The Ramsey Show - App - DAVE RANT: You CAN Work Your Way Through College (Hour 1)

Episode Date: September 3, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones this hour as we talk about your life and your money.

It's a free call at 888-825-5225. That's 888-825-5225. I'm often criticized for a lot of things, but I'm often criticized for saying I'm out of touch. You don't know what you're talking about because you haven't been there and done that. No, I stay in really close touch, so I really actually do know exactly what is going on in the world of money and in the world of your finances. What I am in touch with is the fact that I'm old, which means I've seen more than some of you have seen. Been there, done that.

So an example of that is when I tell people in Anthony O'Neill, our Ramsey personality tells people in his new book, Debt-Free Degree, that you can go to college and work your way through. Oh, no, Dave. That only happened back when you roamed the earth with the dinosaurs in today's world with college as expensive as it is that is impossible says people who can't run a calculator so no you cannot go to college and work 10 hours a week at Burger King being a whopper flopper at minimum wage. You cannot do that. By the way, in 1982, when I graduated from college, you couldn't do it then either. Minimum wage has never been enough to get you through college.

So I don't know which one of you socialist idiots figured out a way that minimum wage was somehow supposed to pay you enough to go through college. No, you have to work at something that pays more than minimum wage, and you have to work more than 10 hours a week, and then you can pay for college. For instance, it is very normal around here. When I ask someone doing their debt-free scream what their side gig was, they say delivering pizza, and I say, how much did you make?

$1,500 a month working four to five nights a week, which, by the way, in case you don't know what nights means, it means all your days are open to go to class. Your nights are not open to play beer pong or to get rushed in the fraternity. Oh, wah. We're talking about getting an education here, getting a degree and learning something. This is the goal. So, if you actually cut grass, walked dogs, or you were a nanny, the average is 20 to 20.

Oh, clean houses. That's a good one. Get on your hands and knees and scrub a freaking toilet out. 25 bucks an hour on average. 20 bucks an hour on average. 40 hours a week, 30 hours a week while you go to school. I worked 40 to 60 hours a week when I was in school. And you can pay for the average tuition in America for an in-state college,

which is $12,000 a year. Now, that does not include living in the dorms. The Atlantic is publishing an article. Being a college student is a lot comfier than it used to be. This fall, many of the undergrads settling into their campus dwellings will find themselves in buildings far better appointed than the ones they're now graying, would be me alumni once called home yeah the dorms that were there when i went to college looked very similar to prisons it was a concrete block freaking wall with a metal thing attached to it that you put a

bad mattress on and called it a room oh and by the way you shared it with other individuals as opposed to a bunch of you who have grown up never having shared a room with anyone because well we couldn't have that it would be a dysfunctional family where we'd all to share rooms most of us in another generation grew up sharing rooms we learned to have these things called relationships in our family as a result. Sometimes the relationships were good, sometimes they were bad, but we had relationships because we were sharing things. Now most people don't know the name of their next door neighbor, and they for sure don't know the person on the other side of their next door neighbor, and they take that off

to college with them because their kids were trained that way, and they don't know how to have relationships down the hallway unless it's over Instagram. They don't know how to sit and talk to another human being, eyeball to eyeball, kneecap to kneecap, and so we have to have our own private rooms in the dorms. These students are the beneficiaries of a generation of construction that has spawned ritzy new dorms and other facilities, the article says, at many colleges, as well as, more infamously, such amenities as rock climbing walls and lazy rivers in the dorms. You're kidding me.

So college costs a lot more than it used to cost. Hmm. You used to stay in a concrete block wall room with another student. It cost a few dollars to put up per student. Now you're staying there with multiple devices on Wi-Fi. We want to make the architectural digest with our dorm room building, says one college. And campus living has entered a new era. For most of the history of American higher education, dormitories were not particularly comfortable or even plentiful.

And yet we say you cannot afford to go to college today, and Dave, you can't work your way through. Would it be reasonable for me to submit to you that part of the cost of increase cost of your college going through the roof would be the fact that the quality and the amenities of your housing for students has gone crazy. Thus, the cost went crazy. Would that be too illogical for some of you to grasp? So you're paying for this crap in other words now in my case i lived off campus in a we called it the cabin it was a shanty that had no heat that my grandfather built on the side of the river and i got to live there i thought it was was cool because it was on the river, and I liked to water ski. But, you know, it was pretty cool until we figured out it didn't have stinking heat,

and we had to get up and light a fire in the morning to get warm in the winter. Next winter, we put in a heater. By God, that was ridiculous. But, you know, that's where I stayed. And one winter, I didn't have the money to go back to college, and I ended up cutting firewood do you know if you cut enough firewood and sell it to people who want like a cord of wood a rick of wood with a chainsaw and a splitter that you can go back to school

as long as the school's not trying to finance in your tuition a lazy river ride see the problem you know i don't know where people think that you know you got your own little ritz carlton going here for your little baby snowflake and then you wonder why these stinking tuition rates have gone through the roof why housing costs for college has gone through the roof it's not simply that they're providing the same exact thing they used to provide. They're providing 10x of what they used to provide. They're charging 12x of what they used to provide.

And oh yeah, you can afford to go to school still if you go to an in-state school. Community college. And you work a job that actually pays and you work it a lot check out anthony's new book debt-free degree it'll show you every bit of that but it won't hook you up with a dorm with a lazy river ride lord help us this is the dave ramsey show Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable affordable biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian

families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry, a Better Business Bureau-accred organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events.

chministries.org. so before we jump back to the phones it just occurred to me at the break that if if your college has a dorm with a lazy river running through it we might rename it six flags over stupid i'm just thinking just think of that it's just a thought. Came to me at the break, and I work on these things during commercials. All right, Erin is with us in Oklahoma. Hi, Erin. Welcome to the Dave Ramsey Show. Hey, thanks for your time today. Honored. How can I help? I have a real estate question. My husband and I are trying to decide if we should sell our home in the near future or if we have a couple of years until we really need to. We love our home. We love our immediate neighbors. It's the rest of the neighborhood that we really have some concerns about. If you look at the several streets surrounding our street, about 20% of the homes

have sold in the past 12 months. Most of them have been sold and basically turned into rent houses, lower, kind of less than ideal neighbors, or foreclosed on. And we have seeked some advice of a couple of real estate agents, have gotten some conflicting advice, and so I just kind of thought I would see what your thought was. We did do a cost market analysis, and the days on the market are great, but we are at the top of the market, what we would like to sell our home for. Between your home and Foreclosureville, is there a main artery, a main drag that you have to go across? No. Is there a railroad track that you have to go across?

No. Is there any water that you have to go across? No. Okay, then you're probably going to get infected then that's what we're worried about yeah because what happens is what happens in most what happens in most towns in urban growth studies is that the we have these invisible lines about what's a good side of the street and bad side of the street that the locals all know you know if you drive if you drive out the main road driving out of town to the right side or to the left side is the cooler neighborhood than the other side right yeah but you don't have that break

point because you don't have a main artery between you or if it's across the creek or it's across the river or if it's across the bay or if it's across the tracks literally i know it's a metaphor but literally across the tracks sometimes that'll metaphor, but literally across the tracks. Sometimes that'll do it. But where's the invisible line? If there is no invisible line between you and Foreclosureville, Rentalville, or whatever we want to call that place that's struggling a few streets over, it probably is going to move your direction.

That's what we're worried about. And the other half of the neighborhood is, like, leased townhomes and things like that. So I think that's against us, too. We're closing out Baby Step 2. We have a great income, and we only have a few months, probably about eight months left until we're completely debt-free and have our emergency fund completely funded. Do you think that we should go ahead and do this now, make a move now, or do you think we have kind of a year to?

Oh, you've got a year. You've got a year. I mean, there's nothing on fire here. There's not a forest fire over there. There's just a disease that's slowly growing, right? Right. Yeah, so, I mean, you've recognized it's there. So, I mean, if you put it on the market next fall or next spring, you're okay.

With what you're describing, purely from an investment standpoint, nothing else, neighborhoods generally are like any other relationship. They're growing or they're dying. And they're getting more expensive and more attractive to the buyers, or they're deteriorating and they're getting less expensive. Every neighborhood is doing one or the other okay and some old some old neighborhoods have they had a proximity to the rich end of town and uh that rich end of town infected them meaning they became very attractive they're the houses really aren't that much but the location by being

close to the good end so so to speak, made a positive impact on them. The same thing can happen negatively. That's our neighborhood to a T. Yeah, and so it's either growing or it's dying. What you're describing is one that's gradually deteriorating. When you come back a decade from now, it's not going to be good. Right.

You won't be there then. So you've got two or three years from an investment standpoint. I'm out of there. If you want to sell it next spring or next fall, I'm out of there. That's fine. The good news is you've recognized it's just a house. Right. And you didn't say something stupid like people say, my forever house.

Well, there's no such thing. Your forever house is heaven if you're a Christian. Other than that, you don't get a forever house. You're going to move. Everybody moves. It's just part of life. I mean, you just don't think you're going to but you go through different stages of life i have these friends that had this mansion this huge beautiful home and they had like 150 acres around it and it looked like terra or some

kind of you know southern plantation and all this stuff and the kids moved off and they wanted to travel all the time and he figured out that all he was doing was paying people to mow this place and so they sell their huge big beautiful, beautiful mansion, their forever home, that they built every stick in it. They designed every cabinet top in it 10 years ago, and it was going to be their forever home. They were going to live there until they died. Now they live in a townhouse and travel the world.

And so it wasn't their forever house after all. There's no such thing, folks. There's just not. Your life changes. You go through stages of life, of life things happen and you know my wife often says as soon as you die i'm selling this house i'm like like like she has a plan for me to die first i don't know how she knows this it worries me a little as i lay down and put my head on the pillow at night but yeah you have to think these things through so yeah i would sell i'd be out of there but i wouldn't panic

about it it's just you're making wise observations you move on there's other houses there's other ends of oklahoma to live in that are great that's a great state it's wonderful people all right chris is with us in north carolina hi chris how are you how are you dave better than i deserve how can i help help? Awesome. So, uh, I've come up with a question that's been giving me a lot of grief over the past few months. And I guess just some stats on my life. First, I'm 32. I'm debt free. I have $2,000 in an emergency fund. I have about a thousand dollars in a 401k. Um, and I've got this car, uh, that I bought in cash eight years ago, or really it was bought for me in cash eight years ago,

and I'm a car guy. I love the crap out of this car, and I've been working on it, kind of modifying it, making it my own over the past eight years, and it's come to the point in the market for this particular car where it's worth a lot like i think to the right person that could bring 40 or 50 thousand dollars what do you make which is i may i bring home 37 000 a year what kind of car is it it's a 2003 bmw m5 oh what'd you do to it? Yeah.

I turbocharged it. Whoa. That thing was a beast before you did that. It'll stand on its hind legs now. Wow. Yeah. That's amazing. Yeah, I mean, I got it featured in a magazine and everything. You had fun with this thing.

Yeah. Yeah. So what was, if it wasn't modified, what would it bring? Probably, well, see, I don't know because the car is super clean. It's got 64,000 miles on it. Yeah, but I mean, what's a book on an M5 from 08? I mean, really. From 03.

03, I'm sorry. The book is probably, I would say, low 20s. Yeah, that's what I was thinking. It's your modifications and the fact that you've kept it cherry and all that that made it go zoom, zoom on price. Yeah, I would stop spending money on it if you're going to keep it. But I wouldn't worry about it and fret about it. It's not causing you financial problems unless you keep modifying it, and then you're starting financial problems unless you keep modifying it, and then you're starting to invest in something that I really – I think you've got too much invested in this going forward.

You don't need to do this again because, you know, you need $40,000. The next $40,000 you need in your 401K, right? I agree, yeah, and see that there's other life factors at play here. I'm pretty dissatisfied with my job. I'm stagnant there. I'm starting thinking of trying to do something on the side because I eventually kind of want my own business or to do my own thing. And I think, you know, I've been really introspective about this,

and I'm a really creative person, and I think I had more joy over this period of eight years modifying the car than I actually do driving it. Oh, okay. I still really enjoy it and sitting in it and everything. But, you know, there's still this really strong emotional attachment to it. Yeah. And, you know, my logic brain says, well, yeah, it makes more sense to sell it and, you know, use that as a source of financial energy to jumpstart, you know, my own thing on the side. Well, I think you're going to end up doing that.

I don't know when you're going to end up doing that. But when your heart leaves the job more and heads towards entrepreneurship more, your heart's going to leave that car more because you're going to want that other thing more than you want the car. You're not quite there today the scales hadn't quite tipped but they might by spring you know you might be done man have a real nasty boss over there and you're ready to get rid of him not a bad thing if you can sacrifice a car and do that it's just a car it was fun but it was a car this is the the Dave Ramsey Solutions, our new lobby, standing on the brand new debt-free Scream stage,

Colin and Amanda are with us. Hey, guys, welcome. Hi, Dave. Thank you. Where do you guys live? We're from St. Louis, Missouri. Okay, wonderful. Good to have you guys.

And you got the kiddos with you. What are their names and ages? We got Caleb right here. He's 10. And this is Amelia. She is 6. Hey, Amelia. Very cool.

Very cool. Well, welcome, you guys, all the way from St. Louis and here to do your debt-free scream. Yes. I love it. How much have you paid off? $222,000. I love it. How much have you paid off? $222,000. I love it. And how long did this take?

Three years and nine months. All right. And your range of income during that time? Started at about $64,000 and finished at $172,000. Whoa, bit of a jump in four years. How did that go up that much? Well, I'm an airline pilot. Okay.

Got a new job, and the new job offered me the opportunity to upgrade to captain, which also comes with a healthy pay raise. Way to go. Big jump. Very cool. Very cool. And what do you do, Amanda? I'm a stay-at-home mom.

Full-time mom. Awesome. Full-time. Running the ship while he's away or whether he's home. Love it. Very, very cool. Well, welcome, you guys. So proud of you guys.

So what kind of debt was the $222,000? It was our mortgage. You paid off your house? We did. I'm looking at weird people. Very weird. I love it. How much is this house worth?

About $300,000. Okay. Wow. How's that feel? Feels very freeing. You don't have a payment? Nothing. Of any kind?

None. Anywhere? Yeah. It's very light. You're so weird. Yeah, we are. You don't have a payment. Nothing. Of any kind. Nothing. Anywhere. Yeah. It's very light. You're so weird. Yeah, we are. You're going to float away. Exactly.

It just feels so freeing. Yes. Well, I mean, and you're making $172,000 a year. You can, I mean, you probably picked up a bunch of shifts extra, a bunch of flights extra to do that, right? Like you took anything they threw at you to build the money up to knock this out? Fortunately, the new company, I didn't even have to do that. Wow. Yeah, I got hired at a legacy airline here in the last five years and the pay raises have come rapidly compared to where we came from. I love it. Well, very good. Good for

you guys. That's amazing. So tell me your story. What happened four years ago put you on this trek? Well, I'll tell you that our journey actually began with you about 10 years ago. We had just had Caleb here, so we had a new baby at home. I cut back from full-time to part-time, so I was working two days a week, and our plan was to live off of Colin's income. So he was working as a captain at a regional airline, and things are going well according to plan, and then he comes home from a trip one day and tells me that his airline isn't doing so well and they're going to start laying off pilots. So we kind of had this moment where we went, oh, my goodness, what are we going to do? So luckily we found out that he was going to be able to keep a job,

but instead of flying captain, he was going to be downgraded to a first officer, which in the regional world we were looking at about $70,000 income down to about $30,000, $35,000. So it was a huge pay decrease. And I just went to two days a week because I want to be home as much as possible with my baby. And it was a wake-up call. We had always been conservative with our money. But at that time, we had never done a budget in our life.

And so our first plan, if you will, was to not spend anything. It was just panic mode. It was like cut everything. We cut cable. We cut... No eating in this house. Yes. In fact, he stopped eating for the most part on the road. He would take food from home. So he became an expert at keeping sandwiches cold and fruit cold and different things that he needed to take on the road with him because we were literally scorched earth. Wow. And during this time, I went online and I was looking for a podcast. So I found you. Financial Podcast, you're right at the top, believe it or not.

I'm part of the room. Exactly. And so I found you and I started listening and I thought, this is more radical than what we were used to, but not too far off. So I thought you had some good ideas. I thought you had a plan going. And so I started talking to him when he would come home from work. And of course, he's thinking, okay, cut up all your credit cards, pay off your house. This is pretty radical. I better start listening to this. So I think he thought it was kind of nutty at first, but he started listening.

It is a little nutty. It's quite countercultural. Compared to the rest of the culture, you're nutty and I'm nutty. That's why I call you weird. It's a great compliment. It's the best kind of weird there is. So, yeah, so he started listening. So it wasn't long before we jumped on board and we started actually budgeting.

And it's amazing. I love how you guys say that when you budget, you actually feel like you got a raise. So, it no longer was it, don't spend any money. It was, okay, this is how we're going to spend our money. So, we really just, you know, he wanted to eventually get hired by a major airline. And that was the goal. So, we couldn't just up and quit our job and go do something else. So, he kept building his hours and staying the course.

So we just did that over the course of several years. So when he got hired by the major carrier and we knew the income was going to pick up and the raises were going to come fairly quickly, we just knew that when we purchased this new house that we had to have a plan to get it knocked out as soon as possible, hopefully by the time we were 40. Okay, so you were renting when all the garbage was going on. We actually did have a mortgage. On a different house?

Yes. On a different house. Yeah. Okay. So when you made Captain, you bought another house, but we're like, we're knocking this out. Right. Right.

We wanted to have something we could afford on first year pay. What can we afford now? And if this never increases, well, we're making the payments and all that stuff. But then when increases come, we want to throw it all at the house. Okay. So you had a plan from day one. Absolutely. I love it.

Very, very, very cool. Who are your biggest cheerleaders? We didn't tell a whole lot of people. The people that we did tell, they were like, oh, that's nice. You kind of want to pay off your house. All right. Well, doesn't everybody? But to be honest with you, we lead FPU at our church.

And so the best form of cheerleaders come from those classes. Oh, definitely. And we have a couple of co-coordinators, and so Brooke and Paul were huge cheerleaders along the way. We always keep in touch and see who was where in their journey. I love it. Well, thanks for coordinating the class. That makes a big difference. While you're walking it yourself, when you help others walk it, it changes everything.

A lot of people in their last stages of their baby steps are coordinators. Yes. It's not unusual. Some of them in their first stages, but certainly a lot of people, because it just keeps you going. Because you're around everybody. You get a positive peer group then. Yes. That you can plug into.

It's a beautiful process. Yeah. Very, very cool, you guys. I'm very proud of you. What do you tell people the secret to getting out of debt is? You paid off your house. The budget. It enables you to actually spend where you need to spend on food and clothes and mortgage. But it also enables communication between your spouse and it enables you to

really stick to the plan and to have a plan ahead of time is really what it's all about. Yeah. And I would say for me, it was opportunity cost, understanding the opportunity cost of your money. So when we were at this stage, we were taking a lot of the extra income and trying to figure out what do you do with it? Is this all going toward the house? That's what we wanted to do so that every time another opportunity come out, whether it be a vacation or if it was go to a sporting event or something, we knew that if we cut

into the budget, it was going to come out of the money that was going to the house. So just understanding if we do this with this pile of money, this is the benefit or not. And we're in control. We can decide. Absolutely. But we just, you know, and what that helps you with is just the conscious realization that if money goes to X, by definition, it cannot also go to Y.

Yes, and it's great for them to learn because we've seen them come up in this journey with us as well, and they do the same thing with their own money. Mom, Mom, I want this. And then you go, you can spend your money on it. And then all of a sudden, it's like, whoa, maybe I don't want that. I don't have so much anymore. You know, when you know that money is going to be gone, it's gone. It's gone.

Yeah. That's how it works. I love it. Well, congratulations, Jo. Thank you. I've got a copy of Chris Hogan's book, Everyday Millionaires, for you. If you're not there, you will be soon. Thank you.

At this route. Very, very, very well done. All right, Colin and Amanda, Caleb and Amelia from St. Louis. $222,000 paid off in three years and nine months, making $64,000 to $172,000. Count it down. Let's hear a debt-free scream. 3, 2, 1. We're debt-free!

I love it! Woo-hoo! Yeah! That's how it's done right there. Wow. How old are you guys? Just turned 39, and she just turned 38 within the last month. Okay, perfect.

39 and 38, not even 40 years old in a paid-off house, making $172,000, and gone from an income of $64,000 to $172,000 during that time. See, folks, this is what happens. Now, you have to make $172,000 to do this? No, you don't. But you might not pay off $222,000 in three years and nine months either. So, absolutely impressive numbers. So, what's the point of them doing that debt-free scream? Number one, it's a chance for them to celebrate. Number two, it's a chance for us to say,

Way to go, heroes. We're proud of you. Number three, it lets all 17 million of you tuning in know you can do it too when are you coming the debt-free scream stage is open when are you coming when are you gonna get off your butt and change your life we're waiting this is the d Ramsey Show. We'll be right back. Dan is in New York. Hey, Dan, welcome to The Dave Ramsey Show. Hey, Dave, thanks for your time. Certainly. How can I help, sir? So, Dave, I'm 32. I'm debt-free. I have a six-month emergency fund all there. I'm putting a little over 15% into retirement. I feel very good about that.

And over the last three years, I've spent maybe $75,000 in rent in a high-cost living area. So as of the 1st of September, I've relocated to my hometown. I put a 60-day self-imposed limit. My folks are kind enough to let me kind of crash here for two months. But any more than that, I just won't be comfortable. So I'm currently looking for a place to live, and I'm trying to choose between a home and an apartment. Now, I do have quite a bit of money saved for a down payment.

How much? Around $70,000, $80,000. Way to go. What do you make a year? I make, well, this year I'm on track for about $180,000. Good for you. What do you do uh i work in software engineering excellent excellent okay and yeah so the town you're in

is what size now uh the town i'm moving back to is very small so i'm lucky enough to be able to work remote and my money will go very far here um but you know i i've been following your steps for about three years now and i am terrified terrified of debt, including a mortgage. So I guess my question is, the first question is, one, do I stick it out for another two or three years so I can buy a home in cash, but in doing so, I might spend another $30,000 in rent, let's say. And if I bought a house today, I'm confident I could probably have it paid off in maybe two to three years, right? And the other question is, when the time comes, whether I buy today or in two years, I'm really struggling with parting with my money. I spent three years building this stockpile of cash, and there's an emotional attachment to it. So how do you get past that?

That's a wonderfully healthy thing um it's interesting when we spend actual money instead of borrowed money that it's harder to do it's true for all of us i mean when you borrow money it's just like you know sign your signature and woohoo you know it's like monopoly money it's not real it's fake you know that's part of the student loan crisis you know it doesn't even feel like it's real oh i'll never pay this back i'm not worried about it woohoo you know that's part of the student loan crisis you know it doesn't even feel like it's real oh i'll never pay this back i'm not worried about it you know and so the good news is is you are struggling because you've got this connection you've made that says hey this was hard to put eighty thousand dollars away it'd be hard to pay off a house in two years um but really, money's only good for three things, and you ought to always be doing all three. You ought to, A, be enjoying it, B, investing it, and C, giving it away with outrageous generosity.

You ought to always have some of those three in your budget. And in your case, you make a lot of money. You're in a low cost of living situation now uh in a small town and so um i think for today in the next 60 days i don't think you're going to be emotionally excited about buying a house the guy i'm talking to right now is not and i and so you know but i might give myself a self-imposed limit and say i'm going to rent for six months during that six months i'm going to get really comfortable with the idea that real estate is also an investment not having a rent payment is a very nice thing

and so getting a house that you pay for or almost pay for and pay it off very quickly is a wonderful financial goal because, you know, as long as that little town is doing okay financially or economically and that house is going to go up in value and someday if you want to sell it, you can sell it. Don't buy too much house. Don't buy the biggest house in the entire town or something like that. Don't buy some weird house that you can't sell, but buy something that's going to go up in value and that has a market when you do get ready to turn it someday. And look at it as an investment. Look at it as a part of your financial growth,

and that'll help you turn loose of it. Because the good news is you're not consuming the money. You're not buying an $80,000 cruise around the world that when you get done, the money has just disappeared. That's consumption. Consumption is not evil, but this is not consumption we're talking about. This is investing, meaning that if you had a bad situation, you could put the house up for sale, sell it, get your money back out, and then some.

So it is an investment, and investing is different than consuming. For me, investing and giving are easier than consumption today. My consumption I limit to a small percentage, although a small percentage of my world is wonderful. But we limit our lifestyle to a percentage of our income and certainly a percentage of our net worth. And the rest of it is investing in generosity because we get a bigger high out of changing our family tree, changing the next generation, and changing other people's lives with generosity than we do just buying stuff. I mean, we got a lot of stuff.

We got nice stuff. I'm not complaining. It's not like we live Spartan. We don't live Spartan. We live very luxurious. But still, even having done that, it's a very small percentage of our world. So I would be more concerned giving that hard-earned money to consumption than I would do investing or to generosity, because both of those are a type of investing.

Hey, good question. It's a good discussion. It's a healthy thing you're doing. Crystal is with us, and Crystal is in Wisconsin. Hi, Crystal. How are you? I'm great, Dave. How are you?

Better than I deserve. What's up? Okay. My husband and I have a question. We have about $16,000 in our savings in addition to our $1,000 emergency fund. We're on baby set number two um i stay at home with our two little girls and so my husband is the only one you know working outside bringing an income in um he is in the army national guard and he actually

works through the guard for his civilian job so his job is is contract-based, and we've had it in the past where, you know, he gets furloughed or a contract doesn't get renewed. And anyway, we're coming up where he should be getting another year contract. And my husband says we should throw the extra money at the debt. And I'm kind of like, oh, that makes me nervous. What's he going to do if he doesn't get a contract? I mean, he's going to go out and get another job. Okay.

And how hard will that be? I don't know. I'd say maybe it takes, what, three months maybe to get another job? I don't know. Depends on what he's doing. Might take him a minute and a half. Maybe. Might take him 15 months.

I don't know. What's he do for a living uh he is a intel analyst right now he's a what analyst uh intel intel yep intelligence analyst and so what would he do if he didn't have a job with the military try and get a job on the you know civilian side i suppose outside outside of the military the only problem is he hasn't been doing it um for very long only a year a little over a year all right here's what you guys need to decide you need to decide if you're in the middle of a hurricane or if you're just worrying okay and here's and if you're in the middle of a hurricane or you have one you know hurricane warnings you know using what's in the middle of a hurricane or you have one, you know, hurricane

warnings, you know, using what's in the news, right? Have hurricane warnings. And we really think there's a chance we could get hit here with this job hurricane. Then you just need to stop baby step two. You need to stop your total money makeover. Okay. And you pile up cash and get ready for the storm. But if the storm is not that imminent, if you just kind of have this general worry,

I mean, if you think it's 90% chance he's going to get another contract or he'll land something pretty quick, then that's just worrying, right? Right. In that case, then do your baby step two, which is what he said, and that's clean out your income. The fact that he's saying clean out the $16,000 and throw it at the debt tells me he's very confident in the renewal. Right. Okay, and I'm just worrying.

That's what he says, okay? I don't know. I'm not there. I don't know what the renewal is, you know? Right. But, I mean, would you say it's a 90% chance or a 50% chance if you were to say it? No, he's been telling me it's 90%. Do you believe him?

Yes. Okay. Yes. Is that a real fact? If that's a real fact, then we can act on that fact. Go ahead and just do it. Okay. Then go ahead.

But if it's just he's overly optimistic and he's always that guy, you know, then you can't, you know, maybe his 90% is wrong, in other words. Then maybe you don't do it. But I'm okay. I think you're okay based on what you're saying. It sounds like he's a pretty solid dude. He's an intelligence analyst. He can probably analyze whether his contract is going to be renewed or not, you know.

So I think you're fine. And I probably would just continue with the proper baby step to put your savings on your death snowball. This is the Dave Ramsey show. Hey, it's Blake Thompson, senior executive producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey show app on your smartphone, catch the full show or watch Thank you.