The Ramsey Show - App - DAVE RANT: Some Cities Have Screwed Up Their Economies in the Pandemic! (Hour 2)

Episode Date: October 22, 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. You jump in. We'll talk about your life and your money. It is a free call at 888-825-5225. Chris Hogan, Ramsey Personality, is my co-host today here on the air. Again, 888-825-5225. Mark is going to start off this hour in Brooklyn.

Hey, Mark, welcome to the Dave Ramsey Show. Hi. Good afternoon, Dave and Chris. It's great to have a great talk. You've been a blessing to talk about these. Well, thank you, sir. How can, Dave and Chris. It's great to talk to you. What a blessing to talk to both of you. Well, thank you, sir. How can we help? Yes.

So I, as you said a moment ago, I live in New York City, and I'm in a position where my girlfriend, who I've been living with, I hope you have some judgment for that, by the way, she actually is moving out of the country next month, next month and the lease doesn't end until March. So she, she said she would pay until the end of the lease, but, uh, basically the relationship is going to end, unfortunately. Um, now I have all of my debt paid off.

Uh, it's been over a year actually that I've, I've been debt free. Um, and I, yeah. Uh, and I have an emergency fund of over six months, you know, in savings. I have a 401k of like $140,000 as well. And basically my question is, you know, I'm wondering if I should go ahead and try to find another apartment to rent or if I should try to buy a home. You know, I think now might be a good time to look at buying homes because of what's happening here in New York. So I guess my first question is, yeah, what do you guys think I should do in this moment? Okay.

So how old are you? I'm 28 years old. What do you make? I've been a fan of yours for a very long time. Thank you. What do you make? Yeah. I make $116,000 a year.

Okay. And your plan is to stay in New York City? It would be nice. I have a business on the side, and it would be nice to stay in New York City. But, hey, man, I'm still thinking about that. That's kind of still up in the air, to be completely honest. Well, you don't want to be buying if you're thinking about that. Mm-hmm.

Good point. Good point. I think you found an apartment to rent. And let's settle down. Let's make sure New York comes back and starts functioning again because you don't want to own real estate there if it doesn't come back uh and you know this is a situation where the policies of governors and mayors and health department people are starting to permanently affect entire economies and so um it's it's the it's they're out of control they're completely out of control

and so uh uh it's out of your control is my point. So I don't know. I mean, I could tell you in some cities that I think the real estate market is going to be just fine long term. I don't know what it's going to be in New York because I don't know how much damage is going to be done to that market permanently. They've shut it down. I know. But every month you keep it closed. That's right. The longer the recovery. I don't know what the ratio is, but another year you keep it closed. That's right. The longer the recovery.

I don't know what the ratio is, but another year you add to it. You are adding a terrible, terrible mess. You are appointing an exit. No, I would not buy a property in New York City right now. Yeah. And, Mark, when you do get ready to rent, you're probably going to have to move out a little bit because you need to find something that you qualify for on your own.

Great job being debt-free and having an emergency fund. But you want to be smart, right? And look at this to say, hey, can I sustain this on my income, not necessarily with a roommate or someone, but can you do it alone? If I were in your shoes, I would rent for one year. And let's see how your personal feelings about where you want to live shake out and how that market starts to recover or not. Factually, not feelings. And so, you know, what is it, you know, how long is it going to be before, you know, before the economics start to work again? And I don't know.

I don't know the answer to that. If you had asked me in April, I would have said, oh, it'll be right back. But I was so dumb, I thought they were going to not leave entire segments of our culture shut down. But that's how dumb I am. Well, and not only have they done that, Dave, and shut it down, the stimulus money, they're not doing that now. See, now you done got me riled up. I know. I did.

I just poked a bear. It's fun, though. Listen, they don't shut down things. We got stimulus money they're talking about. They aren't doing it. So you can't work, but you're supposed to take care of yourself and your family. What are you supposed to do? Well, eventually what's going to happen is that the politicians that are doing this are going to be out of power because regardless of their party, people are not going to accept a lack of freedom based on the math. Because we do know for sure, you know, several things we do know now that we did not know early in the pandemic about the actual math.

The main thing we know is that apparently they don't teach math in med school. That one has been pretty solidly figured out. And the ability to do critical thinking around what actually affects this and doesn't affect this it's um it i mean i had a guy just really just give me a long speech the other day about how he wasn't going to get covid because he wears a mask and i went dude the purpose of you wearing a mask is not so you don't get it. It's so you don't give it. That's right. It doesn't stop you from getting it. So, gee, man, I mean, where are we raising these people? So, but it's, you know, I don't care if you wear a mask, but don't do it for the stupid reason.

Right. You know, it's like, you know, you're going to have to completely be in a hazmat suit to not get it, I mean, that's just, anyway. So this is the kind of stuff that's going on, man, and it's affecting people's lives like yours, Mark, and so that's why it's got us riled up. It's okay, Dave. COVID's going to go away after the election. You think so? No.

Politicians wanting to control people are going to go away after the after the election that's um hey people for real get out and vote um and not just here but on your state and your city level these people that are making decisions sitting behind computers that don't understand how business work and how lives are impacted they need to feel the the the sting of these flippant decisions come next election period. You know, that does happen. It really does happen. People think they're not very hopeful about it.

I remember several years ago, a decade plus ago, you know, we had an idiot Republican governor in Tennessee that tried to pass a state income tax. We don't have an income tax in Tennessee. And the people of Tennessee, pitchforks and torches, I mean, the protests were shut down the Capitol. We filled up the entire Capitol with tea bags. And this was before there was a tea party, by the way. I've always said I think the tea party was somewhat born in Tennessee because of that. Because people just said, no, you're going to have to manage your budget we're

not paying any more taxes you're going to cut spending and you don't need to spend 412 000 dollars putting 412 million dollars putting wildflowers in the interstate medians no no lie that was in the budget and so crap like that everybody wants to start an income tax so but there were a few a handful of uh state legislators and senators who came out and said, you know, we agree with him. And you know what? On the next election cycle, none of them made it. Oh, really? Completely cleaned them out.

Every one of them got voted out. Not only did it push the thing down, now it's a constitutional amendment in the state of Tennessee not allowing an income tax. So eventually, you know, you can vote enough people out that are misbehaving and misusing their power, using bad critical thinking skills, to where you can change things. But, oh my gosh, what a pain in the butt. It's called a democracy for a reason, people. This is The Dave Ramsey Show. Families all over the country are discovering a faith-based and budget-friendly way of meeting health care costs, whether they're anticipated or completely unexpected. For example, take the

Olcheski family from LaGrange, Texas. Jeff and Carice had just celebrated the birth of a new baby boy. Shortly after, they had another expensive medical issue come up. They could have faced a huge financial setback, but thanks to Christian Healthcare Ministries, the Olcheskis were spared from a ton of medical bills. As members of CHM, they're part of a group of believers who financially and spiritually support each other. CHM is the longest-serving health cost-sharing ministry and is a Better Business Bureau-accredited charity. It's Christians helping other Christians, and it shared nearly $97,000 to help the Olcheskis. To be a part of Christian Healthcare Ministries, visit chministries.org.

That's chministries.org. CHM is a proud sponsor of Dave Ramsey Personality, is my co-host this day on the Dave Ramsey Show. Open phones at 888-825-5225. If you are a business owner or you're in charge of benefits for your company, pay attention. Your employees are facing a huge problem right now. It's called money and thanks to uh the pandemic and rules changes from the cares act american employees are taking money out of their retirement at a crazy rate employees all over the country have already taken out more than 12 billion dollars oh that's so freaking stupid oh my god this is what government does just you know

but there's good news you can actually help people get control of their finances and they know not to do stuff like that the average employee using a smart dollar using a smart dollar program has a sixteen thousand two hundred dollar financial turnaround in the first year. That's how much they save and how much they pay out of debt in one year as a total. So learn how to help your employees stop stealing from their futures. Go to smartdollar.com slash retire, smartdollar.com slash retire. Now listen to me. If you are a job, a business owner, or an HR person, or a C-suite individual, we're not guessing that your team is struggling. We're telling you.

And if you're out of touch or disconnected, you need to wake up. You've got a great opportunity with Smart Dollar to be able to plug your team in with the system that actually works. Dave's been in this game for over 30 years. So let's with the system that actually works. Dave's been in this game for over 30 years. So let's change the game. Get started. Go to smartdarlow.com slash retire and throw a lifeline to your team.

Joanne is in Charlotte, North Carolina. Hi, Joanne. Welcome to the Dave Ramsey Show. Hi, Dave. Hi, Chris. Thank you for taking my call. Sure. What's up? So, my question is, I wanted to know if I could pause Baby Step 4 to get ahead on Baby Step 6. Joanne, are you trying to change the recipe?

No, I'm not. I'm not. Just hear me out. Okay, go ahead. Just hear me out. All right, Dave's got his judge hat on, so go. Oh, no. All right, come on. What are you going to say? So, I'm 34. All right, Dave's got his judge hat on, so go. Oh, no. All right, come on.

What are you going to say? So I'm 34. All right. And I can pay off. So right now, if I continue to follow the plan, I can pay it off in 48 months. However, if I pause it, I can do it in two and a half years. And I'm 34. I already have about $110,000 in my 401K, and I don't have any kids.

And so it sounds... What's your income? About $89,000. What do you do? I'm an accountant. And in what function? Are you working in a company as an accountant, or you're a CPA, or...? No, I work for a company as an accountant.

Okay. All right. you're a cpa or no i work for a company as an accountant okay all right um so you're i i far be it from me to correct an accountant but your numbers are wrong i do um you did not include any you did not include any raises in your income 100 of which would go to your baby step six. That's true. In this calculation. And so it's not an 18, you're talking about 18-month spread here. Two and a half to four, right? Correct. Yeah.

So it's probably more like a 12-month spread. And for 12 months, I'm not stopping my retirement. Okay. You can do it if you want, but you have to call it Joanne's plan. You can't can't call it my plan okay and i don't want to follow joanne's plan so it's okay you can you can you can do it if you want you're an accountant for god's sakes you make ninety thousand dollars a year you're not a stupid person so you you just you know but you just go you know i don't make i didn't do uh dave's biscuit recipe i I did mine. Yep. And you got muffins instead of the biscuits.

No, really. I mean, the difference here is 12 months. No, it's true. Either way. So there's nothing here. Either way, she's going to be okay. Oh, yeah, I know. You're right.

And here's the thing, Dave. She could take on a couple of side clients, do some bookkeeping, bring in an extra 10 to 12, maybe even 20 grand a year to throw at the house and knock it all out. There you go. But again, compound growth is necessary. Joanne, you know how to count. You know inflation is 2 to 3 percent a year. You know we can't go 12 months without putting money aside to help that compound growth happen

in your 401k. No, no, no. It's two and a half years to gain 12 months. Nope. On the payoff date. Yeah. So, again, Joanne, follow the plan. I like you, and I'm proud of you for the progress that you've made.

Yeah. 34 years old, and you're talking about owning your house free and clear. Wow. You go rock it. Yeah. By the time you're 35 or 40, which is pretty cool. That's amazing. All right. Susan's with us in California.

Hi, Susan, how are you? I'm well. How are you? Better than I deserve. What's up? So I am an educator, and I'm the sole provider for my family of seven because my parents live with me. And we are working on paying off all our debts.

Good. I will have everything paid off by December except for my student loans. Good. My student loans are about $175,000 because I have a specialist in education, and I qualify for the public service loan forgiveness plan because I teach at low-income school districts. And so I'm wondering, do I continue? What do you make?

I make $123,000, $124,000 a year. All right. Yeah, but the public loan forgiveness that you're talking about is the 10-year plan, right? Right. Yeah, you need to read up on that because somewhere around 200,000 people have applied for it, and so far four got it. Not 4%. Four people.

Right. It's not. I mean, it's a complete disaster. And so the government is, they are not approving them in a very real sense. They just lied. But it's the reason they lied is not because they set out to lie. They're just incompetent and they're not getting them approved. And so I don't think that's a good plan. No, I wouldn't count on that. Now, there are some programs that, you know, in a lower, you know, in a tough school district that there are

some three-year and some five-year chunk forgivenesses sometimes, like a $30,000 or a $50,000 forgiveness. Those you can get a hold of in a reasonable period of time, and those are actually occurring. But the 10-year plan is just not happening. It didn't occur. So I would not make, I wouldn't hook my boat to that one. Your boat's going to sink. Dave, matter of fact, just before I came in here with you, I was talking to one of our team members whose friends had done that, signed up for the 10 year program, followed it to a T and were denied. And so here they had just spent 10 years of their lives living in a place they didn't want to live thinking this program was going to fix it.

Because 10 years ago when it was launched, they didn't want to live thinking this program was going to fix it well because 10 years ago when it was launched they didn't give clear guidelines right and so the what guidelines were given people did right but then there's they changed the game yeah but then when it comes in they're just turning them all down right so they got to the senior mark got turned down woke up said we're going to handle this and in two years they paid it off themselves right and so all of you all listening out there i know your ears are getting tickled down, woke up, said, we're going to handle this. And in two years they paid it off themselves. Right. And so all of you all listening out there, I know your ears are getting tickled. It's an election cycle. It's a topic that's talked about. We're going to forgive your student loans. We're going to do this and that. And it gets people excited and happy. Here's the reality.

It's not going to happen. The only way you're going to get that debt out of your life is if you attack it you make the sacrifice and you handle it so don't put your life on pause don't don't live in a place you don't want to live for 10 years thinking something's going to go away delete it out of your life the scariest phrase in the universe is i'm from the government and i'm here to help that should just terrify you and so so, yeah, you should just be going, ah, like it's Halloween, right? So run out of the house. Yeah, run. So that's, yeah, you're better off to just take care of business. And you've got a lot on your plate.

You've got a good income, thank goodness goodness uh but you got a big debt there and you got a lot of responsibility it sounds like at home and so this is going to be you know it's going to be a three or four year process but then there won't be any debt and if you wait the other way it'll still be sitting there waiting on you and and you'll be um disillusioned i i hope i'm wrong i hope it turns that they turn the program around and they figure out some way to keep their word. But I don't have any reason for that hope. Because I haven't seen them do anything else right.

I mean, this is brought to you by the same people who run the DMV. Oh, my gosh. This is The Dave Ramsey Personality, Chris Hogan is my co-host today here on the Dave Ramsey Show. Up next is Derek and Caitlin in Boston, Mass. It says on my screen you guys are debt-free. Congratulations. We are. Thank you so much.

Well done, well done, well done. How much did you pay off? We paid off $106,000. Way to go. How long did this take? Just about two and a half years. Excellent. And your range of income during that time? Joe, how long did this take? Just about two and a half years. Excellent.

And your range of income during that time? We're at $110,000, and we finished at $150,000. Good. What do you guys do for a living? I work in loss prevention. And I work in human resources. Okay, cool. What kind of debt was the $106,000?

We had my truck, Caitlin's car, and the rest was a whole bunch of student loans. Okay. So tell us a story. What happened two and a half years ago and put you on this journey? Well, we started kind of snowballing our debt together right after we got married. Within a couple of weeks, we went out, we calculated everything, and we couldn't believe how much debt we were in. At that point, we were already credit card debt-free. We hadn't really been keeping score, so we were Dave-ish. But we went all in, and we realized we wanted to start a family right away. We're used to living, you know, before that, beyond our means.

When I first started dating Derek, actually, I used to hope he'd pay on dates because I didn't have the money to pay for it. All my credit cards were maxed out, so it was enough. We were sick and tired and needed to make a change. How'd you find us? I had heard about the Total Money Makeover and your name, and I actually got the Total Money Makeover out of the library. Oh, wow. Good for you. And that got the whole thing started. It got the whole thing started. Caitlin, was Derek resistant or did he go along? I don't know the answer.

So I was a little resistant at first, and then actually she, Caitlin actually gave the idea of the Total Money Maker to make over to our friends, Jen and Evan. Okay. I actually talked about it with Evan, and he actually kind of helped me out a little bit, which I'm getting kind of an eye from Caitlin right now for it. But the important thing is we got on the ball on the same track together, and now we're there. Very cool. That is cool, buddy.

So what do you tell people the key to getting out of debt is? You pay off $106,000 in two and a half years, you're there. Very cool. That is cool, buddy. So what do you tell people the key to getting out of debt is? You pay off $106,000 in two and a half years, you're successful. Well done. The biggest thing that I tell people is you really have to have your whys. I come from a divorced family, and, you know, that's one thing that we don't want, and being money is one of the biggest things that break a marriage apart. We don't have to worry about that.

That's one less thing that we have going for us. So we have a bright future ahead. Another why is I tell people you have to be humble. You have to be smart enough to know that you're stupid joking around me. Other people have good ideas, sometimes better than yours, and it's okay to go with their plan, just like we did, Dave, with your plan. We took it, and now we're applying it to our life, and we're seeing success.

The third thing is we have a daughter, a one-and-a-half-year-old daughter, and we want her to be successful in her future. And actually, quick story, the day we paid off our last debt was the day we found out we're expecting our second child on the way. I love it. That's fun. Congratulations. Special ways. Thank you. Well done. What was the hardest part of this for you guys? Oh, I think, you know, as we got close to the end, we were so good at paying off debt. And we started dreaming big about what we want to do to our home. And I was like, we could just borrow all this money and pay it off again.

Like, I got so tempted to have this setback. But we've had people in our court cheering for us. We worked so hard. We said no for so long that we are just so happy to be debt-free. And now that we get to say yes to things, that kind of kept us motivated. That's fantastic. And it sounds like you guys are definitely walking and working as a team, which is a big deal. For sure.

100%. Yep. Slow and steady wins the race. Who were your biggest cheerleaders? I'd have to say it was our friends Jen and Evan that we talked to about and introduced them to your plan. They actually went all in gazelle intense, and they lapped us, right? They sold their house and moved across the country. So having someone we were so close with being a step ahead of us was super

motivational, especially because Derek's super competitive. He's like can do it I can do it yeah I can't have can't have can't have old Evan beating me yes that's right exactly very cool well congratulations you guys we're very proud of you you're rock stars you're heroes you took control of your life it's a pretty amazing thing in a country where most people don't do that so very very very well done i've got a copy of chris's book for you everyday millionaires because that is the next chapter in your story for sure yep so well done you two very proud of you derrick and kate i'm sorry no we're just gonna say thank you you're welcome derrick and caitlin boston mass 106 000 paid off in two and a half years, making $110,000 to $150,000. Count it down.

Let's hear a debt-free scream. Three, two, one. We're not ready! Take that, Evan. Yes, that's exactly right. That was a mic drop moment right there. Congratulations, you two. I tell you, what is possible when you make a decision and you have a plan that actually works

and you wake up each day and decide to get back to work to that plan? I'll tell you what happens. It's called progress. And regardless of where you are, you have an opportunity to make that decision right here, right now. You know, he said something really important there a minute ago, and we all do this, me included, you included. We're teachers, but we also are students. And, you know, you can try to figure everything out yourself, or you can have somebody who's

actually been down the road before eight or ten million times show you how to do it yeah and so you know my wife made fun of me a few years ago i had a personal trainer coming to the house and she's like he just counts to 10 for you you can't count to 10 like one two three you know what what is the problem and i'm like it has nothing to do with it it's the accountability yeah and he knows stuff that i don't know and he has a six-pack and i have a keg so there's something to be learned here and that i don't know you know yeah and you know you know years ago sharon and i spent a couple years in marriage counseling where i learned how to be a better person by far and uh it worked by the way and so why because the lady would go look when you do this you get this quit doing this you know i mean it's like it's not rocket science you know it's relational iq and it was increased by a professional teaching me and then i could say

oh no i think i'm going to figure this out on my own well then why are you going to a counselor yeah you know why do you need a personal? Why are you in financial peace university listening to baby steps that 10 million people have done and then don't do it. It ain't going to work. And so what you have to do is start to work it. And so what I love about being plugged in is the camaraderie in the community. And you're not on your own. You've got people that are there right beside you, people that have been where you've been and people that are headed to where that are already where you want to go. So you've got a great opportunity and a great chance to plug in, get connected. This life stuff is not meant to be done alone.

And financially, I'm going to tell you, getting plugged in. Dave's got a baby steps group that is absolutely blowing up. But inside of Financial Peace University, you're plugged in. And that's the thing. You're never, ever alone, regardless of if you're single, married, or whatever. You've got an opportunity to plug in to Ramsey Plus and have people around you that care. Well, that's exactly right. The whole Ramsey Plus thing works that way.

I think I'm going to choke to death here. Well, don't do that. So you're going to take us into the break.'s exactly right. The whole Ramsey Plus thing works that way. I think I'm going to choke to death here. Well, don't do that. So you're going to take us into the break. That's right. And listen, we've got a great opportunity for you getting plugged in on it. And listen, also, when you're plugged in with Ramsey Plus, we're going to have live streams that you have available to you. We've got the Smart Conference that's coming up November 7th. If you're a member of Ramsey Plus, you're going to be able to live stream that for free

right inside your home and not have to leave. So throw that graphic back up real quick, everyone, so you can allow people to see it that are watching on YouTube. But those of you that are listening in, you can get plugged in. Go to DaveRamsey.com or start your free trial by going to DaveRamsey.com slash Ramsey Plus.

You've got a great opportunity, and we'll be right back. This is The Dave Ramsey plus. You've got a great opportunity and we'll be right back. This is the Dave Ramsey show. We'll be right back. Chris Hogan Ramsey personality is my co-host today I am Dave Ramsey your host open phones at 888-825-5225 Rob is with us in Spokane hi Rob welcome to the show hi guys how are you today better than than we deserve. What's up? I am calling because I'm in debt, and I'm trying to figure out the best way to get out of it. I've been looking at a couple different options, and I've made a budget for myself and everything like that. And basically what I found out is I can either go ahead and, and, you know, work on making these payments and all these separate locations all at once. And, you know, and throw myself in a real financial pickle for the foreseeable future.

Or I was wondering if a, uh, that consolidation option would be the better way to go. So I have all that debt in one place, and I can stress out or be a little less stressed about it going forward. So you want to stay in debt longer? Yeah. Rob, did you hear what he said? Oh, wait, maybe I didn't. What did he say? I said, so you want to stay in debt longer? Oh, no, I do not.

Well, that's the way the payment goes down. Okay. Right? I was not aware of that. Well, I mean, what's the total of all the payments on all the – how many different debts do you have? I have about five different debts. They're all totaling to be about

$12,000. Okay. And what is the monthly payments total up to be on that $12,000? Just about $1,500. Okay. And so you would be done in under a year. So what is your income? Just about $2,000 a month. Oh, okay. Well, that's why $1,500 is killing you then, right? Yeah. Okay. And so what are these debts on? What kind of debt is it? It's my car is the majority of it, and then several credit cards, which me being a young man decided it would be a good idea to max them out. And then I realized that that is a bad idea. I hear you.

So what do you owe on your car, and what's your car payment? My car payment is $8,000, and I pay just about $300 a month on it. Okay, it's not the majority of the $1,500 then. Oh, yeah, no, it's... What are the other payments of the $1,500 then. Oh, yeah, no, it's... What are the other payments on the $1,500? Did you include, like, your rent in that number? Yes, correct, my rent is in that number. Oh, no, no, no, no, no, no, no.

Okay, you said $12,000 worth of debt, right? The payments on that are $300 for the car, which is $8,000 of the $12,000. The other $4,000, what are the payments on the other $4,000, which are credit cards, right? Oh, yes. So for my credit cards, those are each about $100 a month. So my outgoing debt payment is $700 a month. $700 a month. What do you do for a living?

I am an automotive technician at a local car garage here. Okay. How old are you? I am 22 tomorrow. at a local car garage here. Okay. How old are you? I am 22 tomorrow. Okay. Good for you. Okay. Here's the math.

If you didn't have a car payment, you'd be fine. If your income went up $1,000 a month, you'd be fine. And the stress would be gone, right? Mm-hmm. Okay. and the stress would be gone, right? Mm-hmm. Okay, so your budget is every dollar that you have coming in is assigned to something. We're assigning $300 to the car, $100 a piece to the credit cards,

and then we're going to start paying them off. So if you were to say, I have $12,000 worth of debt, and I'm going to put $1,000 on debt, and I'm going to live on $1,000, you'd be done in one year, right? Correct. Let's do that. Oh, by the way, let's take an extra job that makes $1,000 a month

and let's get out of debt even faster. Okay. Yeah, Rob, what you don't want to do, consolidating, as Dave said, it's going to lengthen the period of indebtedness, meaning the reason your payment goes down in the consolidation is that they're extending how long you're going to be in debt. So it's this terrible math, man. It really is. It is terrible.

It doesn't work. And people fall for it all the time. You've got four debts, three credit cards and a car. You can manage that. Okay. And so us talking about the debt snowball approach, smallest to biggest, because getting out of debt's not about math or interest rate. It's about momentum. And so please do not consolidate these, leave these things individually and attack them

smallest to biggest. Yeah. And so if you say, I'm going to pay the minimum payments plus money up to $1,000 per month total. So the minimum payments, let's call them $700. Okay, the three credit cards are four credit cards at $100 plus $300 car. Are you with me? Yes. That's $700. So if we say, okay, the other $300 to get to $1,000,

because I still want to be done in a year, so $12 divided by $1,000 is $1,000 per month, right? So $12,000 divided by 12 months is one thousand dollars per month right so 12 000 divided by 12 months is one thousand dollars per month plus or minus some interest but we're going to be real close on that so if you said i'm gonna put a thousand dollars a month on my debt or more then i'm gonna put three hundred dollars extra on the smallest credit card how much do you owe on the smallest credit card uh five hundred dollars okay so it's going to be done in one month. Mm-hmm. Right?

Now it's gone. Yeah. Now we've got three credit cards. What's the next smallest one? Uh, $500 as well. They're about tied. Okay, another month and a half, that one's going to be gone. Mm-hmm.

You seeing how this is working? Yeah. Yeah. And you're cutting them up, of course. Mm-hmm. Time to have plastic surgery. And then you're going to work your way right through this. So jump on EveryDollar at EveryDollar.com and download the budgeting app,

and it'll show you how to build your budget out and get that going. I'm going to send you a copy of the book, The Total Money Makeover, to show you exactly how to do the things we're talking about here. You can do this. It's going to work for you. You really can. And I want everyone else out there to keep your eyes open now because around in the next six months, you're going to start to get all these goofy mailers in the mail.

They're going to show you how they can help you. And listen, we know how to count. Fuzzy math never becomes clear, right? It's clearly a trap. So work a plan that works. April's in San Bernardino. Hi, April. Welcome to the Dave Ramsey Show. Hi, Dave. Hi, Chris. Hey, what's up?

So thank you for taking my call. I have a question. My husband and I started the Baby Steps August 30th. And thus far, we've killed off $12,673 in debt. Good for you. That's exciting. Thank you. We both had promotions last year, so our income increased significantly. Great. From $145,000 to $221,000. Yay. Yeah, but we had lots of debt because to get those jobs, we have $105,000 in student loan debt.

And then the rest of it is in various vehicles and et cetera. But you're cleaning that up. Good. We're working on cleaning it up. So we began, well, so listening to the baby steps, I used to put 15% of my paycheck into retirement, but I stopped it. And this year when we were paying our taxes was the first time I've really been hit heavy. That was a big surprise. You mean you had to pay more? You didn't have enough withheld?

That's correct. So we ended up paying $9,200 in taxes. Have you adjusted your withholding for your new income? Well, unfortunately, I was slow on doing my taxes, so I realized it kind of later in the year. And so I'm planning on adjusting those um and i'm not really sure how much i need to do but i was looking at the fact that we were putting 15 of our retirement or of our checks into retirement and i was thinking that was kind of like a cushion no no it's not you need to you need to stop all retirement savings you need to get with your tax planner

your tax person today go ahead and calculate your tax tax estimate right now so you don't have to be nervous about the unknown. You'll know exactly what you're facing. And you are going to owe, right? I mean, and so you want to be aware of that, but you can start planning for it and start psychologically getting there and having a game plan. And again, keep attacking these debts. But that IRS debt, if there is any, that thing's going to go to the top. Yeah. And I think the thing is the 9,200 has been paid. But if you did not adjust your withholding properly with the raises and after the 9,200 underpayment from the year before, then you're going to have another underpayment.

And you do need to get that adjusted and get the proper amount withheld. Not too much, but not too little. And if there is something coming at you, at least you're going to know what it is. That's right. Months and months and months before you have to deal with it. And you've got plenty of income to address the issue. Yep. This is the Dave Ramsey Show.

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