The Ramsey Show - App - Debt-Free in Less Than 2 Years? It's Possible! (Hour 3)

Episode Date: June 8, 2018

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Music Music Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones this hour at 888-825-5225. 888-825-5225. Starting off this hour, Chicago, Jamila is with us.

Hi, Jamila, how are you? Hi, Dave. How are you? I'm good. Good. How can I help? Sorry. Sorry.

I have a question for you. My husband and I are trying to go on plan right now, and we're just looking at the amount of debt and what is needed to make that possible for us. And basically my question is, I've been running a home business for 10 years. It's not really going well for me, and we have four kids. And we feel desperate because the husband makes $80,000 a year, and without any income for me, we're at

$1,000 in the red per month, and I feel like if I don't go back and finish my degree, I feel like I'm stuck to either working the home business, but it didn't seem like that was working for our family, and we're just kind of feeling really stuck. What did you make on your home business last year? Probably $10,000. Okay. So are you not working it much, or is it just not working well? It's kind of both. I'm a photographer.

The one is it is a saturated industry for me. And two, we have four kids, two of which have more special needs. So finding the time for me to pour into the business has been really difficult. So if you go back to school and get a degree to get a full-time job, how's that going to look? Yeah, it wouldn't be to go back to get a full-time job, but I was thinking like if I got something within a school district or something part-time that I could work during the week while the kids are in school. Yeah, so you can make $15,000.

Yeah. That's not worth it. No, and that's why, but we just feel so stuck. A part-time teacher's aid deal is not going to work. There's no sense in getting a degree to do that. There's no value to that to you guys. I mean, you're going to have to put in more hours, or you're going to have to make the business more successful, one of the two, to make more money.

You're not going to be able to work the hours you're working part-time in the school district and make much more than you're making now. Yeah, and that's kind of what I was thinking. But we just, like I said, we're just drowning right now, and we don't really know where to go. Yeah, and how much debt do you have? Over $70,000, and that's not including the mortgage. And what is that owed on? $25,000 of my student loan, because I was a semester away from finishing it 10 years ago.

And two credit cards, a car loan. How much do you owe in your car? $17,000. Of the $70,000? Yes. Okay. Yeah. All right.

Well, what I would say is this. I would say let's do a couple things. One is I'm going to send you a copy of Christy Wright's book, Business Boutique, A Woman's Guide to Making Money Doing What She Loves. And let's tune up this photography business. I think you can make more doing it with the hours you're spending and get focused on those hours and say, okay, there's so many hours a week we're going to do with kids stuff. There's so many hours a week we're going to work.

And we have to make this work with the family because you're you're trying to say i need to create some income here so i'm not saying you got to go to 40 hours or something like that but you've really uh made this business like the last thing on your priority list and it needs to be number two on your priority list some other things need to go a lacking so that you can get your income up there because I think you could probably double your income in the same number of hours that you would spend at the school district. I think you can if you focus on the quality of the business.

So I'm going to send you a copy of Christy Wright's book, Business Boutique for Women. That's going to help with that. Number two, I want you guys to get on a really detailed written budget. Go to everydollar.com, download the free app for your iPhone or iPad, or iPhone or Android, with your husband, the two of you. Let's make every one of the dollars coming in this house scream because it's pushed so hard.

You're making it work so hard that the dollars are all sweaty. All right? They have to have an assignment, no eating out, no vacations, scorched earth on the lifestyle, no spending. We've got to make some progress because we feel trapped. You said that three times in our conversation. Yeah. You've got to make some progress.

And so you're going to have to cut everything and really lean into starting to clean up these debts. If doing that, you're not making progress, then you need to sell the $17,000 car. Okay. And get you a cheaper car. Yeah, we tried to sell it, but we're still $5,000 under on it at this point. That's on trade-in value. That's not on private sale. Okay.

And on private sale, you're about $3,000, $2,000 under. You can write that check and get rid of that car payment and start to make progress if you can't turn it around with budgeting and raising your income. Okay. But I think you might be able to do it with those two things. But the problem is you're seeing no progress, and that's why – Okay. participation, you guys are going to feel like you got a raise because when you start writing this stuff down, you're going to go, where's all this money going? And you're going to tighten this thing up and get very organized, very focused, and you will see a change.

You'll feel like you got a raise. Everybody that starts a budget tells me that. And if you don't do that, you're not going to get ahead. And then you look around, you start having a garage sale, and you look around stuff you can put on Craigslist. You look around for things you can put on eBay. And you start making the decisions to move stuff out of your life so that you move the debt out of your life.

And it's tough, but you can do it. Lisa is with us in Tucson. Hi, Lisa. How are you? Hi, I'm good. Thank you for taking my call. Sure. What's up? My husband and I, we just November or December, we paid off a rental. And so we live in a house now that heals like maybe 60, 65,000. Well, we paid a lot in taxes because we paid off this house and we're trying to our tax man is telling us that we have to get some kind of loan home equity you need a new tax man he's an idiot okay so that we don't have to pay so much yeah well let me walk you through this okay

let's pretend you borrowed two hundred thousand dollars on a house and it was at five percent interest that'd be a ten thousand dollar interest payment that's what this idiot's telling you to do okay now if you pay the bank ten thousand dollars in interest that's tax deductible if you make seventy five thousand dollars a year that'll save you two thousand five hundred dollars on your tax bill so you just gave the10,000 to keep from giving the government $2,500. Well, that's pretty dad-blame stupid. You wouldn't trade $10,000 for $2,500 in any other universe.

So, no, you need a new tax person. I can't add. Go tell you to get a mortgage on your rental to save on your taxes. You get out of the sixth grade with that kind of math. It's unbelievable. But they do it that kind of math. It's unbelievable. But they do it every day out there. It's amazing.

You really do need to fire this guy, Lisa. He really can't add, and people that can't add shouldn't be doing your taxes. This is the Dave Ramsey Show. Folks, the real estate market is on fire all over the country. If you're looking to buy a home and you need a mortgage, don't sell yourself short by going and getting a typical pre-approval. That's a false sense of security, and it's just not good enough in today's fast-moving market. Instead, call Churchill Mortgage and get their certified home buyer program. I'm telling you, it's a game changer. Churchill helps my listeners become fully approved before they go house shopping. In other words, Churchill does upfront what most lenders wait to do at the last minute.

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We're glad you're here. Ramsey personality, business coach, and number one bestselling author, Christy Wright, author of the book, number one bestselling book, Business Boutique, has created a way to do ongoing training, coaching, and encouragement to help ladies make money doing what they love. Business Boutique Academy, online learning center that will equip you with the knowledge and the confidence you need to step into those God-given gifts and turn your passions into profits, ladies. Join the Business Boutique movement today, Business Boutique Academy. You can find it at businessboutique.com. Check it out. Check out the best-selling book, too, folks. Absolutely incredible stuff.

Stacy is with us. Stacy's in Chesapeake, Virginia. Hi, Stacy. Hey, Dave. Happy Friday to you. You too. What's up? Wife and I would like your opinion on something.

The fact we've got to build a new house and moved into in December, and it's on 26 acres of land. We were able to do that before selling our old house. A mortgage on the new house is around 300 000 the old house with the exception of a line of credit does not have a mortgage on it line of credits around 50 000 our intention was to just go on to sell it and go ahead and throw everything at the new house i would what's that i would you would i mean the other option was considering renting it which uh is valued around you know seventeen hundred dollars a month yeah if you owned your home with uh how much

equity is going to come out of the other house uh the old house with pay with the exception of line of credit so if it sells for what the appraised value is, it's $260,000 and $52,000. That's the line of credit. So $200,000. So you'd have a $100,000 mortgage if you do this. Okay. Yes. So if you were sitting in the new house with a $100,000 mortgage, would you go borrow a new mortgage of $300,000 to buy a $200,000 rental?

No. Same thing. Okay. It's effectively what you're doing if you keep that house. Yeah, and again, we looked at it both ways, and we were like, well, we go ahead and sell it and try to get out of it. We struggle with carrying that much debt. So like I said, we were just back and forth, but we do want to rental eventually. Yeah, and I would get a rental eventually.

You'd be down to $100,000 mortgage. You'll get that mortgage paid off, and and without that you're going to have cash flow like crazy in your household and you'll be able to save you know a couple hundred grand or 150 grand or something and buy a rental real quick you're going to be able to do that uh in cash without having to but in a sense you know from a balance sheet perspective, by keeping that rental, it's as if you borrowed the money to buy it against the new house. And I just wouldn't do that. I love rentals and I love real estate, but I'm going to pay cash for it.

And I'm certainly not going to borrow on my personal residence to go buy a rental, not in a million years. Michael's in Bristol, Tennessee. Hey, Michael, how are you? Hi, Dave. Thanks for taking the call, and thank you for all your guidance. Thank you. How can I help? My wife and I are debt-free. We've got a fully funded emergency fund, and we're trying to get our retirement accounts in order and where they should be. And my question is, my wife's been

medically retired for many years, and she gets a small pension every month, and we're curious whether we should be reinvesting 15% of that even into a separate account for later on sure if you can i mean um you know it's not that big an amount of money one way or the other so no it's really not um you know uh we just say 15 of your household income that's part of your household income so let's say you were retired from the military and you had that money coming in. I would call that part of your household income, and so I'd put 15% of that as well towards retirement. Now, obviously, that money doesn't qualify her as earned income to do some things,

but you can do a spousal IRA anyway. So if you want to put some money towards her name, you can do that with a spousal IRA. So yeah, I would be putting 15% of my household income, which is from all sources, your household income towards retirement. The purpose of that is, Michael, it's just real simple. We want to put a substantial chunk towards retirement while we get the house paid off. And then when the house is paid off, your personal residence, boom, you're in a position then with zero debt to really pour on the coals,

really light the fire and build that wealth even quicker and quicker and quicker. And that's the whole concept here is your most powerful wealth building tool is your income, so we want to get you out of debt so you can move that way. Blinds.com gives us our question of the day. Give your home the simplest makeover ever and take advantage of site-wide savings at Blinds.com. They make buying blinds, shades, drapes fun, affordable, easy. With Blinds.com, you get free samples, free shipping, and new promos almost every month.

So always use the promo code RamY to get the best possible deal. Today's question comes from Vonda in Oklahoma. I'm working on my very first budget. I'd like to know if you have an idea of percentages to go by for spending on utilities, groceries, clothing, etc. In the back of the Total Money Makeover book, there's a list of those percentages. In the back of the financial peace workbook, in the back of the old financial peace books, in the back of the complete guide to money, there's a set of forms. In the back of all those, anywhere you find our budget forms, you'll find those percentages.

But here's the thing, Vonda, it's going to change. So what you're doing is you're taking a stab at it. You can look back a few months in your actual spending and say, this is what I've been spending, and just use that. There's not an exact number that goes, okay, you know, 17%, so if you're doing 18%, you're wrong. It's just not that exact. It's a range of percentages to help people get started.

Here's the deal the reason i'm not worried about the actual percentage is two things one is if you have a low income the percentages don't work because you're going to put a higher percentage of your income towards food or towards shelter if you have a low income and the income and if you have a high income it doesn't work you make a half million dollars a year you don't put the same percentage towards food you'd be fat so think about that it doesn't work so you just put you know you use a reasonable amount and then the second thing is is it takes about 90 days of doing a budget about three budget cycles about three months

to get your budget to work and what that means is you're going to try some numbers in this budget that aren't going to work. I will tell you that whatever you think your food budget is the first month, it's more. You're wrong. If you look back and try to figure out what you've been spending on food, you spend more than that on food. Your first month, your food budget, you just go,

I can't believe we spend that and you just put a little more on it over budget for food the first month because you're going to be wrong and you're still probably going to be low so come back and do it again but then what you'll figure out is what it really costs to buy food after about three months of doing it using a food envelope and using the every dollarollar app for your budget form, for your budgeting, you know, it's going to really help you. And, you know, you're going to figure out what you spend on food. Clothing, you can spend more.

But most people realize that they're overspending on clothing, especially in the early parts of doing a budget and in the early days of trying to get out of debt and that kind of thing. Very few people are underspending on clothing. Most of you have enough clothing to last for a while, and you're trying to get out of debt, so we're going to really tighten the clothing budget down a little bit. Utilities are very predictable. You can just call them or jump online and they can give you a history, and you'll be very, very close on that as to what your actuals are. Because what we're trying to do is lay out a budget that will actually pay your bills, that you can actually eat out of, actually buy the clothes, actually pay the utilities.

So that's more important than the percentages are. And if the first month you guess wrong and you guess a little high on some of those things, then that's okay. I'd rather you be a little bit high on some of these necessities and have a little extra money left over, like you thought your electricity bill was going to be $100.25 and it ended up being $100. You got that extra $25 to throw towards debt that month.

That's perfect. You just roll, figure out what you're going to do with any extra money you have. But as you do the budget more and more and more and more and more, and after it takes at least about three months to get it moving, you're going to get more and more accurate with it. And that's the reason I'm not that concerned about the percentages. So thank you for your question. And a very good question.

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Hey, guys, how are you? Hey, we're excellent. How are you? Welcome, welcome. Where do you guys live? We're from Louisville, Kentucky. Oh, not too bad. What, two and a half hours down? Yeah, just about. Nashville, very cool. Good, good. Welcome to have, glad to have you. So you're here to do your debt-free scream.

Indeed, yes we are. Love it. How much have you paid off? We've paid off $125,000. Wow. How long did this take? Took us 23 months. Mm-hmm.

And your range of income during that time? We started around $200,000 and about $300,000. My goodness. What do you guys do for a living? I'm a neonatal ICU nurse. Ah. And I'm a nurse anesthetist. Oh,000. My goodness. What do you guys do for a living? I'm a neonatal ICU nurse. Ah. And I'm a nurse anesthetist. Oh, okay.

Wow. Ching, ching. Well done, you two. Thank you. Very well done. Appreciate it. So $125,000, I'm guessing, might have been a student loan in there? Oh, you're right.

Ding, ding. Absolutely. The whole thing student loans? We had a $4,000 worth of car loan that we took care of. Okay, just a little bit. I'm guessing one of you or both of you graduated and started making the bucks, and you said, we're cleaning this up. You're exactly right.

How long have you been married? Seven years. Actually, our anniversary is next week. Cool. So how long have you been out of school? When did you finish? It's been about three years. We started, I was listening to you uh

podcasts we started feeling the weight of the student loans kind of through graduate school and we knew that we didn't want those hanging over our heads so our plan kind of right from the jump was to uh knock these out as fast as we could and how many how long have you been uh nursing samantha i've been a nurse for almost coming up on 10 years okay so you were doing nursing through this whole time. Yeah, I was the one working. He was in school. He's knocking off nursing.

That's just a school. Right. Okay. Very good. I can't say that. Nobody can say that. It's part of the graduation. You have to learn to say it, I'm sure.

Yeah, very cool. So 36 months ago, you get out, but 23 months ago, you go, okay, we're going to take this income that we've got together here. We're not going to go blow it. We're not going to act like we're rich doctors. We're just going to go pay this off. Right. And you knew that to do that by listening to the podcast.

Yeah, pretty much. We were raised with good principles for managing our money, and yeah, you've been a big inspiration for us. Well, thank you. Thank you. Well, Samantha's been around the neonatal. She's seen broke doctors. Absolutely. She knows what they look like.

She knows what they look like. I don't want to be married to one. We don't want that to be our destiny. They look good. They make a lot of money. They just don't have anything. They worked all these years to make money, and they don't have any money. It's sad.

It really is. So very cool, you guys. What do you tell people the key to getting out of debt is? Well, I would say the key is we, you know, there's a lot of, you can let fear of the unknown kind of take you out of your game plan. You got to stick to your game plan. We had a new baby right at the beginning of getting out of debt. We had a car that fell apart that we paid cash for a new one we had my practice uh had some went through some changes sam cut back a lot of hours to stay at home with the baby so there was a lot of excuses we could have found to kind of ditch the plan or or you know pump the brakes on it but um we didn't

we just stayed motivated i think the second thing i would say is um once we made the budget uh we put giving at the top and um there's the first time we started tithing, and it's amazing what that does for you. Once you're in control of your finances, you can give joyfully. Kind of once you give joyfully, you realize that everything we have is a blessing and by the grace of God. And so then you can give graciously.

And once you start giving graciously, you realize that it's a blessing to have these resources to do this, and you want to be a good steward of it. So in the end, it was so much more than we just thought it was going to be financial wisdom that we gained. It was so much more than that. It affected your whole spiritual walk. Exactly.

Exactly. Very cool. So, Samantha, what was the big takeaway for you on the giving side? Because that's pretty profound. Oh, yeah. Just even what he said, that we grew together as a couple as well, just having a goal and seeing what we could do with 90% of our money and putting 10% at the top to give to the church. And it was just amazing for our marriage, for everything. Well, your pastor is a good friend of mine and he sent me a text this morning.

We love him. He sent me a text this morning. He said, this couple's coming on your show to do their debt-free scream and they are very, very sharp. So Big Dave has been reporting. Big Dave Stone has been reporting on you. You know, he taught me to hoverboard. We've heard about that many times at Bible Spots.

Oh, he brags about that, doesn't he? Okay. I about ran through the wall of your church on that thing, man. I about broke my neck. But, yeah, we had a blast up there. He and I have been friends a long time. He's a good man. And he said you guys lead.

He said you're wonderful leaders. And he just sent a wonderful glowing email down here about you this morning. Very cool stuff. Way to go, you guys. Thank you so much. I'm glad to hear the giving part of the equation. It does do all of that. I mean, the way you stated that was very profound because there's things that giving turns loose in you that you didn't even realize.

Right. I mean, I think if you're blind to a lot of the needs until you can start to have the financial freedom to, to see those, to be available for them. So. Yeah. And, but the graciousness and the gratitude that comes, the natural outflow of changing your generosity, it just, it changes, it shifts everything for you. And, you know, that that's, that's just powerful. Very well well said very well done so um well congratulations we've got a copy of uh chris hogan's retire inspired book for you that's the number one bestseller the next goal is to be millionaires and continue your outrageous generosity and you'll be doing both of those momentarily won't take long at this rate you

guys are cranking man you are absolutely cranking so um very very cool stuff and so good thanks for stopping in and i'll tell dave we saw you thank you all right steven and samantha louisville kentucky 125 000 paid off in 23 months making 200 up to 300 count it down Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free! Way to go, you two.

Very fun. Very well done. Sharp, sharp. Man, that's cool. That's exactly what you do right there. All right, Jordan is with us in Washington, D. Man, that's cool. That's exactly what you do right there. All right, Jordan is with us in Washington, D.C. Hi, Jordan. How are you?

Oops, I pushed Taylor's button. Hey, Taylor, what's up? Hey, Dave. How are you? Better than I deserve. I'm just lost as a ball in tall weeds. How can I help? It's okay.

I think we all get lost. Well, so I make, I just have a quick question about paying off my debt. I'm about two-thirds the way done with my student loan. I'm at $6,600 left. Back before I started graduate school, my mom helped me start a Roth IRA

and actually back in high school I'm just putting $50 a month towards it. So I have about $3,000 built up in that, and I'm just curious if I should take that $3,000 and put it towards my debt to get it done faster. How much debt have you paid off? I started around $19,000. And how long did it take you to pay it down to $6,600? About a year and a half. Okay.

What is your income? I started at $40,000, and then I'm up to $4,100 at my main job, and I'm also an adjunct instructor at a small university. Okay. So you start at $40,000 and you're up over $50,000 now. Yeah, I'm about at $50,000. Okay. So you ought to be averaging over $1,000 a month towards this debt now.

Yep. Okay. So in six months, you're done. Yeah. Yeah. My payoff date and my plan right now, if I don't take that money, is November 1. Yeah. Okay.

Yeah. In five months. Okay. Good. Good. Yeah. No, let's not destroy the Roth for, what, a month of gain? A month and a half of gain? You know, no. that roth run now i wouldn't you

know you know we stop investing temporarily while we're doing the debt snowball in baby step two but um we don't cash out retirement to pay off debt unless it's to avoid a bankruptcy or a foreclosure but in your case dude i mean you got the finish line in sight for sure you don't do it even if it was a good idea it wouldn't be a good idea for you so so excellent man no no just finish play through just play through you got this you got it you got it that's been today's calls all these people that are right there near the finish line, just got to go, hey, run over there, run through the tape. It's right there. That's been half the calls today. You got it. You got it. Some of you guys are doing better than you think you are. This is the Dave Ramsey Show. Okay, I need you to listen to this. Because one normal routine that everyone does can cause total chaos in your life.

I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and every search you're doing online. It doesn't matter if you're on your cell or your laptop. They can see you visiting websites, streaming or downloading, uploading photos, files and more. I'm not telling you this to scare you, but I want you to be aware and take action. You need to download an app called Hotspot Shield. Hotspot Shield helps keep your connection on your own Wi-Fi and any public Wi-Fi secure.

600 million people worldwide have downloaded Anchor Free's Hotspot Shield. Download it right now. Just search Hotspot Shield on iTunes or Google Play or go to hotspotshield.com. You can be secure in seconds. Download Hotspot Shield by Anchor Free today. our scripture today proverbs 13 11 wealth gained hastily will dwindle but whoever gathers little by little will increase it Let's try that again. Because that's one you need to know. Proverbs 13.11.

Just for those of you that weren't listening the first time. Wealth gained hastily will dwindle. But whoever gathers little by little will increase it. Another proverb says, he who hastens to be rich will not go unpunished. Hmm. Hastens. Hastily. That's not a word we use today.

That's kind of an old English word, isn't it? But what's it mean? You're in too big a freaking hurry. That's what it means. You're trying to get rich quick. Get rich quick will not go unpunished. That's what it said. And wealth gained quickly doesn't last usually.

That's what this says. But people that gather wealth little by little increase wealth. The vast majority of people who are wealthy, 90-plus percent of the people that I have met and worked with, the thousands and thousands of millionaires I've worked with over the years, did it gradually. Now, I've worked with over the years. Did it gradually. Now, I'm not against getting money quickly, if you want to do that. I'm not saying you're evil or it's bad.

But there are all kinds of problems that go with it when it comes quickly. Because what happens to most of us is as we grow our wealth, we as individuals are emotionally and spiritually maturing. We are growing. And so the wealth never gets so big that it crushes us under our character is strong enough to carry it as we build it gradually and we build our character gradually. That's the only shot.

But, you know, how many times have we seen the young athlete that gets money and it destroys their life? The young music artist that gets money and it destroys their life. The young actor that gets money and they're in rehab for the rest of their life because they didn't have the emotional, in their case, character to carry it. And it doesn't have to be young. It can be old. How many times have you heard of somebody 55 years old that never had any money in their whole life,

and then they win the lottery, and it destroys their life? It wasn't a blessing. See, wealth gained hastily will dwindle. He who hastens, who's in a hurry to be rich, will not go unpunished. That happened to me. I got rich quick. I mean, I started from nothing. We graduated from college.

Sharon and I got married at 22 years old. By the time I was 26, I was a millionaire. How did I do that? I borrowed it all. I had a million-dollar net worth. I had $ millionaire. How did I do that? I borrowed it all. I had a million-dollar net worth. I had $4 million worth of real estate, $3 million worth of debt. Four minus three is one. I was a millionaire. And I made $250,000 that year.

That was 1983, 1985. I mean, that was a long time ago. That was a lot of money even then. A lot of money now. But it was a long time ago. That's a lot of money even then, a lot of money now. But it was a house of cards. I had so much debt, and I wasn't behind with anyone. I wasn't late on the payments. But the bank got sold to another bank.

They called our notes because I was an idiot that signed up and gave them the ability. I had a lot of short-term notes because I was flipping houses before there was cable TV to tell you how. I built a house of cards because I was in a hurry to get rich, and then I was just appalled and shocked that the house of cards fell. Well, guess what houses of cards do? They fall. All the time. There's no such thing as a well-constructed house of cards.

The point is, it's fragile. It's volatile. It falls in. He who hastens to be rich will not go unpunished. You're trying to get rich quick. You're trying to play the lotto. You get punished because you throw your money down the toilet. You go in there and buy a lotto ticket, you get nothing.

You got nothing. Nothing. Think about every action that someone takes to become wealthy easily and quickly usually results in punishment. This is dead on. These scriptures are straight-up truth. And John Tyler said it this way, wealth can only be accumulated by the earnings of industry and the savings of frugality.

Well, wealth, at last, that's all it is. But you can get wealth other ways. You can get wealth by sudden fame. You can get wealth by sudden, you know, you can hit the lottery. You know, one in a bazillion people do. But the rest of everybody else is trying to win their wealth that way, gets punished by losing their money. Instead of investing their money, little by little will increase your wealth.

That's where real wealth comes from. The highest probability of building wealth, the best way to get rich quick is to get rich slow. Mark is with us in Idaho. Hey, Mark, how are you? I'm doing well, Dave. Thank you for taking my call. Sure. What's up?

Well, my employer will be adding an option for a Roth IRA here soon. And I'm wondering, what do I do with the contributions that my employer has made so far? My wife and I are just getting started in the baby steps. Okay. You mean the 401k will have a Roth option to it? Employers don't have IRAs? Correct.

Okay. So the 401k is going to have a Roth. That's very cool. Well, when you restart after you finish your baby Step 2, I would start it as a Roth. Their matching portion and your old portion is non-Roth. I wouldn't worry about that today. Someday you may want to go back and roll the old portion and the matching portion into Roth. When you do, however, it's going to create taxes, and I would not do that until you're debt-free, have your emergency fund in place,

and maybe even until you have your house paid off. So it will be a little while before you fool with it. But have you put money in it in the past? I have not. It is their enhanced 401K. Okay, great. They have it to retirement. Okay, cool. So you hit get to baby

step four you said you're following the baby steps right yes we're just getting started saving up our emergency fund so we are in the very beginning very good you just brand new perfect that's exactly where you need to be okay so you get through baby step two you're out of debt everything but the house then your baby step three you your emergency fund, three to six months of expenses. When you start baby step four, then you will start putting 15% of your income into retirement. Do the Roth selection with the 401k. They are not allowed to put Roth matching in. They have to do non-Roth matching.

But you can go back later and roll that into the Roth, but you'll pay taxes on it when you do, and I don't want you paying taxes until you get your house paid off and until you get some of these other investment goals hit. So that's your order of attack. But very, very well done. That's excellent. That's good news for you.

Congratulations. Michael's in Greenville, South Carolina. Hey, Michael, how are you? Hey, Dave, how are you? Better than I deserve. What's good news for you. Congratulations. Michael's in Greenville, South Carolina. Hey, Michael, how are you? Hey, Dave, how are you? Better than I deserve. What's up? I've got a question for you. I have my emergency fund in place. Good.

And I have a mortgage left of about $24,000. And I was wanting to know, should I go in and start investing, or should I try to knock that mortgage out? We suggest putting 15% of your income towards retirement at Baby Step 4, and everything else you can get your hands on, throw it at that mortgage. You're going to get that paid off in a very short time. Congratulations. Thank you, sir.

Thank you, sir. That answers my question. That's exactly what you should do, man. Way to go. That's very cool. Hey, you guys are figuring this out. I mean, I appreciate it. There's 13 13 almost 14 million of you out there listening now and this basic clear path i know for some of you that think you're really smart um because you are really

smart uh you're almost too smart to do something that seems easy to understand. But just because something is easy to understand doesn't mean it's the wrong thing to do. As a matter of fact, some of the most profound life-changing things you'll ever hear or encounter in your life are easy to understand but are actually hard to do because they have to do with controlling the person in your mirror. And that is personal finance, and that's walking these baby steps, and that's sacrificing to win

that's um what the bible says uh no discipline seems pleasant at the time but it yields a harvest of righteousness that puts this hour of the day ramsey showing the books we'll be back with you before you know it in the meantime remember there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word. So you think you don't need ID theft protection? Well, think again. The Equifax data breach is a perfect example of why everyone needs to be protected. Over 143 million people, which is half of American adults,

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