The Ramsey Show - App - Crunching the Numbers to Become a Stay-at-Home Mom (Hour 1)

Episode Date: November 5, 2018

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. I'm Dave Ramsey, your host, and we are here to answer your questions about your life and your money. While the nation is in the grips of election fever, we're going to talk about something that actually does affect your life. You. What happens at your house is a whole lot more important to your future than what happens

in the White House. Last I checked, nobody in any of these Congresses or state senates or governors' mansions have sent me any money. I hadn't gotten a check from any of them, unless it was a refund check. It was a portion of the big dadgum check I sent them in the first place, meaning they kept most of it and sent me a little back, make me feel good about them. What happens at your house and how you control your money is a whole lot more important than a lot of the stuff that everybody's sitting and squawking about right now. Yes, I voted. Yes, I believe in voting. But I have never waited on nor will I wait on a Democrat to change my life or a Republican to change my life.

If you are waiting on the president or a congressman or a senator or a governor to change your life, you're going to have a long wait. Meanwhile, your life's going to suck. Because they're not going to change your life. They're not going to fix your problems. That would be your job, boys and girls. It's your job. So this is a place where grown-ups gather around the radio.

And we're going to do grown-up stuff today. You take responsibility for your life, and I'm going to be your biggest cheerleader because I'm your biggest fan. I want you to win, and I'm going to give you some guidelines and some answers to some questions that hopefully lead you to winning. That's our goal. Pretty simple stuff, isn't it? Open phones at 888-825-5225.

John's in San Diego. Hey, John, welcome to the Dave Ramsey Show. Hi, Dave. How are you doing? Better than I deserve. What's up? So I'm getting ready to go to medical school in the coming years, but I just finished a bachelor's degree, and I'm about $70,000 in debt.

I know you wouldn't advise taking out more loans, so how do I make up enough to pay for that loan and then pay for medical school out of pocket seeing as how it's $200,000 plus for tuition? Never known anybody to do that. Yeah. I don't know of a way that when you're 22 years old, you make $250,000 a year or $125,000 a year in order to pay cash for med school. I've known people who their parents paid for their med school. I've known people who went so far in debt they couldn't breathe to go to med school.

I've known people that went to the military to go to med school. And I've known people that joined into hospital companies. And basically, the company put them on scholarship and they went to med school and i've known people who got a fellowship the md phd program that went to med school free i have never i'm not saying it hadn't happened i just haven't met anybody that has worked their way through med school now you can work your way through undergrad. Anybody can do that, and lots of people do that. But the $250,000 bill that's in front of you, you're going to get an MD-PhD program, which are very tough to get in, but you can get in them.

Obviously, the military will pay for it. And again, the one that's not so obvious that's overlooked is a lot of the hospital companies as a recruiting tool will pay for your med school. But you're promising to work for them. It's indentured servanthood for a while. So those are some things you can do. The problem with the model, John, is that when it doesn't work, it's a disaster. Debt only works when debt works, right?

If you borrow money to buy a car and everything's okay, you pay off the car, you keep your job, debt worked. It was no problem, right? You there? John? John? Well, there we go. Okay. End of that.

Anyway, the thing that just killed me, I mean, it's one of the worst calls I've had in years was last week. A young man that called up $438,000 in medical school debt, and he flunked out. And so what he's got now, what has he got now? He's got a biology degree in undergrad. And where's he going to go make the money to pay off $438,000? See, debt only works when it works. You know, I'm going to borrow money and buy this piece of equipment and expand my business. Well, that only works if your business expands and the people that you've expanded for pay the bill.

But not all vendors pay their bills. Not all customers pay their bills. And not all, you know. So the only way debt works is when you lay it out and all the positive things you have in your windshield all occur. But life just doesn't ever happen that way. All the positive things in your windshield never occur. It always costs twice as much as you think it's going to. It takes twice as long and you're not the exception.

Those are the three rules, right? And you just got to, you know, long, and you're not the exception. Those are the three rules, right? And you just got to, you know, it doesn't work. It doesn't work. Oh, I can afford this. I was sitting with some pastors a while back, and they're going, you know, the amount we're borrowing is so small on this church, you know, with our current budget and our current trajectory of growth, that it's irrelevant.

I said, no, it's not irrelevant, because you're one youth pastor scandal away from losing a fourth of your tithers, and your income will drop by 70%, and then you're not going to be able to make this mortgage. I wish I wasn't a prophet, but that actually occurred at that church four years after I said that. And they're deeply in debt now, and they're in a mess because they didn't do what Scripture says, which is avoid debt. And so you're presuming that everything's going to go positively when you borrow in any situation. You lay it out.

We're going to borrow money. Oh, it's no big deal. It's no big deal. It's no big deal today, but try losing your job. It's no big deal today, but try losing your job. It's no big deal today, but try 2008 occurring. Remember 2008? Some of you weren't born. I know.

But, I mean, it's – I was buying real estate for 15 cents on the dollar. You remember that? You can always sell it. I mean, I'm buying this property at 50% off. Yeah, but I bought it at 85% off after you bought it for 50% off and lost it in foreclosure to the bank. It presumes upon the future that you've got the future figured out in a positive way. Now, I like being positive about the future. I want you to be positive about the future.

But the lack of wisdom that's associated with this is unbelievable. And so I'm just not a fan. I'm not going to tell you to borrow money. I don't tell you to borrow money. I've never told you to borrow money. And that includes med school, especially after that. God, man, that guy last week, that was the worst one I've had in a long time because I don't know what to tell him.

That's why it was so bad. I didn't have a good answer for him. Most of the time I can give you a good answer and a good pep talk and go back in the second half and fight again you can you can catch up you're not too far behind but that's like going in at halftime and you're getting beat 63 to nothing in the football game well you tell the team we're screwed you know i mean that's all you can tell them it's like you know next half is going to be what's known as experience boys you're playing for pride because you had none in the first half and you know that's that's that's

all what do you what does the coach say when you're 438 none in the first half. And, you know, that's all. What does the coach say when you're $438,000 in the hole and you flunked out of med school and you have a biology degree? I just wanted to cry for him. I felt so bad. I wish I had a magic wand for him, but I don't. I wish I had one for you, but I don't. I do know that you're capable of doing things you don't even know you're capable of. And if I can get you to do that, you're going to have a life like you never dreamed. You live like no one else so that later you can live and give like no one else. I know you can do it.

This is the Dave Ramsey Show. are high health care costs getting you down are you confused trying to navigate your options do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org.

Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Joining me this segment, Rachel Cruz, Ramsey personality, also my daughter, and the host of the ever-famous Rachel Cruz Show on YouTube. Exploding. It's a new video series there and also on Facebook as well. And has absolutely taken off. Lots of things going on. And the money and marriage events.

Les dropped in. Les Parrott, your cohort in crime on that the other day. Oh, did he? That's fun. We got to talk a little bit about that in his new book and how good the marriage and money stuff is going. So when is the next Rachel Cruz episode launching? Today.

Today? So a new one's out. Yes. So it's all about spending money and spending it wisely like when do you spend out of your emergency fund when do you don't you know when you don't all the above everything around spending money very cool okay and you've got guests do i yes we do we have a great couple on we have woman's day on and, it's a lot of fun. Oh, I remember that segment now. I remember reviewing it.

Yeah. That's a good one. This is a good one. Yep. Good show. Yeah. Wise spending, not just spending money. Well, no.

But how you do it. How to get the most bang for your buck. Yes. And when you spend, when you don't spend. And a big one is people's emergency fund. A lot of people don't know, what is an emergency? When do I spend out of my emergency funds? That's a big question I get. And so kind of diving in that talking about that and yeah

there's a great couple that was on actually they are in staff meeting with us but they paid off uh they're in the middle of financial peace university in the middle of their baby step two yes their whole journey of paying off debt and so it's always fun to have couples on that have won you know like you do your debt-free screams right like people that have accomplished that but then people that are also in the middle of what they're doing whether it's always fun to have couples on that have won. You know, like you do your debt-free screams, right? Like people that have accomplished that. But then people that are also in the middle of what they're doing, whether it's Baby Step 1 or even Baby Step 2. And so they're just an inspiration because they decided to make a change recently. Like they've only been doing this for a few months. And so being able to ask them questions and figure out where their head's at and it's good.

You know, it's good to kind of talk to people and hear from people at every point in the spectrum like during the break i just met a guy who's a 48 year old everyday millionaire oh yeah and so um you know he's done the stuff and living that been living the life for a while living like no one else now they're in a position to live and give like no one else and then you meet someone who hasn't even started doesn't know what to do scared to death uh you meet somebody in the middle of their baby step two meet somebody's the end of baby step two debt-free scream um but and then some of them that are in the who's in the middle of their baby step two. You meet somebody who's at the end of baby step two, debt-free scream. And then some of them that are in the process of becoming the millionaire after they're debt-free.

So all those different positions. The spending is an interesting thing. You've said that the budget is permission to spend. And, of course, I was always the hardcore get on a budget you know live on nothing beans and rice and get everything paid off and shut up stop your whining and you were like no it kind of sets you free it's liberating it gives you permission to spend now one thing that i did say early in the early days i found this way back when i first started teaching financial peace university that um it was i didn't call it permission to spend. I called it guilt-free spending.

Because sometimes when you go something as simple as the grocery store, you feel guilty or worried that the money you just spent at the cash register to buy family groceries means that something else isn't getting done. I can't pay the light bill, or I'm going to be behind on the car, or I'm going to be late on the rent because of groceries. And so groceries generates guilt when you don't have a plan, something that basic that should never generate guilt. That's right. And then any purchase can do that.

Right. And so just the ability to have that plan. And we talk about that in the episode that, you know, there's different motivations to spend money. You're spending money because it's a need. Right. It's food. It's shelter.

It's utilities. It's transportation. You have to spend money. You know, right. That's the currency is money in our world today so you're going to have to spend it sometimes you spend it because you think it's going to make you happy and that there's this little thing in you and it's like okay if i could just spend that if i could just get that it'd be better my life would be more complete you know we have that we have spending that it's controlled

and it's a good thing you've saved up for something and now you finally get to spend it you know and even then people have a sense of they don't want to do it. That's right. Some people don't. And I'm having trouble letting go of this money to buy the item that I saved for. Yes. And then people that are even on the other spectrum where they've won kind of in that same vein, when they've won with money and they say, you know, I got this question just two weeks ago. And this girl was like, I mean, I've done it all.

I'm out of debt. I have my fully funded emergency fund. I just can't seem to like spend some. Like I can't seem to up my lifestyle because it just makes me too nervous. I just don't want to go back to this place. So the whole, you know, psychology around spending money, it's very interesting in the habits people have developed. So we talk about it all on the Rachel Cruze Show.

There you go. Do you see this? America doesn't because it's audio. But people watching YouTube right now. Yeah, there's several million watching you on YouTube. Well, YouTube can, I know. But if you're listening, the Rachel Cruze Show mug. You have a mug.

I have a mug. It's an official show now. I've had a mug and it became very official when I had a mug. And I decided, you know, why not bring it here? It's like a real. And America, tell him that you would buy this mug. Oh, no. Yes.

She's selling coffee cups. Oh, Lord, you have no shame. The Rachel Cruze Show coffee mug. You have no shame the rachel cruz show coffee mug you have no shame at all i'm just saying no standards whatsoever no bar i just i hit a low point just now but i'm very confident and i'm okay with it and i'm okay with it i think it's great so go on dave's instagram because he now loves instagram and comment on his latest post and just say i'd buy a coffee mug that's all all I ask, America. It's not that hard. Well, just go to Rachel Cruz.

Tell her. Well, no. I want you bombarded. I don't care. The episode is great. It's really fun. It's got a mug. I mean, it's an official show now.

We have a coffee mug. The mug's been there. That's the standard. I'm just going to bring it. That's how they tell in New York if they've got a show, is if they have a mug. I know. Now I just need something in it. You're sipping air.

It's okay. We'll get it. We'll get something there. Gulp, gulp. Oh, my gosh. Too funny. All right. You can see the new episodes and the old episodes, for that matter, on rachelcruze.com, and you

can go to the YouTube channel for Rachel Cruze. It's C-R-U-Z-E. And, of course, new episodes air on Facebook and YouTube every other week. When they air, they air live. The first one does. It's a live broadcast on YouTube, right? Yeah, it just comes out. Yeah, we release it.

And then you post it there. That's right. And you can go back and watch it on demand whenever you want. And all of that process. And like we said, it's an official. I mean, there's millions of people watching the show, but as of today, it has a mug. So there we go.

It's not a mug, but as of today, we've announced it nationally. I've announced the mug. I decided to. Unbeknownst to you, you had no idea what was about to happen. Things I don't have control over around here. Well, the Dave Ramsey Show has a mug. That's true. It's had one in different things for years, but that's because we give them away

out front. I don't think we've sold them to my knowledge, but maybe we did. You never know. We've sold a little bit of everything. Money and Marriage is coming up on November 8th. Yes, Thursday night. It's coming Thursday night. Yes, this Thursday. A couple days we'll be in Phoenix. Yeah, we're excited.

It's going to be great. The last one of the season. So make sure to check out some spring dates that will be, they've launched. So you can go on rachelcruz.com or davramsey.com, buy tickets for the upcoming marriage and money events that are going to be this spring. It's less parrot and you. Yes. And we typically have about between 2,000 and 3,000 people at at these events and they've been selling out um i did not look at the report this morning on phoenix to see but i think we do have some tickets left for november the 8th thursday night and the next day i'll be teaching all day in

phoenix um at the entree leadership one day that's right i didn't realize that we're gonna be we may be thursday night passing in the air yeah that kind of a thing i'll be coming in while you're on stage actually thursday night because. Oh, there you go. Because I'm up first thing on Friday morning there in Phoenix. And then the SMART conference is coming up in Dallas January the 12th, which, of course, includes Rachel and Les. Let me circle back to that marriage and money event, though. What is it you and Les cover in the marriage and money event? Well, he is a marriage expert, right?

He's been a psychologist and marriage counselor in this space. So he talks a lot about communication in the first part and Money event. Well, he is a marriage expert, right? He's been a psychologist, a marriage counselor in this space. So he talks a lot about communication in the first part of the event, setting up your communication style with conflict, all the above. And he's great. I mean, he's so smart and hilarious. He's a great storyteller. So you learn so much great marriage info with him. And then I come in after the break for about an hour and

take what you've learned from him. So taking those communication, those points, and then relaying with money. So how do you talk about money with your spouse? And so we go through six different money conversations to have with you and your spouse that you may have had, you may have never had. But we find that talking about money can be intimidating. It can be vulnerable. People don't even know where to begin. And so really starting that dialogue on these six different areas of your life for you guys to get on the same page because it's a tension point.

And money, it can be a friction topic for a lot of couples. So we're there to save the day, America. So we'll give you some great tips on how to communicate well. Important information. Does the Marriage and Money Seminar have a mug? No, but the Rachel Cruze Show does.

It's not official. Alright. Hey, the Smart Conference coming up January the 12th in Dallas. Money and Marriage February the 14th in Nashville. April the 1st in Kansas City. 15th of April in Des Moines, Iowa. And May 16th in Dallas, Texas. Check out everything Rachel Cruz at rachelcruz.com.

Thanks for stopping by, Rachel. Yeah, thanks for having me on. This is The Dave Ramsey Show. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice.

This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance, since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps. That's Zander.com or call 800-356-4282 zander.com

in the lobby of ramsey solutions, Corey is with us from Chicago. Hey, Corey, how are you? What's up, Dave? How are you doing? Better than I deserve. Welcome to Nashville. Thank you for having me. And you're here to do a debt-free scream. How much did you pay off?

$180,000. Woo! Love it! And how long did this take? Three years and six months. Way to go, man. Good job. And what was your range of income during that three years and six months? Anywhere from $95,000 to $160,000. Wow.

What do you do for a living? Physician assistant. Okay, cool. So why the big range? Overnights. Oh, yeah. Okay. Take on all the OT you can get and the overnights pay double.

Exactly. Yeah. Wow. Good for you. Well, that'll knock it out. 180 was med school debt? Yeah, basically three and a half years of undergrad school and undergrad. Is that all there was? About 5,000 in credit cards. Okay. So what made you decide to do this so quickly and believe that you could? You know, someone close to me was doing the debt-free

thing. And I was like, I came out of school. I was like, I'll do, you know, 20 years or whatnot, pay it back slowly. But, you know, she was on board with it. You know, she recommended that I, you know, take a look at your book and basically, you know, listen to your podcast. I read that Totally Money Makeover. And after I read it, I just was all in.. Just game on? Game on. Just like that. You're single? Single. So you didn't have to talk anybody into doing this. Exactly. But you didn't have anybody harping on you if you didn't do it. Right. Yeah. So you don't have the accountability, but you also don't have to drag anybody. So very good. Cool. So what do you tell people the key to getting out of debt is? This is remarkable. Very good job. I think the

biggest thing is, I mean, well, obviously you've got to have a budget, but to have a of debt is. This is remarkable. Very good job. I think the biggest thing is, I mean, well, obviously, you've got to have a budget, but to have a strong support system. I mean, I was super fortunate in the fact that I had people in my corner that were respecting what I was doing. You know, they were proud

of what I was doing. Like who? My parents, my friends, my co-workers. So you didn't have a lot of people telling you you were crazy. You had more cheerleaders. Yeah, it was amazing.

And I'm so grateful for that. It was awesome. But I think the other thing is, too, just being patient and just really trusting the process and believing in yourself that you can make it happen. And then finally, I mean, you just got to sacrifice. I mean, right now I drive a 2004 Suzuki Verona. I live in an apartment complex in Chicagoago that has been renovated since like the 80s but uh yeah okay and um so i'm guessing the 160 was last year and you just turned the heat up

you could see the finish line you turned the heat up sprinted for the finish line yeah i just i mean some months i do 11 or 12 overnights um and i just kept doing it and doing it and it was tough it's just it's exhausting i mean you're not sleeping you know and it's just it's just it's a tough gig but yeah very very tough okay so that last year how much of the 180 did you pay um i'd say probably 75 to 80 yeah well approaching half yeah yeah not quite but that's what i was gonna guess i was going to guess you turned it up so you kind of got started and had some success and then you turned up the heat a little had some more success and by the time you get to year three you just turn it

up wide open blowtorch exactly because i had a thing on my wall of how much i was dead and how much i was paying off and that just kept on going you know lower and lower every time i was yeah and that'll make you work like a crazy person. It will. I mean, when you measure for results, it'll make you go crazy. I just about killed myself snow skiing because we put an app on my phone, how fast you're skiing that run. And if I didn't know how fast I was skiing, I was just skiing fast and I was having fun. But when you're trying to beat the other run, you'll kill yourself.

Yeah. I put myself in the hospital, man. It's unbelievable. I was trying to ski my age. So I'm making sure I was going 60 miles an hour at least, you know, and it's just nuts. But the same thing here. Once you have something to measure against, you're like, you'll go all in. It turns up the heat.

Definitely. Very, very, very cool. Very cool. So how does it feel? Amazing. I mean, I'm speechless, really. I love it. Yeah, it's great.

How many of your peers around you that are PAs or docs or nurses have done the same thing, and how many are just going to be in there for 20 years? Unfortunately, not many went down the path I went down. Yeah. They can. They can still decide. But, yeah, you came straight out of school, turned it on, and then turned it up, and then turned it up, and then turned it up, and blew through it.

Yep. Yeah. Very, very well done. Well, I'm proud of you, man. Thank you. Appreciate it. Congratulations. Thanks for making a trip to Nashville to do your debt-free scream.

Thank you for having me. Very cool. We have a debt-free dock in Chicago, so if anybody needs one, we know where to go. Very good stuff. Or PA, anyway. But, yeah, same thing. Good. Very good.

Very good. We've got a copy of Chris Hogan's book for you, Ret for you retire inspired it's the next chapter in your story for sure uh not only debt free but now millionaire on the way plus multi-millionaire in your future as well so you're set up dude you're in a position to give like like you're gonna be in a position to do all kinds of stuff you never dreamed well you did dream about it's why you went to med school's why you did all this work all this extra study and you hoped you would get there so well done very well done cory from chicago 180 000 bucks paid off in three years and six months making 95 to 160 count it down let's hear a debt-free scream i'm debt-free yeah Yeah! Well done! Yeah! There we go! I love it.

I love it, I love it, I love it. Very, very well done. Open phones this hour at 888-825-5225. Jared is in Birmingham. Hi, Jared. How are you? Hey, Dave. Good to talk to you.

You too. What's up? Hey, so I've been with my employer for about eight years now, and the whole time been contributing to a regular 401K. But I was happy last week to find out that they're offering a Roth 401K now. Great. So my question mainly is, should I fund separately a Roth, or should I move everything I've got now into a Roth,

or how should I approach that, because I definitely want to fund one. Yeah, I would start from this point forward making your 401k a Roth. That doesn't cost you a dime. Okay? Okay. The matching portion, do they match you? Yes, they match up to 6%. Okay, the matching portion cannot be roth

by definition by law and so it'll be regular you'll have your old that's regular traditional and then you'll have your new that's a roth anything whether it's the matching or the old that you convert to roth you're going to be taxed on but not penalized on. I would not do that until you are at baby step six or seven. Okay. Are you working on getting out of debt and that kind of stuff? Yes, sir. I'm on steps four, five, and six now. I've been going above my match 9% into a regular, well, a Roth IRA.

And so I guess... regular Roth IRA. You can continue to do that or you can just do your Roth 401k. But either one, I would keep you at 15% total between the two, 15% of your income. That's your baby step 4. Baby step 5 is kids college 6 is pay off the house early. And then how much is in your regular current traditional 401k it was close to a hundred thousand for this latest sell-off now it's closer to 90 okay and so um it

would cost you roughly 25 grand in taxes to convert that to roth and i would not do that um unless you've just got an extra $25,000 laying around in cash. And right now, you've probably been doing kids' college and house debt reduction, paying off the house early, and probably don't have that money. How much do you do? What's the balance on your home? Right now, it's about $131,000. My goal is to have it under $130 for the end of the year.

Okay. Let's not convert anything to Roth right now then, except your new contributions going forward. So I would not take your old eight years and roll it to Roth because I don't want to pay taxes on it today, and I wouldn't even take the match and roll it to Roth because you have to pay taxes on it today. Let's get the house paid off.

When the house gets paid off, then reach over and with cash, be ready to pay the taxes that are created and roll it all to Roth. Are you in your 30s? Yes, sir. I'll turn 30 in September. Oh, man, you are killing it. Very well done, Jared. Proud of you.

Good job. Very good job. Love it. Hey, man, thanks for calling in. Open phones at 888-825-5225. Michael's on Facebook. Dave, how much term life insurance should I buy and for how long? We recommend 15 to 20 year level term because that's enough time to get the mortgage paid off, the kids grown and gone, and build some wealth. And we recommend 10 to 12 times your income as the amount. And so if you make $50,000 a year on you, you would buy, you know, $500,000, $600,000.

Same thing on your wife. And in 15 to 20-year level term. And check Zander Insurance for the best rates anywhere. Zander. Z-A-N-D-E-R insurance.com. This is the Dave Ramsey Show. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure or you pick the wrong color, they'll remake your blinds.com they have a 100 satisfaction guarantee that means even if you mismeasure or you pick the wrong color they'll remake your blinds for free they have site-wide savings

happening right now plus you can take an additional five percent off at blinds.com slash ramsey blinds.com slash ramsey christy is in ohio dave I'm working on Baby Step number one, and I work for a local community college that takes out a mandatory 20% into retirement. I know that all contributions should be stopped until debt is paid. Any thoughts on this type of a system that my college has in place? It feels like so much money is being taken out of every check to go into retirement. It is a lot. That is a lot. And the fact that it's mandatory, man, that's amazing.

I mean, I know a few places that have a 12%. Some of the railroad situations have that, that kind of thing. 20%, that's unusual, and it's unusually high. But it's, you know, you took the job. That's what you signed up for. So you just have to decide, you know, are you willing to work there? And if you are, then obviously you're not losing the money It's going into retirement of some kind

I don't know the structure of the retirement account But it's a lot But it's not the end of the world Because at least it's not, you know, it's not a tax It's money that's actually going there for your use someday. Michelle is in Los Angeles. Hi, Michelle. Welcome to the Dave Ramsey Show.

Hi, Dave. It's great to talk to you. You too. How can I help? Thank you so much for, first of all, being the smart dad that a lot of us never had. I listen to you all the time, and I think, gosh, I missed out on so many great things with my father. So thank you again. You're very kind.

How can I help? So my question is this. I have five young nephews, and rather than loading them up with a ton of gifts during their birthdays and Christmas every year, I've set up custodial accounts for each of them that are invested in a S&P 500 fund. Good. I'm just not sure. Is that the best option? Yep.

Do you have any advice? Yep. That's about all you can do. The custodial account is, I assume you're the custodian? Yes. Okay. And so the money is in their name. It's called a Uniform Transfer to Minors Act,

and they will become the owner of it regardless of what you want at age 21. The taxes on it are at their tax rate, which is none for a long time until the accounts get to have sufficient size or substantial size, so it's a good way to do it. The only other thing you could do would be for those to be 529 accounts or esa accounts if the parents aren't putting anything aside for college and then it would be designated for college um this is not designated for college it's just you're building a mutual fund in the kid name that's all you're doing and you know all that so So, you know, obviously you made the decisions for those reasons. You can control it. You're the custodian.

And, you know, what I would do is start, as they age, trying to have some influential conversations with their parents present on the amount of money that's here so that kids do better if you ease them into this information rather than, you're 21, you have $200,000, congratulations, which activates all the stupid cells in their brain usually. But if instead you ease them into it and explain to them this is not a gift, this is a responsibility, it is a gift, but with that comes the responsibility of you, the young person, being wise. And my intention is that you use it for education or that you use it for something smart,

not a trip around the world in a hot air balloon or something, right? Correct. And their parents are Dave Ramsey fans, so they're already down the path of teaching their kids well. Okay, that makes it easy then. But let's say there's $20,000 in there and you're dealing with a 12-year-old someday. Then you can start having some conversations

every couple of years over a cup of tea with them and their parents sitting there. And this is a gift I've done for you guys. Here's why I did it. I want you to be able to do this kind of thing for your nephews and nieces when you grow up. And here's some ideas and things you could do with this. Here's my intent. Here's my wishes.

It's technically your money, but I'm going to have some influence on you during this 12-year-old to 21-year-old period of time by having conversations, assuming that's appropriate with relationships with the parents and those kinds of things. So, hey, good question. Beautifully done. It's a good idea. April is with us in Wilmington, North Carolina. Hi, April. How are you?

Hi, Dave. I'm great. Thanks. How are you? Better than I deserve. How are you? Hi, Dave. I'm great, thanks. How are you? Better than I deserve. What's up? My basic question for you is, should I sell my home to pay off debt? My husband and I started the FPU in January.

We're currently in baby step two. We bought our home before we heard of Dave Ramsey. How much is your house? Our house payment is about $2,900. And what's your take-home pay a month? $15,400. Okay, good. All right, what do you guys do for a living? We are both nurse anesthetists. Very good. Excellent job. Excellent job. Do you like your house? Thank you.

We do like our house. No, I would not sell it. No, I would not sell it. We have $196,000 in non-mortgage debt that we are just trying to get out from under. And the reason that we... But you're making $200 a year. Yeah, well, I don't want to work anymore. I want to raise my baby.

Or at least work very part-time. You're a nurse anesthetist. You went to all that expense and you're going to quit. Well, I would just work part-time while they're little. And then I would go back to full-time work when they're older. And how many do you have? Two. Okay.

All right. So your idea, your tradeoff is I'll live in a smaller house if I can stay home and work part-time. Correct. Okay. Okay. If you want to do that, that's fine. That's different than I need to sell my house to get out of debt because you don't. You both have careers that you're currently making $200,000,

and if you turned up the heat, you could get that to $300,000 pretty quick if you both did that. I mean, I'm talking overtimes and weekends and uh picking up emergency room gigs and all that you know what i'm talking about you are in a career that is a money-making machine and you got a lot of debt so if you decide to go the other way and say we're going to keep the house and we're going to turn the heat up completely and i mean we're both going to work like crazy like 60 80 hours whatever is allowed right and we're just going to go mean, we're both going to work like crazy, like 60, 80 hours, whatever is allowed, right? And we're just going to go bananas, and we're going to go to 300, and we're going to knock this debt off in two years,

and then we're going to go on with our life. And then I can stay home and keep the house. You could do that too. That would kind of be a more normal process. But I'm okay if you want to go the other way and say, all right, we're going to cut the income down. He's going to turn up the heat. I'm going to stay home, work part-time, and we're going to be in a cheaper house, like

a house that the payment is half of this. Right. And then move back up and house later, you know, but obviously keep all your boards and all your certs and everything current because you paid a lot of money to get a money-making machine of a career, and I would never want you to lose that. I mean, you guys can make more money than a lot of docs. You're aware of that, right? Yes.

Yeah. I mean, I've met with nurse anesthetists for years, and I mean, I've seen them make $400. Right. After a few years of experience and getting the right gig and all that, and then turn up the heat. So you're sitting in a position seriously. I mean, you've got a little combine there. You can just bail you some money.

But it's okay if you're going to choose kids. There's nothing wrong with that. And, you know, it's a good choice. Kids should come before money. I'm with you on that, right? So you're just going to, you know, you just going to drop the house and drop your income down, and he's going to turn his income up, and we're still going to be on beans and rice, rice and beans,

and get the 196 paid off. Because I assume that's med school debt, right? A hundred is. And then, well, a little over a hundred is. And the rest is just life. How much of that life is cars? That in life is two cars with a total combined payment of about a thousand a month. Oh, sell your cars.

There's what you ought to do. If you want to sell something, sell your stupid cars. That's a lot smarter than selling a house. You're a car poor. Okay, now we got to the bottom of it. 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. Keep listening for more inspiration.