The Ramsey Show - App - Debt is the Most Frightening Monster of All (Hour 3)

Episode Date: October 31, 2018

The show about you

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 BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show because it's all about you. The phone number is 888-825-5225. That's 888-825-5225. Samantha is in Evansville, Indiana. Hey, Samantha, how are you? Hi, Ed, how are you? Better than I deserve.

What's up? I just had a question. My husband just put his truck up for sale, and we owe $46,600. Good Lord. And it blue books for $45,500. That's good news. So we weren't sure how much of a loss to take on it. Well, you've already taken the loss.

When you sell it, you just admit it. Yeah. The thing is worth what it's worth so um yeah you know what's your household income uh seventy thousand okay do you have any money in savings at all um we have the emergency fund which one the one thousand thousand dollars okay yes so how are you going to cover the difference if the truck sells for $3,000 less than you owe on it? I guess just pay it. I don't save up and pay it off or pay monthly.

I'm a fair credit union, I know. Okay. You need to work out with the credit union to let you have a loan for the difference ahead of time. Ahead of time. Because you can't sell the truck if you can't cover the difference okay so um and then yeah i would be willing to go down i mean two three thousand dollars below what you owe it sounds like it's a one thousand dollars blows the blue book on it but you need to get this truck sold it's killing you yeah i mean i wouldn't go ten i wouldn't go 10 000 in the hole on it but i would drop down there a few thousand bucks in a heartbeat just to get rid of it

you're stinking payments a thousand a month isn't it um 680 680 okay yeah close enough wow yeah so i mean you you made the right decision to get rid of it it's an out of control purchase wow over the top and out of control. And, you know, you're just going to have to sell the truck for what you can get for it. And if you can get $45,000 for it, fine. If you get $44,000 for it, fine. If you get $43,000 for it, fine. You know, $3,000, $4,000, you know, a little small payment is a whole lot more than having almost $50,000 owed on a truck.

You're reducing your debt substantially by doing that. And with what you're paying a month, you pay off that, you know, a couple thousand dollar loss in just a few months. You'll be done with it very, very quickly. So you'll be right on track, kiddo. You made the right decision. But no, I wouldn't lose 10,000 or I wouldn't take a $10,000 beating on it. It doesn't sound like you have to in this situation.

But I would get rid of this truck by Christmas. Somebody makes you an offer, you try to figure out a way to make it work. Joe's with us in Minneapolis. Just got home from Minneapolis. Joe, how are you? I am doing well, man. How are you? Better than I deserve.

We loved our trip up there. How can I help today? You guys had some good weather. You got lucky. We did. We did. Hey, I have a 401k question. So we just became debt-free and finished step three as well.

And my company matches on a 401k on an annual basis rather than on a per check basis and however if we're not employed with the company by the time they pay it out on the annual basis we don't get the match at all so my question is am i better off investing in other areas rather than the 401k if i don't see myself at this company long term well i mean if you're going to be there for this year, through the end of the year, each year, I would continue to do that. You want to get the match. Match is the best route. But, I mean, you're going to know.

You're not going to come home one morning and decide not to be there, right? This is going to be a planned exit, correct? Well, yeah. I mean mean this company's been known for some unplanned exits as well in unfortunate times but oh you think they might lay you off okay possibly okay so what what if you said uh in the year 2019 coming up you're getting ready to start your 401k and you know you'll get the match in December because December's here. You're going to make that one.

But by the next year, what would you say the chances are you're there? 50-50, 90-10, what? Yeah, I'd say probably 50-50, 60-40. Okay, so not very good. Yeah. What do you do for a living? I'm an account manager. Okay.

All right. I probably would still do it. Okay. Because you're not going to lose money. You're just not going to get the match. Do they have a Roth 401k? They do. Then that makes it a no-brainer.

Do the Roth. Because a Roth 401k will give you the exact same thing as a Roth IRA, but you might get the match if you're there. And so definitely do the Roth and do it there. And then if you're not there, you didn't lose anything, as long as you picked good mutual funds in there, and you're spread across the four types of mutual funds that we tell you to use, which are growth, growth and income, aggressive growth, and international.

And put a fourth in each of those and pick good mutual funds with long track records and do the Roth. You should always do your Roth 401k anyway, but in this case, it's like doubly essential. So let's say you do the Roth, and you get fired in November next year, and you don't get the match, you didn't lose anything. You just take that Roth and roll it out to a Roth IRA, and you'll have no taxes, and you move on with your next career, and everything will be fine.

John is with us in Chicago. Hey, John, welcome to the Dave Ramsey Show. Thank you, Dave. How are you doing today? Better than I deserve. What's up in your world? Well, I'm going to need to learn how to budget a little bit. My wife passed away about 10 days ago. Oh, my goodness. She took care of all the money. Yeah, I know. What happened? She had multiple sclerosis, and I came home one night, and she was just, you know, I thought she was asleep on the couch, and she had passed away.

I can only guess it was an embolism, but I don't know for sure. No autopsy was required. But that being as it is, now it's up to me to take care of the funds. We had no children. My house was paid off. The car was paid off. So we don't really have any real debt except for her funeral. But I never had to take care of the money before to figure out how to budget everything.

How old are you? 59. Gosh. And what's your household income? What do you make? About $60,000. How long were you guys married? 33 years.

Just celebrated that. Wow, I'm so sorry. Okay. It's tough. Yeah, I can't imagine. Well, you need a crash course on money, don't you? I'm not stupid with money, but it's just learning where she has money. I know a lot of things.

I'm finding this out as I go through. She had a lot of automatic payments. There was a budget plan, which is good, like the gas bill and electric bill and all that. They were on a budget plan, so it was the same amount every month. And then it would get just adjusted once a year. Gotcha. However, now I need to figure out exactly where the money is going because I didn't pay as much attention to it as she was always there. All right.

I'll tell you what. Hold on. We're going to put you into Financial Peace University, our one-year membership on everything about money, and it certainly includes budgeting and includes the EveryDollar app. Hold on. I'm going to pay for that as my gift to you. I hope you get back going again here, sir.

This is the Dave Ramsey Show. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged loan.

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NMLS ID 1591. NMLSconsumerAccess.org. Equal housing lender. 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Well, guys, we've been talking a lot about the millionaire mindset, the way you think if you're a millionaire around here. One thing we found for sure is millionaires think long term. They don't think, thank God it's Friday, oh God, it's Monday.

They're looking out forward and they're thinking. And there's two things that millionaires do. They play offense and they play defense. Offense is they do the right things to build the wealth. They do the investing to build the wealth. You know, investing in your mutual funds and your 401k, investing in paid for real estate. They do these kinds of things. The defense is avoiding stupid stuff that calls you to lose everything,

all the progress you've made. And so that's stuff like the right kinds of insurance, the wills, all that kind of stuff. And so having a good, solid financial plan is both offense and defense, and that is one thing we find, one of the data points we find with all these millionaires, they're really good at defense. And it sounds tedious. It can be, but we've got a thing to help you.

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Andrea's with us in Pasadena, California. Hi, Andrea. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for having me on. I am so happy that we're able to speak with you. It's my husband and I, and we currently have two leases, which we know you're totally against. We've been listening to you about three months already.

Okay. And just trying to see what our next step is. We have about $6,000 in credit card debt, and we have about $14,000 in savings. And we have these two leases, and I feel like they're really holding us back. But we're just not sure what we can do with them. I mean, can we get rid of them? I'm just not really sure what to do. Right.

Well, we can do some math and determine if you want to just ride them out or if you want to sell the car. Now, if you want to sell the car, here's what you would do. And you need to get this information gathered up. You need to call the fleece company and ask what the early buyout is meaning if i wrote you a check today to get my title what would it be now it should be less than the total of your remaining lease payments plus the residual value the buyout at the end okay and um so you get that number that's like the early payoff without the interest on a car payment okay it's the same

thing the early buyout number that's what you're looking for and then you compare that to the value of the car have you done that on any of these cars yes we have on both of our vehicles oh wow okay so we've got the actual numbers let's talk about vehicle number one then what's the early buyout the early buyout is 33 000 okay and what's the value on that car the value of that car i believe we looked at it was like 25 okay and that's kelly blue book private sale yes yes my husband just said it's 32 that's how much it's on Kelley Blue Book. I'm sorry, 32 or 20? I made a mistake. The early buyout is 33, and the Kelley Blue Book number is 32. Oh, great.

So we're not too far off. Okay, so you'd only lose $1,000 by selling that car. You'd only write a check for $1,000. If you sold it for 32, but you had to give the lease company 33 to get the title, you're $1,000 in the hole, right? Right. Okay. Now, your lease payment is how much?

Our lease payment is $542 a month. And how many payments do you have remaining? We have about 18 more payments. Okay. All right. I'm just putting that in here. That's $9,576. Mm-hmm. Okay. So if you sell it here. That's $9,576. Okay. So if you sell it today, you lose $1,000.

If you keep it, you lose $10,000. Yeah. No-brainer. Sell it. Okay. You see how I did the analysis. Now, let's look at the second one then. All right.

What's the value of the second one? So the value of the second vehicle is $25,000. Okay, and what is the early buyout on it? The early buyout on it, apologies, the early buyout is $25,000. I haven't done the Kelley Blue Book amount, but I'm sure it's way less. I think actually my husband said $11,000, so that one we're really in the hole. Okay, and what is the lease payment on it? The lease payment is $230 a month. Okay. All right. And how many of those are remaining?

14 more payments. Okay. So that, let's see here, 230 and 14 times is $3,200 if you keep the car till the end of the lease and hand them the keys, right? Yep. That's 230 times 14, okay? And that one is somewhere around $14,000 in the hole today, okay? So you get to drive this car for free until the end of this lease on that one. You keep it because I'd rather lose $3,200 than $14,000, and I drive the car. Okay. You see what I'm doing? Yes.

So I'm comparing the total of your payments against the amount you're in the hole. So that one I would probably keep if your husband's numbers are correct on the value. I suspect you're going to keep it anyway, because I don't think he's going to be that far off. I mean, we've got a $14,000 deficit right now if his 11 value is right. But even if he's half wrong, it's still a $7,000 deficit versus $3,000 to keep it. So that one we keep. Okay. And you pay it out.

Now, is it over on miles? No. That one's way under on miles. Okay. And the wear and tear, you're going to keep it up so you're not going to have to write a check when you turn it in 14 months from now no they're both well that one's in great condition okay good good yeah that one uh you see how i did that analysis yes yeah that really clears it up for us we were really struggling with what to do

yeah i'm keeping that one and you know what i would do is move on past uh baby step two once you've gotten rid of the the big car the more expensive one and once you've gotten rid of all your other debts except this but if you still had this one with the 230 payment we're just renting a car all the way through the end here and you might as well keep the car you get no advantage to turning it in early right right you're going to write the three thousand two hundred and twenty dollars worth of two hundred and thirty dollar payments no matter what you do so you might as well drive the dadgum car you know and um if you want to put thirty two hundred dollars aside extra in your emergency fund just to make sure you got that plus your

emergency fund covered to call yourself in baby step two and three then that's fine but that's how you do the analysis on whether to keep a lease or not and um most of the time unless you're close unless you're close to the end of the lease you're going to be selling the car and that's what happened with the more expensive one there. It's killing you. Now, that one was a beast. Woo, bite you. So, good question. Thank you for joining us.

If you've never heard the saying, it's kind of a country saying, you're getting fleeced, which means it's like a sheep getting its fur removed. That's where it comes from, you're getting ripped off is what fleeced means. That's why I call them car fleeces. Because if we take the value, the original market value of that car, that $33,000 car on the expensive one there for those folks, and I put that 542 into a calculator,

and then I put the end value into a financial calculator with the residual value at the end. In other words, the residual value is what you can buy the car for at the end of the lease, your games up number at the end of the lease. You put those numbers into the calculator, you can back out what the effective interest rate is. And most of the time it's around 14%. They call it cost of capital,

and they don't have to disclose the interest rate, the APR, to you. You know, if you get a car loan, you get this truth in lending sheet that the Federal Trade Commission makes them show you the APR, the annual percentage rate that you're being charged. But when you're leasing, it's technically not debt under the law. And so because you're renting the car and so they are not required federally to disclose the cost of capital or the interest rate. But you can figure it out with a calculator and it'll make you puke. I mean, it's ridiculous. That's why we call it leasing. It's the most expensive way to operate a car. The car lease is a disaster.

It's a disaster as a financial decision. And if you just do the math, you can understand why I'm saying this is the Dave Ramsey Show. Identity theft has become an epidemic. Data breaches are being reported every day, and hundreds of millions of people have had their identities stolen, sometimes multiple times. That's crazy. Now, I've seen firsthand when people are stressed and freaked out when they become an identity theft victim.

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Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Daniel and Carmelina are with us. Hey, guys, how are you? What's up, Dave? How are you doing? Welcome. Where do you guys, how are you? What's up, Dave? We're doing great. How are you doing? Welcome. Where do you guys live?

We live just north of Boston, Massachusetts. Go Red Sox. Bit of a trip here. Yeah, look at you, man. Wow. What a great week you've had. Amazing. Oh, yeah.

Very cool. Well, welcome to Nashville to do your debt-free scream. Thank you. So how much have you paid off? Just a little bit. About $448,000 in about 100 months. Wow! That's a bunch. We're pretty excited. I bet. Your range of income during that time? We started about $95,000 and then we probably ended up around $240,000, somewhere in that range.

Okay, wow. What do you guys do for a living? So I work in science mostly. I work as a scientific researcher, and my wife is? I'm a lab operations manager. Okay, very cool. Very cool. Great careers, great income. Excellent. And what, seven, eight years here, right? It's really two phases for us. The first 16 months was we got married. Our pastor said, you know, you guys should check out Financial Peace. We said, what's that? And my wife read the book. She read the Total Money Makeover. And she said, you should check this out. And I got right on board pretty much right

away. I was super excited. I felt like I needed a plan. I was ready to go. So the first 16 months was $89,000. We just hit it really hard. We were used to living like students, so we just kept it up. Yeah. And then we walked right up the baby steps. We bought a house in 2011, and we paid it off in April this year. So this is house and everything. This is house and everything. And you did this in about eight, a little under eight years.

Eight years, four months, I think it was. Yeah, yeah, okay, a little over eight years, yeah. Excellent. Way to go, you guys! We both even still have second jobs now. We actually picked up a second job now that we're debt-free, which is an odd way to do it. Oh, yeah. I actually just joined your, I took financial Coast Master Training this summer. Oh, wow. I've been so excited.

We've led four or five FPU classes. Wow. And so I'm a few months into coaching. I love it. It's amazing. We're from Boston, so I call it Beantown money. There you go. It's been amazing. Love it. My wife just felt like she, you can tell your story a little bit more. Yeah. I mean, I just picked up a side business too, because why not? And so I've been doing... We only have two kids. We've got lots

of free time. Oh yeah. I mean, our kids are already a full-time job um but yeah i picked up um selling skincare on the side um but i love my job uh we both work the same place in the pharmaceutical in cambridge um and we've been really blessed i mean part of our debt-free journey is um just really learning to live on much less than what you make. And we've been blessed along the way. I have to say, give a shout out to my parents because they helped us out so much. Child care. We didn't have to pay daycare for the first couple of years. Wow.

Which was amazing. Wow, very cool. Yeah, so that really helped us out a lot. In the Boston area, that's, they can get really. It's a big deal anywhere, but it's a big deal in Boston for sure. So how much of the $448 was your house? $378. Okay.

All right. Wow. Way to go, you guys. I'm looking at weird people. House and everything. Yeah. Woo! How old are you guys?

I am 34 years old. And I'm 36. With a paid-for house. Yep. How's that feel? It's pretty amazing, actually. I think you talk about a lot that idea of something relaxing when you don't have any debt that maybe you didn't know was there.

And I think for us, that's been surprising. I think I academically understood, but I do think that there's a sense of peace that you get. I mean, you got it right on about financial peace that something relaxed that you didn't know was there. And all of a sudden, we don't feel like we're at the end. We feel like we're at the beginning. I mean, I think I didn't realize Baby Step 7 is a real step.

It's not the end. We get to actually build wealth and do all kinds of fun things now, and I think that's what I'm most excited about. Amen. And having kids that are so young, too, to know that we can do whatever we want and we're not tied down. We're killing it.

I mean, you're making $240 a year. You've got no payments in the world. You're 30 years old. My God, this is awesome. Pretty exciting. Wow! Touchdown! Yeah!

This is great! Yeah, and we had some hard times. Everything was not easy. It wasn't just a cakewalk the whole time, but we worked hard, and I think it brought us together for sure. We always had a goal that was right in front of us, and that

was one thing we didn't fight about. I mean, like any other couple, we fight about stuff for sure. But that one, we were, I know, that one being one of the most important ones, we were not, we were on the same page. Love it. Yeah, that's one of our biggest things. Even with telling people when we were hosting or leading FPU classes,

our biggest thing is, guys, get on the same page because we never fight about money. It's awesome. It's really cool. So do they listen when you tell them that? Sometimes. Sometimes? It depends.

I think we've definitely had some resistance. Definitely, you know, it's all the stuff you talk about. Why would you, if you can get 0% interest, why would you not do it? It's free money. I'm like, yeah, no, I don't get it. It's different. So what is the key to getting out of debt? You've done it, you're coaches, you've led classes, you've done everything.

I think the key is vision. I think you have to see where you're going. I think if I have any criticism of myself, it's that I'm probably too long-term oriented. And I think that has been, I believe your strengths actually are your weaknesses. If I'm focused on so long-term, sometimes I forget to look short-term.

But she helps me with that. Yeah, he's very, very determined. And I was the one that first started us on the journey, and I was so excited about the book. I was like, oh, you've got to read it. And then there were times that I was the free spirit, and he was like, no, we've got to do it this way.

And I was like, oh, really? But now you're here. I think sometimes I thought I was crazy, but I think the numbers don't lie. When you come back to it time and time again, that's where I want to be, so you've got to do the work to get where you want to be. Winning is never an accident. No, it's amazing.

It's an intentional series of acts. Absolutely. Very well done. Congratulations, you guys. Thank you. And you brought the kiddos with you. We did. And their names and ages are what?

So we have Mary, who's four years old. Mary's four. Mm-hmm. And Nathan, who's four years old. Mary's four. Mm-hmm. And Nathan, who's three. And Nathan is three. All right. And he got a free cookie, so he's happy. Yeah, life is good.

I like getting free cookies, so that's good. No touching. You're going to come with me, Mary? All right. It's Daniel and Carmelina, Mary and Nathan from Boston. $448,000 paid off in eight years and four months. That includes their house, everything, baby. Count it down.

Let's hear a debt-free scream. Are you ready, guys? Three, two, one. We're debt-free! We're debt-free! Woo-hoo! Wow! Wow!

That is awesome right there. Very, very well done, you guys. Proud of you. Well, we've definitely got a copy of Chris Hogan's Retire-inspired book for you. That is the next chapter in your story to be millionaires. Chris will show you how to do that. Very, very, very well done. Well, our Halloween sale ends tomorrow.

So go to the online store at Dave Ramsey dot com because Halloween's today. So you would you know, it would end tomorrow and you can save huge on books and bundles. And it's not scary at all. You can check out the best sellingselling kids bundle, the Adventure Pack. It's only $45.99 right now for teaching your kids. Everything you need to teach your kids about money. It's the whole pack. You won't believe how much stuff is in there for $45.

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I would like a recommendation on what kind and how much life insurance I should carry. You should carry 10 to 12 times your income on you in level term insurance. We recommend 15 to 20-year level term. 15-year will suffice for you because in 15 years, your 8-year-old will be, what, 23 years old and on their own. And so your need to take care of dependent children will have gone away at that point. And so 15 years is fine. That'll take great care of you there. You don't need anything else.

And check with Zander Insurance and get you a quick, easy quote, and you'll be set up to go. That's where I get my term life insurance, by the way. It's the cheapest you can get it anywhere. You do not want to miss that out. So, zanderinsurance.com. This is The Dave Ramsey Show. We'll be right back. Our scripture of the day, Psalm 119, 130. The unfolding of your words gives light.

It gives understanding to the simple. Reed Markham said, gives light. It gives understanding to the simple. Reed Markham said, successful leaders see the opportunities in every difficulty rather than the difficulty in every opportunity. Justin is in Greenville. Hey Justin, welcome to the Dave Ramsey Show. Hey Dave, thanks. How can I help? I have a weird situation. I'm not married.

We've been together for about six years now. We moved from California to North Carolina, bought a house. She's still in the military. I got out in California, and that's what brought us here. And it was just going to be cheaper and easier for us to buy a house anyway, so that's what we ended up doing. This is before I listened to your show and understood the debt and everything like that. So we bought the house, and I got a good-paying job.

Our household income right now is about $120,000. But she's getting out of the military in June of this year. So that will drop our income down to about $85,000, $90,000. She pays a mortgage on the house. I pay the forerunner. That's just the way that we had been doing things. And then we both agreed to go in and tackle this so that we can own the house you know within five or six years um it was probably may this year i bought a 2018 forerunner and so the upgraded package so it was like 41 000 we put 11 000 down with a trade in and everything um i owe about 35 000 on it together we have about twenty thousand in savings uh she essentially what i got from her is that she kind of wants to skip to baby step three that she doesn't have any other

debt that's our only debt is the forerunner in the house um she kind of wants to get to baby step three to prepare to get out and so that would put her paying you know the normal mortgage and the um just the normal bills that we have and saving everything else until she gets out of the military. She teaches dance on the side as well, so she's got additional income. What's your question? I wanted to know if we should tackle this forerunner together and get this $35,000 out of the way, or if you think that we just keep going about it the way that we're going

and let her continue to save and then me tackle the forerunner and then eventually when she... I think you're running into the natural tension that occurs when you're trying to act like you're married but you're not. Okay. Because you're vacillating back and forth between acting like a married couple or acting like roommates. So it's my bills, her bills, my bills, her bills, but we did this and we did that.

And in a legal sense, from the law perspective, there's not a we. You have a roommate from the perspective of the law. You see what I'm saying? And so if she decides to walk out the door, whoever's names are on these things are who's going to be holding the bag. Whoever's names are on these savings accounts is what's going to be there. And relationally, you're struggling back and forth and vacillating. So you guys can do what you want to do. Obviously, you're grownups, and you've done very well. You're making $120 a year.

Congratulations. You called and asked me, so I will tell you what I would do if I woke up in your shoes, okay? Yeah. I would get married tomorrow, and then there would be no your 4-1 runner, your savings account, your this. It would only be we, and then i would work the baby steps exactly as prescribed okay that's what i would do i think you're making really good money i think you pay that stupid forerunner off or get rid of it before she gets out and i want her to line up i want her to line up her career uh for what she's gonna do as she comes out of the military but you the thing

is you you just can't vacillate between you know looking in the refrigerator and going well that's my mustard i bought that mustard um you know back and or no that's our mustard because we're we're doing this together oh well i can't decide and there's this it just pulls people apart it's um there's all kind of statistical research that shows you're going to have substandard results in your finances as well as other areas of your life until you put marriage in the equation. And so you do what you want to do. I'm just an old guy advising you. I've got several reasons for that advice, but that's what I would tell you to do. If you were my little brother, that's what I would tell you to do. If you were my little brother, that's what I would tell you to do.

I'd say, get married and stop trying to play both sides of this coin. Just do it. And, you know, you've been together forever anyway. You're doing life together. It's a technicality, really. But then you have to say from that point forward, we. We have a forerunner. We have a house.

We have a savings account. We have a forerunner, we have a house, we have a savings account, we have a plan, we are going to submit ourselves to the baby steps. We are going to stick with this. We are going to go that route. And you become French at that point, oui, oui, right? And so that's what I would do. It cleans up everything and then walk right down it.

And if you want to say, well, you know, we're facing an emergency with the loss of her income, and so we're not going to work the baby steps right now. We're just going to pile up cash and get ready for a baby step. That's not really skipping the baby step three. That's just saying we're not going to do anything right now and pile up money. If you want to make that decision, you can because you're panicked about the loss of her income. I don't think I'm panicked about the loss of her income, though, because, A, I think she's going to have another income lined up.

She's got from now to June to figure that out. And, B, I don't know what percentage of your income she, of our income once we're married, that she represents. So that's the other thing you've got to look at, the variable. Will is with us in California. Hi, Will. Welcome to the Dave Ramsey Show. Hi, Dave.

Thanks for having me. Sure. What's up? So I've got four homes that I own. Three are rentals at this point. One is obviously my primary residence. Two of those rentals are paid off, and the third I owe about $170 on. I guess my question is, I have the cash to pay that rental property off completely.

I'm wondering if I should versus what the ultimate goal is to get more investment properties. So I was wondering what your thoughts are on that. Okay. Is the ultimate goal to have a bunch of investment properties and a bunch of debt on them or a bunch of investment properties that are paid for? Paid for, of course. Okay. And then let's start with that.

Okay. That's what I did the second time. The first time I had them all in debt and I lost everything. But the second time I don't borrow money anymore. And so I paid off all my properties and I used the increased cash flow that was resulting to buy the next property and buy the next one. And, of course, every time you buy another one, you've got that much more cash flow that's debt-free cash, because, I mean, these things cash flow like crazy when you don't have any

debt, right? Right. It changes everything. How much do you own in your personal residence? My primary is about $240,000. Okay. The rental is $170,000. And you have how much in cash?

About $220,000. Okay. I'm going to pay off my primary first. Pay off the primary first? Yep. Yep. And either way, you're increasing your cash flow. Well, the reason is simply this.

Your heart is part of this equation. it's not simply a math equation uh and when your home is paid off you think differently you can't keep yourself from doing it you will make different decisions um it's it calms you down um you know you just chill and not in a way where you lose your ambition or something like that but um you relax uh because you're walking around the backyard with no shoes on, and the grass feels different under your feet. The borrower really is slave to the lender. I've experienced that, and I've had many, many, many people experience it over the years that I've taught this to millions of people.

And, of course, that frees up that $2,000 or whatever dollars a month. What's your household income? About $145,000. Good. You've been doing great, man. How old are you? 44. You're doing well.

You're doing very, very well. So either way... Without the psychological, I guess, is kind of what you're... Because that rental home that has money on it owed used to be my primary residence and probably will be again at some point. So if you take the emotional equation out of it, it doesn't matter which one you pay off versus the other. The emotional equation is part of the equation. So yes, it matters. It's personal finances, personal. It's not just finance. When you try to do your wealth building process and don't involve behavior and don'tbuilding process and don't involve behavior

and don't involve relationships and don't involve emotions and don't involve spirit, your spiritual walk, you've got a substandard plan then because you're doing it only on math and you're going to miss it. You do whatever you want to do, Will.

You're a sharp guy. You're making good progress. But if I were you, that's what I would do. That puts this hour of the Dave Ramsey Show in 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 guys, this is James Childs, producer of the Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.