The Ramsey Show - App - Debt is Not the Problem. It's the Symptom. (Hour 3)

Episode Date: January 24, 2019

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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. Thanks for joining us. Open phones at 888-825-5225. Lindsay starts off this hour in Maryland. Hi, Lindsay. Welcome to the Dave Ramsey Show. Hi, how are you? Better than I deserve. What's up in your world? Okay, so I'm 29 years old, and I'm $137,000 in debt.

Yeah, so a part of that consists of my car loan, and the other part of that is my student loans. I'm a rental car agent. I make $45,000 to $30,000 a year, and I have to live at home with my parents. So I want to move out, and I want to get this debt paid off. Good. And how much do you owe on your car? $17,000. Okay.

All right. It's an awfully big car payment for an income like yours and a mess like you got. Yeah. Well, I was just involved in a car accident, and so my car was totaled back in December, so I had to get another one. So that car that was totaled actually was almost paid off. I had like $7,000 left. So why did you have to upgrade? You didn't.

You moved up in car. You have a nicer car than the one that was totaled. Well, no, not exactly. They were both the same price, actually. Then where'd the money go? Because you said you only owed $7,000. Now you owe $17,000. The car was in the accident and it was

totaled i know they give you a check when that happens right and if what was the car worth the new one no the one that got totaled um the one that got totaled it was 17 000 uh it was worth that much but then when the accident occurred i I had like $7,000 left to pay off. Right, which would mean you would have had $10,000 in your hand. No, no, no. They paid the car off with most of it. Now, honey, if you get a $17,000 check and you have $7,000 worth of debt, you end up with $10,000. Oh, no, no, no.

The check they gave me was $10,000. After they paid your car off. No, no, no, before they paid the car off. So your car was not worth $17,000. Your car was worth $10,000. Maybe I'm confused by your question. Okay. You had a $10,000 car. Now you bought a $17,000 car.

Or a $20,000 car. You went up in car. You had to. Otherwise, you would still owe $7,000. Well, when my old car got paid off with the settlement check, I was only left with $3,000. Which means they valued your old car at $10,000. Do you understand? Okay.

And then you went and bought a car for $20,000, right? Yes. And then the $3,000 knocked it down to $17,000. Yeah. So you doubled your car when you got a car totaled. That was not necessary. You could have gone and bought another $10,000 car. That was what I was trying to explain to you.

Okay. Okay. Okay. But anyway, you got an awful big car payment for somebody making $45,000 with $137,000 in debt total. The rest of this is student loans, $120,000 in student loan debt? Yes. And what's your degree in? Business administration and human resources.

Gotcha. And you're 29 years old, and you're living at home still and trying to get this mess cleaned up. I appreciate where you are. Okay. And you're working 40 hours a week, right? Between 45 and 50 hours. Okay.

All right. I think you're going to pick up a side hustle because you need some more money to get after this. It's going to take you a long time with $45,000 as a ratio against $137,000. And I probably would sell your car and move down to about a $7,000 car instead of a $20,000 car and get your debt done away with or almost done away with on the car. And then I would work extra on anything I can get where I'm making some bucks. Because a couple thousand bucks a month, 1,500 bucks a month, would change this scenario dramatically.

Because you are in a mess. And you're going to have to work like you're in a mess. And it's not going to be pleasant. And if you can stay in that home for another year and work and make an extra $1,500 a month on a side hustle of some kind and move down in car and throw everything at this, I think you can get a good run at starting to knock off the debt. But you're going to have to live on nothing, and you're not going to go out and party. You're not going to have time. You're going to be working all the time, and you're not going to go out and party. You're not going to have time. You're going to be working all the time, and you can't afford to go out. But if you don't have any rent and you don't have any utility bills,

that's also going to help you big time move towards this debt. And so I would prescribe no life, work all the time, throw all your money at this debt, and move down in car, and stay at home for at least one more year, hopefully only one more. You're not going to be out of debt in one year, but you could make some real headway on it doing that. I mean, if you could reduce this debt $30,000 in the next 12 months plus move down in car 10, that'd be $40,000. I think that's very doable, and that would put you in a completely different mindset about this debt you'd be owing under 100 at that point and i think that's where it'll get you to so good question hold on i'm going to send you a copy of the book the total

money makeover to help you and show you what i'm talking about it'll help you unfold on that open phones at 888-825-5225 let me me tell you, 25 years of doing this show, 30 years of doing this show, the number of times that people call me like she did, and your car got totaled, and you move up in car, is almost every time. And the hilarious thing is, the Bible says, out of the abundance of the heart, the mouth speaks. And so the words you

use tell us how deceived you are inside of you okay here's how deceived you are I had to buy a new car because my car got totaled and that's your explanation and that was hers and I'm not putting her down I'm not running her down she's great we're gonna help her okay but when your car gets totaled you don't buy a more expensive car than the one you were driving as a matter of fact it could be a real opportunity to buy a less expensive car than the one you were driving here's an example in her case let's use her case okay she was driving a ten10,000 car. She owed $7,000 on it.

Insurance company gave her a $10,000 check. What should she have done? Buy a $3,000 car. No car payment. Ha! Instead, she bought a $20,000 car. And the reason she bought the $20,000 car is because her car got totaled. No, it's not.

The reason she bought the $20,000 car is because her car got totaled. No, it's not. The reason she bought the $20,000 car is because she wanted a $20,000 car, and she doubled the amount of car that she had. But that's almost everybody that calls me when their car gets totaled. They always move up, and there's something about the way our brain gets in a fog, and we're like, okay, the car got totaled. That means I have an excuse. I have a rationalization to move up in car and i had to buy a car because my car got totaled yeah well why not when you have to buy a three thousand dollar car with the cash you had in your pocket after yours got paid off

that's move down in car and pay cash when your car gets total it could be a blessing if you don't rationalize your butt off and move up in car. And it's so foggy, we can't even get through the math on it. It can't get to you. It's just, but boy, I see that almost every time. So if your car gets totaled, what you need to say is, thank you, Jesus, and pay cash for a little tiny beater car. I love it.

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That's Zander.com or 800-356-4282. Thank you for joining us. We're glad you're here. This is the Dave Ramsey Show. Jared is with us in Dayton, Ohio. Hi, Jared. How are you? Hey, how you doing, Dave? Better than I deserve.

How can I help? All right. I'm a new listener. I just want to say you really inspired me to man up and, you know, take on this debt for my family. Well, I'm honored, sir. Thank you. Here's where we stand. We have about $52,000 in debt.

We're going to bring in about $49,000 combined. So obviously, I think we need some more income. I'm looking for a role to get my Ohio State real estate license next month. Hopefully do my job. We have an educational program where they would pay for schooling. So I just want some advice on where to go from here. Okay. What kind of debt is the $52,000?

Got one. My car is $17,000. Her car is about $15,000. We got, let's see, I got $4,000 in student loans, and she has about $6,000 in student loans. And then I have some credit card debt, and she has a little credit card debt as well. Okay. All right. Well, tonight I would sit down and open the EveryDollar app and begin to do your budget with your wife

and start to talk about what have we got to do to take this income that we have, plus any income we can create extra, and get out of debt. What's the fastest thing we're going to do? Then as soon as you're having that meeting, I would get out some scissors and cut up every one of those credit cards. They've obviously not been a blessing to you. That's correct. Every one of them.

And get debit cards, if you don't have them already, for your checking account. And you don't spend money that you don't have starting today. Ready, set, go. Okay? And then I'm going to start asking myself a question about these cars, because, you know, well over half of your debt, $32,000 of the $52,000 is cars. Right. You've got a car problem.

Yeah, I can definitely see that, yes. Yeah, I mean, you know, if you didn't have any car payments, you would have only $20,000 worth of debt, making $40,000, pick up an extra job, you'd be debt-free in a year if you didn't have car payments. You see what I'm saying? Yes, I see. be debt-free in a year if you didn't have car payments you see what i'm saying yeah so i'm i'm thinking about one or both of these being gone if i'm you and get me a couple thousand dollar two thousand dollar paid for cars and let everybody make fun of me that's just fine but i got no

payments and then we can save up and move up in car later with cash but uh the rule of thumb is this you should even if they're paid for you should not own things with motors and wheels You can save up and move up in car later with cash. But the rule of thumb is this. Even if they're paid for, you should not own things with motors and wheels, motors or wheels, that total more than half your annual income. boats and motorcycles and cars and four-wheelers and gators and whatever else you want to buy like that, all added together should never be more than half your annual income because you've got too much tied up in things that go down in value. And everything with a motor goes down in value with the exception of the occasional classic car, and nobody's ever really made that argument successfully. Some of them go up in value, and it's a collector's thing.

That becomes an investment for somebody who actually knows what they're doing, but that's not what we're talking about here. We're talking about rolling stock goes down, and you've got $32,000 worth of cars, or car debt anyway, I don't know if the cars are worth that, with a $50,000 income. So you're over half, or at one time, you were over half of your income. You have too much in cars, even if they were paid for. You have too much tied up in cars. And because they go down in value, I'm not against you having a nice car.

I'm against your nice car having you. And you got car-itis over there, brother. So that's what I would do if I were in your shoes. And hang on. I'm going to send you a copy of the book, The Total Money Makeover, and show you exactly what to do and how to do it. And Kelly will pick up and get one of those out to you. Mark is with us in Las Vegas.

Hey, Mark, welcome to the Dave Ramsey Show. Hi, Dave. Hey, what's up? Oh, boy. We're trying to figure out whether or not we want to help our daughter get out of her, uh, student loans. Um, she, she, she is a dentist now, you know, thank God she's been practicing for about two months. And, but Dave, I'm telling you, she really, really racked up student loans during her eight years of college. You know, she was jetting here and jetting there and spending a lot of money.

But she's a dentist, you know. But this interest. So how much is it, $400,000? About $380,000. Okay. Pretty good guess. Almost like I've done this. And what's she making now?

Well, she's making some darn good money right now. What's she making? To be honest with you, Dave, I don't know what she's making but i've seen the payments that she's been making you know uh she consolidated is she as worried about this as you are pardon me is she as worried about this as you are i don't think she is dave but i'm gonna help her you know i help people that are heading in the right direction, but she's not worried about this.

She's not headed in the right direction. She's still under the stupid illusion this is okay. So, no, I'm not. You know, you're all tore up about this, and she's the one that should be all tore up about it. Well, you know why I'm tore up about it, Dave? Because I have always, my whole life, even when I was a kid i was very very fiscally conservative i saved my money i just uh we're gonna uh we're gonna retire with i i just we ran the numbers while i was

on hold and we're gonna retire about1.6 million in the black. Good for you. Well done, sir. I'm proud of you. Listen, I always hate a paying interest, Dave. I know you do, but she doesn't. She doesn't. And so, you know, let me tell you what's going to happen.

If you reach over and pay off $400,000 worth of student loan debt, you know what she's going to do? She's going to go buy a practice and go half a million dollars in debt because she doesn't hate debt. I want her to learn to hate debt, and then I'll help her. Because the debt is not the problem. It's the symptom. And she's got to learn to hate it like you hate it. If she calls me up exasperated and sighing and stressed like you are, then I would say, you know, if you want to match her and say, all right, baby doll, you put $150 on this, I'll put $150 on this,

I'll match you whatever you do, which might be something you could offer to her. Say, I'll match you dollar for dollar. You want to do that? That sounds good, too, you know you know yeah because i want her heading in the right direction i don't want to try to coach somebody to go do something that that doesn't want to do it and she's not worried about it because all these dentists they you know they're so dadgum stupid they think this is okay and it's not okay it's ridiculous it's absolutely ridiculous and so it's got to be cleaned up and the first thing she should do is use her newfound income and keep living like a

college student like you and i would do live on nothing and clean this mess up as fast as possible so let's put her to the test sit down and tell her this is stressing me out i feel so bad for you i wish you were stressed out about you as I am about you. And here's what I'm willing to do. I'm willing to match you dollar for dollar and see if you've got anything inside of you that's going to make you get this paid off. See if you've got some of my DNA in you, kiddo. And I'm going to call her out if I'm her dad. And then if she does nothing, you do nothing.

But you match her dollar for dollar. If you want to do that, you got the money. $150 won't hurt you a bit. It'll hurt you emotionally, but you got plenty of money. You've done a great job. Congratulations. But you can't make other people behave, even your grown kids. And you can't want it for them more than they want it

and have a successful interaction. It won't work. So love her well. Give her some fatherly advice. By the way, you're worth a whole lot more than she is. So it'd be worth taking counsel from a guy like you. I mean, you're smart as a whip. You got a million six.

You're an everyday millionaire. So that's what I would do. I would match her, and I would encourage her and coach her up and see if you can get her moving. And then that would be the biggest blessing that ever happened to her. This is The Dave Ramsey Show. Your goal this year is to get rid of your debt, but here's the deal. In order to keep your momentum going past January,

you have to make small changes that get quick results. That's why you need to attack your debts smallest to largest. I also recommend you look for ways to find extra money to pay off your debt sooner. It's there, I promise you. Take a look at your mortgage. If you call my friends at Churchill Mortgage and request a five-minute checkup, they can help you find extra money. Churchill Mortgage Checkup has helped thousands of my listeners save big. In just a few minutes, the Churchill team can tell you how much cash they can potentially save you

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761 Old Hickory Boulevard, Brentwood, Tennessee 37027. In the lobby of Ramsey Solutions, they're here. Warren and Elaine are with us. Elaine are with us. Hey, guys, how are you? Good, thank you. Doing great. Where do you guys live? Houston.

Houston, Texas? Yes, sir. Looks like some Aggie blood running in the family here. Seen a little ATM shirt going here. A&M shirt going here. Oh, my gosh. Well, welcome anyway. Oh, fun.

So all the way to Nashville to do a debt-free scream. Yes, sir. Congratulations. How much have you paid off? $122,441.07. Woo-hoo! And how long did this take? 15 months.

Good for you. And your range of income during that time? Mid-200s, $250-ish. Okay. What do you guys do for a living? I work in IT and oil and gas. Good. I'm the director of marketing for a group of construction companies.

Ah, two great jobs then, huh? Making some serious money. Yes, sir. And looked up with $122,000. What do you owe money on? That would be our house. You paid off your house? Yes, sir.

I'm looking at weird people. Wow. Awesome. How much is this house worth around 300 probably how old are you guys i'm 37 i'm not and i'm not okay we'll leave it at that but you do have a paid for house yes sir and did you ever think you would by this age no not at all no most people never dream that they ever will get there and you just did this and you just drew back and smacked it in the mouth 15 months baby just knocked her out so tell me the story what made you decide to do this with such intensity i got a new kitchen uh-oh so we uh got married about six not about six years ago on Saturday. And as you've said, he bought the wrong house before me. So we paid off the student loan debt, everything else. And

we're working towards four or five and six. And one of the things that I want to do is redo the floors and the kitchen and everything else. And we sat down and said, we saved up and cash flowed this in one year. If we double that, we can pay off our house in two years. So I set up the plan that we put together. So what you saved for the kitchen, after you were out of debt on everything but the house, and you're up in baby step four now, what you saved up for the kitchen told you, oh, we can do this in two years. Yes, sir.

I got you. Okay, that makes sense. So we set out the plan for two years, and then we just kept hitting it and hitting it and hitting it, and every time we'd just get more excited because we'd knock a month off, and then it was 23 months, 20 months, 16, and we got it all the way down to, we did it in 15 months instead of two years. I mean, just a little over one year. A little over one year.

Wow. I mean, that's impressive. You knocked the crud out of this thing, man. Yes, we did. Very well done. What was the weirdest thing you did? Because you got fired up. I mean, you're making a lot of money, but you cut down.

You cut to the bone. I don't feel like we did anything too weird. We just kept living the way we had been living because we'd been saving before, whether it was from before we got married, saving for our wedding, we paid cash for our wedding, or just saving to do these renovations on the house. We just kept doing that. And even during that time, we kept doing stuff.

So really what it amounts to is you had been accustomed to living on substantially less than you make, and you just continued that trend. Yes. Our favorite question was, is it more important than the house? And it's amazing how many times that answer was no. Yeah. More important than being debt-free on the house? No.

But we still went to our Aggie football games. Did you? Oh, yeah. We traveled a lot. We went to road games. Okay, wow. Yeah. Good.

Well, they had a good team this year. You should have. Yeah. Good stuff, man. All right. That's fun. Wow. So, okay, people find out everything's paid for. I mean, they find out right. That's fun. Wow. So, okay.

People find out everything's paid for. I mean, they find out. I'm looking at weird people. I mean, you know, they find out how weird you are. And they say that classic line, how'd you do that? Because that's what people do. They look at you like you're a unicorn, you know? Like they just discovered a wild animal, you know?

How'd you do that? And so what's the secret? A couple of things. I know a few people have said the contentment issue, but we also like to dream big. And we have a pretty big why. We want to leave a legacy for we have two nieces and a nephew. And I think the combination of that and then the balance of still having a life and doing it at the same time.

It all kind of came together. Okay. Yeah, we read the Legacy Journey book and we both love that and that really spoke to both of us. And so between our nieces and nephew and just we also like to give back, to give to other kids going through college,

putting together scholarship money, anything we can do to help people with their education, that's real big to us. That's what we really our part of our legacy to be so that's been a big part of our why i remember the first time i met a guy a guy named john this was 25 years ago because i didn't grow up around anybody that ever do anything like that you know and this guy named john he was telling me the story he said a uh a wealthy guy in his town paid for his college almost kind of randomly i mean he vaguely knew him but he just he talked to him he got he interviewed him and he said i'm going to invest in you he just paid for his college and i thought man that's a cool idea i'd like to

do that someday just just go this guy just paid for my college and that's what you're doing you're getting a position to do that yep and we we've been doing along the way we say that you know we don't have kids of our own so we want to be able to pay for other kids to go to school so our baby step five has been doing some of those some of those we've set up 529s for our nieces and nephew and then just the scholarships that we do both through the schools and through community 4-H FFA organizations we do a lot with the Houston Livestock Show and Rodeo. And they give $27 million a year in scholarships. And so we just like being a part of that.

Yeah, absolutely. Well done, you guys. Very well done. All right, who was your biggest cheerleaders? Not counting yourself. Our moms. They're right there. Both moms are here.

Both moms are here. And the moms were the cheerleaders. That's a good thing. That's a good thing. That's a good thing. My mom told me when I was 16 how to do this, and I didn't want to listen. Oh, okay. So what made you do it this time? Oh.

Some guy. Some guy. Some guy. I told you about 10 years ago, and we got married six years ago, and we had the conversations before getting married and got on board, and we've just been working this together ever since how's it feel to not have a payment in the world it's pretty awesome it's pretty awesome we haven't felt it completely because we actually to cut down and get in those last few months we really cut a lot of things to the bone so the last couple months have been picking up and doing some of the things we probably should have done in those last months

okay wow but you knocked her out. And so now you're making a quarter million dollars a year and you've got no payments in the world. You're going to be so rich it's going to be ridiculous. And you're going to be able to help so many people. You're going to be able to live and give like no one else. Very, very proud of you guys. Well done.

We're very proud of you. Excellent, excellent job. All right, Warren and Elaine, we've got a copy of Chris Hogan's book for you, Everyday Millionaires, How Ordinary People Built Extraordinary Wealth and How You Can Too. job all right warren elaine we got a copy of chris hogan's book for you everyday millionaires how ordinary people built extraordinary wealth and how you can too you're getting ready to be one if you're not already you're almost there man we hit that over this process i love it knocking that knocking that house out did it i love it there's a double scream then it is all right

warren and elaine houston texas 12000. House and everything paid off in 15 months, making $250,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! Woo-hoo! This is how it's done right here.

Wow. Wow. Wow. Well, Dave, I don't make $250,000 a year. Okay. Then I won't expect you to pay off $122,015 months. But I do expect you to take a step forward and not sit on your hands and whine, to be a Viking and not a victim. You got to fight. You got to fight.

You got to fight. You got to draw the sword. Get the battle axe out. Start chopping. We're going to fight. Lay siege to this stuff. I don't know what your ratios are, but I do know that you can win. Some people, it takes longer than others because they got a bigger mess and a lower income.

What's your situation? We call it the shovel-to-hole ratio. How much debt have you got? That's the hole. How big a shovel have you got? Your income. Using that ratio, where are you going to be? How are you going to fix that ratio?

Are you going to sell some stuff? Good. Are you going to work some more? Extra job? Side hustle? Over time? What are you going to work some more extra jobs, side hustle, overtime. What are you going to do to get the income up? Let's get that shovel-to-hole ratio tip in the other way so that you can knock this puppy out.

You can do this. I'm talking to you. You've been sitting around listening to this show for the entertainment value, and now it's time you decide you are actually going to do this stuff and change your whole life and change your whole family tree. I will make you a promise. If you will live like no one else, later you can live and give like no one else. This is the Dave Ramsey Show. Thank you. Our scripture of the day, Matthew 6, 33, but seek first his kingdom and his righteousness,

and all these things will be given to you as well. Chuck Swindoll said, We are faced with a series of great opportunities brilliantly disguised as impossible situations. Love, Chuck Swindoll. I just love that guy. He's incredible. Absolutely amazing. Hey, folks.

We've been talking a lot around here about millionaires and everyday millionaires. Let me tell you one thing we know. We know that people who win with money have a long-term planning horizon, and people who lose with money have a short-term planning horizon. What's that mean? Well, if you're broke and you stay broke, which've been broke but i didn't stay there you have a thank god it's friday oh god it's monday mentality you're living for the weekend and that's it that's a short-term planning horizon i'm just gonna make it to friday blow all my money on the weekend. That's a child walking around in a large body that looks similar to an adult.

I've been that. I know what it is. But people who win with money have a long-term planning horizon, meaning when they're making decisions with money, they're not thinking about the weekend. When they're making decisions with money, they're thinking about 10 years out, 20 years out, or how can I change my whole family tree? Eternity. They're thinking way out there.

And when you start thinking way out there, you start thinking about defense and offense. Meaning you start making sure you have the right kinds of basic planning things in place. People who think long term have the right kinds of insurance in place, not the gimmick rip-off stuff, but they've taken care of their business. They have their health insurance in place. They have their life insurance in place. They've got the right amounts of these things. They have their will done.

They're thinking long-term. They're doing basic financial planning stuff, and there's a huge correlation between this. That's the defense side, making sure that all your hard work doesn't evaporate with one event. I mean, what if you saved up $300,000 and your house burned down with no insurance? See how dumb that would be? That's what I'm talking about.

That's the defense. You put the insurance on the house. Now you've got $300,000. House burns down. They give you another $300, about. That's the defense. You put the insurance on the house. Now you've got $300,000. House burns down. They give you another $300,000. You rebuild the house. And you don't lose your money because you didn't have defense. And one dumb decision like that can set you back decades.

And you get to start again. So we want to help you with this. We want to let you do your own five-minute coverage checkup, the five-minute checkup. So all you do, it's a completely free thing. It's not going to cost you a thing. Go to your phone, text the word CHECKUP to 33789. Or you can go to DaveRamsey.com slash CHECKUP if you want, however you want to do. And we will help you do the five-minute checkup.

It doesn't take but five minutes, in other words. And you can tell, you know, okay, I need to work on this one, this thing. You're checking the boxes. Have I got the right defense and got the right offense going? Because you just can't out-earn your stupidity. I've tried it. I've tried it for years. I've made a lot of money. I couldn't make enough to out-earn my stupidity. I've tried it. I've tried it for years. I've made a lot of money, and I couldn't make enough to out-earn my stupidity

because I was really stupid. So text the word CHECKUP to 33-789. Jason's with us in Austin, Texas. Hi, Jason. How are you? Hey, Dave. How are you? Better than I deserve, sir.

How can I help? So I recently came across you on YouTube. I've listened to all your podcasts and have your book, but I have a few questions. I'm self-employed. I take home about seven to eight a month. That's after taxes.

But I made a bunch of fun mistakes. Hello? You made a bunch of what kind of mistakes? I think we just lost him. All right, put you on hold, see if we can get you back up. And meantime, I'll talk to Colton in Hot Springs, Arkansas. Hi, Colton, how are you? Hi, Dave.

I'm doing better than I deserve. Good, how. I'm doing better than I deserve. Good. How can I help? Background. I first listened to your Financial Peace University when I was 12 and at least one year ever since then. I'm a 22-year-old college student and works in a hospital lab part-time. I am debt-free. I have two years left to go on college, which I pay for semester to semester, and I'm full-time there.

I have $5,000 in the emergency fund. I need to get $10,000 in there in order to pay for six months and a semester of college. Seven percent of my paycheck is put in a 401K. My first question is, should I stop putting that seven percent in a 401k and like it's a ten thousand no you should stop until you get out of college okay i want you to graduate from college debt free your rate of return on you what you spend on education what are you studying you nurse no medical laboratory scientist okay so you know you're going to make a lot of money doing that. And so the result of your education, what you're spending on your education versus what you're going to make as a result of your education,

is a much higher rate of return than any mutual fund. Knowledge, when properly placed, is valuable. I mean, you're not getting a degree in left-handed puppetry, okay, or gender studies or some BS like this. You're getting an actual degree that you can use, okay? And so that's what you need to do is invest in you, and let's just pile up money as high as you can pile it for the next 24 months. No long-term investing.

The best investment in your life today is named Colton. Okay. And that's not just bragging on you. It's just a mathematical fact. And so finish school 100% debt-free. Then dive into your baby steps. Make sure you've got your emergency fund, that you're still debt-free. And then, you know, you start 15% of your income going into retirement at that point.

Get all those matches. Do your Roth IRA. Do your Roth 401K, whatever's available to you. And, of course, start saving towards a house at that point. But you're going to be in great shape, man. You've done a really, really good job. And you're way ahead of the game. I mean, you can see the light at the end of the tunnel.

And it's a debt-free education. That's what it looks like. Well, congratulations, sir. Very well done. All right, Douglas is in Little Rock. Hi, Douglas. Welcome to the Dave Ramsey Show. Hey, Dave.

Nice to finally talk to you. You too. What's up? So I'm in the back half of my baby step two, and I'm a planner, so I like looking ahead at things. Good. And so step three and 3B would be planning know planning on uh buying a house and i was curious as to what you would suggest as like a minimum starting point for a down payment on a

house i don't really have one for your first house um you know i get get the house you know uh but but uh i of course my favorite is the hundred% down plan. My next best favorite is 20% down because you avoid PMI. You avoid private mortgage insurance, which runs you about $70 a month per $100,000 borrowed. And so if you can get 20% down, that's ideal. But even that with a first-time homebuyer, I don't hold that out as a hard and fast day rule. But it's just ideal. I mean, it's optimum because, again, you're avoiding buying foreclosure insurance, which is basically what PMI is.

It's a rip. Okay. So, yeah, I mean, save up your good, solid emergency fund and then save up as much as you can, but as fast as you can. And first optimum milestone will be 20% down, next optimum or more. Next optimum milestone will be 100% down. And just start looking at how we can get there and what we're doing. And it has to do with the size of house you buy. And I will tell you this, very few people buy their first house and stay there their whole lives.

Almost none. The average house is turned over every six and a half years in America. People move on average every six and a half years. Now, that means that there's all these people that move over two or three years, and there's people like me. I've moved, I think, Sharon and I were looking at it the other day. We move every 10 or 15 years has been our average since we got married and so we've been in four houses plus a couple of rentals when we first started but um you know and we've been

married almost what 37 years now so you know that's about the average in other words your point is it's not forever no my forever house forever house. You don't have a forever house. It doesn't work that way. All right. That puts this hour of the Dave Ramsey Show in the books. We will 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. and Spotify. For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.