The Ramsey Show - App - Chop 'em Up: No more Credit Cards! (Hour 1)

Episode Date: January 7, 2019

The show about you

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. Well, Happy New Year, America. It's good to be back on the microphone. We've been vacationing around the holidays here and excited to be back with you guys today. Our organization is quite a buzz today. All 806 of us, we are running around in circles like crazy over here because today is book launch day for Chris Hogan's new book, Every Day Millionaires. That's right.

How ordinary people built extraordinary wealth and how you can too. If you haven't heard the story, our Ramsey Solutions and Chris Hogan, he's one of our Ramsey personalities, came together. We hired an outside research firm, and we completed the largest study of millionaires ever done in North America, over 10,000 of them. About half of them were people who knew of me and knew of this show and knew of the things we teach. About half of them never heard of them. About half of them were people who knew of me and knew of this show and knew of the things we teach. About half of them never heard of me. And oddly enough, the statistical differences in those two groups was almost zero. So we thought there might be some differences, but there weren't. Basically, the people that knew me were doing the same stuff that the people didn't know me were

doing to become millionaires. Because it is now believed in America that you can't get ahead by some of you, that you're stuck, and the only way to become wealthy is to inherit it. And there are people that say that every single day. And, well, the largest study ever done, airtight research of millionaires, says that you're wrong. You're wrong. You're wrong. You're wrong. 79% of millionaires that we studied received zero inheritance.

5% received less than $100,000. And most of the people that did receive an inheritance beyond that received it after they were already millionaires. So at least 84%, somewhere probably closer to 90% of millionaires did not become millionaires because of inherited money. That is simply a lie. We have the largest study ever done with airtight research. It's simply a lie.

Well, you have to be people of privilege. No. Every color, every background, every sex, every region had about the same incidence of millionaires. About the same. Not exactly, but about the same. Well, you have to go to a prestigious school. That's how you become successful. Not according to this study.

If you line up 10 millionaires, 7 of them went to public colleges, state colleges. One of them went to a community college, one of them didn't go to college, and one of them went to a prestigious school. So the data says a prestigious school does not cause you to be successful. It must be other things. Financially successful, anyway. if you want to be a millionaire. A millionaire is someone with a million-dollar net worth. And so Ivy League schools is not it. Inheriting it is not it.

So what is it? 80% of the millionaires, see, statistics are all 80 and 90% numbers. You don't find statistical analysis in research that is like that. Most of the time it's 57% and we call it, well, over half, you know. This is 80 freaking percent of these millionaires use their 401k. And they paid off their home in an average of 10.2 years. And so we find someone with a million-two net worth, with a $500,000 paid-for house and $700,000 in their 401k,

and they're a millionaire. How'd they do that? They invested over time. Well, stock market rates of return have made them rich. You can say what you want about the stock market. You can say what you want to say about mutual funds. You can say what you want to say about the fees and the 401ks. And you can go on and on and on and on and on about your freaking theories. But your theories are mythology.

In actual fact, the people that become millionaires, the first stage of wealth, the first million to $5 million of net worth comes from investing in their 401k and good growth stock mutual funds over 15 to 20 years plus and paying off their home in 10.2 years. Oh, and by the way, they don't use any debt. They hate debt. Haven't carried consumer debt in an average of 20 years. No car payments, no credit card debt they

don't carry debt they might have had a little debt early in their misspent youth but they got rid of it and they figured out that debt was a robber so it sounds a lot like the stuff we've been teaching patrick who's a millionaire says i don't invest in single stocks my investing has been in 401ks roth iras and mutual funds and index funds. Joe, or Jose, he's a millionaire, says, I drive a 10-year-old Mazda CX-9. It has almost 200,000 miles on it. Of all the cars we've purchased in the past 10 years,

all have been used cars, and we've purchased them in cash. Rich says, who's a millionaire? I didn't attend an Ivy League school. As far as I got was two years in community college, and I owe a lot of that to my folks. They instilled in me to save, save, save. I don't owe money to anyone and I think the biggest part is having a plan and sticking to the plan. Budgeting and smart investing. Here's the thing. 97% of the millionaires we interviewed. that's all of them, okay?

97%. That's all of them. When asked the question, are you in control of your own destiny, said yes. 54% of the general public said yes. So if you are one of those people who believes you're not in control of your destiny, the data points tell us that you're probably not going to be in control of your destiny. You're probably not going to be an everyday millionaire. That's what the data tells us.

Belief and acting on the belief that it can be done and you have to take the hard steps to cause it to happen, that I'm not going to get a good crop of corn if I don't plant some freaking corn, that you're going to reap what you sow. We live in a cause-and-effect world, that the American dream isn't dead. The belief of these things are what cause you to be an everyday millionaire. That's what Chris Hogan concluded in this book.

You want to read all the statistics? The book is on sale now. We predict that this time next week we will be announcing a number one bestseller. I don't think there's any question. We've sold so many of them in pre-sale, it's unbelievable. So he's in New York today. He just finished up at Fox & Friends. We'll talk to him after the break, and then we'll get to some of your calls.

But this is important information. You know, my friend Tom Stanley did the book Millionaire Next Door 25 years ago and came to a lot of the same conclusions. They only studied 750 people, and one of the big arguments by the detractors was that the sample size wasn't large enough. Now, those of you that know something about statistics know that Tom's sample size was large enough for it to be conclusive. But if you don't know anything about statistics, meaning you never took one of those classes,

then you don't know that. So just in case, as a PR maneuver, we thought we want to do 10x what Tom did 25 years ago. We need at least 7,500. Well, we didn't stop. We took it all the way to 10,000 millionaires that we studied. And the conclusions are in the book. Everyday Millionaires. How Ordinary People Built Extraordinary Wealth

and How You Can Too, by number one bestselling author, Chris Hogan. He'll be with us after the break. This is the Dave Ramsey Show. I had a conversation with a friend recently, and he told me about a young man in his late 20s who died suddenly with no life insurance. Now, I don't want to sound unsympathetic, but this drives me crazy. What are people thinking? I don't understand how taking care of your family isn't a top priority.

Most of you probably just spent a bundle on Christmas on things you didn't really need, and now you're making New Year's resolutions that are focused on yourself. But have you taken the time to do something really important like protect your family? If you want to use the new year as a reason for doing something right, then do it. Term life insurance is something every family needs, and that's why I talk about it every day. It's not complicated, it's not expensive, and you need to do this right now. Zander Insurance is the only place I recommend. Visit Zander.com or call them at

800-356-4282. Please learn from other people's mistakes and get this taken care of. Zander.com. Well, in all of my excitement, I got confused. Chris is actually in the middle of another media hit in New York City. He was on Fox & Friends to kick off the book tour this morning, and then he's doing local TV there and a serious XM town hall today. And then he'll work the lowly Dave Ramsey show into his ivory tower approach from New York City later on. I'm kidding. But yeah, he'll be with us a little bit later. In the meantime, remember that you want to come to the book signings that are in your

area because the SmartVestor team has sponsored those and the SmartVestor pros will be on site and we will be giving away one thousand dollars no purchase necessary must be present to win each of the signings the first one is tonight in new york city in tribeca area at the barnes and noble there on warren street six o'clock wednesday night is the next signing at chicago and uh that's at the Skokie Old Orchard area in Skokie, Illinois, there in Chicago. Barnes & Noble, 6 o'clock in Skokie. And then Thursday night is Nashville at our offices. We're doing a town hall, a millionaire town hall event that's going to be broadcast on

Facebook and on YouTube and across about 65 television stations as well. And we'll be doing a book signing there, here at our offices. Friday night, Dallas, Texas, Barnes & Noble, 6 o'clock, Lincoln Park. And that'll conclude. Then Saturday, we have the Smart Conference in Dallas. You'll be there signing books, of course. Monday, be over to Houston and so on. But that gives you this week's lineup. Make sure you're out at those signings

and you come by. Meet Chris. He loves to meet folks and he's a lot of fun. We're with him this weekend in the Philadelphia area, really Lancaster. They were trying to teach me how to pronounce it because Southerners say it wrong. We think it's a 19-syllable word and you're supposed to learn to say it truncate it but uh i say lancaster and that's not what they say there but anyway at lcbc church there with uh 25 30 000 folks we were hanging out with this weekend speaking at all their services and chris got to speak to some of the financial peace university coordinators there and uh it was just a great fun weekend so a lot

of stuff going on that was he and i this weekend we dropped him in new york i came back home to do the show today and then he'll be back down here thursday after chicago and new york so that's what's going on around here michael is with us to kick off this hour in nashville hey michael how are you i'm doing well sir how are you better than i deserve what, sir. How are you? Better than I deserve. What's up? So my wife and I started with a little over $100,000 in debt six months ago. We have paid it down to about $59,000 in the six months. One of those was a stupid purchase. We bought a boat and decided to sell it and were able to walk away from it without incurring any more debt. Wow. So that helped us a lot. Yeah. So we're thinking about moving and buying a new

house because it would open up some more opportunities for us. We owe about $192 on our house right now and it's worth $162, so we can pay off the rest of our debt with the equity that we would have in selling our home. The thing that scares me is that the home mortgage would go up, but without any debt. We could do it with our budget with as much as we make. I'm sorry, where are you moving and why? We'd be moving just down the street a little bit. We'd like some property.

We want to get into maybe fostering a child or adopting a child. We have two children of our own. That doesn't require property. Yeah, but this would allow us to pay our debt off in the process. What's your household income? Without any overtime, for me it's $112,000. With my overtime this year, we made over $175,000. Okay.

And you sold a boat that sold for how much? We sold a boat for $35,000. And you paid off in six months $41,000? Well, in six months total, we paid off $50,300 roughly. Well, I was real proud

of you for a few minutes, but when you make $175,000 and $30,000 of that is the boat, you hadn't paid off hardly any debt. Am I missing something? No. I mean, we've been doing the snowball effect. We've gotten three of our credit cards paid off. Let me back up one more time.

You make $175,000 a year. Yeah. You live in an inexpensive home for somebody that makes that. Why are you not paying like $50,000, $60,000 in six months? Well, that's what we're trying to work on with the snowball. Yeah, but now you're trying to sell the house to get $30,000 out of the house and move up in-house in the process. No, I'd sit right where you are.

Okay. Until you get out of debt. And let's cut your budget. You ain't cut your lifestyle at all yet. Let's cut your lifestyle down to nothing. And when you get out of debt and get your emergency fund built, then talk about selling your house and moving up, where the payment on a 15-year fixed is no more than a fourth of your take-home pay.

But you've made a hard decision to sell the boat. You've not made a hard decision to cut any of your lifestyle yet because effectively you paid off $2,000 a month, which is a rate of $24,000 a year of debt reduction out of $175,000 income. That's wimpy. And you can do a lot more than that with the income you're making. So you guys need to get on that lifestyle because you have not cut the stuff out yet. You're still spending money like a lot of it.

See, $175,000 minus $24,000 is $150,000 a year that you're still spending. That's what I'm saying. And you only have a $190,000 house. So it's not going out the door on your house. No, no, no, no. You're not there yet uh i wouldn't do that i wouldn't do that i wouldn't do that and that's why so you'll get there you're focusing you're making some progress but you you need to turn you got the burner on about a one i want you

to turn it up to about a six out of ten and that's where you are hope that helps you this is the dave ramsey show open phones at 888-825-5225 jonathan is in new hampshire hey jonathan welcome to the dave ramsey show hey how you doing dave better than i deserve what's up i have about 72 000 in debts um about 14 000 in credit card 45 000 in student loans and about 20 $20,000 in car loans. What's your household income? $150,000, roughly. My wife is going to have a baby, so obviously that's going to go down a little bit. Is she staying home permanently?

No, she's probably going to take like six months off. Maybe two months before, prior, and then... How much of the $150,000 is hers? Only about $50,000. Okay. All right. Okay. And your question is what?

My question is that we have a home equity line of credit. We currently have about $100,000 in it, and we have $75,000 left in it that we can use. We don't have a first mortgage. We just have the home equity. We can pay the $72,000 left in it that we can use. We don't have a first mortgage. We just have the home equity. We can pay the $72,000 outright right now. My question to you is, should we? You mean you can borrow the money on your home equity loan to move your debt over onto your home? Correct.

Okay. No, I would not do that. No. I would get on a written, detailed budget. Have you cut up all the credit cards yet? No. They're all in low interest. Some of them are deferred, most of them, actually. Yeah, okay. So we need to chop them up,

and we need to start doing our written budget on the every dollar budget, and we need to really look at this budget and say, okay, how fast can we pay off $72,000, making $100,000 to $150,000, which is what you'll be making over the next two years, either $100,000 or $150,000, somewhere in there. How fast can we pay off $72,000? $36,000 a year, what you'll be making over the next two years, either $100,000 or $150,000, somewhere in there. How fast can we pay off $72,000? $36,000 a year would do it in two years. That's doable.

Okay. And I'd rather do that than move it on to the house. The problem with moving it on to the house is the verbiage that you said. The Bible says, How the abundance of the heart the mouth speaks. Meaning, before you realize it, what comes out of your mouth is what's really going on in your brain and in your heart. And when you say, I'm going to pay off my debt with my home equity loan. See, what that says is you feel like you got out of debt.

You can get out of debt. You just move the debt over onto your house. And you don't want to move student loans onto your house. Because if you die, that loan survives. Student loans, when you die, go away. If you become disabled, student loans go away. Home equity loans don't. So now I'm going to work on this.

I'm going to sit down, do my written detail budget on every dollar, and I'm going to lower my lifestyle, turn up the heat, get focused, and spend the next two years getting out of debt. That's what I would do. Hey, that puts this hour. That doesn't put this hour. That puts this segment of The Dave Ramsey Show in the books. 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 Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs.

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sponsor of Dave Ramsey Live Events Jason and Beth are with us. Happy New Year, guys. How are you? Happy New Year. Thanks for having us. Absolutely. Where do you guys live? Lexington, Kentucky.

Oh, nice areaucky oh nice area very nice area that's fun well welcome to nashville and all the way here to do your debt-free scream yes sir absolutely that's fun how much have you paid off we've paid off 153 000 over two years wow look at you and your range of income during that time it was 160 to 185 there you go okay how's that guy I was just talking to. Yep. Yeah, making $175,000 and he paid off a measly $15,000

in six months. Yeah, that's... And you guys did $152,000 in two years, so you're at about a $75,000 pace. Mm-hmm. Yeah, you were on beans and rice.

You knew what I was talking about when I said crank out lifestyle because you just did it. Right. Yes. Way to go, guys. What kind of debt was the 152 it was our mortgage you paid off your house yes i'm looking at weird people i love it wow how long

you guys been married well two years we paid it off on our anniversary oh my gosh so you get married and say we're gonna knock the house down yep just like that how that. How old are you two? I'm 33. And I'm 38. And you have a paid-for house? Yes. What's this house worth? About a quarter million. Everyday millionaires. I'm looking at them, baby.

You're going to be there before you know it. Oh, wow. I love it. You have a great income and a paid-for house, and there ain't nothing stopping you now. Oh, my gosh. What in the world? So tell me this story

how did i mean who gets married and their first goals pay off their house you do i know but but wow we were kind of thrown a wrench yeah well we were thrown into the middle of a little bit of a storm we got back from a honeymoon in the next day after we get back i find out the church that i'm working for is merging with another church so we don't know if I'm going to have a job in a couple months or not. So we talked and we decided to live exclusively off of her income. Okay. And then everything that I made, we were setting aside just to see what was going to happen. And then about eight months down the road, I wound up going out and becoming a full-time freelancer. So we're still living 100% off of her income,

and everything that I make is going to pay off the house that's now paid off. I love it. Wow. What do you do? What do you freelance? Television production. Okay. All right.

So you're doing production at that church. Okay. Very cool. Good. I love it. Good for you guys. So it scared you. It did. Absolutely. It scared us. And it scared you it did absolutely it scared it made

you realize what you can do when you have to yes exactly and we didn't you know starting out your marriage like that yeah was such a stress like you're you know he had just moved into my house sold his house um you know we made 15 000 off of his house put that towards mine um and just you know starting starting a marriage is so stressful anyway yeah living with somebody for the first time oh yeah and and all of a sudden you the day after we get back from our honeymoon to find out he may not have a job these guys have horrible time yeah yeah they really do for us it was it was not great but we just said we're not gonna let money just rule our life we're're going to take charge of this.

And the easiest way was for us to figure out, cut our budget down and live off my income. And so if he lost his job, it wasn't going to be a huge detriment. He would be able to bounce back quickly. Yeah. Well, the weird thing is the biggest oh crap moment that you've had became the biggest blessing. Oh, absolutely. Absolutely. It was stressful in the moment and even, you know, looking back on it.

But it's like it turned out that it was the best thing for us. Yeah, absolutely. And it pushed him into, you know, he had gone back and forth with wanting to freelance anyway. And I truly, we see God's hands all over this situation because what it did was it pushed him to, you know, we prayerfully decided it's time for you to get out of this stressful situation at the place you're working and you know, let's do what you want

to do, which is freelance, and he's been very successful at it. Absolutely, yeah, that's perfect. Yeah, if you won't jump out of the nest a little eagle, we'll push you. That's true. Fly! Fly! Fly! I love it. Yeah, that's great. It scares the crud out of the nest a little eagle will push you that's true very true i love it yeah that's great it scares the crud out of you absolutely without question you guys have been living large for a couple years i'm proud of you very very well done who are your biggest

cheerleaders my parents are probably our biggest supporters but we have a lot of friends who are going through this journey, too. And so when we got to share that we had become debt-free with them, they just really rallied behind us and are celebrating this with us today. Oh, praise God. That's awesome. That's the way it should be. So what do you tell people the secret to paying off your house in the first two years of marriage is? Focus.

Decide to do it. Yeah. I mean, you know, we're also professional scuba divers. And so one of the sayings in scuba diving is plan the dive and dive the plan. Yep. And so when you get a budget, live the budget. Like you have the map in front of you. And if you follow it, you can pinpoint exactly when you'll pay off your debt. The people that get hurt on dives are the ones that don't dive the plan.

Exactly. Exactly. They don't dive the plan. And it's the same with the budget. Yeah. I just dove the cenotes in Mexico last week. Very nice. We've done that.

You better dive the plan in those things. That's for sure. Absolutely. Yeah. Very cool, you guys. Wow. That's it. Dive the plan.

That's good. You have that tendency, but what happened with you guys was it was this intense focus because there was enough of a healthy fear. It wasn't to the point it was paralyzing or toxic, but it just went, whoo, game on, this is real, this just got real, man. And that was good for you. I mean, he never lost his job, and that's a blessing in itself, that it gave us time to come up with a plan and to get our budget in place

to where we could live off of my income. And luckily it never came. But then what it did was it let us see, you know what, if we can live off my income, you can go do what you've dreamed of doing forever, which is going out on your own. So how does it feel to have no payments in the world? It's amazing. It's incredibly freeing. Yeah, which is going out on your own. So how does it feel to have no payments in the world? It's amazing. It's incredibly freeing. Yeah.

Yeah, it is. Yeah, you just, you can, your choices are different. Right. Yeah. Way to go. Well done. Well, we've got a copy of Chris Hogan's Everyday Millionaires for you. Great.

Because that's what you're going to be next. That's the next chapter. That's the next chapter. You call in and scream whatever we scream for being a millionaire. I don't know what that is. Yeah. Well, it was also easy as we went through this. You know, we've got cheerleaders and we've got our budget, but we also have a dog named Ramsey.

Oh! That helps us to stay focused. I hope he behaves. Very good dog. Very good dog. Don't tell me you're paper training him right now. We're trying to house break Ramsey. That could be a problem.

Oh, my gosh. All right. Jason and Beth Lexington, Kentucky, $152,000 paid off in two years, making $160,000 to $185,000. Count it down. Let's hear a debt-free scream. All right. Three, two, one. We're debt-free scream. All right. Three, two, one. We're debt-free.

There we go, baby. That's how you do it right there. I love it. I love it. I love it. Man, oh, man, oh, man. Open phones at 888-825-5225. You jump in.

We'll talk about your life, your money. Derek is in New York City. Hey, Derek, how are you? How's it going, Dave? How's everything going today? Better than I deserve. What's up? I've got a quick question for you.

I'm kind of looking for some guidance. So you talk a lot about saving for college in a 529. So I've done that. I don't have custody of my son. He's getting ready to go to college in the fall. So he received a full academic scholarship to cover the tuition for the private school, and yet we still have to pay for room and board. That room and board cost would be about $14,000 a year. As of today, that 529 balance is about $68,000. So my question is, I basically have two options at this point.

Because he doesn't live with me, the FAFSA was done based on his mother's income, who he resides with. So the 529 was not on that. But what the drawback to that is, when we do withdraw money from the 529, for FASTA purposes, it's considered untaxed income. And we will reduce any aid by up to 50%. So he's eligible for financial aid through grants up to $8,000 out of that $14,000. So should I just pay the $6,000 difference in cash for the first year and a half and then pull out money from the 529? Or should I just pull it out from the 529 now, and if he loses some financial aid, it's fine? What are your thoughts on that?

I don't know. That's a hard one. I've never run into that one. I think I'd sit down with your tax pro and calculate it both directions and see which way it's going to cost you. Because you may have some penalties if you don't use it pro and calculate it both directions and see which way it's going to cost you because you may have some penalties if you don't use it uh just due to the fact you're going to it's going to mess up the fafsa what a crock and that's ridiculous yeah sit with your tax guy and get

better answer than dave ramsey can give you i don't know the answer Connor is in Fresno, California. Hey, Connor, welcome to the Dave Ramsey Show. Thank you, Dave. Hey, how can I help? Yes, I just had a quick question. New listener here, so I'm just kind of new to this. I am currently 20 years old. I have about $26,000 in a savings account.

I plan to graduate Fresno State University in two years and have that completely paid for because of scholarships and money saved do you think it's best to start saving up for a house now with that 26 000 or should i invest it in like a roth ira or um what do you recommend that i do way to go you're way ahead man congratulations thank you sir and no student loans, huh? No. I got about $10,000 in scholarship money. And since I've been young, instead of birthday gifts and Christmas gifts, my parents contributed to my college savings account. Okay.

And that's the $26,000. No. I have a separate savings account from when I've worked. Oh. And saved up about $26,000. How much is in your college savings? About $19,000. Okay, very good.

And the three things combined, the scholarships and the two different savings accounts, gets you through school? Yes, sir. Plus or minus? Because I went to community college first. Good for you. What are you studying? Apparently it's not the best degree, but criminology, because I want to work for the sheriff's department here.

Well, that would be the correct thing to study, if you want to work for the sheriff's department, right? Yes, but it's not a really applicable degree, because they don't really look at what degree you have. It's basically, if you have a bachelor's degree, it helps. But that's what I'm interested in, so that's what I decided. Okay. Well, a lot of law enforcement does look at a criminology degree,

so you're on the right path if that's the direction you want to go, plus or minus that particular sheriff's department. Okay, great job, man. Well done. Okay, here's the thing. Connor is the best investment mathematically that Connor can make. Let me explain what i mean okay the rates of return on a mutual fund will be 10 or 12 percent the rate of return on you graduating from school 100 debt free and finishing a degree that is applicable in the marketplace which you are doing

is much higher and so by far the most important thing in this discussion, if there's three things on the table, graduating from college, debt-free, in a good field of study, number one. Number two, buying a house. Number three, a Roth IRA. House and Roth IRA are nowhere near as good an investment as you are. Okay? So I'm going to tell you, if you're my kid,

I would say just keep piling up cash, and that's your insurance policy that you get through school on time and 100% debt-free. Now, when you graduate and get the job, now we'll talk about what we're going to do with it because you may have still a pile of money laying there. You should have still a pile of money laying there

based on what you're telling me. But just in case, I'll take a $26,000 insurance policy that you're going to graduate debt-free and just let it sit there in savings. Boring is what I'm saying because I want to make sure you invest in you first and foremost until you get out. Now, when you graduate in two years, you get a degree, you get a job. Now we start working the baby steps you set some of your money aside for your emergency fund and at that point if you want to buy a home anything above your emergency fund would be your down payment and you can start

your roth iras 401ks 403bs whatever's available to you for retirement at that time and if you do that beginning at you said you're 20 years old if you do that beginning at, you said you're 20 years old, if you do that beginning at 22, you're going to be very wealthy. Yes, sir. Because you're a guy who knows how to work. You're a guy who knows how to not spend everything he makes and save money. And that's the kind of people who become wealthy. It really is.

And so, you know, you learn about that and you just keep pushing that forward. So well done, man. Well done. Gabrielle is with us in Sacramento, California. Hi, Gabrielle. How are you? Hi, I'm doing wonderful. Thank you so much for talking to me. I'm really excited. My pleasure. How can I help? Yes. So I just had a question about making a budget on kind of a fluid income. So my husband works for a church. We also own two small businesses, and I am a server as well. But we get paid kind of as we go.

Sure. So as we do a job or as I serve, that's how we make our income. And so I was just wondering, what is your advice for that kind of a lifestyle, you know, for that kind of an income? So we have our plans for the month, like, set out. But I'm just finding it a little bit difficult to figure out, like, how do we make all of our... Here's what you do. Jump on EveryDollar and get the EveryDollar app.

Have you done that yet? Okay. No, I haven't done that yet. That's the world's best budgeting app, and it's completely free from us. Okay. EveryDollar. Put it on your phone. Put it on your desktop.

And all it does is... The purpose of a budget is you want to spend every dollar of your income on paper, on purpose, before the month begins. Your challenge is we don't know what the income is going to be exactly. Right. And so what I want you to do is I want you to run your budget at the first of the month based on the lower estimate of what you really think this month is going to be. If you only look out from January 1 to the end of January, you can be pretty accurate at the beginning of the month. But if you adjust it two or three times through the month, you'll be perfectly accurate.

Okay. But if you do your budget based on low, and then as you make more than you thought it was going to be. So what would be a typical month? What do you think you're going to make this month, total income? Yes. So this month we're projected to make $4,381. Okay, perfect. What would you think a typical month is?

That's probably typical. Okay, so what if we did a $4,000 budget? Okay. And then as the money comes in and you realize you're going to go over $4,000, then you adjust your budget. Okay. And then as the money comes in and you realize you're going to go over $4,000, then you adjust your budget. Okay. But you just adjust it as you go along with every dollar. You can do it that way. Another way to do it that I used to do before we had the app was I just make a list.

I do a regular budget on $4,000, and that's give every dollar a name before the month begins. And then I would make a list of things I want to do if i get more than four thousand dollars okay great and put that list in order of priority what would i do if i got four thousand and one dollar what would that one dollar go towards if i got four thousand six hundred dollars how many different things could i cover and you list those out and you say, what's the number one thing I want to do if I get above four? And you put that as number one. What's the number two thing I want to do if I get number one done? Put a two, and so on.

And so you've got a prioritized spending plan for the money that comes in above 4K. You can do it that way if you want, and then actually enter that into your every dollar budget as you go through the month and begin to really figure out where you are and that's that's a way to do it that'll work so hey good question you're on it kiddo you got this whoa it is the first of the year you guys are doing this stuff man you're doing it hey this is your year this is your year the people that decide to take control of areas of their life and they decide way deep down in their decider not a drive-by not a passing fancy but way down in your decider you decide way down there where nobody can change your mind you decide no Way down there where nobody can change your mind, you decide.

Way down there where no amount of adversity is going to keep you from winning, that's where you decide. Way down in your decider, you decide. When you decide to do that, you can get out of debt. You can get on a budget. You can get your baby step four going into your 401K and be on a track to be an everyday millionaire. But there's no skipping any steps.

You lay the plan out, you work the plan, and you're no different. You're not the exception to the rule. You do not get to break the rules. A couple getting out of debt a while ago were divers. I've been a scuba diver since I had hair. 1984, some of you weren't even thought of yet the first time i dove and she said dive the you know you work you work the plan you dive the plan you lay the plan out if you don't dive the plan when you're diving you take a dive plan because every 33 feet's an atmosphere and you start busting through those atmospheres

and you don't do your safety stops this is is how people die underwater. It's just stupid land. And so you don't get, I'm not the exception. 33 feet's my atmosphere, it's your atmosphere. 66 is another one. There's no exceptions. Your body's going to work the same way and your body's going to explode if you don't do it right. This is really pretty simple.

And so you're not the exception. You work the plan. You don't get to change it because it's you. You're not that special. You work the plan. This is the Dave Ramsey Show. 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.

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