The Ramsey Show - App - Buying a House Isn't Always a Good Idea (Hour 3)

Episode Date: January 4, 2019

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Cody is with us in Beaumont, Texas. Hey, Cody, how are you? Doing all right. How about yourself?

Better than I deserve. What's up? Okay, so I'm 22 years old. I don't have any debt other than our normal bills, and I know we're not supposed to, but we're renting. My income kind of varies. I make usually around $3,000 a month. So I'm looking at about $36,000 a year.

I just had a seven-month-old. We paid for all the medical bills out of pocket before he was even here out of checks or out of just normal income. I'm getting married in April. I'm just trying to figure out what the next best plan for me is to do. Great. Well, you're doing really, really well with your finances. Very well done. You said we're not supposed to.

You mean you're not supposed to have debt or you're not supposed to have debt or you're not supposed to be renting? I'm not supposed to be renting. I know my dad watches your show. I'm actually a first-time listener. My dad watches your show, and he's told me from watching you that, you know, you're not really supposed to rent. You're supposed to buy if you can because basically you're just throwing money away on renting because you're not going to get anything out of the investment, no return.

Well, that would be true over the long haul. But on the short term, short term no you're 22 you've done a great you said 20 or 22 22 you're 22 you've done a great job you're debt free you know everything's going good we're getting married everything's happening here right life is good you got no troubles so um the first thing we teach a process of building your wealth or building handling your money called the baby steps. Baby step one is to save $1,000 cash as a starter beginner emergency fund. You've done that. Yeah, we've got like three or four. Okay.

Two is to be debt-free, everything but your house. And you don't own a house, and you're debt-free. So you've done baby step two. Baby step three is to raise that $1,000 account up to three to six months of expenses as a good rainy day fund. That's your next goal. Okay. Okay, so let's take the $3,000 you have saved and start adding to it by living on a written budget every month, giving every dollar a name, which, by the way, is really good pre-marriage counseling for you and your fiancé to do that together.

Okay? And certainly after you're married, to do it together for the rest of your lives, where you spend the money on paper. You have been very responsible and pretty frugal to be able to pull off what you've done so far. So you've already got the right spirit to do this. All we're going to do is kind of polish it a little bit by living on a detailed plan. When you start making every dollar on paper behave and the two of you are agreeing about that you're agreeing not only about your money then you're agreeing about your goals right because you're making those we're

agreeing that we're not going to spend money over here because we're saving for our rainy day fund and then the next thing i want you to save for after the rainy day fund is to start thinking about saving for a down payment on a house and so you're not buying a house until maybe this time next year or even later and that's okay that's okay that's okay there's no panic you just don't want to wake up at 68 years old and have been a renter your whole life because you didn't have a plan you know exactly but but if that was another question i had was when you go to buy a house, how do you know what you really want your spending limit to be on a house?

You don't want the payment to be more than one-fourth of your take-home pay on a 15-year fixed-rate mortgage. Okay, 15-year fixed rate, no more than a quarter of your take-home on a month. Exactly. If you were to go get a 30 year adjustable rate they will qualify you and loan loan you money for twice as much house as i'm talking about okay so i'm putting you in about half the house that the mortgage company if they maxed you out on the least payment possible, like most people do, stupid people, right?

And they go in debt to their eyeballs, and they can't breathe then. The house owns them. They don't own the house. And the reason I'm wanting you to do that is I want to leave wiggle room in your budget so you can start a college fund for your baby. You can start retirement. And you can start talking about getting this house paid off then a lot sooner than 15 years. And so you're tracking towards every bit of that, Cody. You're doing good stuff here.

But no rush, nothing panic, nothing on fire about buying the house. Buy a house, but do it in the right order so that the house is a blessing and not a curse. When you buy a house and you're broke, you have no money and a bunch of debt, which is what most people do. The house is not a blessing. Buying real estate is not always a good idea. And so you get yourself on a good solid footing where you have that emergency fund in place of three to six months of expenses, which, you know, is probably 10,000 bucks for you. Okay. And then above that, you save a good good strong down payment on the house over the next year and so you got some a lot of savings to do the next year uh including getting married you know so you know or more it may take you a little longer in a year to save up your down payment and

your emergency fund but you move in the house that way and you keep that payment down to a fourth of your take-home pay on that 15 year fixed conservative like that you're the house will be a blessing you'll enjoy it and it won't be this burden hanging around your neck choking you to of your take-home pay on that 15-year fixed conservative like that, the house will be a blessing. You'll enjoy it, and it won't be this burden hanging around your neck, choking you to death all the time. Hey, man, thanks for the call. Hang on. I'm going to give you a copy of the book, The Total Money Makeover,

which explains this whole process in detail, because you are definitely on fire. You're ready, and this will walk you through exactly what to do. Trina is with us in Milwaukee. Hey, Trina. Welcome to the Dave Ramsey Show. Hi, Dave. How are you today?

Better than I deserve. What's up? Well, I have a question. We are trying to decide if we should pay our house off. It is the only debt we have. Good. We have about a million in our 401K. Wow.

I am 58, and my husband is 62. Okay. And so we're saving about 30% of our income a year. Wow. Way am 58, and my husband is 62. Okay. And so we're saving about 30% of our income a year. Wow. Way to go, millionaire. Look at you. Ding, ding. So how much do you owe on your house?

$127. I'd pay it off by the end of the day. Okay. That's what we were thinking. We've done all your steps, and we have no debt at all. All of our cars are paid off. We drive old cars, like you say. Yeah.

Well, most millionaires do. We're going to live now like no one else. We can live like no one else later. Yeah, exactly. What's this house worth? Last time we had to praise, it's worth $320. Okay. So you're millionaires and then some.

Way to go. Well done. Well done. Now, I wouldn't take it out of your 401k. Let's take it out of his, because yours is still subject to penalty. Okay. Because you go. Well done. Well done. Now, I wouldn't take it out of your 401k. Let's take it out of his because yours is still subject to penalty. Okay. Because you're not 59 1⁄2.

Okay. So let's use it. My question is not to take it out and pay it off. My question is to, like, take out, stop saving 30%. Oh, do you have any money that is not in the 401K? We have about $75,000 in a traditional IRA, and then we have about $27,000 in a Roth. Do you have any money that is not in retirement savings? Yes, we have about $30,000 and then, well, about $33,000. Okay. I would pull enough out of his 401Ks or Roths to pay off your house today. Okay. I would pull enough out of his 401Ks or Roths to pay off your house today.

Okay. Because you're going to pay taxes on it, or if it's not Roth, you won't pay any taxes on it. But you've got plenty of money. You've done a great job. Let's knock the house out and be done. You might have a little taxes on that. Don't pay penalties by taking it out of yours. Let's take it out of his.

But I would be debt-free this week. I really would. Completely. House and everything. Well done! Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry.

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Teaching you to live on less than you make. A concept Congress can't grasp. Thanks for hanging out with us here. Matt's with us in Fayetteville, North Carolina. Hi, Matt. How are you? Well, I hope you're sitting down because I'm doing so good you can't even stand me. Well, we'll be the judge of that. What's up in your world? Well, about 20 years old now, whenever I was a kid, I actually won from a little competition,

drawing competition, that I won a little, just a little small $100 savings bond. About, I don't know, I'm guessing maybe two years after that, my house was broken into and the safe, or the filing cabinet that it was in, the little certificate, was stolen. I'm just curious if there's any way to claim it, find it, or cash it out in some fashion or form without having any information on it. Yeah, there's a website on the.gov, the federal website, that I can't remember where it's housed.

I would just Google savings bonds website, and it'll probably pop up. But you don't have the number on the certificate, so I don't know how you're going to be able to trace it. Because they're not posted in a name, I don't think. Okay. I don't know. Jump on there and fish around, though, just for the fun of it. It won't hurt anything. But there's a.gov website for recovery on savings bonds. You don't have to literally have the certificate.

You might have to have the number off of it, though. I'm not sure exactly how that works. I haven't looked at it in probably 10 years or so, but it's still there. I had some people look at it the other day. So you can get savings bonds replaced or reprinted or whatever else if they're lost. You can track them, everything else on that site. It's a pretty comprehensive site. They do a good job with it. Zach is on the line in Morgantown, West Virginia. Hey, Zach, welcome to the Dave Ramsey Show. Hi, Dave. How are you doing? Better than I deserve.

What's up? Hey, so I have been working your plan with my fiance for a little over a year now. We've made quite a lot of progress towards our outrageous outstanding debts. We have about a quarter million dollars between the both of us, most of which is student loans, the vast majority of it. How much have you paid off? We've actually, in the last about 13 months, we've paid off close to $30,000. Very good. And so who's the doctor or the lawyer? She is the physician's assistant.

Okay. And I am in retail. So my student loan debts from two years of college were very minimal and they have been since paid off but her pa her pa bill still laying there yeah okay oh yeah so but what's your household income going to be we we currently make about 180 okay so our shovel is a pretty decent size so i'm thankful for that are you um are you working on this together in some way or just walking beside each other while you're engaged or because if if a couple were married in making 180 and they only paid off 30 in 13

months i wouldn't call that good. Well, yeah, I agree with you. It is a far cry from where we need to be. And we are, especially more in the last few months, we are 100% on board together. Okay. So we share a bank account now, and all of our money is budgeted out, written out on paper now. Um, so, uh, you know, the $30,000, a lot of that was making minimum payments. Um, so we have, we have, uh, kicked it into high gear, so to speak. We do want to get married. Uh, we've been engaged for two years. So, yeah, I was wondering, uh, what you would recommend doing as far as the debt snowball goes.

We have such a lot of ground to cover yet. Is it okay to put something like that on hold? So what would you spend on a wedding? We went over it all, and we want to spend about $15,000. Okay. That's like one month's income. Yeah. That's exactly what month's income. Yeah. That's exactly what it is.

I'm not counting taxes. You make $180,000 a year, that's $15,000 a month. Yep. Yeah, we see after taxes, we do see a little bit less than that. Obviously, yeah. But I guess my point is, yeah, two months. Save everything. You stop for two months and save everything you can and get married on whatever that is.

But you ought to be able to get close to 15 on that. And then let's roll up our sleeves and stay on that kind of a course. Because, you know, out of 180, if you can't put 100 towards your dad, I mean, you've got to adjust something. Yeah, and it's, I mean, a lot of our month-to-month expenses is paying on these loans um and where we live and believe it or not in west virginia is quite expensive to live um you make 180 you live in morgantown pay a hundred a year off and be debt free in two and a half years and yes stop your debt snowball temporarily for a little bit and and knock the wedding out that's what i would do yeah but look dude really you you make there's no excuses allowed here you cannot spend money like you make it you

know you've got a disaster on your hands here So you guys got to act like the building's burning down. But, yeah, just for real quick, just tap the brakes, save up the money, get married, get married. Then let's tear into this whole hog. But you don't need to be buying anything or traveling or going out to eat or buying anything. You have $250,000 in mess to clean up. So you really got to focus on that. No excuses. Bill's with us in Dayton, Ohio.

Hey, Bill, how are you? Hi, Dave. Thanks for taking my call. My mom, Nancy, is a big fan of yours. I appreciate all that you do. Thank you. I had a question about buying a house. So I've been pretty blessed financially and am debt-free currently.

I kind of have had a dream of buying my first house just with cash. I'm 28 years old with no wife, no kids yet, a pretty steady girlfriend. I've got $152,000 in liquid assets and I make about $88,000 a year. I'm currently looking at a home that I'm pretty interested in that's $155,000 is the list price. I think I could negotiate it down to about $140,000. Do I have enough money to pay cash, or do I need to finance some of that? Why would you finance? You have $30,000 left in your emergency fund, right? Well, I have $152,000 that I have in the bank right now. Oh, I see.

I think I can negotiate down to $140,000 on this house. So my difference would be $12,000 is what I'd have left. I guess I'm just a little bit worried about putting all the money instantly in one place if an emergency were to come up or how much exactly I should leave myself. Well, we would tell you to not do it and destroy your emergency fund. You're not destroying your emergency fund, but you're using some of it, because I think your emergency fund is probably larger than $12,000. Would you agree, three to six months of expenses?

I'd say it's probably pretty close to $12,000. I do live pretty frugally, but, yeah. Well, if you said $12,000 is your emergency fund, as long as you leave that and put everything else into the house and you pay cash for the house, I'm good with that. Okay. Sounds good. Thank you.

Next thing is this. Steady girlfriend. Yes. Yeah. She's in Chicago right now. I'm in Ohio, so we're working on figuring that out first. Okay. Well, this is not financial.

This is an old man talking. Whatever house you buy when you marry her, it will probably be the wrong one. Well, she has toured the house with me, so she actually does approve of this house. Okay. Yeah, it still could turn on you. But you may end up, you need to be prepared that you may end up, this house may not be a long-term thing. But you're paying cash for it, so you really can't mess it up. Get a good buy on it and, you know, make them a cash offer and we'll close it by Friday.

That's pretty appealing, even in a hot real estate market. And I would go from there. But yeah, as long as you can leave your emergency fund in place after you purchase whatever you purchase in cash, I'm pretty much there. 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 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. Zach and Amy are with us in Columbus, Ohio. Hey, guys, how are you?

Hey, Dave, good. How are you? Hi. Better than I deserve. Welcome. So you're here to do your debt-? Hey, Dave, good. How are you? Hi. Better than I deserve. Welcome. So you're here to do your debt-free screen, my screen says. That's right. Awesomeness. How much have you paid off?

$144,000. Way to go. How long did this take? 49 months. Wow. And your range of income during that time? We started at $102,000, and now it's $118,000. Good. What do you guys do for a living?

I'm a physical therapist. And I'm a musician and arts education director for a nonprofit. Very cool. So what kind of debt was the $144,000? The majority of it was undergrad and graduate school loans, a car, and then just a small credit card. Okay. So how long have you two been married? A year and a half.

Two years, yeah. Oh, wow. So you were working on this prior to marriage, both of you. Right, right. Yeah, so what happened is we got together, and I had a mentor that when I was in college had turned me on to you and the show, and I knew that it was something that as soon as I started generating income, I wanted to do. And then I got with Amy and we knew we wanted to start a life together. And we had seen enough marriages fail because of money and knew that we didn't want ours to. So we got on a budget first and foremost and then started down the baby steps separately.

And then when we got engaged, we started looking at what would happen if we combined our debt snowball and then slowly got more serious from there and tackled it. Wow. Very cool. Good for you guys. And then you get married and really lean in and push it through, huh? Right. Yeah.

Very good. So what do you tell people the key to getting out of debt is? You paid off $144,000. That's impressive. Yeah. I'd say the biggest thing is, especially for people our age in their late 20s, mid-20s, is get a budget. Just have it on paper. You know, we have a lot of friends that make steady and then not steady income, and it doesn't matter.

It has to be on paper for you to get started. And then only from there can you start talking about the debt and how to make a plan for the future. Very cool. What was the hardest part for you, Amy? Well, there were two opportunities that came up once we got together and moved in together to upgrade our space to bigger apartments. And each time we really wanted to upgrade the space, but deep down we knew, you know, one, we really don't need it,

and financially it was going to set us back on our goals. So we decided to turn both apartments down and stick with where we currently are and still are, and it just made us closer making the decision together. Wow. Very cool. Good for you guys. Excellent, excellent, excellent job. Very good. How's it feel? Oh man, it feels great. And it's liberating because now we both became aunt and uncle last year to my brother's child and he wasn't in a position yet with his money. So we were able to kind of use this as an example and help him out and get him on a budget and to be able to spread the word.

Amy's brother just started working out of a graduate school with loans, too. And so to have our story to kind of use for our family and friends has been really great. Yeah, there's nothing like a great story to inspire other people to move. And that's one of the reasons we do these debt-free screams, because of that exact thing. Well, way to go, you guys. I'm proud of you. Congratulations. Thank you. Well thank you well done well done we're going to send you a copy of chris hogan's book signed by him retire inspired number one

bestseller that's the next chapter in your story i want you to be millionaires now and you're well on your way i mean you make really good money and you've learned how to control it at a very young age and boom here we go you can bust bust this thing, man. You got this. You got this. All right, Zach and Amy, Columbus, Ohio, $144,000 paid off in 49 months, making $102,000 to $118,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt free! Way to go, you two. Very, very well done. Excellent job. Our question of the day comes from Blinds.com. It's time for brand new custom blinds from Blinds.com. Brand new custom blinds from Blinds.com are the easiest and most affordable way to give your entire home a facelift. With blinds.com, you get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Use the magic word, the promo code, Ramsey, and you get the best possible deal. Blinds.com. Today's question comes from Jan in Boston. I took a new job four months ago that is not a good fit, but I could stick it out. However, I have the opportunity to move to another job that will double my income. I'm not a job hopper, and I was at my previous two jobs for 10 and 12 years. How long should I try to stick it out, the new job, from a moral standpoint? 20 seconds. Because that's how long they would keep you in the same scenario.

They would put you on the street so fast your little head would be swimming. And so you're not a job hopper, and you don't have to worry about that. And, you know, you went in there, it's not a good fit. It's not a job hopper, and you don't have to worry about that. And, you know, you went in there. It's not a good fit. It's not a good fit. When we hire people here, we have a 90-day probation where we're on probation for 90 days and they're on probation for 90 days and see if it's a fit. And sometimes they come in and go, you know, you people are nuts.

I don't want to work here. And they leave during the 90 days because we're kind of weird. I mean, we do all kinds of weird stuff around here. And it makes some people just really uncomfortable. It's like a spiritual gift. And so, you know, that's all right. And it's cool. If you don't fit, you don't fit.

You know, it's a bad fit. And sometimes we hire people and we go, you know, it doesn't matter how much we work with you. You ain't the sharpest tool in the shed. You're not going to make it. And you're not going to cut it here. And so we set you free in Jesus' name during that probation period. But it's not mean. It's just it didn't fit.

It's a job. It's not entrance into heaven. There's more than one ways to make a living so um you know hopefully your new position that doubles your income uh will be a good fit and make sure that the people and the value systems of the organization and the way they think and talk and act and that you're going to enjoy being there culturally and that kind of a thing. You should do that any time you're taking any job. But, you know, I've had folks over the 25 years that I've run this organization. We've got 600 folks here. I've had people that stayed four months, and I said, it's not a fit, and they left.

They stayed 90 days and said, it's not a fit, and they left. And sometimes things change in people's lives, and it's no longer a fit. And so, you know, you want to – fit's a really good word when you start talking about culture and the way an organization functions, and you do want to do that. You want to have that. So I'd be out of there. I'd take the other one and, you know, be classy, give a two-week notice, and don't say a bunch of nasty stuff to the people you're leaving because it's not going to change anything they do anyway.

Just be kind and tip your hat and say, gosh, I'm sorry. I thought it was one thing, and it wasn't, and I goofed up, and it's my bad. And pack your desk. That's what I would do if I were in your shoes. And I don't think that's mean at all, and I don't think it's immoral at all, and you're not a job hopper. If you do that every four months for the next two years, then yeah, you're a job hopper and you're the problem then. But one time you screwed up and picked the wrong place out of, you know, the last 10 and 12 year job stints.

No, you're not a job hopper. I don't know what happened that you got in something that was a bad fit. And I would probably, if I were you, I'd want to kind of look at myself and go, how did I allow that to happen to me? So it doesn't happen again, but I don't think you have a moral obligation to stay in something that's a bad fit. No, that's not, especially when you have a better opportunity sitting right there in front of you. Easy enough. That's how this stuff works. Hey, thank you for writing in and giving us our question of the day for the Blinds.com folks.

And they're good people, by the way. You know, that guy started that business at Blinds.com thing in his garage. It's like a hundred-something million dollar business. I mean, they are amazing. They're the number one seller of blinds on the internet. And they're good people. We've endorsed them for many years.

I'm proud to. Check them out for real. Blinds.com. This is the Dave Ramsey Show. Thank you. Our scripture of the day, John 15, 19. If you were of the world, the world would love you as its own. But because you are not of the world, but I chose you out of the world, therefore the world hates you. Jeff Bezos said, I believe you have to be willing to be misunderstood if you're going to innovate.

If everybody likes you, you're not doing anything. You really are not doing anything it's you really are not doing anything and then eventually someone will like not like you just for not doing anything oh dennis is with us in wisconsin hi dennis how are you better than i deserve your phone is awful can to put it off a speaker where you can speak directly into it? Okay, yeah, is that better? Yes, sir. Okay, first of all, I want to thank you for taking my call. Sure. I've got a question. I've got a mortgage on a house that I bought for my stepdaughter about five years ago, and I want to turn the house over into her name. I went to the bank last week and we're going to try to get a loan in her name and sell it to her and her credit score was down and it was probably about 100 points I believe and they said well we could wait for a few months and try again

but they said there's no problem you know as soon as the credit score gets up. And the bank did give me a couple sheets of paper I looked at. It's called creditmatterstreatsheets.com. But I did call that person, and they want a fee like around $300, and they're going to send it to the credit companies, I guess, or whatever. And they figure that the credit scores could get up probably within four or five months. And I guess, I don't know if that's advisable or not. If it don't get in four months, then they'll charge you another couple hundred dollars

and do it for another month or so. So I talked to the bank, and the bank said I would just wait. And I was just wondering if you knew of any way that she could get her credit score up, you know, more quickly. Well, I think the question you've got to find out and pull a copy of her credit bureau to determine this is why is her score down? Is it down because she's paying late well she's got a few credit cards she got a student loan is she paying late yeah uh

that's why it's down i don't i don't think she is right now no she wasn't why did it drop 100 points there's a you know there's really there are only one unless she's been closing accounts and has paid them off and has closed a bunch of accounts, her credit score would not drop 100 points unless she's in default on something or is paying late. Well, her credit score was always low to start with. I don't know how high it got, but it was low.

She even took out another credit card. She said was low. She even took out another credit card. She said somebody told her if you took out another credit card and kept peeing on it, that your score would go up. I don't know. I've never done anything with credit scores. A credit score is based on your interaction with debt. So the only way to have a high credit score is be borrowing money and paying it back, borrowing money and paying it back, borrowing money and paying it back.

So it's basically how much you play kissy face with the bank is what makes your credit score go up. And so, yeah, taking out a credit card and paying it on time, as long as you don't have too much other debt, generally would cause your score to go up. It's a bad way to live your life, though, because you don't want a credit score. And I love debt score is what it is. And so the way to live your life is not to maintain your credit score. In this case, you're trying to get it up. You've got two options. You've either got to get the score up to get the loan, or you've got to make the score completely disappear to get the loan.

And the only way to do that is for her to be 100% debt-free, everything paid off for about six months. And with zero credit score, she can get a manually underwritten loan from people that know how to do a mortgage. Now, not all mortgage companies know how to do a mortgage unless they use the FICO score. So like Churchill Mortgage that we recommend can do a manually underwritten mortgage for you, and it doesn't cost you extra or anything but um but you have to have every she'd have to be a hundred percent debt free

for six months with all the accounts closed no payments of any kind otherwise that score is going to keep ticking along along the cellar down there so my guess is you need to pull the copy of the credit bureau report and she's got an old bad debt out there lingering, an old medical bill she hadn't paid that she forgot about or didn't know about, and that's dragging it down. And she probably is not paying her payments on time, Dennis. I think she's got some late pays in there. And let's get her on a really, really tight budget

and pay everything 10 days early for the next six months and get any negative things that are on there, any defaults that are on there, anything like that cleaned up, on a really, really tight budget and pay everything 10 days early for the next six months and get any negative things that are on there, any defaults that are on there, anything like that cleaned up, anything that's on there that's inaccurate, dispute it, and you can get it removed. And if you'll do those three things, be current 10 days early for six months, get anything negative off of there that's default anything that's inaccurate completely removed her score will probably bump right on up and no i wouldn't pay somebody to artificially raise your score

and then as soon as you get this done let's get out of the credit score business let's get in the business of getting out of debt because a credit score just means you're paying the bank interest to have this number and the number doesn't do anything except allow you to borrow more money. And, you know, staying in debt your whole life is a really dumb plan. So as a long-term plan, let's get out of the FICO business. And Andreas is with us in Sacramento. How are you? Good.

How are you doing, Dave? Better than I deserve. What's up? So basically I have a question. I've been with the company for about two years. I'm all about trying to save up, and I'm trying to get my wife on the board of savings. I just accidentally ran into her on YouTube, and my company just, tomorrow is the last day of making a decision, should I get a 401k? They do match up to 5%. But I just realized I'm having a third kid just

and our budget's already tied. We purchased a house and we have about a couple credit cards to pay off because we started remodeling slowly. So I'm kind of trying to make a decision. Should I get a 401k or just pay everything off and maybe later on open a 401k. You need to get to work on a plan to get yourself out of debt and have an emergency fund in place before you start the 401k. And I want you to do that really fast because I don't want you to miss this 401k for long. That match is wonderful. It's a great way for you to build wealth, but right now you're right.

Things are tight. You don't have an emergency fund. Your gut instinct is exactly correct because you don't have any money, and you feel the pinch with that baby coming, and so, you know, that's... Well, I mean, yeah, I do have about $30,000 saved up. How much is on the credit cards? No, no, I have about $30,000 in my savings saved up that I don't touch. Yeah, how much is on your credit cards? About $7,000.

Pay them off today. Okay. And cut them up and never use them again. Okay. Now, then you've got an emergency fund, and when the baby comes and everything, you know, throw money in that emergency fund for the next six months. You'll have another chance to get in the 401K. They'll let you in every six months or once a quarter or once a year

or whatever their entrance policy is. But if you have to wait a year, wait a year. But let's build that emergency fund up until the baby comes and be 100% debt-free except your home. Do you have any other debt, car loan, student loan, anything? Just house. That's it. That's it that's it okay good good well you're that's going to put you in good shape then quit using the stupid credit cards they're not a

blessing they got you in a pinch pay them off cut them up now you got 23 000 now throw money on that account until baby comes after baby comes then jump in your 401k does that feel solid to you yeah so 401k isk is a good idea. It's a wonderful thing. I mean, I've been putting it off. It's a wonderful way to build wealth. As a matter of fact, it's the primary way that people become millionaires, is their first million usually comes in their 401k investing.

And so you do want to start it, but I want to get you stabilized. I want to get the foundation laid at your house before we stand the walls up. The 401k are the walls and the roof, right? That's where the wealth is, but your foundation is debt-free except the house and that emergency fund of three to six months of expenses in place, and that'll set you up to win. Congratulations with the baby on the way, brother. That's awesome, man. Proud for you. We appreciate you being a new listener or viewer or whatever you are there on YouTube. Thanks for hanging out with us.

Well, that about puts this particular 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 Prince of Peace, Christ Jesus.

Hey guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live.

Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern. Enjoy.