The Ramsey Show - App - DAVE RANT: Fear and Hope Are More Contagious Than a Virus (Hour 3)

Episode Date: March 16, 2020

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🎵 Thanks for joining us, America, 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'm Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. 888-825-5225.

Zachary is on the line in Arkansas. Hey, Zachary, welcome to the Dave Ramsey Show. Thanks, Dave. How are you? Better than I deserve. What's up? My wife and I are in baby step number two. We have $8,700 of total debt left until we're on to baby step three. We can pay this debt off by the end of the month. How we're going to do that is we have a tax refund, a bonus, and then we would cash flow the rest out of our budget. With us having about $7,000 of cash on hand to pay this off, would you hang on to that with everything going on around us, or would you just pay off

the debt and be free of that and then move on to the three to six months emergency fund really good question well what we always tell folks is if a storm is coming or if you've got a time of serious uncertainty uh like you're you're in a you're you know aside from the time we're in now if you're just your company was doing some layoffs and you're worried about your job or your uh your wife's pregnant got a baby on the way or anything like that, then we don't do the baby steps. We just push pause, push pause in a time of great uncertainty. And then you would just pile up cash until the storm goes by, whatever it is.

And when the storm goes by, then you push play again, and you would use all of that cash down to $1,000 to become debt-free. Beyond that, build your emergency fund. Beyond that, start your 15% going into your retirement and so on. So you would just push play again and work the baby steps straight up with that pile of cash. So you don't really lose any ground that way. Now, in this current situation, the way I think that would be an individual determination as to whether you press play or whether you just go ahead and do your plan or, you know,

you keep going and you knock out the debt or whether you push pause and use this money to pile up some cash. And that has everything to do with the stability of your incomes in this current environment. How strong are your companies? What are your careers? Our careers, I'm in logistics. My wife is a teacher. You know, we haven't been informed that we're going to be laid off.

We're both working from home right now, but you just never know what the next day brings. So that's kind of why we're on the fence. Part of us wants to just be free of it, but at the same time, having, you know, a three to four month emergency fund kind of buffer right now would be very peaceful, you know? Yeah. Well, I mean, so no one ever knows about tomorrow on anything, by the way. But, you know, her job, you know, she's going to get paid. Right. And I don't know your company, what they're going to end up. They may furlough to try to turn the corner, or they might even do some layoffs to try to turn the corner.

I don't know if you get caught sideways in that or not. But, you know, I think if you've got some level of fear like that that that is realistically based and there may be some that's realistically based then i'm just going to pause and have that pile of cash but don't try to do both don't sort of do this either do it or don't based on the probability of you having a problem the higher the probability of you having a problem a mild worry because everyone else is afraid and freaked out, that's not a reason to push pause. I'm looking at the actual financial condition of my current company,

and I'm worried about being laid off. That would be a good reason to push pause. Yes, sir. Your wife, you can't really say she's going to lose her income. That's such a low probability. That's just a vague worry. That's just being scared because everybody else is. Yeah, I think hers is a little more secure.

I've been laid off before in this industry. I don't have a fear necessarily, but I just think it's easier for me to be furloughed or laid off. Yeah, I think it is. The good news is logistics. You just got a supply chain. You got a great career, and you'll jump right back into something but you could have a really rough month or two that's possible so i'm with you i'm okay if you push pause and just pile it up now when you get when this when the smoke clears everybody's back at work you're not working from

home and you know you feel good about the stability of your place again uh which you wouldn't have taken the job in the first place if you didn't think they were stable. So when you again feel good about the stability of it, that may be 30 days. It might be 60 days. Then you push play again, and you reach over and pay that stuff off. In the meantime, pile that cash as high as you can pile it. Okay. Yes, sir.

We'll push pause. I sure appreciate it. Thanks for the call, man. Appreciate you joining us. Alex is with us. Alex is in Indiana. How are you, Alex? Hey, Dave. Thanks for the call, man. Appreciate you joining us. Alex is with us. Alex is in Indiana. How are you, Alex? Hey, Dave.

Thanks for taking my call. How are you? Better than I deserve. What's up? So a quick one. My wife and I just got out of baby step two in February, so we're getting started on step three. I did have a question, though, regarding since the market's kind of going down,

my company offers a 401k match. They offer 4%, and I was wondering if it should contribute just enough to get the match, and then from there focus the rest of our efforts on funding the six-month emergency fund? Absolutely not. Never start investing until you have your emergency fund in place. Dude, you're square in the middle of a national emergency. You need an emergency fund. Okay.

I'd love for you to be able to invest, but you're putting yourself at risk, and I'm just not going to tell you to do that. No. Gotcha. Okay. Easy enough. Thanks for the call, man. Open phones at 888-825-5225.

Listen, guys, if you don't have your emergency fund in place and you have an emergency, you will use your 401K money. And it is a lousy emergency fund. Because if you take your 401K out early because you're having a dadgum mess, it's a 10% penalty plus your tax rate. They're going to hit you 35%, 45%. It will take half your dadgum money no you put grandma's rainy day fund in place and if you're married you're going to see your wife

relax because she is wired by god to want an emergency fund she is wiser than you and then she will lead you to having an emergency fund. It's just her nature. It's a wonderful thing, by the way. It's wisdom. So that's a compliment if you want to get pissed off at me, but that's fine. Somebody gets mad about everything. But anyway, so now really it's an incredible thing. So absolutely.

Open phones at 888-825-5225. You guys jump in. We'll talk about your life and your money. A number of guys out there. I'm a numbers guy. You all are numbers guys. I'll be honest with you. I kind of hate accounting.

I don't like to do accounting. Small business taxes, no thank you. You guys, that's too complicated. I want to spend my brain cells, what few of them I have, concentrating on anything but the IRS. I'll let somebody else do it. I don't pull my own teeth either, by the way. So I get a professional.

Check out our tax-endorsed local providers. If you run a small business, you need a professional to do your taxes. If you've got a complicated return, you need a professional to do your taxes. If you've got a complicated return, you need a professional to do your taxes. DaveRamsey.com slash ELP and click on Tax Services. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say, I love you. And yes, this is an ad for Zander

Insurance. But since this is one of the most effective ways I say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. you guys know fear is more contagious than a virus you hang around with a bunch of people who are terrified, you cannot keep from becoming terrified.

You know what's as contagious as fear? Hope. You hang around with a bunch of people that are hopeful. It's not a Pollyanna. It's not a stick your head in the sand and ignore the facts. That's not the point. But the point is I really have my perspective correct, and I know that by this time next year, probably by September,

the vast majority of this and the effects of it are going to be a distant memory. I'm old. I've seen a bunch of the stuff that was going to bring into the world come and go, and it just didn't work out for them. There's been something trying to bring it end to this world for a long time and it hasn't worked out so far. I don't think this world is going to end until God decides it's going to end. And so just remember, if you back up, if you pan back a little bit, it sure is easier to keep calmer and really watch what your inputs are. What's your input?

My friend Zig Ziglar used to say, read the Bible and the newspaper every morning. That way I can tell what both sides are doing. So, I mean, you need to have the input. Some of you don't know what a newspaper is. Look it up. It's in Wikipedia. But remember your dad shaking it out and getting it right?

Yeah. Be able to read it. A long time ago, wasn't it? Newspapers hadn't been thick enough to shake out in a long time. But anyway, yeah. It's going to be okay. Perspective, if you pan back and you go, look at all the other disasters that were going to bring

an end to the stock market bring an end to your career bring an end to your life as you know it and they just didn't as disasters go they generally are fairly disappointing and so you're going to be okay you'll be okay i know some of you're going through some stuff man that's why we're here. We're here to help you. I am not overlooking that. I am not looking down on that. I am not any of those things. I've got some extra stress right now that's very real. You know, I'm responsible for a thousand people in this building. We're washing everything in here. This place looks like one big swath of hand sanitizer.

The whole place smells like hand sanitizer. It's crazy. We've wiped everything down to CDC standards and oh my God, on and on and on and on and on and on and on. But you know, hey, it's a smart thing to do. It's the right thing to do. You know, you don't want to create a situation where people get sick. But on the other hand, I'm not going to sit in my home and suck my thumb and be afraid. I'm not going to live in fear. Fear is contagious. You guys be careful with it. It's, it's what it brings wisdom because it doesn't let you play in the traffic and doesn't let you do something dumb that brings harm to you. And I don't want you to do that either. But the truth is that hope is contagious too. And hope really, hope deferred, hope put off makes the heart sick.

But when desire comes, it is the tree of life. And God says that he didn't come to, he's got a plan for you, and it's not to bring harm to you, but to give you hope. Hope is a real thing, and you need to just stop and breathe that in. Have enough fear to be wise, but not to be paralyzed,

and unwise, and overreaching, and overreacting. When you overreact, you double the cause of the car wreck. I almost did that this morning. All right. Coming up is Dylan in Pennsylvania. Hi, Dylan.

How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? All right. So I have two kinds of stupid. I have federal and private student loans, and I want to consolidate them to actually save some cash on my private student loans,

which have a super high interest rate. But the thing is that with the current turn of events with 0% interest rates on federal student loans, I'm wondering if I should actually put them in there or not. Are they allowing you to? I didn't think you could combine them. Yeah, they're actually – they just said that I could combine anything. I don't know. It's through Splash.

They've been very helpful. Splash says you can put them together and you can get 0% on everything. Why would you not? That's kind of a no-brainer. Mm-hmm. Okay. What would be the downside of that? I was under the impression that their rates were not

going to be changing um oh splashes rates they include private student loans i'm sorry i misunderstood you you can cut you can combine them but you don't get zero on everything no i get i would get zero on my federal if i don't combine them or I combine them and they'd all be considered private at that point in time, and my rate would still stay fixed at whatever the underrate is. So your rate would be what if you combine them and they're private? If I combine them all, I get 4.71. If I don't combine them or don't consolidate um my federal then those stay at zero for a temporary amount of time until your first i got you okay so what's the balance on your privates

private student loans um a whole lot of stupid uh about 80k in principle at about an 8.7 percent interest thank you 80k at 8.7 and what is the federal federal is average of about 4.5 percent interest for about 20 okay so you can run the math out here okay so you either say 4.5 on 20 or you say 4.5 on 80 because if you do the federal down to zero you drop you get rid of that four and a half at 20 000 right that saves you four and a half percent on 20 but you got the other 8.7 and you can drop it to four point you said four point what one uh 4.7 4.7 if you consolidate so you can say four percent on 80 grand and you're going to go up 0.2% on 20 grand. You're going to pay less interest that way, a lot less interest.

So you combine them, and you take the 4.7. It's a better deal than zero on 20. All right. You see what I did? If you want to check my math, here's how you do it. If you want to check my math, here's how you do it. If you want to check my math, here's how you do it, okay? Take 8.7 times 80 for your annual interest charge in dollars. Okay, it's going to be about $6,900 or so, okay?

And then you take 4.5 times 20. And so what's that going to be, $900, right? Okay, I didn't do that right. Yeah, I did do that be, $900, right? Okay. I didn't do that right. Yeah, I did do that right, $900. Okay, so you put those two together, and that's your total interest charge today. And then you take 4.7 on $100,000, the $80,000 plus the $20,000, and that's $4,700. And so if my $6,900 was right and my $900 was right, that puts you at $7,800 versus $4,700. So I just saved you $4,000 a year.

Okay? I did the math roughly in my head. It might be $100 off one way or the other, but it's pretty close. Sounds good. But do you see how I did the math? So you can go back and check it yourself. Run out the interest the way it is and the interest the way it would be and compare the two numbers 4.5 times 20 8.7 times 80 add those two numbers

together or 4.7 on 100 which is your two balances combined under the new refinance plan that one's easy that's 4700 okay and then you when you compare those you're going to see about a three thousand dollar swing by doing this refi with Splash at 4.7. So that's what we're going to do. Ding, ding. Got it. Got there. Takes me a minute, but I'll come around.

Open phones at 888-825-5225. Can you tell I was a math nerd in every grade? I love this stuff. I was the kid with a pocket protector and a calculator on my belt. So there. That was me. So that was not the cool kid. But there you go.

But that's that. You know, you learn how to do things like that because your brain just works that way. And I love that stuff. And what a great thing, though. We just saved that guy $4,000. And it didn't cost him anything. See, Dave Ramsey just rips you off every day. That's what I do here.

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so Thank you for joining us, America. Paige and Kevin are with us in California. They're debt-free. Way to go, you guys. Hi, Dave. Thank you. Absolutely. Welcome, welcome.

How much have you paid off? $27,000 in about 15 months. Wow. And your range of income during that time? We started about $40,000 and we ended at about $90,000. Way to go, you guys. Very cool. So proud of you. What a wonderful thing, man. That's amazing. So what kind of debt was the $27,000? Student loans. All of it? All of it. All of it.

Oh, stupid Sally Mae. Okay. And what do you guys do for a living? I work actually at the university where we got the student loans from. And then Kevin. I work actually at the university where we got the student loans from. And then Kevin. I work in IT. Okay, cool.

What do you do at the university? I coordinate tutoring and do academic support. Good for you. Very cool. Yeah. So what happened 15 months ago that put you all on this journey? We got married. Oh, that'll do it.

Okay. We kind of decided to take it seriously. Okay. So we get married, come home from the honeymoon, and tell me how this went down. Tell me what this sounds like. Well, actually, when we started dating, we took the foundations course together through our college. And as we kind of went through it, we had a lot of conversations about what we wanted our lives to look like when we got married. And so we kind of knew that we'd be working on our debt as we went along.

And then once we got married and started working full-time, we were really able to kind of ramp things up and start kicking Sally Mae to the curb. I love it. Way to go, you guys. So, so fun. Congratulations. How does it feel? Feels great. fun congratulations how's it feel feel great yeah how many of your friends i mean like say you're the 10 people or 20 people out of your peer group that came out of school when you did

about your age how many of them have gotten out of that only two that we know of yeah they've been big supporters for us too they actually shared your book with us when we were in the middle of getting out. So you know you're officially weird is what I'm saying. Yes, I'm proud of it. I love it. It's the best kind of weird. Very good. Very proud of you.

We'll take it. So what do you tell people the key is now to get out of debt? Tell me. We usually say persistence. it's pretty easy to get discouraged when you're paying it off but having the persistence to put some money towards it and just make sure you're making those payments every month if not more absolutely yeah and and i would just add um being able to have like a clearly defined goal and kind of making the decision that you're going to commit to this instead of, you know, kind of being wishy-washy as you go along.

Just hunt it down and do it. Yeah, some people do Ramsey-ish and then some people do gazelle intense, right? Yeah. You don't want to be ish, ish is a wish. Yeah. Way, right? Yeah. And you don't want to be ish. Ish is a wish. Yeah. Way to go, you guys. That's true. Very, very cool.

So when you sat down and did the math, you said you've got to have a clearly defined goal. That's a really, really good suggestion. When you sat down and did the original math, the very first time you did your budget and you did your debt snowball, when did you estimate you would be out of debt? Oh, man. We were looking at probably about two years or so because I didn't have the job that I have now, and Kevin was still working part-time.

And so, you know, our jobs changed dramatically, and that was able to kind of increase our cash flow and grow our shovel. I would say of the people that sit down to do their debt snowball and then complete their debt snowball, I would say almost everyone finishes it sooner than their original projection. Because once you lay it down and you start asking yourself, what do we got to do to make this happen? See, you shaved six months or more off of this, off your original estimate, right? Yeah. Pretty cool. Yeah.

Pretty cool. Well, I'm proud of you guys. Way to go. What is the name of the school? What's the name of the school where you took foundations? William Jessup University. Oh, yeah. And I'll just add one of the really cool things that happened through this journey is when the Borrowed Future podcast came out,

I started asking around about foundations and actually reached out to some of your team members about getting the program back again and we are actually offering it this semester and we had some programs that were left over from when Kevin and I had gone through it that were never cashed in and so we've been able to kind of start a pilot program and are talking about maybe continuing to do that moving forward. Great. Thank you. It's been really exciting. That's very cool.

Yeah, it's been really cool. Yeah, way to go to the Borrowed Future team. Yeah, excellent. Wow, way to go. Good stuff. All right, Paige and Kevin in California, we got a copy of Chris Hogan's book for you, Everyday Millionaires.

Needs to be the next chapter in your story. Live like no one else so later you can live and give like no one else. $27,000 paid off in 15 months, making $40,000, now making $90,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Woo-hoo! Woo-hoo! Excellent job. Excellent job. Well done, well done, well done. Open phones at 888-825-5225. You jump in. We'll talk about your life, your money.

Elijah is with us in Ohio. Hi, Elijah. How are you? Living the dream. How are you? Just the same, sir. How can I help? Hi.

So I'm a college student. I'm actually debt-free. I'm castling college, which is all glory to God. And I want to start investing, so I've saved him some money. I have my emergency fund. And my family is from a different country, so we're in the process of getting our citizenship and green card. And I met with one of your SmartVestor pros,

and we sat down and did all the paperwork. And, however, unfortunately, he said, I'm not able to open an account with them because I don't have a green card or, like, an official status here. So my question for you is what should I do? How should I invest? Because I do want to invest. I'm young.

And what would you suggest in that situation? Well, to start with, what are you studying? Business management. Good for you. And when will you graduate? I'm a sophomore, so I'll graduate in 2022. Okay. And how are you doing this debt-free? Well, I got a really good scholarship to private school and cash flowing college. It's only like a few thousand dollars I have to pay. And I also

commute. And so I'm saving a lot of money. Okay. How much money have you got saved? I have an emergency fund, a grand, and then I've saved up now over 5,000. Good for you. Okay. Well, Elijah, I would tell you that what you're studying, the, uh, the, the area that you've chosen to study is going to make you worth a lot more in the marketplace than you are without the degree and the knowledge. So what you're spending on the education out of your pocket, which is not a lot right now because you've got a scholarship, is going to give you a tremendous return on investment, much higher than you could get in mutual funds. And so what I'm saying is the best investment in your life right now is Elijah

to make sure you graduate. And so I would personally be perfectly okay if you piled up $30,000 while you're in savings, just a simple savings account while you're in school, and that's just your insurance policy that you graduate with no debt. And that's the first goal right here. When you get out of school, you've got plenty of time. By then, you'll have your green card and or your citizenship, and you'll be able to move on and start doing investing.

But I think if I were you, I'm going to make really sure that you dial in and make sure you are graduating debt-free with a big pile of cash. That's the number one goal right now, man. You're doing great. This is The Dave Ramsey Show. our scripture of the day romans 12 11 and 12 do not be slothful and zeal be fervent in spirit serve the lord rejoice in hope Be patient in tribulation. Be constant in prayer. Hal Borland said,

Knowing trees, I understand the meaning of patience. Knowing grass, I can appreciate persistence. Ha ha ha ha ha ha ha. Oh, that's good. Albert's with us in Oregon. Hey, Albert. Welcome to the Dave Ramsey Show. Hi, Dave. How can I help? Well, Albert's with us in Oregon. Hey, Albert, welcome to the Dave Ramsey Show.

Hi, Dave. How can I help? Well, is it okay if my wife's on the other line? Sure. Okay. And this is the way the situation is. I have $40,000 in the bank, and I'm not sure what to do with it, whether to put it into the house or some kind of IRA. Okay.

Well, what we teach folks to do is to take every dollar that they take captive of and work a detailed, thorough financial planning process called the Baby Steps. Baby Step 1, save $1,000. 2 is to be, you've done that, 2 is to be debt-free everything but your home. Do you have any debts other than your home? No. Okay. You've done that one then baby step three is to have a fully funded emergency fund of three to six months of expenses a rainy day fund so when it rains you've

got some money does that make sense do you have money other than this forty thousand yeah i have we have uh eighteen thousand savings And that's your emergency fund? Yes. Okay. Not to be used to buy a car or a couch or a trip. That's only for emergencies. Correct. Okay, cool.

Do you have anything that you're needing to purchase, an upgrade in a car, or is there anything like that that's on the horizon that you need to take care of? No. What did you need to take care of? No. What did you say, ma'am? Hey, we're 70 years old. We don't have a retirement fund. So what should we do with this money? Put it in our house?

Yeah, I understand. I heard the question. I'm walking up the baby steps. And so you've got your emergency fund in place, and you're 70 years old. How much do you have in retirement savings? Just $13,000. Okay. Well, we suggest putting 15% of your income away for retirement savings.

How much do you owe on your home? $140,000. Okay. What is your income, your household income? $2,800. That's Social Security, and I have a part-time job. Okay. What is your income, your household income? $2,800. That's Social Security, and I have a part-time job. Okay. And you can live on that? Well. It's going to be tight, but yes.

Okay. Well, you're going to have to, I guess. It's the only money you've got, right? Right. Okay. Because if you invest this money, or if you put it in the house, neither way is it there to live on. It's going to be working on one of those two things. And really either one of them is a good answer. I think your nest egg is devastatingly small, and so I'm going to put the money into retirement.

Okay. Your entire nest egg is currently $13,000. Did I understand that? Yes. And where did the $40,000 come from? I got injured at work, and they settled with a certain amount of money. Yeah. Okay.

So, yeah, that needs to be invested for your nest egg so that now you've got a $53,000 nest egg, and we'll let that grow. And, you know, in about six or seven years, if it's invested in good mutual funds, on average it will double. And so you'd have about $100,000 in there. And that starts to be a little bit more comfortable. Meanwhile, you're beginning to tick away at the house and try to get it paid down and paid off.

Because, you know, our goal is twofold here. We need a paid-off house and a good-sized nest egg. And so I don't know which of those you're going to reach first or you're going to reach them simultaneously, but they're both good goals, and they're both really the only goals you two should be working on right now. If you need some help investing and you're not used to doing that all the time

and it sounds like you're not, click smartvestor at daveramsey.com. And when you fill in your information, it will drop down a list of people in your area called SmartVestor Pros that we endorse. I am not in the investing business, but these are guys and gals that have the heart of a teacher and do stuff the way you hear me talk about it here on the air, and you will understand what you're doing when you're working with one of them.

And if you don't understand it, don't do it, because when you put money in stuff you don't understand, it keeps you freaked out and you can't sleep at night. And you should be freaked out and can't sleep at night if you don't understand it because you're probably going to lose it. So always understand what you're investing in and their job is not to pick an investment for you their job is to teach you and then put some investments in front of you that you pick and they'll show you how to do that that's a big deal right there and that's a new experience for

you guys and but do it anyway go learn something new it's a good thing carson's with us carson's in utah hi carson welcome to the dave ramsey show uh thanks dave um my question is that my wife and i are currently on baby step two working on that snowball um and just with everything that's kind of going on we were wondering if maybe we should add up our emergency fund a little bit where we have five children at home. Well, no, with everything that's going on, if you are struggling with career or you have a potential problem because of coronavirus with your career, you don't need to be doing the baby steps. You would just stop, push pause, and pile up cash until the storm blows by.

And then you'd push play again. Okay, I'm not really concerned about that right now. Okay, I thought you said with everything that's going on. Well, just... You are concerned about it. You know where I have five kids. If something were to happen... Well, five kids is one thing, but in that case, you know, if you want to build up that

emergency fund a little bit, listen, here's the thing. I want baby step one, and it's intentionally small to be uncomfortable how much money do you have in savings now um now about three thousand okay how long have you had money in savings um just recently because we got our tax return and i know that i need to adjust that so most of that comes back to me directly. Yes, absolutely. Okay. But my point is you've been making it with five kids with no savings anyway.

True. So nothing different now. So, I mean, if you want to leave it at two and throw one, I mean, I wouldn't have it more than double a baby step one, though. 1,000 is not designed to be enough. It's designed to catch a little emergency and it's designed to keep you uncomfortable until you get your debts paid so that you're focused and intense and sacrificial in your lifestyle and getting your debts paid. You probably don't

have a glamorous lifestyle. You're feeding a lot of baby birds. So how much debt do you have, not counting your home? About $17,000. We've got about $10,000 on a vehicle and $7,000 student. What's your household income? Right now it's about $40,000. By the end of the year it should be up to about $48,000 to $50,000 take home. Okay, cool. How old are the babies? What's the age range?

Um, my youngest is in preschool and my oldest is 12. Okay. All right. Well, I suspect you're going to be doing something to earn some extra income to knock this out even faster. Cause you've not got a lot of wiggle room in this budget feeding five kids that age with a 45 or $40,000 income. There's not a lot of wiggle room. You're not irresponsible and overspending yuppie of some kind. I mean, you're just barely cutting it. And so in order to knock that $17,000 out, you're going to need an extra $1,000, $1,500 a month coming from somewhere to get rid of that, and you can get rid of it in about a year if you do that.

Okay. And as soon as you get that stuff off your back, then your budget's going to have a little more room, and you'll be able to go ahead and build your emergency fund of three to six months of expenses. So if you want to hold that baby step one at $2,000, that's okay. It's not the end of the world. The point, though, is, and I want everybody to hear this,

baby step one is supposed to make you uncomfortable. It's supposed to be not enough. It's supposed to make you worried that if there's an emergency, you can't cover it. Because it's not so that you get your butt out of debt. Because I want you to bust through that with intensity. And that's what we're doing here. Hold on, Carson. I'm going to have Zach pick up and send you a copy of the Total Money Makeover book

to help you guys get through this. We want to make sure we're there with you. And we appreciate you listening, sir. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Zach Bennett filling in for Kelly today, and the associate producer and phone screening chair. I am Dave Ramsey, your host.

We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. on your smart speaker. Just tell your Alexa or Google device to play The Dave Ramsey Show or find out all the ways you can benefit at daveramsey.com slash smart speaker.