The Ramsey Show - App - Credit Scores Do NOT Measure Financial Well-being (Hour 2)

Episode Date: June 21, 2019

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

Hi, Jacob. How are you? Good. How are you doing? Better than I deserve. What's up? All right. So a couple months ago, my wife and I got back into the country.

We did a bit of traveling because we cheated in life, I guess. Basically, we came back into the country. I signed up for a job that didn't work out so well, but the pay was supposed to be at $65,000 a year. And I immediately jumped into a horrible car loan because I got overexcited. Now, since then, I have changed to a job that I actually really enjoy, but the pay is about $15 an hour and I'm making not a lot of money. My question is, how much is it worth? I need to sell the car, obviously, but how much is it worth losing in order to get out of the car loan?

Because right now I'm making the payments and struggling, I guess, to make those payments. We have rent and all that stuff to take care of as well. Yeah, what do you owe on the car? It's $21,000. Yeah. Does your wife work outside the home she did until next week uh she's a teacher's assistant so she only works nine months out of the year um so i six months ago is when i or seven months ago is when i got the car um and

everything was looking up and i thought I'd be making decent money. Yeah. Not paying attention to the summer that she's not working or the fact that I don't have that job anymore. So owing 21, I haven't listed. It doesn't really matter how much you lose on it. You've got to get rid of it. You can't afford it.

Okay. You don't have the luxury of making the decision. The decision's made for you yeah so just list it for whatever i can get rid of it for well you gotta i mean whatever the value is hopefully you can hold on to it long enough you don't have to sell it for 50 of what it's worth have you looked up on kelly blue book what it's worth yeah yeah well i have i've had it listed for about two months now at 19 000 what's what's kelly blue book say it's worth between 19 and 20 on private sale yeah have you got any nibbles at 19 uh no what is it it's a volksI 2015. Limited market. Okay.

Yeah. Yeah, you're going to drop that puppy. So if you sell it for $17, you're four in the hole, and if you sell it for $18, you're three in the hole. Where are you going to get the money? I have about $2,000. Well, I've got $1,900 in a savings account, and in another savings account I've got about $1,000. So you have $3,000, and you're advertising it at $2,000 in the hole.

You're probably going to burn all that $3,000. So it sounds to me like your wife and you both are taking extra jobs. Okay. Like now. Yeah. Well, she's planning on getting a job. She's not going to wait around as long as she can. She's trying to get another job for the summer,

and I'm planning on taking up another position at a different place as well. Good. You're going to have to. I mean, you're going to have to because you can't pay these bills otherwise because the problem with this car is you can't keep it, and you've got to be able to afford to get rid of it. Correct. And you barely could do that if somebody offered you 18 right now.

You'd be rolling nickels out of the corner of the couch to get there, right? Yeah. And you'd be down to zero money which scares the crap out of me i don't know if it does you but uh having zero money is a real bad plan that's one cough from homelessness so um i don't want you there but yeah you got to get out of this car i mean it's nightmare it's insanity on wheels and And everything about this decision was stupid. And it's just going to cost you. I mean, when I do something stupid, Jacob and I have done plenty of stupid stuff, and it costs me money.

I call it stupid tax. So you're getting ready to write a check for stupid tax. And the trick is to learn your lesson. And don't, you know, well, I well i got a job i can afford the payments famous last words of fools and i've been that fool and so have you now so don't be that fool again and learn your lesson from it cost you only cost you three grand four grand this time that you didn't have and it's going to put you in a pinch, and hopefully that will make you, you know, sear this lesson into your conscience and you just go, no, I'm not borrowing money again ever. You know, whatever we drive, we're paying cash for or we're not buying it.

I hope you learned that. John's with us in Hattiesburg, Mississippi. Hi, John, how are you? I'm doing good. Thank you for taking my call, and thank you for everything that you do. Thank you, sir. How can I help? Yes, sir.

Me and my wife, we're in a really bad situation. We make about $2,600 a month, and combined, that's take home after taxes and paying our employee insurance. And I'm part-time at work. She's full-time. I'm a full-time nursing student i've got one year left yay um yes sir and our debt is about equal to what we make we got about thirty thousand dollars in debt most of its medical bills we um my son he's two was a twin, and we lost his brother at six weeks old. Oh, my Lord.

And he spent two months in the NICU. And then shortly after that, she had an ectopic pregnancy, which was an emergency surgery, and she didn't have insurance, which now we know was foolish. But we're new listeners, and we don't really know where to start. I have an appointment at the end of this month with a one-on-one with a financial coach.

I just don't know what to do about it. Most of it's medical bills. We do both have a car. The first thing I would tell you, John, is that if we put a couple things in place, I think you can tread water until you get your nursing boards passed. And when you do that, your household income is going to triple

because you can make some really good money as a nurse, and you can get all kinds of extra jobs as a nurse temporarily if you need to to clean up some messes like this $30,000 in debt. So if we can just kind of keep you afloat for 12 months, then that's like your worst-case scenario. Your best-case scenario is you actually make some progress on the debt during those 12 months and clean up some of these medical bills. So thing one is I'm going to put you on a budget, a written game plan,

where every dollar that's coming in has an assignment on paper before the dollar gets to you. You and your wife sit down, go to everydollar.com and sit down and build yourself out a budget. It's a free budgeting tool and give every dollar an assignment before it comes to your house. That will make you feel like you've gotten a raise. You don't have a lot of wiggle room in your budget right now. You've not got a lot of money coming in so there's not a lot of wiggle room that's okay you're doing something about it you're getting your nursing degree you pass your boards your life is going to be better you're i see a light at the end of the tunnel for you brother you're going to be doing fine but that budget then any money you can squeeze

out of it goal number one is save1,000 as a starter beginner emergency fund. And then goal number two is we're going to list these debts, smallest to largest, and we're going to pay off a bunch of those tiny little medical bills because you've got a lot of $79 and $179 stuff floating around that's bothering the crap out of you. You get some of those off your back, then you can fight through the rest of them or hold them at bay until you get that degree and get your income out. Hang on. I'm going to send you a copy of the book, The Total Money Makeover, to help you.

This is big news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again.

A mortgage through Churchill could save you thousands, or better yet, reduce the time until you're debt-free. Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Heather's with us in Lubbock, Texas. Hi, Heather. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for talking to me. Sure. What's up? So my husband and I, as of last week, paid off all of our debt, and we are really, really excited. But now we are saving up for a down payment on a house, and I never had any debt. My husband had debt when we got married. We got married last year and paid it all off.

And I still have this credit card that has just been used but paid off every month so that I could, you know, quote, build my credit. And now we're trying to figure out what the best next step is. Do we continue to just use this credit card like I've been using it for a long time so that we can get a loan for our house with a better interest rate? Or do we just get rid of the credit card altogether and just try to go a different route for getting a loan for our house? Okay. There's only two ways to get a loan for a house at the premium interest rate, the best interest rate.

Okay. One is a very high credit score, and one is a zero credit score. Mm-hmm. And the way to have a zero credit score is have zero accounts open of any kind for six months or more. Okay. And then eventually your credit score will absolutely disappear. And you do not want to have a medium or low credit score. And so I'm a little bit afraid that you paid off all your debts and even if you keep using that card, your score may drop.

So I don't know. I don't know what it will do for sure. There's no guarantees on what the score is going to do or not going to do. But the only thing we know is you can get what's called a manually underwritten loan on a mortgage. Someone like Churchill Mortgage can help you do that um if you if you don't have a if you don't have any credit score at all which means every single account that's showing on your credit bureau report has to not only be paid but be closed for six months or for six months or more okay if that works for you then yeah go ahead and close everything. But you cannot play around in the middle ground and just say, you know,

we're only going to have one credit card and we're going to pay that off every month. Your scores are going to drop if that's going to happen. Because the credit score is only maintained by your interfacing, you interacting with that. And when you quit interacting with that, it starts to go away. It starts to erode and because it is not a measure of financial well-being it is a measure of how much you play kissy face with the bank that's all it is and so once you get that then you know you're there but you cannot you know the best way to get a house is have an ultra high

credit score which means you're paying a lot of interest. You're constantly paying, constantly engaging in debt. And, you know, your score may, if it's high now, it may stay up high enough for you to go ahead and get you a loan and then cancel the credit card after that. Or go the other route and just cancel them all. But make sure every single thing is closed. Very important. If you have one account open, you're going to end up with just a low credit score. Make sure every single thing is closed. Very important. If you have one account open, you're going to end up with just a low credit score,

and you don't want that. Carol is with us. Carol's in Miami, Florida. Hi, Carol. Welcome to the Dave Ramsey Show. Hi. Hi, Dave. Hi.

What's up? I'm an owner. Thank you for taking my call. Sure. Okay. I'm a single mom right now. I'm working. I paid off all my debts. I don't have any mom right now. I'm working. I paid off all my debts. I don't have any debts right now.

Good. However, I also pay my house, which is good. I pay my apartment. I have a two-bedroom apartment. But I own a house in New York that I had some tenants, but they didn't pay me for a few years. They were, I had to refinance, and I own $300,000 in a 40-year mortgage right now, which right now is being paid by itself because I have it rented again. And I don't know what to do with the property. I don't know if it's a good idea.

You should sell it. You should sell it. I should sell it. Okay. You know how I know? Here's how I know. If you did not own that property, you would not wake up one morning and go, I need to go buy a house over there and go $300,000 in debt to have a rental property. You only ended up with this by default. It was not your plan. Yeah, that's why you should sell it. It's not got, you know, and, you know, you've got a big honking mortgage on it, and every time that thing goes empty, you have a problem again,

and you don't need any more of these problems. And so I'd get rid of that. I don't think that's a blessing at all. I love rental property, but I don't think this is going to be fun for you. So, hey, thanks for the call. Nick's with us in Atlantic City, New Jersey. Hi, Nick. How are you? Hey, Dave. Doing good, man. It's good to talk to you. I appreciate everything you do. Sure. What's up? So I am a assistant pastor. Um, and so I make about 20,000 a year right now. It'll probably go up next year a little bit. My question to you is I have about

30,000 in debt, um, between student loans and credit cards, but that's all that I have. Uh, student loans are about 25, 26, and the credit cards are about $3,000 to $4,000. And I have three vehicles. They're all paid off. One's a car. The other two are trucks. And one of the trucks I just use, you know, in the wintertime when it snows, and it sits pretty much eight, ten months out of the year.

It's worth approximately $4,000 to $6,000 depending on the times and all that. So my question to you is, since they're paid off and it's not on my car insurance, so it's not costing me anything really, do you think I should sell it and then put that toward the debt? Or do you think, you know, since it's not really hurting anything, I should hang on to it? So you have $40,000 in debt. Did you say that? It's $30,000. $30,000 in debt.

And you said you make $20,000? Yes. Yes. Yes, I make between $20,000 and $25,000, give or take, after taxes. How old are you? 26. Okay. So what is your career game plan to get your income up? So I'll be finishing seminary here in probably about two years.

And then after that you know then i would i would proceed into a full-time pastorship ah okay all right very good so that's so that's why i know it's a lot of not a lot of money right now but i know that well i just wanted to i just wanted to hear that you were going somewhere with it all right that's good yeah oh yeah sure so um are you paying your paying cash for seminary as you go? Yeah, so actually the church is helping me for one and for two. You know, they kind of do a 50-50 match, plus the church is going to help me with the rest of it. So it will be probably 90%, and then the other 10% I can finish paying myself. Perfect. Very good.

Okay, so you have a $4,000 truck, and your car is worth what? The car is probably worth probably about $2,000, and then my second truck is probably worth $1,500. Okay. So, I mean, if you wanted to keep, like, the truck or something, I guess, for snow, that's fine, or why don't you just drive it and get rid of the other two? You are paying insurance on all these. Yep.

I'm paying insurance on all of them except for the big one that, like I said, it doesn't, you know, it's off the insurance in the hot, you know, in the hotter weather because there's no snow. But, like I said, I took it off the insurance the other day, and then I'm thinking to myself, like, why? Is this really worth keeping? You know, so that's why i wanted to call yeah i think i think it's a good idea to simplify your life right now you

don't need a car collection right now and particularly a collection of beaters um right because none of these are like anything that no no classic car there's no memory there's no nothing here it's just some junk sitting in the driveway. And yeah, I would pick the one I want to drive for the next little while until I get out of seminary, and I'd keep that one. And I don't care which one it is, and let's get rid of the other two. None of these are particularly out of line. It's just kind of a pile of stuff sitting in your driveway, really. I mean, it's just, and they're not going, you know, they're eating money. They're not making money. So we might as well use that and pay some of and they're not going, you know, they're eating money. They're not making money. So we might as well use that and pay some of that 30 down.

And, you know, you might scrape together $5,000, $10,000 between all this and pay it against that 30. That sure would be a nice push. So, yeah, I would do that. I think you're right. I think that's a good suggestion on your part. I would go with that and sell some stuff. Good question, man.

Thanks for joining us. This is The Dave Ramsey Show. Thank you. Our question of the day comes from Blinds.com. You can find out why for yourself that Blinds.com is the number one online retailer of custom window coverings. This is a cool story. So Jay starts this whole thing in his garage a few years ago. It becomes a multi-million dollar business, selling window blinds on the Internet. The guy is a world-class entrepreneur. Love this company.

They take great care of you. You can't beat their prices. Check them out. Blinds.com. All kinds of deals there. Always hit the blinds.com slash Ramsey or Ramsey promo code to get the deal, right? Yeah. Today's question is from Colin in Texas.

I'm looking to open a checking and savings account with an online bank. Been looking at Discover and American Express. I want to know what you thought of those banks. Or is there a different online bank you recommend? Thank you. Well, I don't do business with anything that has American Express on the front of it because they once asked my wife why she would stay with a man that wouldn't pay his bills, and she called me crying and said she was thinking the same thing.

So I'm done with them. That's what happens when a hillbilly gets mad. That was 37 years ago. I'm still pissed, okay? So I don't do any business with American Excess under any circumstances. And I really don't like doing business with Visa, but I have a Visa debit card through my bank. Discover pretty much has one goal in life, and that's debt. So I'm not sure why I would use them as my bank.

So overall, both of them sound like credit card companies to me, not banks. And my tendency would be to stay away from them for those reasons. Now, would I use an online bank exclusively? There's nothing wrong with that. If you check out their background and so forth, I am a little bit more old school, and I use what you would call a click and mortar bank, a bank that is a traditional bank but has tremendous online capabilities. And so I've got both. However, I've not been inside of a bank in probably years because of two reasons. One is I don't have any need to go in. I'm spoiled rotten. I have an accounting team here that does all of my one is I don't have any need to go in. I'm spoiled rotten.

I have an accounting team here that does all of my transactions. I don't go to banks. I don't need to. Um, so I've just spoiled. That's what that means. Um, I don't even go over there to deposit my own stuff. Other people do that, right? So that kind of thing.

So, uh, I'm a little bit of a weirdo in that sense. So I don't need an actual physical location. Most of us do transactions now. Ninety-something percent of our transactions are online. So there's nothing wrong with an online bank. I haven't chosen that route personally, so I don't have a recommendation for you. The other thing I look for in a bank is I actually want human beings around, even if it's online, that I can have somewhat

of a connectivity to. That's why I don't recommend you do business with the super huge banks, the Wells Fargo's, the Bank of America's, where you're pretty much a number, and they couldn't give a rip less if you're there, especially unless you're borrowing money. And so I use community banks and credit unions. Those are the two things I endorse in a lot of communities around America. When you turn on the Dave Ramsey Show, you'll hear my voice, which we don't put my voice on stuff I don't believe in

and our team hasn't checked out in detail. And so a lot of community banks, a lot of credit unions have my voice on it. And a lot of those have very high-end online experiences. And so, again, you get a click and mortar you get the benefit of a location where you can walk in and you know sally the you know or george the the teller uh and you get to know them over the years like in the old days if you're regularly making a physical deposit or withdrawal or something um you can do that you actually know the the branch manager, like in the old days. And they actually, in the smaller banks, actually have more power. A Bank of America branch manager has less power than the teller

in terms of waiving NSF fees or, you know, taking care of a problem or something, moving some money. They really can't even approve a car loan at the local level. All the decision-making is decentralized. And so in the old days, a banker was a pillar in the community, and they had a lot of power to make decisions. Now a banker is a joke in these large banks. Truly, it's like an entry level position

it's a horrible position honestly if you're a branch manager for bank of america i'm sorry for you um i really it's pitiful and so of course i'm obviously don't like bank of america i don't know why anybody does business there wells fargo they just make up accounts and put them on i mean and fired well they fired thousands and thousands of people for fraud. You know, so, yeah, just that's my thing. So online banking is okay. I don't personally do it, so I can't really tell you to go do it because I'm not hypocritical.

I love the small, the regional bank and credit union, and that's where I would send you. Laurie is in Elkhart, Indiana. Hey, Laurie, how are you? I'm good. Thank you for taking my in Elkhart, Indiana. Hey, Laurie, how are you? I'm good. Thank you for taking my call today. Sure. What's up?

I want to know if I should stop contributing to my 401K to put extra money towards my house payment. No. Okay. How old are you? I am 38. Okay. How much do you owe on your home? $74,000. Cool. What much do you owe on your home? $74,000.

Cool. What do you make of your household income? About $90,000. Okay. And how much do you have saved in your retirement accounts now? Retirement accounts are close to $130,000. Good. Okay. So we're telling you to put 15% of your household income into retirement at Baby Step 4.

In your case, that's about $10,000 a year. Does that sound right? Yes. Okay. And you wanted to put that $10,000 instead towards the house to pay it off faster. Right. Okay. And if we don't do that,

how much extra are you going to be paying on the house? We're paying $209 in interest each month on the house. That's what I want to ask. I said how much extra are you paying on the house? Oh, I'm sorry. I do apologize. That's okay. We were doing $100 extra up until about a year ago.

We ran into some financial issues with our house we had to waterproof it which cost us almost our whole emergency fund um have you got that rebuilt yes we have we've gotten it back up to about 13 000 okay here's what i would do all right the typical person working our system putting 15 of their income away for retirement living on a written budget to addressing kids college at whatever level you need to if you need to and baby step five any other money we find a bonus an inheritance a sale of an item or money we squeeze out of the budget we throw at the house the typical person is paying off their home in about seven years doing that the numbers you're giving me are more like nine years if we take the ten thousand and throw it at the house it reduces the nine to five

okay so the only thing we're having a discussion about is about four years you're going to pay off your house short of 10 years if you do what i'm teaching you in your with the numbers you gave me okay and then the only question is are you going to pay it off in nine or in five by abandoning for five years your retirement savings at 38 years old which i would not do that's going to make you a lot of money and so i'm going to put i'm going to stick right with those baby steps exactly you're you're right in the case study range of the stuff we use to develop the baby steps you're sitting there the age group the income everything and um you're sitting right there and when you run these numbers out two or three different ways that's what you're going to find so i love that

you want to get your house paid off and here here's my suspicion. Your income is going to go up during the next five years. Most people do. Most people's income goes up over time. If you go five years and don't get any income raise at all, something's wrong. Right? I mean, most people at least get a cost of living bump. Right? So you should get some kind of increase in your income.

And hopefully you're growing in your career. kind of increase in your income, and hopefully you're growing in your career, you're moving in your career or careers, and you're moving up that way. And so over that five years, we're not dealing with a straight line income. We're dealing with an increased income. Don't increase your lifestyle as your income increases. Throw the difference at the house, and that's how I get to your seven or nine years on your house instead of five, and I'm going to continue to invest in your 401ks. This is the data that takes you to millionaire status. Those are the data points right there.

Paying off the house and investing steadily in the 401k. This is the Dave Ramsey Show. We'll be right back. Kate's with us in San Diego. Hi, Kate. Welcome to the Dave Ramsey Show. Hi. Hi, thank you. How the Dave Ramsey Show. Hi. Hi, thank you. How can I help? Okay.

Well, here's my situation. I'm 55. I'm separated. I have a 16-year-old and a 22-year-old. I have been renovating our homes. I did a couple and selling, and I'm just about to sell one. And after all the debt's taken care of, I'll have $500,000. My husband, once we finalize the divorce, will take another piece of property that we own that's a piece of land as his.

We sort of had it written up, and that was what he agreed to do, although he wanted me to keep the house until my daughter graduated from high school, but I felt like now was the time to sell. So my situation is, you know, what do I do with the money? Basically, what's the best thing to do with the money? Part of me wants to sort of activate it maybe into another sort of real estate investment, maybe do like an Airbnb or a small rental. But I feel like the interest rates might be going up.

I feel like, you know, San Diego itself is very expensive. Yeah, I've heard the rumor. Okay. So where are you going to live? Well, right now I already got a rental that we're in because my two daughters are living with me. My 22-year-old came back and went to community college, although she's going to be leaving in the fall.

So I have this kind of month-to-month rental in San Diego right now. So right now you've got housing. Well, here's the thing. What I want you to do is do something that takes you where you want to be 10 years from now. A lot of the description, you've been kind of jumping around short-term, short-term, short-term, short-term in this conversation, and I think you'll make better short-term decisions if you have a long-term plan so where do you want to be real estate wise career wise home wise 10 years from now when you're 65 what do you want to spend the next 10 years doing and living and how does this 500,000 best take you there

right rather than oh let's go do a deal let's go do an airbnb and let's do another flip and that but no slow down let's go where do we want to be in 10 years and does that take you there if an airbnb takes you there because you want to own five of them do it but if you're just doing this my problem is i you know i i don't have a job history i've been a stay-at-home mother for 20 years and so so once I get divorced, I won't have much. It'll be difficult, I think, to access funding. You have $500,000. Right.

And the average home in San Diego is $440,000. Yeah, so that's part of it. You know, I'm not sure how important it is for me to actually own a home right now just for myself. Yeah. I think I'd be more interested in... What do you need, but I'm asking, you know, other than monthly income to live on, what do you need funding for? Oh, well, I guess I would need funding to get a decent sort of income property, but actually I don't want to have a mortgage.

I don't want to have funding anyway. So I'm just kind of confused. That's what I'm hearing. I'm hearing this. You're kind of still reeling a little bit from the uncertainty that this divorce has left you in. Okay? And that's kind of normal. I mean, like you said, you've been a mom for 20 years, and all of a sudden you're, so to speak, out in the cold, you know? And so it's kind of normal to be going, oh, God, what do I do now? But that's what I'm challenging you to do is to smooth that out by looking further into the future

and saying, okay, here's where I want to go. Now, what are the five steps, six steps, ten steps, two steps it takes for me to get to where I want to go? And how do I use that $500,000 to get me there? You've got your temper. Okay, well, let me ask you a simpler question if i decide to just wait for like two years and before i make any decisions and waiting for my daughter to go off to college what would be the best place to put the money savings account yeah yep okay you're not going to make any money on it but you're not going to lose any money if you put it in the stock market

buying good mutual funds like we suggest for long-term investing, it could go down and you could lose $50,000 and you can't afford to lose $50,000 of this. Okay, thank you. That's what I was thinking, actually. Every one of these dollars is too precious to put at risk. And so I wouldn't do that. If you just want to sit there and rent that house for two years and just camp and heal and decide what you want to do about the future, that's not a bad plan. It's not a bad plan. And then when you decide, then you've got that half million sitting there to activate

towards real estate, towards a career, towards a small business idea, or all of the above, you know, one of those things. And, uh, you decide I'm going to take some classes. I'm going to get retooled and have my own core career. It's time, which, by the way, it's not unusual at all for a lady between 55 and 60 years old to make the most money she's ever made in her life. And so that's a real possibility for you. We call those encore careers,

where you go and take a few classes, get a specialization, get something you've always been interested in, and you're free and you're passionate to do that, and boom, you can do anything. So if you need some more help, I'm here. You call me anytime. Daniel is with us. Daniel's in California as well.

Hi, Daniel. How are you? Living like no one else, so later I can live like no one else. Go for it, brother. How can I help? So I am 29 turning 30. My wife is 26. We are in what I believe you would call baby step 3B. We are completely debt free and we have six months worth of savings. I am currently in a PhD program that will probably last another

four to five years. So we are stuck where we are. We live in a special care room and board for care situation. So our expenses are very low and we're saving to the best of our ability and budgeting. So over the next four to five years, we're going to be accruing enough that when I do get an academic position that we can put down a significant amount

for a mortgage. So my question is, with this four to five year saving, how does one look for good savings accounts, money market accounts, where there's so many options and different rates? How do you make your money grow in this limited time period? It's's not going to grow much i mean you might get 1.2 you might get 1.6 or something but you're not going to get 9.9 you know and so there's not going to be a substantial difference in what you earn during this shorter time 98 percent of what is in this account when the smoke clears is going to be money you put in there and that's going to be the answer. So I really, just much like the last caller, I wouldn't put the money at risk.

I really wouldn't. I wouldn't play with it. If you've got $50,000, $60,000 or something, and you want to put $20,000 of it in mutual funds just to try to jack up some of the returns a little bit and take some risk with some of it, then that would be fine. But, you know, a high percentage of the two-year periods in the stock market's history are down. The vast majority, over 90% of the five-year periods in the stock market's history are up. And so if you can leave it alone five years, then investing in mutual funds starts to be very wise. But prior to that, anything, any shorter windows of opportunity can get you, you know, you can lose 5,000 of your 50. It could be done.

It can happen. So good question. We appreciate you joining us. Open phones at 888-825-5225. My husband recently lost his job, Heather, on Twitter says. I'm contributing 11% of check into my 401k, roughly $500 a month. Should I temporarily stop my contribution until we get back on our feet? Yes.

You're in the middle of a storm. You stop investing when you're in the middle of a storm. Temporarily. And you pile up cash and make sure you have a super, super large emergency fund. He gets his job, then he starts. If you still have your emergency fund in place and you're still debt-free, then you just restart at baby step four, and that's 15% of your household income going into retirement.

And so that's his and yours together times.15 going into some kind of a retirement. So you're underfunding now, but when he gets back on his feet, you'll get back to 15% of your household income and you'll be fine. Hey, thank you for following us on Twitter, Heather. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.