The Ramsey Show - App - Chunk Your Savings at the Smallest Debt First (Hour 2)

Episode Date: December 6, 2018

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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 hasn't 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's a free call at 888-825-5225. That's 888-825-5225. Jessica is with us in New York City. Hi, Jessica. Welcome to the Dave Ramsey Show. Thank you, Dave.

Thank you so much for taking my call. I'm wondering what your thoughts are on cash flowing private school tuition while we are in Baby Step 2. What's your household income? Household income is $190,000. And private school tuition for high school? It's actually for a kindergartner and a second grader. We live in a school district that is not good. Sure.

And we have actually a discounted rate. It's kind of a back story to that so that we would be able to afford it. It would be something we would obviously not go into any more debt. Right, right. So how expensive is it? How expensive is it? We would be paying $7,000 per child. And you have two?

We actually have three, but right now we have a baby as well. Okay. So $14,000. I'm sorry? $14,000. Correct. Okay. And how much debt do you have?

$50,000 credit card, and here's the big one. We have $180,000 in student loans, which we think are going to get paid off in the 10-year program in about three years. But I know your thoughts about how that, I mean, it's not just your thoughts. It's not going well for a lot of people. So it's a lot of debt. So far, 96% of the people have not had theirs paid off. I know, yes.

And I have discussed that with my husband, and he thinks he's got all the paperwork in line, but I'm very concerned about that information. I would be. Yeah, and you've cut up the credit cards? Absolutely. We are not going into any debt ever again. It's a small enough percentage of your income that it doesn't keep you from achieving your other goals. If it was four times that much, you'd have to stop and think about it, right? Of course, yeah.

And it would also really increase our lifestyle. The school is next to where I work. We can also walk to school, and I can walk to my job. So right now we're taking the subway. The kids are getting home very late because we're putting them in a school that's further away. And so our lifestyle would improve dramatically. Your quality of life will go way up. Yeah.

Okay, exactly. For sure. Yeah, I definitely would do that in your situation. Okay. Okay, I really appreciate your help. Yeah, if you made $28,000 a year, I don't think we would do it. I think not, right. But I wasn't sure.

My husband and I didn't know. He thought you would say no, and I said, well, I think as long as we're not going into any more debt and we're following the plan and we have, you know. I think it is all of that, and it's the whole story you're telling me about where you guys are going and that you've got a plan and you're focusing and you make really good money. But the biggest factor for me is it's such a small percentage of your overall net worth. It's less than 10% of your income. Okay, and even if we add that when we have our third child, it will end up being, you know, let's say $24,000.

If it was even $30,000 a year. Yeah, but by then your income will have also gone up. And our debt hopefully will be gone. Gone. Gone. If his plan works on the student loans, it will all be gone. Right. By then it's irrelevant.

The discussion's no longer open at that point because you're just rocking. So I think you're fine. I think you're fine. Good question. And that's how I'm kind of thinking through it with you together. We're just thinking through it together. Jennifer is with us in Michigan. Hi, Jennifer.

Welcome to the Dave Ramsey Show. Hi. Nice to talk to you. Thank you for taking my call. Sure. What's up? Well, first of all, I am very happy to announce that my husband and I paid off our mortgage this week. And I just want to thank you for your part of our financial journey.

I really had great principles growing up. My dad is firmly against debt and, you know, really hates credit card debt. I love it. So he's cheering, too,, you know, really hates credit cards. I love it. So he's cheering, too, then? Yes, he is. In fact, I had a little, you know, note card every month. I went from month to month, and it said pay mortgage. And so I FaceTimed him this week and let him watch me tear the thing in pieces because it's done.

I love it. So what's your home worth? Oh, gosh, I don't even know. Probably $160 or something, I think. I'm not really sure on that. Yeah, cool. How old are you? I am 42, and my husband's 48.

And you have a paid-for house. Way to go. Yes. Way to go. That is nice. So anyway, and that was it for our debt. So we never had debt outside of that, but it's still quite a happy day. So I wanted to thank you because it was particularly your teaching on budgeting.

I'd always tried to do a budget, but it was always a little bit difficult. I could never quite figure it out. And when I read Total Money Makeover, there were a couple tips in there that really helped me to get it all together. And so I credit you with a lot of that, and I thank you very much for your work. And then I also have a question for you. Sure. Okay. As far as investing, I know that you recommend kind of splitting up your investments between small, mid and large cap funds and then also some international. And I do understand your thought process behind that. It makes a lot of sense. However, in our 401k, we're very limited, of course, because it's through his work. We're limited as to the number of funds.

So I'm curious, because the international does not historically do nearly as well as some of the other funds, looking at the five-year and 10-year, you know, there are quite a number of, you know, small, large, and mid-cap that are going anywhere from, oh, 10 to 15, maybe like 10% in the last five years and 15 in the last 10 years, whereas the international, the only ones that are available are more like six to eight. Yeah, the international category has sucked up the place for quite a while. It's gotten so bad that to the point that I actually got with my own personal ELP who I've

known for a long, long time that works, my own personal SmartVestor Pro I'm sorry, that I've known for a long, long time and he and I sat down and just did a little research project with some of his staff and said, okay, let's go back and figure out if I need to change my suggestion to

everyone because I'm not going to change my personal investments and remove the international unless I change what I'm saying, you know, because I don't tell you all to do stuff I'm not doing, in other words. So what we did was we ran hypotheticals back, and here's what's interesting. This is the longest period of time, it's about nine years now, that the international category has sucked. In previous periods prior to that, it runs pretty much inverse of the others. Well, it has in this nine years, too, because during

this nine years, pretty much everything's gone up faster than the international. So here's what happens in, like, if you go back 40 years or 30 years, that if you run it without the international, even though nine years of it sucked, and you run it with the international, even though nine years of it sucked, right? Now, which way would come out ahead? You would think if you pulled out the one that was underperforming the other four that it would go up.

But what happens is there's enough shifts in the market where the international goes up while the others go down it picks up their slack that you come out ahead and so it's overdue way overdue like about a five-year overdue on the normal cycles of things to be the one that catches up so So what that told me was if I cancel that right now, next year is going to be the year. You know how that works, right? So I'm not going to cancel it. I'm staying with it, and I'm going to recommend you stay with it because of that inverse relationship it has with the other funds. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month.

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Just visit puretalkusa.com, enter promo code SAVEDAVE, no spaces, and receive 50% off your first month. That's puretalkusa.com, promo code SAVEDAVE. Dirk is in New York City. Hi, Dirk. Welcome to the Dave Ramsey Show. How's it going, Dave? Thank you for taking my call. Sure. What's up?

So I just wanted to talk to you. I'm getting ready to get engaged. I'm getting ready to get married next year. Dave? Thank you for taking my call. Sure. What's up? So I just wanted to talk to you. I'm getting ready to get engaged. I'm getting ready to get married next year. Congratulations. Thank you. So I'm just trying to figure out, we're in the process now of combining our finances and making decisions together. So I'm 37.

She's 42. We currently are, I guess, in baby step four and five. We're maxing out our 401k. We're putting $10,000 a year in our kids' college fund. Paid cash for the wedding. We don't have any debt. Great. And we can still save about $3,000 a month.

Cool. So I'm just trying to figure out, and we want to purchase a home. And so I guess that baby step 3B process. So I'm just trying to figure out, should we scale back on the 401K, which she's not very comfortable with doing, or should we just continue to save up and be a little bit slower in regards to the process of saving up for the home? Either one is fine. And, of course, you're not going to do any of this until you're married, actually. You don't combine finances until you're married.

But once you do, then, yeah, either one. Sometimes people temporarily stop their 401K in order to more aggressively save for the down payment, or sometimes they're willing to save a little slower for the down payment in order to keep putting money in the 401K or Roth IRA or whatever, the 15% of your income in Baby Step 4 going into retirement. So either one's fine. Sometimes people do it in the middle. They just back it off a little, but not all the way off. It's okay. Because the whole thing is this, baby step three, you know, saving for, if you're not, if you're going to do anything other than 15%, it should be a, towards your retirement and

baby step four. In other words, if you're not going to do anything for a little while, or if you're going to scale it back for a little while, you need to very quickly get that down payment put together. Okay. Now would you make, I know with her, she's a little bit, you need to very quickly get that down payment put together. Okay. Now, would you, like, I know with her, she's a little bit, like she has a much lower 401K balance than I do. So if we are going to scale it back, do you think it makes more sense to scale back on my account because I have the higher balance or?

Doesn't matter. Okay. It's whichever one you want to do. And maybe where you're getting the best returns is what I would worry about, not the balances. Okay. Or if there's a match, make sure you're picking up a match if you're going to scale back. Yeah, we both get a match up to 5% at both our jobs.

Yeah, I wouldn't touch that unless you're going to stop it altogether temporarily. No, no, at the lowest we'd go would be going down to 5%. Yeah, okay. I mean, that would be a good medium ground. But still, if you're going to do that, then let's be very aggressive about getting that down payment saved up so we can get back to putting 15% away like she wants to do and like you want to do ultimately. So, hey, good question. Thank you for joining us.

Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Ashley is with us in Philadelphia. Hi, Ashley. How are you? I'm doing well, Dave. How are you?

Better than I deserve. What's up? I'm a new listener. I recently came across your page on YouTube, and after listening to a couple videos, I've seemed to have had a financial epiphany and realized that I am lost. Okay. More lost than I thought I was.

I have $64,000 in student loan debt from undergrad and graduate school. I don't have a true working budget. I don't have three to six months worth of savings. And I'm confused as to where I should start. I don't have credit card debt. Good. I do have at least $1,000 in emergency savings. But in terms of next steps, it's, you know, do I focus on loan debt savings, 401K IRAs.

I'm not quite sure. Yeah, you're catching on pretty quick. It sounds like you've got this analyzed very quickly. What's your degree in? Uh-oh, I think I just lost you. Oh, well, see if you can get her back, Ms. Kelly. All right, Bradley is with us in Seattle. Hi, Bradley, how are you?

I'm good, thank you. How can I help? I have a question for you. So within the last three to six months, I started listening to you on an app. I didn't even know it was available. And with Chris Hogan's new book come out, you guys were talking about the everyday millionaires. So in my prayer time, I was really praying, what's the next big thing for me? And I really believe that this is the next big thing to me.

Cool. And so I started, like, what can I do next? Well, I never actually read your book. And I called in a few weeks ago, and you said, here, read my book. And you sent it to me. Well, I couldn't wait, so I actually ordered another one. I read half of it, highlighted it, gave it to the wife, and then read the one that you gave me. Wow.

Thank you. And so what I found out was when I thought I had everything together, I don't. I'm a complete moron, lots of mistakes. I doubt complete, but how can I help? Well, my house is paid off. Good. And when I got to that finish line, I decided to take a lunch, and everything's been running on me. And since two years ago when I paid to that finish line, I decided to take a lunch, and everything's been running on me.

And since two years ago when I paid that house off, we incurred about $18,000 in credit card debt. Okay. So I got $18,000 in credit card debt, and I got $39,000 going on an RV. Okay. Well, it's time to come off lunch break then. Time to come off lunch break. So should I stop my contributions in my 401? Yes.

Okay. Yeah, you're in baby step two. You have $1,000 saved. Do you have any money in investments or savings that is not in retirement accounts? I have about $10,000 in the bank. Okay. Well, let's use that and start working these things off down to $1,000. And then baby step two is list your debts, smallest to largest.

Other than that, begin to attack them. And that's the RV and the credit cards, right? Yep, that's it. You know, so. And I think I smell a six-figure income, do I? So she's on track to make, well, usually on average she makes about 80. I make the same. I took about three months off due to an injury.

Okay. So I'm going to make about 65 this year. Okay. So, but this coming 12 that we're going to use to get this mess cleaned up, you're looking at probably $180,000 then, or $160,000 rather, $160,000. Yeah, right in there. Yeah, okay. So time to roll up your sleeves and act like it, right, and just clean this mess up.

Are you going to keep the RV or are you going to sell it? I use my RV more than anybody else. So, yeah, I'll keep my RV. Okay. Then you got – One other question I got for you is you got a great sale, and I'm actually on your website right now. So I'm going to order Financial Peace University.

I can't find any classes that start today, and I want to start today. I got some coming up in the next month or two. So I'm going to go over that with my wife and watch that, and I think I'm going to take a class as well because I want that accountability. Yeah, cool. Yeah, you ought to get in the class because the community has power to it, especially as a couple. It really does.

But in the meantime, you've got access to the online. Right. And you'll see some updates to the online lessons even after the first of the year. So I ordered that Financial Peace University. I ordered that Chris Hogan's Everyday Millionaires. Wow. Thank you. Take a class.

This is my question. I ordered those two, and I watch it with my Wow, thank you. Take a class. This is my question. I ordered those two, and I watch it with my wife, and I take a class, and we should be on the right track. You should be. I mean, you will know how to be on the right track. Then you have to decide to be. Right, absolutely. It's a very, very clear path. We're devastatingly easy to understand.

That's what's amazing about it, actually. It is easy. Yeah, what's amazing about it, actually. It is easy. Yeah, and you can do it. It's just hard because it means you're going to have to roll up your sleeves and, you know, you're not going out to eat for a while and you're not going on vacation because you're keeping the RV and we're going to clean this mess up and then we're going to build up an emergency fund and then we're going to start saving and investing. Good news is your house is paid for, so you should have pretty heavy cash flow.

It'll knock this stuff out really, really fast. So, yeah, you can watch all the lessons when you order Financial Peace now. So you should have pretty heavy cash flow. It will knock this stuff out really, really fast. So, yeah, you can watch all the lessons when you order Financial Peace now. And as I said, we're refreshing a few of the lessons right after the first of the year. I was just looking at some of the edits this morning, as a matter of fact. So there's going to be some really cool stuff coming. It's a good time to be getting into Financial Peace University, as a matter of fact, for those reasons. If you're giving it as a gift out there, folks, that's a, yeah, it's a good time. It's a good time to be getting into Financial Peace University, as a matter of fact, for those reasons. If you're giving it as a gift out there, folks, that's a, yeah, it's a good time.

It's a good time. Open phones at 888-825-5225. If you want to be more intentional next year, join us in Dallas on January the 12th for our Smart Conference event. This is the big deal. The big deal where all the Ramsey personalities and the top speakers and writers and best-selling authors in almost every space are there. It's all day long. Marriage and Relationships, Dr. Les Parrott, best-selling author. Dr. Meg Meeker, country's leading authority on parenting. Dr. Henry Cloud, The Book Boundaries. Wow.

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We're glad you're here. Open phones at 888-825-5225. Scott is here from Seattle. Hi, Scott. Welcome to The Dave Ramsey Show. Yeah. Hey, Dave. Thanks. Hi, Scott. Welcome to the Dave Ramsey Show. Yeah. Hey, Dave. Thanks.

Hey, listen. I'm 61. We read your book. My wife and I both read it, discussed it. We have no debt on anything, no credit card debt. We live very simply. We've saved and invested everything we've got, and our broker continually pushes us to move to really low-return, low-risk investments, telling us that, hey, now that you're 60 or whatever,

I plan to work for a few more years, and I just don't understand why I would want to shift to bonds, T-bills, and other things when actually, if I plan on living for a while, I just as soon continue with an aggressive investment strategy. So I just wanted to see what your thoughts were on that. I agree with you. Basically, the asset allocation model is a model that when you're young, you invest aggressively, and progressively as you get older, you get more and more and more conservative to where by the time you reach age 65, you're pretty much in bonds, money markets, and some maybe blue-chip type stocks, that kind of thing.

That's the standard model that most of the financial planning community buys into. The problem with the financial planning community is it's often a bunch of lemmings. They just follow each other and sometimes right off the cliff. So I'm a contrarian. I question everything. I'm the little boy that says why. So my theory is simply this. By the way, I'm 58 and I will be investing what you call aggressively the rest of my life. It's not really aggressively, by the way. Aggressively is the roulette wheel or the poker table in Vegas. Aggressively is the roulette wheel or the poker table in Vegas.

Aggressively is playing single stocks. We're not doing anything with super high risk here. We're buying mutual funds that are good growth stock mutual funds with long track records, and we're riding the market. And here's why I think the asset allocation model is hooey. Like you said, you're going to keep working a while. You're going to be living a while. You've got enough room in your overall net worth to absorb some volatility up and down.

Not bunches. We don't want to lose half of your net worth. But, I mean, if you have a swing of 10% or something in one year, which would be a huge weird year in the stock market. But, you know, you could have that. But here's the problem. If you're 65, statistically, the average death age of a male in the U.S. is 76, a female, 78. Okay? That includes infant mortality and teenage death.

By the time you get to 65, the actuarial tables say you're living into your 90s. So you have 25 or 35 years to outpace inflation. This is like a 30-year-old investing to 65. My point, exactly. And so I am not putting money in something that's not even pacing with inflation plus taxes. Inflation plus taxes equals 6%. You've got to make 6% on your money to tread water long term and break even with a 4% inflation rate and about 2% of your money going to taxes on your returns. And so you've got to do something

aggressive enough in the long term to outpace that. So I think you're exactly right and I think you need a new financial advisor because you're not aligned with him. And, you know, he's going to constantly think you're weird, and you're going to constantly be questioning everything else he brings up because you don't agree with him. Well, you actually triggered one other thought, if I could. Half of the money, half of the cash, in other words, non-real estate investments, is in U.S. equities. And that's split between tech, where I actually just buy stock in that company, and mutual funds with very high ratings.

So you said, to put mostly in what sounded like mutual funds, you know, maybe some index funds, things that essentially are where the fund diversifies and then you just buy by sector. I didn't hear you say that exactly, but that's what I'm saying. No, I don't buy by sector. I don't do sector funds. I like real broad diversification because I like the safety of that. I'm not that aggressive. If you do sectors and single stocks, which is what you've done, you're more aggressive than I am because you're taking more risk. I'm not a general growth stock mutual fund, just a regular old growth stock mutual fund, whether it's an index fund or otherwise, I don't buy index funds much.

I do a little bit. But in other words, if I'm just in a growth stock mutual fund, it might have some health care in it, but it's not all in health care. And if health care goes down, auto industry might go up. Some of the other industries might catch the slack on it. So I like being diversified across the industries, and I don't buy single stocks because of the risk. So I'm more conservative than you are in terms of my portfolio mix. I'll reevaluate that then for sure. I like that idea.

You think I'm fine with just sticking with U.S. equities as opposed to taking in non-Asian? I keep some international in mind. The mix I use is I use a fourth in growth, a fourth in growth and income, a little more conservative, a fourth in aggressive growth, put some spice in the gumbo, and a fourth in international uh and and so and the international category has underperformed the other three categories for the last probably decade or so uh but but it's overdue to catch up and if you look back over 30 40 year track records you'll see it performing so that's what i do personally and that's what i've recommended to folks uh and you can you know you can substitute out that international sometimes people

put a reit in there a real estate investment trust uh some of some of those have beat the s&p 500 and so you can pick out one of those that's beat the s&p and mix that in if you don't like international give you a little real estate spice in there something like that but um you know the the point is that the all of that because it's equities, by the financial planning world's terminology, in our late 50s, early 60s, like you and I are, would be considered very aggressive. I don't consider that very aggressive. I consider playing single stocks and playing the roulette wheel very aggressive. And I don't do that kind of stuff.

I don't like losing money. And by by the way i don't lose much money i generally just make money every year on my real estate and on my investments sometimes it goes down a little bit in one year but i don't cash it out so i don't lose money i ride the roller coaster back up and i don't lose money uh i have it's been a long long time since i bought something I lost money on. Like, decades. Because I'm just careful and conservative. And, you know, again, spread out, well diversified. Thanks for the call. Really good discussion.

Thomas is with us in Ruston, Louisiana. Hi, Thomas. Welcome to the Dave Ramsey Show. Thomas? Three, two, one. Hey, can you hear me? Yeah, now I can. You just barely made it. Hey, can you hear me? Yeah, now I can. You just barely made it. Hey, sorry about that.

That's okay. How can I help? So to give you my situation real quick, I'm 23 years old, out of college for a year now. I have no debt. Good for you. I was fortunate enough to get through college without any debt. I like to say that I'm a Dave Ramsey baby. Thanks to my parents

well we'll just call you a financial peace baby that's safer twice myself but i grew up with envelopes and everything else good very cool well i'm um but to get i guess to get to my question i'm currently doing 15 into my roth 401k um between my contributions and my employer match. And I also have some additional disposable income at the end of the month. And I was wondering what I should start doing with it. Should I start saving up for a house? Yes.

Okay. Absolutely. You have your emergency fund in place, I'm sure, right? Yes. Yeah, I'd start saving for a house. Okay. I say the problem, I don't know if I'm sure, right? Yes. Yeah, I'd start saving for a house. Okay, but I say the problem, I don't know if I'm going to be here where

I'm at now for the long term. So should I just, I say wait, wait on buying the house and just keep saving that? Sure. The bigger the down payment, the closer you get to paying 100% for the house. That'd be pretty cool. I mean, if you save for three years or something and things change around.

So what's your degree in? Finance. What kind of money are you making? This year I should make $75,000. Way to go, dude, at 23 years old. Ding, ding. Proud of you, man. You're killing it.

That's awesome. Wow, that's amazing. This is The Dave Ramsey Show. Thanks for being with us, America. We're glad you're here. Merry Christmas to you. We're glad you're with us. Joe is in Denver. Hi, Joe.

Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me. Sure. What's up? So my question is, my wife and I have two, we each have school loan debt and one car payment totaling $74,000. And I have an I-bond that's a 30-year, started at $10,000, and it's 18 years in. And so it's at $28,756, and it's at 5.66% interest currently. And we foresee it maturing at about $55,000.

And I'm wondering if it would be best to let it stay in and mature or to take it out to pay off a chunk of the debt. Oh, I would use it to pay debt in a heartbeat. Definitely. I'd clear my debt up. You would not borrow on your cars or on student loans to buy an I-bond, and effectively, from a balance sheet perspective, that's what you've done. I mean, on one side of the column is assets, on the other side is liabilities,

and when they offset, it's mathematically the same as having borrowed on your car to buy an I-bond. You see what I'm saying? Yeah. Yeah, so I definitely would be chunking through my debts really, really fast here using that. And anything else I can get my hands on that's not in a retirement account. Okay. And am I correct in saying that if I'm using the I-bond for school loans that they don't tax it? I know that's true on savings bonds, but I'm not positive on the I.

I guess it does fall under that category probably, that the interest rate on it doesn't, the interest isn't taxable. But the rate of return is not that great. Here's the problem. You're making 5% on your money, and tuition inflation rate is 7%. So you're not even keeping up with inflation of tuition if you're using that to invest for college. So, no, I don't use bonds to invest for college. Matter of fact, I don't use bonds for anything. But in this case, it really mathematically is not palatable at all.

Rachel's in Illinois. Hi, Rachel. How are you? I'm doing well, Dave. How about yourself? Better than I deserve. What's up? I just had some questions.

I'm trying to get started with my debt snowball, and I have gone through financial peace. My understanding is you start with the lowest lowest and you work towards your highest debts as far as paying them off to get some momentum. Correct. But I have some interest rates and payment plans that I'm not sure if it kind of changes the scenario. So like my lowest loan is, I have $50,000 in student debt. My lowest loan is about $1,900. It's at an interest rate of only 3.86%, and I'm actually on a payment plan that's 20 years and contingent on my income. So I only pay about $130 a month on that. But my federal loan, not my federal loan, one of my private loans,

it has a 5.95% interest rate, and I'm paying $460 a month on my federal loans. Sorry, private loans, private loans. So I'm wondering if my paying off... What's the balance on that you said? What's the balance on that you said? My total balance... No, on the private that you're paying $460 on. Oh.

Total balance is about $40,000 across five separate loans. Oh, that one. So $460,000 is across five? Correct. Okay, so that's not the... Yeah, exactly. Okay. Individual loans are what we list, regardless of the interest rate.

You have one that's $1,900. What's your next smallest one? My next smallest one is $2,180. Okay. That's also part of that federal payment that I make of $130 a month. $130 a month. Okay. Not the $460.

Yeah. Okay. What's the next smallest? Right. The next smallest is $3,450, and that is part of the $460 that I pay him off. So when you pay that off, it'll drop the $460. Yes, that's my understanding. But again, if I need to check, it's smallest to largest.

Okay, and what's your household income? My household income between me and my husband is about, I would say, 65. I bring home about 44. Okay. And your total student loan debt was 50, you said, right? Correct. Okay. And what other debts other than student loans have you got?

We have a mortgage. My husband's been married before. He owes over 20. Well, we owe over 20 in attorney fees, things like that. Okay. So he has never been in a good financial position since the divorce. I am the planner, so I kind of help him. Well, I help us in that arena.

Good, good. Yeah, we're working together. We have debts. We have an income. We are paying things off. Here's the thing you're going to knock out those first three or four so fast that this discussion mathematically becomes irrelevant okay because i mean you're going to be paying at a rate of almost two thousand dollars

a month towards your debt with what you've described to me okay you should be and so i mean like three months from now most of what we just talked about is gone. Four months from now it is. And so you're just going to plow on down through there. See, if you make $65,000 a year and you pay $24,000 a year, you're debt-free in two years. Okay. Not counting the attorney's fees, but, I mean, that's where we're headed. And I think you'll be able to do that.

So the point is it's all gone so quickly that the math stops being an issue. The interest rate on the math stops being an issue, or the payment rate, the 460 versus the 130 and all that, stops being an issue because it's just gone. And it's gone so fast that mathematically it just doesn't affect anything anymore. The type of things you're discussing matter if you're dragging something out 10 years. But you're going to be done so fast if you lean into this the way we teach you to do, and you get really fired up and wired up and knock her out. That's what I would do. Phillip is in Charlotte, North Carolina. Merry Christmas, Phillip.

How are you? I'm doing well. How about yourself, Dave? Better than I deserve. What's up? So I have a rental house that my wife and I have, and my dad has been renting it for the last nine years or so, and I've been informed he's wanting to move, so that's fine and good.

Our question is, should we sell it or try to continue to rent it? Okay. It's been a very stable renter, so that's kind of why we've left it the position it's been in. Where's the house? It's about 30 minutes away from where we live. Is it paid off? It is not. We owe roughly about $65,000 on it.

Okay. What's it worth? About $130,000, $135,000, somewhere in there. Okay. Would you like to work as part of your financial plan and get it paid off in a few years and keep it as a rental? I struggle with that. I don't know if I could handle somebody thrashing my house but on the same token it seems like uh seems like a wise decision to keep it it's not a wise decision if you don't

if you don't want to deal with renters sure having a rental house it requires you deal with renters now i don't have people trash my house because we screen a renter like we're hiring them for a job. Right. So, you know, we take care of that kind of stuff on the front end. We're so careful. I haven't had a house trashed in a decade or more because we've just gotten really, really good at, you know, going through the process of figuring out who can rent and who we're going to let in there. I mean, this is like taking my daughter out on a date. You better have your act together.

I'm letting you move in almost a $200,000 asset here, you know? Sure. And so, you know, we don't have animals in them. We love animals. I've got puppies. I've got a little Shih Tzu at home. But I don't like dogs as a landlord, and I really don't like cats. So, you know, that kind of stuff, right?

So, I mean, you can't get cat smell out of a house. It's just, I mean, you have to tear up the subfloor. So you just got to go in and you got to look at stuff like that and decide what you're going to do. And, you know, what you're going to allow in there. And if you're willing to be kind but firm and patient on who you put in there, then landlording can be a fine experience. There's nothing wrong with it. You don't have to be a meanie or anything to do it. You have to be tough, firm, kind, and firm.

And if you don't want to do all that, it's okay. Just make the decision and sell the house. No problems. This is the Dave Ramsey Show. Hey, it's Kelly Daniel, associate producer and phone screener for the Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year.

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