The Ramsey Show - App - DAVE RANT: Pay Attention to FACTS, Not Hearsay! (Hour 2)

Episode Date: January 7, 2020

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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'm Dave Ramsey, your host. Thank you for joining us. the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Matt is with us in Montana. Hi, Matt. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thank you for having me. Sure. What's up? Okay. So a few years back, I was on deployment. I actually took FPU while I was on deployment, paid off all my debt, and I started a retirement fund, started paying into that. Since then, gotten married. I've had three kids and moved. I was in California at that time. We moved to Montana for a better lifestyle, give my kids a better chance, some nice clean air up here. And I hopped back on the stupid train and I got myself back into some debt. I went through,

my wife has graduated from college and I went back and I graduated from college and we've got about $35,000 in student loans and then $4,000 on a credit card. Now I have in my retirement account currently, because I use that, I use my retirement account to pay the closing costs on my house because there was no penalty for that. So I have in that retirement account still, there's a little over $3,000. And then in a IRA savings account that I rolled over a 401k from my previous job, there's about another 4,500 into that. So what I'm wanting to know, because our goal is to pay off our $40,000 of debt in two years. Should I cancel my retirement account and my IRA savings, take the penalty and use that to

pay off my debt? Or should I leave that in there and not touch it? What's your household income? Household income is currently about 55. Ituates between between 45 and 60 i'm a mechanic so it's kind of whenever i get uh whenever i get you know more more hours or something like that and she's not working with her degree no no that's correct she's not working yet is she planning to did she just finish the degree um actually my goal was i wanted her to be able to stay home and take care of the babies. We've got one that's two and one that's eight months. She got a degree to be a teacher, so her goal is once our kids are in school, then she's going to go back to teaching. She would substitute

teaching while she was going to school, and then we started having kids. So once our kids are of age to start going to school, then she's going to be a teacher. Okay. All right. Well, you're in a 20% tax bracket. And so if you take the money out, you're charged your taxes plus a 10% penalty or 30%. So it's kind of like saying, Dave, I want to borrow money at 30% interest to pay extra on my debts. Gotcha. Wouldn't do that. Okay. Wouldn't do that. Okay.

Don't recommend that. Okay. I do recommend the two of you going through Financial Peace University again since you flunked the first one. Yes, I did. And you got a new wife that has no idea this foreign language you're speaking when it comes to money. She's actually the one that got me back on track. She put the reins back on me.

The system that you learned she's not familiar with, other than the simple principles of living on less than you make, being conservative and staying out of debt and that kind of stuff. She understands those principles. But let's put the both of you back through. I'll pay for it. Let's put you back into Financial Peace University. You guys go back through. I'll pay for it. Let's put you back into Financial Peace University. You guys go back through.

And that'll get you out of debt faster than cashing this money out and taking a 30% hit on it, okay? Okay. And thanks for your service, sir. We appreciate your service. All right. Savannah is in South Carolina. Hi, Savannah. Welcome to the Dave Ramsey Show.

Thanks, Dan. What's up? I said thank you. Sure. What's up? I said thank you. Sure. What's up? Thank you. So I just started reading the Total Money Makeover because I'm tired of living paycheck to paycheck. Cool.

But I have gone to the point where I have over $1,000 saved, but right now I'm the only one in my household working. My husband, since we moved to South Carolina, has not been able to find a job. How long have you been in South Carolina? For about seven months now. Is he disabled? No. What's wrong with him? Why hasn't he found a job in seven months? He's been interviewing

a whole bunch but never gets calls back. For what? He's trying to go into security or some sort of administrative position. Like IT security or a security guard?

Security guard. Okay. What was the last job he had? So he's getting his master's degree right now. So he was working at a private security office. He was doing kind of more of like the computer and IT stuff there. But he wants to just take a job that's more in line. Why do you need a master's degree to be a security guard?

Well, he wants that because he's getting a master's in criminology. He wants to work for Border Patrol. So he's trying to do something that's more in line for his resume gotcha okay so while he's working on his master's he needs to be delivering pizza at night every night that'll make him that'll make him fit starting today by the end of the day this young man needs to be bringing some money into your household seven months with no income in a booming economy with negative unemployment is unacceptable yeah i've uh i've i just started a second job um not you him my yeah him he needs to work starting today go buy a leaf blower at at home depot rich people are afraid of leaves. They'll hire you to get rid of them.

Yeah. Do something, for God's sakes. Drive Uber. Something. We only have one car right now, too. Yeah, seven months with no income, and you're calling me up because you guys are freaked out. I bet you're freaked out, I understand. So I'm going to get on his case right now. He needs to get up off his butt and go do something. Now, having said that, your question was, um, you, you, you, you're just starting your total money makeover and you got a little over a thousand dollars and you're scared to start working on the debt snowball. Why are you scared to do that? Um, just, you know, if something else happens, that's all the money I have. I've, I've done my budget and every dollar goes somewhere. And so I'm just, you know, it's just that hesitation that if something else, you know, doesn't go through or if there's a medical emergency, then I have no money.

Yeah. Well, that's where you've been for a long time, though. You've been broke a long time. Yeah, this is, I've done internships. This is my first real job out of college. Yeah. So you have $1,000, and everything else is going to go on your debt snowball. And that really doesn't change your life one way or the other. It doesn't make your life worse. It starts to make it better. But the crisis in your home, the reason you're feeling all this insecurity is your husband needs to go to work.

And that'll change everything. It really will. While he's getting his master's, while he's working for the Border Patrol career, all of that's fine. Create a freaking income. This is the Dave Ramsey Show. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated and they have a sense of fear and intrusion. It can be overwhelming.

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window coverings started by a guy in his garage now it's become a multinational, highly successful business. Jay really did a good job with this. They've got free shipping and free samples. Check them out, blinds.com. Maritza is in Maryland and says, Dave, my husband and I are on our way to being debt-free. Woo-hoo! We took your class earlier this year, and remember you're saying to pay off the house last.

When I talk to people about paying off my house, they say it's not a good idea, speaking of themselves, because of being placed in another tax bracket and having to pay high taxes. Is this so? Well, Maritza, one rule is don't take financial advice from broke people or dieting advice from fat people. So they said and I heard are the worst financial planning firm out there. Now let's talk about why. Okay. Number one, under the current tax code enacted two years ago, a married couple has a $24,000 standard deduction. That means unless your write-offs on your house interest and your

charitable giving and other write-offs that you have exceed $24,000, you will likely take the standard deduction on your taxes. Now, before that, that's a Trump-enacted tax law. It increased the standard deduction by double. The amount that you can take as a standard deduction, if you don't have write-offs in excess of that, you would take that. Now, before that, 80% of Americans did not itemize, meaning they took the standard deduction. Now, the standard deduction in the last two years has doubled.

Translation, almost no one, it's going to be well under 10% of Americans, probably under 5% of Americans, will actually itemize on their taxes. You have to run a small business or make incredible interest payments or incredible charitable giving to bother to itemize because your standard deduction is so freaking big. make incredible interest payments or incredible charitable giving to bother to itemize because your standard deduction is so freaking big. Translation, almost no one actually takes the tax deduction on their house because they take the standard deduction. So this is complete BS. It's all theory and it's all somebody talking over the Thanksgiving dinner that has no freaking idea what they're saying because they haven't ever taken a standard had never done an itemized tax

return they take standard deduction every year and they look at you and say but i'm not paying off my house because i'll lose the tax deduction which they didn't get the tax deduction but they're too moronic to actually understand how this really works And they're giving you advice. So let's say that you are one of the very few people that actually does take the tax deduction on your house. Let's run some numbers. Everybody get your calculator ready. Here we go. Let's pretend you had a $200,000 mortgage. I'll make it easy at 5%. 5% of $200,000 is $10,000. Does that sound right? Everybody say yes. That means if you had a $10,000 interest payment you paid that year, if you're one of the few unicorns that actually does do an itemized tax return

and does take the deduction on your interest rate on your home, you didn't take the standard deduction, you're one of the few, that means you would actually have a $10,000 tax deduction because you paid the mortgage company $10,000 in interest. Is that correct? Everybody say yes. And so what that means is not that you take $10,000 off of your taxes. It means that you reduce your taxable income by $10,000. So instead of being taxed on $80,000, you're taxed on $70,000, which means not that you saved $10,000 on your taxes. It means you saved your tax rate on the $10,000.

And so let's walk back through that. Let's pretend this is a couple making $80,000 a year, put you in a 22% tax bracket. If you're in a 22% tax bracket and you have a $10,000 tax write-off, that saves you $2,200 on your taxes if you're one of the handful of people who actually itemize. And almost no one does. Have I said that before? So what you did, if you follow your genius friend's suggestions, is you sent Countrywide Mortgage $10,000. Because, God forbid, you'd pay off your mortgage and lose the tax deduction.

So you sent Countrywide Mortgage $10,000. Why? So that you could keep from sending mortgage and lose the tax deduction. So you sent countrywide mortgage $10,000. Why? So that you could keep from sending the government $2,200. People who trade $10,000 for $2,200 are not called sophisticated people. These are called morons. Don't trade $10,000 for

$2,200. It's a bad trade. Trading a dollar for a quarter is a bad idea. And so when you keep a tax deduction in order for the opportunity to give someone money in order to save a quarter and you give someone a dollar in order to save a quarter you're not sophisticated you're math challenged and if your cpa is stupid enough and a few of them are to tell you to keep your mortgage because of your tax deduction, a CPA that can't add is not a good one. Get a new CPA.

Use these two words. You're fired. And don't listen to people who have theories that don't exist in the real freaking world. And when you do actually put the nominal facts and mathematics to the theory, it makes you look ridiculous. Now, when I first got in the real estate business, I was stupid. I was 18 years old, and you know what they told us? They told us to get everybody as big a mortgage as we could get them because they get the

tax deduction. And you know what I told everybody? The same stupid thing everybody tells everybody. Get you a big old mortgage because you get the tax deduction. Now, certain times in the last 40 years that I've had my real estate license, that's been more true than others of the tax. You actually did get the tax deduction. The irony of this is, one more time I'll repeat,

less than 5% of Americans are actually going to get the tax deduction on their mortgage interest. And yet everyone keeps their stupid mortgage because their broke brother-in-law, who has an opinion, tells them that they need to keep their mortgage because everybody knows you don't pay off your mortgage because of the tax deduction that you never get. And if you do get it, you're trading a dollar for a quarter. Y'all getting how dumb this is? This is dumb. This is seriously dumb.

So Maritza in Maryland. The moral of the story is, A, don't listen to broke people about money. B, pay off your mortgage as soon as possible. Oh, let me give you one other piece of actual data. We did the largest study of millionaires ever done for Chris Hogan's book, Everyday Millionaires. The millionaires that we interviewed had two, if they had a net worth of under $5 million, $1 million to $5 million, which is not bad, by the way. Consider most Americans can't even pay their bills. If you have a net worth of between $1 and $5 million, our in-depth, airtight, detailed research shows that that typical millionaire has two primary sources of wealth.

Almost every time we talked to one of them, it was their 401k and their paid-off home that made them a millionaire. So they're sitting on a million and a half net worth with a $500,000 paid-for house and a million dollars in their 401k. So they're worth a million and a half net worth with a $500,000 paid for house and a million dollars in their 401K. So they're worth a million and a half. They got no debt. That was very often, that was the ratios that we heard in that research, over and over and over and over again. So in other words, two of the primary places that people get their first one to five million dollars in their wealth building plan is a paid off home and investing steadily in mutual funds

in your retirement plan. Kind of sounds like what we've been teaching for 30 years around here. So that's what you need to do. When I talk to people about paying off my house, they say it's not a good idea because of being placed in another tax bracket. Well, it's not going to place you in another tax bracket if you're not taking the tax deduction. And another tax bracket does not affect all. By the way, we have a marginal tax bracket system. Do you know what that means?

It means if you're in a 22% tax bracket, it does not mean you pay 22% of all of your income on taxes. It means the last dollar of your income was taxed at 22%. But you worked your way all the way up through the brackets. There's a certain amount that is not taxed at all. Then there's an amount taxed at 10%, an amount taxed at 15%, an amount taxed at 17%, an amount taxed at so on up until you get the 22%. So you don't take your income times 22% to get your taxes.

People making $80,000 do not pay 22% of their income in taxes. They pay about 7% or 8% of their income in taxes. But the last dollar that we're talking about, so our calculation was correct, that you would have saved on that tax deduction would be 22%. So I gave you the most generous possible analysis in that math, and it still gives you a mic drop answer. This is the Dave Ramsey Show. I love talking about companies that know how to do business right. You've heard of Grip6 belts, right?

Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk. I'm talking weightless. And the buckles come in really cool designs and are interchangeable. I personally own a number of these belts, and they're so comfortable, you forget you're wearing it. Plus, these guys have a great story. BJ Minson started Grip6 on Kickstarter from his garage in 2014 and now sells hundreds of thousands of these American-made belts to customers all over the world. As a mechanical engineer and a minimalist, BJ took his dislike for heavy, bulky leather belts that never fit right

and created the perfect belt, a high-quality, minimalist belt that gives the strength and support of a belt without even knowing you're wearing one. I'm really proud of these guys. Check out this month's special offers from my listeners at Grip6.com. Andrea is in Texas. Welcome to the Dave Ramsey Show, Andrea. Hey, Dave. Paul, this is awesome to talk to you.

You guys have changed our lives. Well, thank you. So, yeah. So with that, we know very well your teachings on how much house one can afford based on our income, how you feel about mobile homes, and currently we're housing there debt-free. Good. Including our property. We live on five acres and a double wide. Okay. and our goal has always been to build a house good um we are thinking about building based on interest rates being so low and some builder

incentives that are available currently good but we're not sure if we should do that now or if we should stay put and save cash which we do about 40 to 45 a year for say two or three years and have a bigger down payment later but interest rates could be higher those building incentives may not be available anymore can you build what you want that fits the guideline come again can i can you build what you want with a 15 guideline? Come again? Can you build what you want with a 15-year fixed where the payment's no more than a fourth of your take-home pay? Yes. We don't want anything fancy, just for sure we can.

Okay. All right. I don't know why you wouldn't go ahead and build now, then. The question, one way you can re-ask the question yourself is, which of these options puts me in the best financial shape and the best situation with my life 10 years from today? Because in either option 10 years from today, you're living in a house, right? Right.

And which way 10 years from today is the best thing where you're going to look back and go, we were wise to go ahead or we were wise to wait. And if you'll think about it, looking out 10 years rather than wringing your hands and worrying about interest rates, it'll tell you what to do there until I saved up the money to build the whole thing, which is what I've done many times in my life. But I don't yell at people. As you know, you recounted my teachings back to me. For a 15-year fixed, where the payment's no more than a fourth of your take-home pay, and if what you build is going to be at that or less as far as your actual mortgage goes, then I'm good. Go ahead.

But a good way to do it is to ask yourself not what feels good by Friday, but what feels, what's going to be the best answer for our family 10 years from today or 20 years from today, what's going to put you in the best possible place. And that's the thing. Hey, thanks for the call. God bless. All right, Jane is with us. Jane is in Florida. Hi, Jane. Welcome to the Dave Ramsey Show. Hi, thank you so much. My husband and I are from Illinois. He worked for a state park for 25 years.

We bought some rentals, and I stayed home with the kids and raised a family while he worked. He had an injury, blah, blah, blah. At the height of our rentals, we had like 24 units, but we had like a $61,000 tax burden. So we got taxed out of Illinois. We liquidated everything, moved to Florida five months ago. We Starker exchanged out of the rentals and bought some rentals in Florida that are all mortgage-free. I have one mortgage left on a rental in Illinois that's bringing in about $2,500 a month, and the expenses are about $15,000, so it's cash flowing $1,000 a month still there.

He was injured in 2008. He was bringing in a small Social Security of about $1,700 a month. Now the state just decided that it was a workman's comp. We had a workman's comp claim going all these years and they said, yes, it was workman's comp. So they gave him, they just awarded us all his back pay from 2008, which is a sizable amount. And so I feel like we're kind of on the cusp of greatness here. I want to, you know, do you think what should we do with that money, first of all? Second of all, are we on the right track with the rentals? They're all, you know, mortgage-free and they're cash flowing for us.

Except the one in Illinois, which you need to sell. Except the one in Illinois. Okay. All right. I'd sell that. You're liquidated and went to Florida. Don't fall in love with the one you left behind. Well, it's not.

It's like an old girlfriend. Get rid of it. I know. De-friend her on Facebook. Yeah. Good, yeah. It's a historic. It was in my husband's family.

Oh. So he wants to kind of hold on to it, but I'm not attached. So what's the balance on the loan on it? $130,000. Okay. And how much money are you getting in your lump sum back pay? It was $194,000. If you're going to keep it, you need to pay it off.

Okay. Do you have a mortgage on your personal residence in Florida? No. We just bought really low-end things, you know, between maybe like $25,000 and $65,000. Our personal residence we bought for $65,000 out of a foreclosure. You are rocking it. You're rocking it. So the one in Illinois is just going to be a problem because it's long distance,

and it's going to be a problem because it's historic, which means the actual mechanicals in it usually suck. And so you're going to be doing a lot of repairs, long distance, which are very expensive. But that's all to hold on to something that was in the family. So that's the cost of doing business in that world. And so you're going to struggle with that property, but you know that at least it'll be paid for. And then let's just take our cash flows and continue to build wealth with them. I guess you're living off your cash flows, aren't you?

Yes. Okay. And through the workman's comp thing, his income just went up, his monthly income just went up a little bit. So we do have flexibility. We have our kids at home. We've got two more kids split to college. So do you think we should continue on with the rentals here in Florida?

As long as you pay cash for them. Okay. Save up and pay cash for another. Save up and pay cash for another. Save up and pay cash for another. By the way, every time you get another one paid for, you've noticed that when they're paid for, they really have great cash flow. Right. And you always talk about how when you are mortgage-free,

it unleashes creativity and it unleashes possibility, and that's where I feel like I'm at. Like how can I really get this program to accelerate in the next five years yeah i think you just you just increase the the rate at which you were doing the wise things you were already doing you don't change your plan it just accelerates in other words every time i get a nice big fat piece of real estate that is paid for added to my portfolio that means i get a nice big fat check every month from the renters that I didn't get the month before. And I keep adding those checks all together and then I go buy another piece of real estate and then I add all those checks together and I go buy a piece of another real estate.

It's another, it's a reverse snowball, right? Yeah. So that's the track. That's the track to stay on. Yeah. As long as you're going to be, are you going to be in real estate exclusively or you've got retirement plans and mutual funds? Well, I don't know.

That's why I want to be smart with this income and diversify. But right now we're having real estate. We always have been. Yeah. And the other thing is you need to keep a strong cash position even though they're all paid for. Yeah. Because stuff happens with real estate, and, you know, the people that make money in real estate are the ones that don't let themselves get painted into a corner with emergencies and a lack of cash so let's keep it you know i'd pay off that one and i'd set the other stuff aside and let's keep a i mean as much

it sounds like you're talking about a million dollars worth of property i'd probably keep 50 to 100 000 sitting around in cash just just to make sure that that you've got some wiggle room just to make sure there's not any issues. And I think that'll do you well. You have done a wonderful job with a really horrible situation, it sounds like. So great job of turning this around and making a decision on where you want to live. You've been very proactive, very intentional about everything. I mean, very, very well played across the board. I love it.

I think you're set. And just keep doing more of what you've done that got you here, and that's all you do. You don't have to get fancy just because you won. That's the thing. Folks, that's an interesting point, by the way, that comes out of that discussion. One of the things I found when I start talking to people when they get their first million or $2 million is they think then it's time to start doing something very weird and very sophisticated. No, just keep doing the stuff you were doing. When I meet wealthy people that have five or 10 or 20 million dollars,

you know what they invest in? The stuff that caused them to get five or 10 or 20 million dollars. They don't start changing and trying to do, you know, family limited partnership, double backflip with a twist. You know, this is not a, you know, don't get crazy and you don't have to become super. A lot of people are fairly primitive in their investment strategies that have tens of millions of dollars. Matter of fact, most of them are. To find a highly sophisticated investor that becomes wealthy is fairly unusual. Isn't that weird? This is The Dave Ramsey Show. LaVon is in Georgia. Hey, LaVon.

Welcome to the Dave Ramsey Show. Hey, Dave. Thank you for taking my call. Sure. What's up? Just wanted to say that me and my husband, we just started a total money makeover journey. So we just found out about you and your practice, and we're trying to incorporate everything in. Okay.

As of now, we're currently behind on all our bills, from the to the car note to credit cards about three months roughly. We signed up with every dollar and kind of saw where our money was going. Still haven't got a zero budget because it's still over about $600. But the issue that we're having is that we're struggling to get over Baby Step 1. And I know it's kind of – Baby Step 1 doesn't happen until you get current. Oh, okay. Let's get current first.

So let me go back two sentences. Your budget says that you're spending still $600 more than you have coming in? Yes, according to the EveryDollar app. Okay. Is that because you tried to put something in every blank in the EveryDollar app, or is that because you have outrageous debt and a low income? I think it's because of the outrageous debt and low income. I mean, our household income, I just found out our household income is $81,900 because I just got an increase at work.

That's not a problem. A promotion at work. How much debt do you have? We have about $400,000, but that includes our mortgage. How much of that is your mortgage? $271,000 is our mortgage. So you have $130,000 in debt? Combined, yes. On what? Car notes.

We both have a car note. Credit cards, medical expenses. Okay. If you redid your every dollar budget and the only things in your every dollar budget were food and utilities and bills, would it balance? It would balance if it's just food, utilities, and bills, yes. Okay. So a lot of other stuff needs to stop around your house then. Okay.

Because you can't be behind on everything and be saving for Christmas next year. Right. You can't be behind on everything and be budgeting to go out to eat. That's correct, yes. You can't be behind on everything and planning a vacation. Right. So, now, how long have you guys been married? Six years this year.

Okay. What do you do for a living? I am an IT tech support. Good. My husband works at Warehouse. Okay, good. And the two of you together make $81,000. Correct. And what do you owe on your two cars? What do you owe on each car? My husband's car, we owe $29,000 and owe my car $19,000. Okay,

all right. And so you have $50,000 in car debt and you make $80,000. So the $30,000 car needs to be sold. Wouldn't hurt to sell. And that's what we were trying to do. Wouldn't hurt to sell. Yeah, that's what I was thinking. Yeah, okay. So you're already on that track. Now, the second thing is this, okay, two pieces of advice you need to leave here with. In order to get current, we're going to go on beans and rice, rice and beans. Nothing is going to happen in this house except getting bills current.

And here's your order of priorities. We call it the four walls, meaning you've got to build the four walls of your house. Okay? And that's just the basics of life. Food is first. If you don't buy anything else, you can afford food your family's going to eat. But that's not eating out. That's beans and rice, rice and beans.

Okay. Basic food to feed your family's going to eat. But that's not eating out. That's beans and rice, rice and beans. Okay. Basic food to feed your family at home. You can't afford to go out to eat. You can't afford to see the inside of a restaurant unless you're working there as an extra job. Okay. Okay. Now, then the second thing you're going to do is you're going to pay your lights and water.

Are you behind on those? No. No. Not the basic utilities. Good. Just more so mortgage. Yeah. We have to do after-school care. That's weekly. That tends to kind of creep around. Mortgage is behind, the cars are behind. Yes, sir. Okay, so food is first, lights and water second, shelter is third. Let's get the house current. Any money we can find in the budget is going to go to bringing the house current as soon as possible.

Okay. Okay. Now, here's what we're walking through. We're giving you emotional stability to keep fighting because if your belly is full and your kids are fed and you have lights and you have water and you have shelter. This is like civics class. This is social studies class. This is needs versus wants. Those are actual needs.

So we're not going to lose the house. You make too much money to be behind on your house if it was the number one priority after food and lights. Mathematically, that's an easy mic drop, right? Right, it is. That's all you're focusing on, okay? We're going to get rid of a couple of these cars or at least one of these super expensive cars because they're killing you. They own you. You don't own them.

They're taking the fun out of your life. Am I right? That's right. Okay. Yeah, you're right. And in the meantime, we've got to try to get them current so they don't freaking get repoed while we're trying to get them sold. So after the house is current, the next thing we're going to work on is getting the cars current. So it's food, utilities,

shelter, transportation, clothing. But this is not expensive clothing. This is not buying a $4,000 coach purse. This is basic clothing to get by. Do you have children? I do. We have one daughter. How old is she? She's eight.

Okay, good. She's a good age because she doesn't really have a lot of Instagram pressure about how she's going to dress yet. Okay? Right, no. So we she's going to dress yet. Okay? Right, no. So we're just going to dress her nice, but she doesn't need to have holes in her clothes. But, you know, you make $80,000 a year. You can put basic clothing on your family,

but you don't need to be buying a new outfit when you've got six in the closet. Yeah. Okay? This is necessities. We're trying to get the house current and the cars current now i can see you being there in two or three months if you just did those two two or three things you're gonna feel so much different agreed agreed because you're terrified right now I am I'm trying to

Who wouldn't be I'm about to lose my car I'm about to lose my house I don't know where there's any money We make all this money we can't figure out where it's going I mean it's a terrifying thing you're living in Okay so you're going to do great You're going to turn this around We're going to walk with you and help you

Now once we've got all that current You can get the back after school care right after that or right around there i don't care that's not going to be that much money you can get that current then the rest of it is just a monopoly game and you're behind because you got food shelter clothing transportation and utilities that's the four walls of your house, the necessities of life. You get that done. Now we're just working to play catch up on everything else. We'll get current on the other stuff, and then we'll start the baby steps. Okay.

Makes sense. Now, the other thing is this. Oh, I forgot I'm called. You know what the number one cause of divorce in North America today is? Lack of communication? Money fights. Oh, that too. Money fights, yeah.

And money stress. So my warning is, Sharon and I, when we were going through what y'all are going through, we about killed each other, kiddo. I mean, we fought. We're hillbillies.

We fight good, you know? And if you guys are not, when you're this scared, it's easy to get in a good fight, you know? So don't let this stuff take your marriage. You and your husband sit down together, lay these details out, work this plan together with great detail and great focus as a unified team. Not as you talking about the mistakes he's made, him talking about the mistakes you've made.

You can tell him, honey, I'm just scared because you are. And by the way, he probably doesn't feel like Superman right now. Right. Because things are upside down and guys kind of take it on the chin when that stuff happens. I felt like a dog because I couldn't provide for my family. And that's probably how he feels. Most guys would feel that way. So you guys lock arms, get really unified, protect your marriage,

work the necessities first, work the budget, then work your way all the way down, then get current, and then once you've done that, then we'll work the baby steps. Does that make sense to you? It does make sense. Thank you. And you're going to go through Financial Peace University as my guest. I'm going to pay for it, okay? Oh, awesome.

Thank you so much, Ray. All right. You hold on, and you call me back when you're not only current, but you're out of debt and you're winning. Or if you get scared and you don't know what to do, you call me again. We'll work together. I got you back, kiddo. That's what I do. This is The Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country.

To find a station near you, head to DaveRamsey.com slash show.