they didn't drive down there in brand new whatever's or you

know all that kind of stuff so anyway but if you want them to work for part of it i wouldn't say you're wrong because i did that but i had i knew they had work ethic because we had established that before they left home and i had all of these other things that they had to do that were all for their good by the way right none of it was because i was getting anything out of it it was just for your good that you that you behave and that you you know you walk and right and so on and so but that was you know my money was contingent upon that and so you know you're going to start you know you're going to move in with your girlfriend ramses don't do that.

It doesn't fit our evangelical belief system, okay? We're Christians. That's eh, eh, eh, eh. We don't do that. So no money. So everybody kind of knew that going in. We laid it all out real clearly, but that was their job to do that. If they were going to do that other kind of stuff, then they were going to have to pay for everything.

It was an all-or- nothing thing with the money with us but if you wanted to put the same rules on them and give them 75 of what they need they have to work for 25 of it you could do that that's not a bad thing it's not a bad thing at all by the time we had gotten them to college i had worked them so hard and so much doing other stuff. They knew how to sweat, all three of them. So I wasn't worried about them having to learn the lesson of work ethic. But, you know, so I knew they could carry water, you know, and so forth. But you got to look at the kid and say, is it going to be good for this kid to carry some of this water through this? And if you think it's good for them, then, yeah, put some of it on them. But I refuse to say that because I paid for all of it, that if you don't do that, you're bad. But on the other hand, I'm not going to take the condemnation from someone who goes,

I can't believe you pay for your kids' college. They ought to have to work for everything. No, I don't believe that either. I mean, it's not a bad thing if you believe that. I got a friend of mine who's in the NFL, and he wanted his kids to work their way. He'd given them zero for college, and he's a multi-gazillionaire. But he's hardcore about it, and he thinks I'm crazy. But I think he's just too hardcore.

I think there's other ways you can do that. So anyway, that's a good discussion to have, but I don't think there's a right or a wrong thing on parenting, except that when parents are spineless and they're wussies and they just give money to kids when they're they know their kids misbehaving oh i know johnny's partying i know he's getting degree in beer pong but i'm still writing the checks well that's because you're a bad parent you're a wuss you don't love your kid enough to stand up to them and you know that we didn't have that problem at our house brooke is in buffalo new york hey

brooke how are you good how are you better than i deserve how can i help um i'm trying to find out if i should voluntarily give the bank back my current car that i'm that i'm making car payments No. I owe $7,700 on it. I paid $291 a month. It's a 2009. It's only worth about, I was told, maybe $2,500. Yeah. You know what happens when you bank the car, right? That's called a repossession.

Right. And you know what they do with a repossessed car they sell it on the repossession lot on the repo lot which is not exactly a retail price right right right and so if it's a three thousand dollar car they're going to sell it for a thousand bucks and the difference in that in 7700 would be six thousand seven hundred dollars they're going to come and talk to you about wanting that and if you don't give it to them, they're going to sue your butt. Right. So no, I don't think you ought to do a voluntary reposition.

I just don't know what to do. It's the only car I have, and it keeps costing me. I've cut out my credit card since listening to your program. What's your income? My income, I make roughly gross, about $2,000 a month, and I take home about $1,600 of that. Okay.

Did you get any tax refund at all? No. Good. All right. What you need is an extra job. Your car is not your problem. Your income is your problem. You're struggling with income, and so you need to take the car and deliver pizzas every night

or take the car and do something, pick up an evening nannying job or something. Because if you add $1,000 a month to your life, it changes your world. It changes your world. Almost doubles your income. And that will clean this car debt up fast. We'll be right back. In the lobby of Ramsey Solutions, Joe and Sarah are with us. Hey, guys. How are you? Hey.

Good. Welcome. Where are you guys from? Greenville, South Carolina. And all the way to Nashville to do your debt-free screen. Yes, sir. Well, welcome. Good to have you.

And who's the youngsters you have with you? This is Jonas and Ivy. And how old are they? 11 and 9. All right. Very cool. Good to have you. And who's the youngsters you have with you? This is Jonas and Ivy. And how old are they? 11 and 9. All right. Very cool. Good to have you guys. How much debt have you paid off? Paid off $170,000. Wow. How long did that take? That took 11 years. 11 years. All right. And your range of income during that time? For eight of the years, our average income was $43,000 a year. The last couple of years, we've been able to get that up to $110,000 to $115,000. Well, that's a big jump. Yes. Okay, wow.

What do you guys do for a living? I'm a police officer. I work in business development. We do prospecting automation work for other companies. Very cool. Very cool. So I'm guessing maybe you went back to work. Is that how that income doubled?

I sure did. Okay. All right. Because I'm thinking, how in the world did your income double like that? So 11 years, $170,000. I'm also going to guess and say that was your house. That is the house. I'm looking at weird people.

Yes. No mortgage, no debt of any kind. No. None. None whatsoever. Just like that. Wow. And basically on a police officer's salary. Yes. No mortgage, no debt of any kind. No, none. Just like that. Wow. And basically on a police officer's salary.

Yes. Is how you did this. Wow. Congratulations. Thank you. How does it feel not even to have a house payment? Crazy. It's a good feeling.

I bet. What's the house worth? It's worth about $170,000. Wow. Neat. Very neat. 11 years. Well done, you guys. Wow, neat. Very neat. 11 years. Well done, you guys.

How old are you two? I'm 41. I'm 40. How long have you been married? 17 years. Have you ever been debt-free while you were married before today? No. Wow.

I love it. You know what's running through my mind right now? We just finished this huge millionaire survey. We've surveyed 10,000 millionaires. The average person that becomes a millionaire, you know how quickly they pay off their home? 11 years. Oh. That's the typical time is 11 years.

Yeah. I've heard those stats on your show before. You are on track. You are tracking it. Well done, you guys. So tell me the story. What happened 11 years ago that put you on this journey? Well, back in 2006, we had $170,000 worth of debt.

And April of that year, Sarah lost her job. And so our income basically got cut in half. Mm-hmm. And so we had to come up with a plan because that wasn't going to work for us. Mm-hmm. So I came up with the budget and figured out how to make it work and went to working a lot of overtime. I bet. We were expecting Jonas at the time. And so we had to figure out something to change our family tree for the future.

So she loses her job, but perfect timing, stay home with the baby, right? Yes. Yes. I was the breadwinner. I made a little bit more than he did back then. We wanted me to stay home with the kids. It just happened five, six months premature because of the job loss and the company bought us out. So he turned 30 in June of that year and his sister bought him the total

money makeover book for his birthday. We knew about you. We weren't avid listeners necessarily. We also knew that we were already headed on a path of wanting to be debt-free and knowing if I'm going to stay home, you know, we have to buckle down. Right. And so we started the journey, and we stayed consistent, persistent. You're patient. But it was a long 11 years. Yeah, it is stayed consistent, persistent. You're patient. But it was a long 11 years. Yeah, it is.

Yeah, it is. We never deviated from it. Not one time. Well done, you guys. Well done. What do you tell people the key to being out of debt? House and everything by the time you're 40 years. The key, I think, is the budget and communicating and talking.

Every month we go over it and look at what next month is going to be and are patient. If there's something we want, we just have to be patient and save up for it. Communication is so key. And he talked a lot about it. I was the one who did all the spending as the stay-at-home mom. I did the grocery shopping. I did all of the, you know, purchasing of things that we needed. And so it was my responsibility to stay within the budget we set and to communicate with him about receipts.

I mean, there was a time we did Excel, entering some receipts and things like that. You know, every night we would go through it and then of course now um so he's like mr discipline this man is either all in or all out there is no in between yeah um in everything in life and he's so disciplined and has led our family so well um did you ever run the car in the ditch while Mr. Discipline was watching during this 11 years? You had to do it once. I don't think I did. You did that.

I'm the one that would probably tear up the car before she would. No, I meant metaphorically. Did you ever go spend something that wasn't on the budget and blow up everything? Not really. He has a super duper love for technology. So for somebody who loves to dabble and he's very technically minded, all

of the technology that comes in you know, he would love to do and be part of that. And we have done some things, you know, fun stuff. We've recently automated our home. But we're not free now. Yeah, now you can do that.

Well, well done, you guys. Very well done. So are the children scarred permanently? Will they have to be in counseling over this? I don't think so. But they were born into it. And they have been told no so much in their lives. I got told no.

Did you? Yes. Yes. I mean, I think that's kind of part of growing up yes and um and wait no and wait and so we've been excited to just recently be able to say yes yeah what's something big other than the home technology that you're going to do uh we're going to eventually take a trip to disney world there you go ding ding there you go that that's always they've always been told once we get to this point we're going to do disney and we're going to do it big yeah um maybe an all-inclusive resort or something like that yeah very good where money

you know you got the money right make 110 000 you don't have a payment in the world right i mean you can do whatever you live like no one else now you can live and give like no one else i'm proud of y'all well done done. Thank you. Well done. Did anybody cheer you on or everybody say you were crazy? We had a few people that cheered us on. People that were encouraging. But we had a lot of people who I'm sure thought we were nutso.

Maybe they didn't say it. But, you know, we could tell that there was... Turn their back before they rolled their eyes. Yes, yes. I love it. Well, way to go, you know, we could turn their back before they rolled their eyes. Yes. Yes. Yeah. Well, way to go, you guys. We got a copy of Chris Hogan's number one bestselling book for you. Retire Inspired.

I want you to be millionaires. That's the next chapter in your story, okay? Yep. You can do this. Proud of you. Very well done. All right. Have the kiddos been practicing their debt-free scream?

Yes. For 11 years. Since they were born. Yeah. All right. Joe and Sarah, Jonas they were born. Yeah. All right. Joe and Sarah, Jonas and Ivy, Greenville, South Carolina. They paid off their home and everything. It's a $170,000 mortgage paid in 11 years, making $43,000, and then just in the last

few years got it to $110,000. All right. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! I love it. Well done, well done.

Man, that's how it happens right there. Gosh, that's amazing. Beautifully done, you guys. Beautifully done. Can you imagine being 41 years old and having your house paid for? You know, when they started, they could imagine it, but they didn't imagine it. You don't know what it's like until you don't have a payment. When you burn the mortgage and you walk through the backyard with no shoes on,

the grass feels different under your feet, baby. I promise you, the borrower is slave to the lender. It changes things when you don't have a single payment in the whole world. When you don't ever think about some idiot bank taking your house. Shoot, where your kids live. Changes everything, man. Changes everything, man. Changes everything. This is the Dave Ramsey Show. Thank you. Our scripture of the day, precious treasure and oil are in a wise man's dwelling,

but a foolish man devours it. Another version of Scripture says, In the house of the wise are stores of choice food and oil, but a foolish man devours all he has. If you spend everything you make, you're a fool. Wise people save money. That's what it says, in other words. John Tyler says, Wealth can only be accumulated by the earnings of industry and the savings of frugality.

You have to earn money and not spend it all. Then you have money to save. Wow, that was insightful, Dave. That's why I come around and hang out with you. Nancy's in San Diego. Hi, Nancy. Welcome to the Dave Ramsey Show. Hi, Dave.

How are you? Better than I deserve. What's up? Well, I'm 61 years old and would like to retire at exactly the same time in five years. My questions are, should I use what I have in my 403B to pay down some of my student loan debt? How much is in your 403B? I only have $17,000, but I also have a teacher's retirement account that's building up. How much is in that?

I have about $4,200 a month in retirement for that. Okay, that's a pension plan? Yes, it is. Okay. So you have $4,200 a month to retire on in five years. And how much student loan debt do you have? I have a total of $70,000. So I've got two loans. One's lower than the other.

And what is your income? My income currently is $93,000. It'll probably go up a few thousand by the time I retire. Okay. And you're single? I'm single. I own my, or I don't own my home, but I do. Oh, how much do you owe on your mortgage?

Oh, it's about $240,000. Okay. All right. So I was wondering, should I use that chunk of $17,000, which after I pull it out, I'll be taxed on it, so it won't quite be $17,000, to get down a good portion of that student debt? No. I also have $13,000 in savings, which is my cushion. Yeah. No, I would not.

What I'm looking at is this. I'm trying to say, in my mind, you make $92,000 a year. Can we get you 100% debt-free in five years? I think so. It's going to be tough, but it can be done. I'm talking about a house and everything. Oh, okay, yeah. The house will be tough. It's $200,000.

You said how much was owed on the home? About $240,000. $240,000 plus $70,000. $70,000 plus $6,500 in credit cards. Yeah, I know, it's a rough one. I think I came up with a good plan, though. If I pay down my lowest student loan, and then I have a teacher loan forgiveness that might kick in in two years of $17,000, that will get me down enough to make higher payments on my other loans.

If I go with the schedule they gave me, my loans will be paid off in 10 years. If I pay a big chunk now, I think I can get it paid down by the time I retire. No, it's got to be gone in 10 years. If I do it, if I pay a big chunk now, I think I can get it paid down by the time I retire. No, it's got to be gone in five years. And I want most of your mortgage gone. I'm thinking $50,000 a year of your income is going towards debt. Yeah. Which, you know, that clears plus or minus the forgiveness, all the student loan debt, and a bunch of the mortgage, if you just say, that's $250,000.

Yeah. You need $310,000 to be debt-free. Yeah. Okay. Well. So you're not going to quite be debt-free by the time you get to 65 house and everything, but we're going to pay that house way down, and we're going to, because I want the home paid for early sometime in this retirement.

Yeah. I don't want to roll into retirement with a $200,000 mortgage. Yeah, I know. I'd be happy just to get out of the student loan debt. I think I'll be comfortable after I do that and get rid of that debt. I don't. I don't. I don't think you're going to be comfortable.

I think you need to get rid of that mortgage debt, too, by age 70. Oh, definitely, yeah. I think I can do too by age 70 oh definitely yeah i think i can do it by age 70 well i don't i don't unless you're living on 4200 a month you can't from 65 to 70 yeah i get about 48 i clear 4800 a month that's my point i mean yeah you know you you're making 90 now so while you're working i mean you may be need you may need to work one more year. Yeah, I always have that option. So that's there. The only thing is I won't be able to contribute any more to my 403B. Yeah, I'm not worried about that part.

I'm worried about the income being big enough to defeat these two debts or these three debts now, the credit card, the student loans, and then the mortgage. Because if you can go into the bulk of your retirement age from 70 on, let's call it, 100% debt-free with minimal in the 401K or 403B, you're not going to have a ton in there, but you've got the $4,200 coming in plus Social Security, you'll be fine. Correct, yeah. But if you go into that with a $200,000 still owed on a mortgage you're going to struggle to keep that house yeah it's going to be a problem so would you pull out the 403b money no no i don't think 17 000

solves this problem okay i'm gonna leave it alone i would stop adding anything to the 403b at this stage of the game and i would 100 be on beans and rice rice and beans and let's cut these credit cards up attack them and then attack the student loans as hard as you can hit them and as soon as they're done let's start working on that mortgage and let's get deep into that mortgage being paid off uh before you quit and uh if not paid off 100 very close i mean get down to less 5050,000 or something, because I don't mind you living on $5,000 a month at all 15 years from now. Think about inflation.

That's where we're looking at, and you can do that. You can do that and have a great life if your house is paid for. If you're sitting there with still payments on a $200,000 mortgage, that's going to take everything. It's going to mess this up. The math's not going to work. Veronica is in Dallas. Hey, Veronica, how are you? I'm great.

How are you? Better than I deserve. What's up? So I just had a quick life insurance question for you. So my husband and I were in our 20s, and he is a heavy, heavy smoker. I was just wondering if it would be smart to pull out a life insurance policy on him. Well, it's always smart to pull a life insurance policy on people that you're depending on their income.

And we recommend you go to Zander Insurance and get a quote for a 15 to 20 year level term policy and um you have children uh no we hope to have some in five years but we it's just us right now okay all right and how old are you exactly um my husband's 22 and i Okay. Well, life insurance is not very expensive, obviously, at that age, and you can usually get about 10 times his income on him and about 10 times your income on you. The problem with him being a smoker is it's going to be twice as expensive. It's double. Right.

And so not to mention the fact that his health care costs are going to be higher because he's a smoker. And so there's tens of thousands of dollars in the next three to four years that you're going to lose if he doesn't quit. Yeah, and we're working on getting him to quit. We're weaning him off, you know, because cold turkey hasn't worked yet. But by the time that we have kids, we plan to have him to quit. We're weaning him off, you know, trying to, because cold turkey hasn't worked yet. So, but by the time that we have kids, we plan to have him off completely. I just didn't know if the life insurance was a good idea. What it's going to cost you between now and the next five years doesn't make sense for him to wait until he has kids to quit smoking. Right.

By the time that we have kids, he'll be stopped. No, I'm talking about by Christmas. Yeah. That's what I'm talking about by Christmas. Yeah. That's what I'm talking about. That I would like to have him done by Christmas, too, because it's gross. Yeah. Right. Yeah, not to mention, listen, it's not a moral thing.

It's a math thing. It costs a lot of money to smoke. It costs you extra in your health care costs because you're sick more and more often. You're more susceptible to everything that comes along your your your uh your your system breaks down and your life insurance is twice as expensive and anything else you go to get in the insurance world is going to be more expensive and so it's just a lot of money it's a lot of money and you know so no i'm not waiting five years for this you know you can do whatever you want to do but um wait five well i have kids to be smart what does that mean no we're not doing

that no go ahead and do it now but if he gets life insurance right now you're going to find a smoker's rate versus a non-smokers rate is double. And it's twice as much. But yes, he needs life insurance. Everyone that's counting on, that someone counts on their income needs life insurance. Pretty simple. Thanks for the call. That puts this hour of the Dave Ramsey Show in the books. We will be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for 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.