The Ramsey Show - App - Budget, Stick to the Plan, and Pray! (Hour 3)

Episode Date: April 10, 2019

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Live from the headquarters of Ramsey Solutions Broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. That's 888-825-5225. Stacy is with us in Detroit, Michigan, starting off this hour. Welcome to the Dave Ramsey Show, Stacy. Hi, thanks, Dave.

It's an honor to be able to talk to you. You too. What's up? About four years ago, before we started your program, my husband and I purchased a couple of rental homes. We put 20% down on them, and then we financed the rest on a 15-year mortgage. Fast forward four years, we finally found your program, and we've fully embraced it. But we're just about to finish paying off all of our debt, except for the house, those two rental homes.

And I'm kind of trying to figure out where that fits into the whole plan. Is it something that we should include in our debt snowball? No. Or is it something that we can pay off after we do our savings and everything else? It would be Baby Step 6. Baby Step 6. We pay it off with our own mortgage. Pay off your real estate, all real estate, your personal mortgage, your any rentals, that kind of stuff in Baby Step 6. Okay.

We put real estate there. So you have a home mortgage as well, right? Yeah, we own a home as well. Okay. And what's your household income? Last year it was just under $180,000. Oh, wow, you're killing it. Good for you.

What do you guys do? Yeah. Well, I'm sort of a stay-at-home mom. I have a couple little businesses I run on the side. But my husband works for a startup electric vehicle company here in the Detroit area. Okay, so he's doing well. Good. Very good.

And obviously your startup businesses aren't slouching either, so good for you. No, yeah, we work hard. At the end of the day, we never had any money left over, which is what made me take a second look at you, because I was sick and tired of being sick and tired. Good. So what do you owe on your mortgage, your home? Our mortgage on our home, we owe about, I think, about $280.

And what about the rentals? The rentals, we owe about $60 for both of them. Okay, all right. I'll probably knock those out before I knock out the house. And the reason I'm doing that is they're very small in ratio to your household income. Okay. You can pretty easily knock out one a year. Yeah.

You know, if you just lean into it, right? Once you get to that baby step, I mean, you got other debts you've already cleaned up or what? Yeah, we've gotten most of our other stuff cleaned up. We paid off our student loans years ago. When we made the same money, we invested in these houses, which was nice, but we just made some dumb choices. So we had some credit cards, and we paid off our cell phones. Okay. Are you debt-free now, except for the homes? We would be, except that we ended up owing on our taxes. So by the end of the month, we should be debt-free. Okay.

And then you'll have to make sure your emergency fund is placed, and then you'll start putting 15% of your income away, and then you'll start your baby step six. And in 12 months, I think from that point, which is probably 18 months from today, you would have your first rental paid for. Okay. And 12 months after that, the second rental paid for, and then it's going to take about

three or four years to knock out the house. And that's a very, very reasonable schedule, and you make really good money, so you're going to do great. Congratulations. Well done. Oh, thank you. I wish it always felt like we were doing great, but now that we're living on a budget, it's a lot easier.

Now, that's assuming, of course, you want to keep the rentals, do you? I think we do, yeah. I mean, it's something we want to do as part of our portfolio, our retirement portfolio. I like rentals, but it's just some people, you know, if they're driving you crazy or something, then we're not going to force you to keep them, you know. No, they don't bother us at all. I just wasn't sure when I needed to get them paid off. And I know you said always pay cash for rentals, but we did it before we opened the light.

See, when your house is paid off in like four years from now and all the rentals are paid off, you're going to have cash everywhere, and you'll be able to save up and pay cash for a rental really fast. Yeah, that would be really nice. I mean, you could buy a $100,000 rental every year and a half or so pretty easy. Okay, that would be great. Yeah, you can buy a $100,000 rental every year and a half or so pretty easy. Okay. That would be great. Yeah, you can build a really nice portfolio. And every time you buy another one, all that rent.

See, when you don't have any payments on those rentals, the cash flow is astronomical. Yeah, of course. Yeah, it's wonderful. Yeah. You just make different decisions then with the rentals. It makes your real estate much more enjoyable it really does dimitri is with us in lexington kentucky hi dimitri how are you hey dave thanks for taking my call sure what's up hey so i uh i got a few questions for you i hope

i don't take up too much time um but i'm pretty new to your whole debt-free thing. I first heard you on YouTube, and then me and my wife, we decided to try to get rid of our debt, but we never really followed your steps because I don't even really know them. So we sold our house right before January of this year. And so we don't have any debt. I'm currently living with, you know, the in-laws until we find something. But we are thinking about renting just so we don't have to get another loan for

a house. Plus I don't think I can with my new job that I've got. Why? Well, I heard there's a loophole to where you can get a house, but you have to be in the same industry for like two years, and I haven't done that. I've only been in the industry for a year. That would be if you had no credit.

Do you have no credit? Pretty much just a couple credit cards that I pay off every month, you know, make the 30%, you know, credit utilization and then pay it off. Right. Okay. Well, I would cut those up and get you a debit card, which will further damage the situation. But I think you probably still could get a house.

The only way you're required to have two years is if you're, A, self-employed, or, B, you have a zero credit score, and then they want to see stability. So you can talk to Churchill Mortgage, and they can tell you. There's no sin in renting for a short period of time as patients in order to wisely purchase. And if you need to rent for six months and save up and get established or whatever in your job, whatever you've got to do to get a reasonable situation and wisely purchase, then that's not a bad thing.

But I don't teach people to rent for 10 years. You know, I don't want you to be a renter for life, but it is a smart thing to rent for a period of time until you're out of debt, you have your emergency fund in place, plus a good down payment, you're stable in the job, everything's wise and steady, and then the house can be a blessing to you. And, of course, we tell people not to take out more than a 15-year mortgage where the payment is more than a fourth of your take-home pay.

And if you do all of that, then the house can be a blessing instead of a curse. And we just don't. Everybody runs around and buys houses they can't afford on adjustable-rate mortgages, and then it adjusts, and they're shocked. And you bought an adjustable rate mortgage. Of course it was going to adjust. And you bought it at the lowest interest rates in 50 years. Where did you think it was going to adjust?

Down? You think they were going to start paying you? You know, that kind of stuff. That's what people get into, Demetri. So if you'll just do it wisely with a good down payment above your emergency fund, payments no more than a fourth of your take-home pay on a 15-year, and if it requires you rent a little while to be able to pull that off, that's not a problem.

The renting in that case is just patience money. And, yeah, it's money that's going down a rat hole. I get that. But it's patience, and there's nothing wrong with having a little patience. This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander

Insurance. But since this is one of the most effective ways I say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Thank you for joining us, America. We're glad you're here.

Nicole is in Seattle. Welcome to the Dave Ramsey Show, Nicole. Hi, how are you? Better than I deserve. How can I help? So my husband has $110,000 in student loans between five different loans. The first three are all under about $10,000 each, so we could pay those off in the first year. However, the larger two loans are about $40,000 to $45,000 each, and they all have really high interest rates.

So should we consolidate the two bigger loans while we pay off the smaller ones, or how would you do that? If you can get a lower interest rate. Okay, so then right now, so would you do a shorter term with the low interest rate, even though the payment would still be high? Sure, because you're going to pay them off anyway, right? Yeah, but the first three are all under $10,000. The other two, it's going to take a lot longer to pay them off.

So what's your household income? So he makes about $50,000. I just had a medical emergency kind of thing, so I haven't made any money in two years, but I'm getting out trying to get another job. I think I can get about $30,000 a year. Okay, so you have an $80,000 give or take household income going forward and $90,000, whatever it is. And you've got some $10,000 loans. So it sounds like it's about

$110,000 worth of loans, right? $110,000, yeah. Making $80,000, how fast do you pay off $110,000 worth of loans, right? $110,000, yeah. Yeah, okay. Making $80,000, how fast do you pay off $110,000? Probably three years. I'm thinking that it'll take us about two or four years. Yeah, I'm thinking three. Okay, because I'm just thinking if we can throw everything we have at the first three. Then they're gone. That's $30,000 in one year.

Right. And then two more years of $30,000 in one year. Right. And then two more years of $30,000 is going to get you really close. I'm just worried that we won't be able to pay all the first three off with the minimums of the other two. Oh, yeah, you will. You're still making the exact same progress. It's just a matter of which one goes away first. But, yeah, I mean, you don't have to put it on a three-year note.

Put it on a five. I don't care. Put it on a ten. It doesn't matter because you're going to get to it anyway. Here's the thing. Make sure that the interest rate is a fixed rate if you're going to consolidate. Do not consolidate on a variable rate and make sure that it's a lesser interest rate. There's no benefit to doing it otherwise.

And here's the thing. What is your current rate on those two big ones? One is nine something and the other is ten. So if you saved 2% across the board on those two, that's $1,600 a year. Now $1,600 if you send it to me, I'll take it. Okay? But it doesn't change your life on $110,000. Right.

What changes your life on $110,000 is you living on beans and rice and attacking these things. Uh-huh. So you're the secret sauce to getting these paid off, not the interest rate. Okay. So just taking my whole income, because we've been living without it for two years. Well, your whole income plus some. Yeah. I think you get on a really tight budget on every dollar. But the point is big, hairy principal payments are much more important than the interest rate

because we're only dealing with a three-year period of time here. So if you want to refinance, that's fine. It must be fixed rate. It must be a lesser rate than you are paying now on the two big ones, and then put it on whatever length of time you want to put it on. But keep in mind, that is not the answer. It's not what's going to solve your equation. What's going to solve your equation is what you're talking about,

living on nothing and throwing $30,000 or $40,000 a year at these loans, and then they'll be gone in around three years, and you're going to get there. Good question. Davina is in Jackson, Mississippi. Hi, Davina. How are you? Hello, Dave. Doing just fine.

Good. How can I help? Well, I have done a lot of extensive research in your CDs, in your books, and I just wanted to get some professional words of wisdom here and see if our situation may be a little bit different. Because my husband is going to be 50 this year. I'll be 49. He is self-employed in construction,

and I really don't think he's going to be out there down in those manholes and pouring concrete when he is 70 and 80 years old. So I'm wanting to find out if we should be sticking with the cut-and-dry snowball approach or if maybe we need to be aiming more toward our retirement funding and, of course, you know, keeping our bills current and getting things paid off as we can. But I've got written down right here after looking at the formula for the retirement monthly planning that if we're wanting $50,000 a year, then by looking at the amount of nest egg that we need and multiplying that times the factor for his age of 50, then we would need to be putting aside $1,806.25 per month toward retirement

if we're going to achieve that goal. So that right there is the first thing I'm trying to figure out. And two, as far as our budget is concerned. The deal is this. What's your household income? Well, like I said, he's self-employed, but if we're talking about... What do you guys make a year that's taxable income on average? Okay, you got me on that one.

I'm trying to recall. If I had to guess, I would say that it's going to be about 80 before tax. Okay, that sounds probably right with the other numbers you gave me. How much debt do you have not counting your house? Not counting the house. Let's see. We have got, he owes approximately $8,000 on a trailer. We have got a truck that's financed for $44,600.

We have still got $7,600 on a credit card. And we have got approximately $2,000 in doctor bills. Okay. You need to sell the truck. Yes, I agree. We've been talking about doing that very quickly. Okay. Truck's out of control

it's over half your annual income and tied up and that's what's blocking you and then you do need to stick with the debt snowball and clean this up because your most powerful wealth building tool is your income and right now it's going out the door to other people in the form of debt payments so yeah you need to do your debt snowball stop all investing and you need to do your debt snowball, stop all investing, and you need to do it with great, great, great focused intensity. Lots of overtime, beans and rice, rice and beans, no life. I'm scared about retirement so much that I'm going to live like no one else and get out of debt so later I can live and give like no one else. And you'll be okay.

You're going to get there because I think you've woke up. I think you woke up just in talking to you and listening to you and uh you you're dialing in on this you're you're really doing the research you're thinking about it you've been on chris hogan's website and we're in the riq is what you're telling me there and i i'm i'm proud of you i think you're going to be fine but you're going to have to clean up the mess because the when you don't have any payments but a house payment then investing aggressively is very possible. But it's tough to do with a car payment on a $44,000 pickup.

That's kind of prohibitive to doing all this. And so, yeah, just work your baby steps straight through. You're going to be there faster than you feel emotionally like you're there because once you woke up, you became suddenly impatient which is wonderful that's going to be the motivation that's going to drive you through this process hey thanks for the call christian is with us in lincoln nebraska hi christian how are you hey dave doing good how are you better than i deserve what's up well uh my wife and i got on your plan about, I want to say, two months ago. She had a pretty big medical scare, and it all kind of started because she realized that we were in financial trouble.

And I didn't think we were, but taking a bigger look at it, we were. So I got gazelle and tents, intense paid off everything the only thing left is our two cars i owe about 15 000 on mine and she owes about or we owe about 10 000 on hers um plan is to get that paid off by the end of the year hopefully a lot sooner. Good. My question is, I'm having troubles. I'm a worker. I always have been. And when I saw this, the only way I do things is do it all in. So I got an extra job.

Good. I've been working nights. I've been bartending, waiting tables. It's really good money. The only downside is I don't get off work until 11 midnight. Before I run out of time, what's your question? My question is, is that

ethically right for me to be missing time away from my family? Yes. On a temporary basis, it is. I did. It's not forever. It's for a short period of time. Your wife is having medical issues because of debt. You are going out there

and cleaning up the debt. You're a superhero, man. It'd be unethical for you to not do this. And I don't care who argues with that. They're wrong. One Dental is a company I've been telling my listeners about because I know these guys will save you money at the dentist. One Dental is a dental savings program that allows you to go to one of over 158,000 dental practice locations nationwide

and save on things like cleanings, dentures, root canals, crowns, and even orthodontics. Here's the really cool part. You can join One Dental right now, and you don't have to worry about high deductibles, waiting periods, or preexisting conditions. Just find your highly qualified dentist in the network, make the appointment, and start saving every time you go to the dentist. This is a great cost-saving alternative to expensive dental services and a great alternative to costly dental insurance. It really is that simple.

And unless you want to blow your emergency fund, everyone needs to go to the dentist. Folks, this is a no-brainer. Join today at OneDental.com. That's OneDental.com. That's OneDental.com. Trenton, New Jersey is calling. Joseph and Diane are on the line. My screen says you two are debt-free. Congratulations.

Thanks so much, Dave. Thanks, Dave. How are you? Better than I deserve. Welcome, guys. How much have you paid off? $21,000 in four months. Good for you. And your range of income during that time?

$85,000. Okay, cool. What kind of debt was the $21,000? Credit cards and car loans. And medical bills. Okay. So what woke you up four months ago? You did. Okay. So what woke you up four months ago? You did.

Okay. How did that happen? Well, our church decided to do this little program called Financial Peace. And believe it or not, it was the first time we heard of you. And so we just watched one of the programs for about an hour um kind of got down on our knees and repented and uh said all right we're all in game on clean her up huh you got it yeah how long have you two been married uh go ahead 34 years okay have you ever been debt-free no no wow very cool one of those it's one of those things you think uh that's that's the way it's supposed to be right

you're gonna live in debt until somebody dies and leaves you in a hurry exactly and just nobody would that is rich would die for you, huh? Right, right. So what is the secret to getting out of debt? You knocked it out in 21 months. Or in four months, I'm sorry, 21,000. Yeah, yeah. Budget, stick to the plan, and pray. Will you ever go back in?

No. No. No. No. It's back in? No. No. No. No. It's a freeing experience. No. We cut those babies up. Feels good to be free, doesn't it?

Amen. Amen. Very cool. Who are your biggest cheerleaders? Each other, I think. And our pastor who initiated the program. Actually, as the program was initiated in our church, we were the counselors. Or the coordinators.

Okay, cool. So you got assigned the job by the pastor, huh? Yeah. Very cool. What church is this? Grace Bible Church. Love it. Well, thank you for leading the class.

I appreciate it, even if it was an assignment. It was a good one. I love it. Well, we've got a copy of Chris Hogan's book for you, Everyday Millionaires. That's the next chapter in your story to become everyday millionaires and outrageously generous as you go along. You are on your way. Congratulations, you two. We're proud of you. Thank you.

Thanks. Praise the Lord. Praise the Lord. Joseph and Diane, Trenton, New Jersey, $21,000 paid off in four months, making $85,000. Count it down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free scream. Ready? Three, two, one.

We're debt-free! That's how it's done. Thanks for leading the class, you guys. Well done. Very well done. Well, in some areas of the country, it's getting warm this week. It's gotten warm around Nashville. I know that.

Beautiful day out here today. Actually, an ice storm, I think, up north maybe, but I'm not up there. So, sorry for you guys. I got to tell you, I'm a real estate guy down to the soles of my feet. I grew up in the real estate business. Mom and Daddy were in the business. And I can't help it. Springtime means houses to me. Springtime means real estate. If you're thinking about buying a home, a lot of people

kind of get cabin fever, we used to call it, like you're stuck in the house all winter and finally it gets nice and you can get outside. And what do you do? You go look at houses, right? That's what we did. And if you're thinking about buying a home with the weather warming up, lots of yards are going to have for sale signs in them, and that means you can really find some good deals. You might need an agent who will work for you to make sure you don't get in over your head. A good buyer's agent is a good plan. The local agents our team has vetted in your area,

our endorsed local providers, ELPs for real estate, will help you. They can help you sort through the options, and they see things when you're looking at a house you don't see because they're pros. They do this all the time. And they can help you negotiate the proper bargain. And sometimes you've got multiple offers and things going on in a hot market, and you need somebody to guide you through that because you can really get stung.

It's almost like the old movie scenes at an auction where people get all excited and they're just winking and twitching their nose and everything else, and they keep bidding and bidding and bidding and bidding, and before you know it, you've paid six times what something's worth. And you can get all house fever. You can get all hot and bothered with house fever and pay too much. So you need somebody in your corner. It's that simple.

And the same thing's true when you get ready to sell your house. You need somebody that knows what they're doing need somebody in your corner. It's that simple. And same thing's true when you get ready to sell your house. You need somebody that knows what they're doing right there in your corner. And that's what these endorsed local providers will help you with. Go to DaveRamsey.com slash agents or at the front page of DaveRamsey.com over on the right hand side, you'll see the ELPs and the real estate one is the one you click on, and they'll help you get hooked up and help you do that stuff. Thanks for checking them out. You know, we've got in the whole ELP program and the SmartVestor Pro program, there's almost 6,000 people now that we endorse across the nation that we have vetted.

And that all started because I tried to endorse in the investment world, tried to endorse one company, and they couldn't get their crap together and do the right thing at all the branches. And so I ended up going, I'm not going to go with one company. We're going to endorse individuals regardless of which company they're with. Same true in real estate. Same is true with property and casualty insurance and so on. And that way the customer, the actual listener, you get someone that is a pro in your area.

And I'm more concerned with the individual that's going to be helping you with your house or your investing or whatever it is than I am who they work for. And so that they have the heart of a teacher and they guide you through this. Yes, in every case they pay us an endorsement fee, but in zero cases do we take money from someone blindly that we have not vetted. They have the heart of a teacher. We spend time on them. We check on them. Every complaint is followed up on.

We've got 150 people in this department working in our company that do nothing but check on these people and make sure that they're the right people for taking care of our listeners. And, you know, we've been doing that for 20 years. And it's an amazing thing that this network of people who have the shared values with what we talk about here on the show. You know, they know the baby steps, and they're not going to try to sell you something to violate that. They'll tell you not to buy a house unless you're out of debt, and you have your emergency fund in place plus your down payment. They're not going to tell you to buy a house, you know, when you're broke

because a house is not a blessing then, and that's what you do. So you work that stuff through and it makes all the difference in the world kathy is on facebook and says should i use my mutual funds that i have for a down payment on a house sure you could if they're not in a retirement account um it's it's savings it an investment. And a house is an investment. Nothing wrong with that at all. I'd want to make sure you're debt-free and you have your emergency fund like we were just talking about. But beyond that, you got $100,000 sitting in a mutual fund and you're getting ready to buy a house. Yeah, I'd throw that at the house because I want the house to be debt-free as part of our baby step six process. We want to push you down that road as fast and as quickly as we can

because as soon as you don't have any payments, then building wealth is really, really strong. Benjamin's also on Facebook. Why do you suggest putting an emergency fund into a money market? Is it to stay ahead of inflation? No, it won't stay ahead of inflation. A money market account makes 1.5%. A savings account makes 0.8%.

Neither one of them are making anything. They both suck. It's not the purpose of making money for the emergency fund. The emergency fund is not an investment. It's insurance. Insurance costs you money. Investments make you money. And so your emergency fund, it's just sitting, I mean,

the money market is just a glorified savings account. That's all it is. And that's where I keep mine. But certainly your money market is not going to cause you to build wealth. It's defense. It's not offense. It's protecting you so you don't have to cash out your 401K if your transmission goes out. That's what your emergency fund is for.

It's a rainy day fund. It's your umbrella for when it rains. That's where the money is made within. This is the Dave Ramsey Show. Romans 5.5 is our scripture of the day, and hope does not put us to shame because God's love has been poured out into our hearts through the Holy Spirit who has been given to us. Johnny Majors, former University of Tennessee coach, said, Live in your hopes and not in your fears. Good.

Adrian is in Cleveland, Ohio. Welcome to the Dave Ramsey Show, Adrian. Hi, Dave. It's a pleasure to talk to you today. You too. What's up? So my brother-in-law lives with my wife and I. We have become the caregivers for him because my in-laws passed away.

And I was calling because I wanted to know how to go about getting term life insurance for him. We reached out to Zander, and unfortunately, they were unable to provide any coverage for him for such a policy as that. So I just was calling for some advice. Your brother-in-law has special needs? Yes, sir. I'm sorry I forgot to mention he has Down syndrome. Oh, okay. Yes, sir. Okay.

And he needs life insurance on him for when he passes away. Why? Because we don't have any coverage on him. Um, he, he's never really had that. So why does he need coverage? Just in case for funeral, like funeral expenses and things like that. Okay. All right.

I would not buy life insurance for that small amount of money. That's 10,000. That's $10,000. I would just say part of your wealth building that you do and your emergency fund would cover that for when he passes. It's just something you're going to cover. You're feeding him and giving him a place to live now. You've already got expenses associated with caring caring for him which is wonderful that you all are doing that but when he passes you're just going to pay for a funeral um he's not creating an

income that the family is dependent upon that needs to be replaced that's what you would use life insurance for um and so it's just enough to cover burial is all we're talking about. And so what's your household income? Our household income is $76,000. Okay. And where are you guys in the baby steps? We're on baby step two right now. Good. Okay.

All right. So when you get to baby step three and you're doing the three to six months of expenses, it needs to be six months, not three. Absolutely. And then as you go along, you may earmark some mutual funds in your mind that take care of his final expenses in the event something happens. But it's a pretty unusual funeral today that runs over $10,000. Exactly.

And so you guys can handle that. You can't handle it today, but you can handle that within a year or so, two years or so, you're going to be in a position to handle that. How old is your brother-in-law? He's 34 years old. Okay. How's his health doing? He's actually doing well.

Good. Yeah, he's doing really good. Good. Well, I appreciate you guys taking care of him. I know it's an act of love on your part, and what you're doing is awesome. And I'm sure he's a joy to be around as well, so that's good news. Oh, yeah, he absolutely is. And so, yeah, just make that part of your cash planning a little heavier emergency fund at the start. Later on, when you've got some other investments and things and there's just some money laying around,

you would just use some of that money. You're self-insuring through this by saving. In other words, rather than trying to buy that. Because I'm not sure how insurable he is, but even if he is, it's such a small policy, I would not buy one. If you wanted to get something through some kind of guaranteed issue or something, it's going to be a little bit expensive for what it is. Until you have $10,000 saved, you could do that. But I wouldn't even bother.

I'd just quickly have an extra $10,000 laying around, beefing up your emergency fund, in other words. Amanda's in Jackson, Miss. Hey, Amanda, welcome to the Dave Ramsey Show. Hi. Hey, what's up? I've been needing some advice on my house. It's one of my many stressful situations I'm going through.

But our house right now is currently at $67,000, and it has some major issues with the foundation. And it's very small for us. I've got two teenagers, and I just got custody of my three nephews and nieces. And it's just really small for us. I was just wanting to know, I mean, should we fix the foundation and stay, add on, or sell it? I mean, we do have credit cards that we're trying to, we're in babysit to. We just paid off three.

So you have five kids you're taking care of now? Yes. And what's your household income? At least between $50,000 and $60,000 a year. Okay. And you're married? Yes. Okay. And you're married? Yes. Okay.

All right. And this house that you're living in is worth what? I want to say we bought it at $85,000, so it's about $85,000, $90,000. It's a small house. Gotcha. Okay. All right. And how much debt do you guys have, not counting the house?

Not counting the house, we have right around $15,000, $20,000 in credit cards, and we do have a lease on a car. Okay. And that's everything. We need to get all that cleaned up as fast as we possibly can. And I don't care if you stay there for a little while. I don't think you're going to stay there long term, and I don't think you're going to add on to it.

I think you're going to move. Three years from now, I don't think you're going to stay there long term, and I don't think you're going to add on to it. I think you're going to move. Three years from now, I think you have sold it and you have moved. But if you stay there for a year while you get rid of the stupid car lease and you get these stupid credit cards paid off and you chop them up and you start saving some money and get your finances in balance before you move, that would probably be wise. Yeah. Yeah.

And so we've been there eight years, and it's just been a money pit right now anyway. Well, I'm not saying stay. I'm just saying, I'm not saying stay. I'm saying identify when you're going to be out of debt and have your emergency fund so you can afford to move and then make the idea to sell it. But today, you don't have any money to move with. Today, you're broke so let's lay out a game plan and an exit strategy from the house and say okay we're not adding on

to it we might fix up the foundation we might not depend on what we need to do to sell it when we get ready to sell it um but the first thing you do is you clean up the credit card debt and get rid of the car lease. Then you build your emergency fund. Then you start talking about putting the house on the market and making a move and getting into something that's affordable but that will fit this new larger family that you have. Mike's in New York. Hi, Mike. Welcome to the Dave Ramsey Show.

Dave, it's an absolute pleasure to talk to you. You too, sir. How can I help? Yeah, so I had a quick question. It's a question that I haven't heard anyone bring up. I was wondering how you advice on it. It's about vintage watches as an investment. A little bit of background.

Household income is about $110. I'm married. The wife and I, we max out our 401ks at work, and we also have outside IRAs that we just opened. And I was wondering if it makes sense when a baby says 3B as well, we're saving for a house, and we're probably going to be shooting to save $30,000 a year for that, save $30,000 a year and then buy a home.

But I was wondering if it makes at all sense to spend about $5,000 to $8,000 on a vintage Rolex. I work in the high-end retail, and we do sell some vintage watches. And in the past five years, these certain sports watches have been doubling, tripling in value. Yeah, I've seen it. And I was wondering if I could do this now, or should I wait until baby steps? It's a hobby, though. It's not a real investment. Correct.

You know, I own a couple of hundred firearms, and the vast majority of them have gone up substantially in value over what I paid for them during the time I bought them. Okay? But that's not my investment strategy. It's a hobby, because I'm a gun enthusiast. Okay? It's not my investment strategy. It's a hobby because I'm a gun enthusiast, okay? I've got a friend that has 20,000 bottles of wine, but it's not his investment strategy. And the wine is worth a whole lot more than he paid for it. So if you buy a watch, $5,000, and you make $100,000 a year after you're at Baby Step 3B, that's okay.

But don't buy 10 of them. No, I think it's just a case of guy-itis, too. Yeah, it's a little bit of, it's a collectible thing. It's a collections thing. You can do the same thing with a collectible car, but don't make that your investment strategy. And so, you know, treat it like

it's a consumption item that you can afford to do, and if it happens to go up in value, well, woo-hoo, it was fun. I like watches, I like guns, I like whatever. Woo-hoo, it was fun. I like watches. I like guns. I like whatever. Woo-hoo, it went up. That puts this hour of the Dave Ramsey Show in the books. We'll 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 Prince of Peace, Christ Jesus. I'm your executive producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.