The Ramsey Show - App - Decide to Never Again Go Into Debt! (Hour 1)

Episode Date: May 18, 2020

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show. Chris Hogan, Ramsey Personality, my co-host today on the air. The phone number here to talk to Chris and me, 888-825-5225. That's 888-825-5225. So Chris, did you stay home all weekend? No. I mean, dave i got things to do where where did you go well i went to the

grocery store did you yes that's probably scary for people well i did i went to the grocery store i ran some earrings i we got to do life as normal dave we have to and so i kept my distance from people well that's good yeah that's good. Yeah. That's good. For the most part. So I went out to eat four times last week. Oh. Yeah. And had four different experiences. All the way from we don't give a crap, do whatever we want to do.

All the way to you have to go through hazmat cleansing exercise to get into the place. So it was interesting it's just the different organizations and how they're how they're reacting or yeah were there other people in these restaurants oh yeah yeah they were all full oh i mean well except i mean some were more stringent on depending see uh this weekend the governor opened up the state of tennessee completely for restaurants so there's no 50 percent of tables or stuff like that except in certain counties where the mayors and so Davidson County Nashville they're still at 50 percent and all kinds of other stuff and but I

tell you man I'm just going in those right there are people I know that own them and so I'm going to you know to try to help them and just do business with them. That's what I told Sharon anyway. We're trying to help these poor people. That's how you got out of the house. But they're, you know, and I kind of feel the same way here at Ramsey, and you do too. When the world is upside down and someone is loyal to your company, it means the world. Yeah, it does. And so we've got all these chefs in Nashville.

It's a big food scene, and a lot of them are friends. And so I'm calling them up and going, hey, when you open, I'll be there because we're going to support you. Because we've always eaten there. We've always loved them. And a lot of them, as I said, are friends. And so, you know, but the wait staff are almost tearful thanking us for being there for being there yeah for bringing the business and um uh some of them are varying degrees of freaked out just like in the grocery store anywhere else but i guess if you're super freaked out you just don't come in to work right right no you would just stay home you would do

something different than the wait staff that's right but they uh um and and so what it's doing is it's warping my brain because there's a very um everything's so open around here right now uh and kind of back to the way it was uh in a sense not quite, but I mean, a lot more so than a lot of you out there in other states. And so I'm kind of losing my perspective. I got a friend that lives in LA and he's going bananas. Oh yeah. You know, he's clamped down like he's in freaking Russia or something.

Through the end of July. Well, yeah. Yeah. So I don't think he'll live there through the end of July. I think he'll be moving. I mean. This guy's done. He's so done. But yeah, it's just live there through the year. No. I think he'll be moving. I mean. This guy's done. He's so done.

But, yeah, it's just the different, and, you know, certainly there's different population situations and different counts and different densities and all kinds of different things that are valid to look at, but also the psychology of the politicians, the psychology of the business owners, and the psychology of the public. It's varying so dramatically across the United States right now. It's very interesting. No, it really is. And I don't see any end in sight with having those varying degrees of people with their opinions as well as their responses. And so I think it's going to be important for us to continue to push and to give people the right information so they can make the

right call for themselves. Yeah, one thing's for sure. We know that 100% of you either had an emergency fund and were out of debt or wish you did. One of the two right now. There's nobody going, oh no, I love being broke without a job. No one is saying that. And no one's saying, I had an emergency fund and I'm debt-free and I really hate it right now. It was a really dumb thing to do. What was Dave Ramsey and Chris Hogan teaching us anyway?

No one's saying that. So what's happening is the stuff that we're – one of the few things people can actually agree on is the stuff we're teaching. But regardless of where you are, whether you're broke and you're getting ready to start for the first time in your life and you're going to do the baby steps now because you've had a never again moment. Yeah. I'll never again be in this situation. Well, we're on your team because we know what it feels like to be up against the wall and not be ready.

That's exactly right. And we know what it feels like to be up against the wall and be scared financially and be worrying if your lights and water is going to get cut off and if you've got enough, if you can afford the food. If you could find some toilet paper, could you pay for it? That's right. And to be, to have been there, done that, and been scared and felt how much shame I felt that I couldn't take care of my family.

Yeah. I remember Rachel was a little baby and Denise was a little toddler and we're broke and our our lights and water got our water got cut off one week i got it cut back on and the lights got cut off next week and just i mean i just felt like a complete failure as a dad as a husband as a man you know i just i felt like crap and but the thing i got out of it was this healthy anger. And, you know, yeah, I felt guilty. I felt condemned. I felt shamed.

But not by other people, but by the guy in my mirror, you know. But then I got the other side of that, and I just finally, I just started yelling, you know, Dee Snider, we're not going to take it anymore, you know. You got to be old to know what I meant right there. I'm young enough to know who that is that's twisted sister look at you come on look at you i know don't let this gray in my beard fool you okay so uh hey d's probably got a little gray right now he's got a lot of colors but uh uh but anyway the uh you know never again yeah well les brown our friend over in los angeles said i hope he's doing okay i didn't talk to him but he always says you know people change their lives when they say i've had it yes yes never again and i'm going to tell you when you draw that mental line in the sand something everything changes everything because now it's not a matter of what comes your way you

know you're going to get through it relying on our lord and savior to get you through it but you're going to put yourself in a position to do better you're never going backwards next time not not if that's right but when there's an event well it probably won't be covid and it probably won't be something as weird and whacked as this was might not be crazy as 2008 might not be as crazy as 9-1-1 it might just be an individual thing happens in your particular family but the next time i'm against the wall i got a way out i'm gonna have the emergency fund in place that's right i have no stinking payments yep and there's no banker calling my house american express calls my house by god it's a wrong number you know yeah you just reach a

point you go i'm not taking it anymore i'm never going to be back here again and that's when you jump in you know and you start reading chris's books or you know you say i'm gonna be an everyday millionaire you say i'm gonna go through 14 day free trial financial peace or i'm on watch nine bazillion minutes of youtube of ramsey and hogan and and never again no not going backwards never better again you got to get there man before you got to get to this is the day ramsey show Folks, since you're spending more time at home these days, why not make the most of it? Now, I know not everyone has the means to do a full renovation, but thanks to our friends at Blinds.com, there are some small changes you can make to help improve your home. Blinds.com makes it incredibly simple to shop top-quality blinds, shades, and interior shutters from home with easy online ordering and free shipping right to your door. Listen, window treatments are a simple project that you can do

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Thanks for joining us, America. Ramsey Personality, Chris Hogan, my co-host today on the Dave Ramsey Show. Fred is up in Florida. Hi, Fred. Your question for us. How can we help? Hey, good afternoon, gentlemen. Thanks for taking my call. Our pleasure.

So my question is, last year my wife and I took in her parents from South America. They moved in with us, and long story short, my father-in-law was hospitalized shortly after arriving. Now he owes about $60,000 in medical bills and counting. He can't pay it, and obviously we don't have it. What is our moral, legal, and ethical obligation to pay his medical bills? Legal would be zero. Okay. Moral or ethical would be questionable. I would think it's zero.

Is there some kind of circumstance other than that makes you feel like you are liable for his medical bills just because he's under your roof? Partially that. And there's a slight another factor to the situation. He's going through the immigration process, and we have an attorney, and so kind of factoring in making sure that he's financially stable here, which I feel that we are as a family, but not with the $60,000 hanging over our head. Well it's not hanging over your head it's hanging over his. Yes true and he'll never own a car or a home so I'm not worried about somebody coming after him in that sense. What's your household income? Last year my wife and I made about $125,000 we'll probably make about $100,000 this next year. And Fred where are you all on the baby steps

right now, you and your wife? We're on baby step two. We just, thanks to you guys, paid off about $35,000 in credit card debt, and now we just have a car payment that hopefully we'll finish within the year, and then we'll be moving forward. That's fantastic. What is his age? He's 71 What was the nature of his illness? There's a lot He's diabetic and he's got Goes through dialysis He's got some broken bones A little bit of everything

How's your wife feeling about all this Fred? Well I think the uncertainty Of feeling like Okay is somebody going to come after us Just not being sure if we have any obligation to his bills has caused some uncertainty for us. You could check an attorney. We're not attorneys, but I've been dealing with debt collectors for 100 years. And you're just not liable.

It's that simple. You didn't sign it. He's an adult. If it was your child, you'd be liable. But you're not his legal guardian. You're not his caretaker. You've not been appointed by the court as guardian ad litem. He just lives there.

That's it. I mean, you're not responsible for your roommate's bills. Well, that is a huge weight off the shoulders. Again, you can double-check that. Now, how can we address this? How much have you got left in your baby step-two? How much have you got left in debt? About $25,000.

Okay. If you want to just let this sit a little bit and cook, or you can do it now proactively, either one, you could go down on his behalf schedule an appointment with the administrator at the hospital and the way i always suggest you have these meetings is with gratitude thank you guys so much for taking care of you not like you're wagging your finger at them like they overcharged or they did something wrong because they didn't do anything wrong thank you so much for taking care of him and i'm not here for anything except just to say thank you. He's from another country.

He's in ill health. He's elderly. So I'm acting not legally but just as his advocate. And so we know that we are not liable for the bills. But if you guys wanted to settle these bills, I might scrape together some personal money just to clear his name and just to say thank you to you guys for taking care of him. And so if you want to settle this $6,000 for $5,000 or $10,000, I'd probably scrape it together and do that for him as a gift. And you make $125,000 a year, I might consider doing that if I were you.

You don't have an obligation to it adds cleanliness and simplification to his immigration process his life your wife's worries it cleans the slate problem is with his health he may be right back in the hospital right okay and you may be right back in this same boat again i don't know that's the downside of my idea here yeah and i think it's going to be smart, Fred, to let this run its course to see what the end number is going to be. That may be a better idea rather than being proactive. Just trying to run in right now because this 60 could turn into 120, 180,

and so I would just wait. Yeah, new bills are coming in all the time. Yeah, but the problem with the insurance companies is sometimes they'll start to send you duplicates. You don't even have insurance, do you? He doesn't. He does. He does. Oh, well, that's good.

Okay. How does he have insurance? My brother-in-law got it. I wasn't really involved in the process. Okay. Well, good. Well, then to keep an audit and make sure insurance is paying what they're supposed to be paying, it's probably not 60 out of pocket then.

From what I'm keeping track of, am i'm keeping a spreadsheet of it it's 60 after insurance so after copay and and deductible you got that much out of pocket correct okay yeah well here's the thing they've already gotten a bunch of their money true so it's not like, yeah, I'm with Chris. I think I'm going to let this cook. You guys go ahead and finish your baby step two. Three years from now, if the medical issues are over and so forth, then I might circle back if you want to and try to clean it up to simplify his life for 10 cents on the dollar is what I'm suggesting. Now that I know there's insurance involved, I might even do less than that. But the point is the guy's broke, and anything you offer these people is a gift.

Yep. And so it's a straight-up gift because you're definitely not legally liable. I don't see how you're morally liable. I wouldn't feel morally liable. I mean, you're giving him a place to live. That does not make you liable for all of his other stuff. Yeah. And here's the deal.

If they do get to the point that they are willing to settle or negotiate, if they don't put it in writing, you don't have anything but a promise. Exactly. So they need to put it in writing, giving you the exact actual dollar amount. When and if you get that dollar amount, you want to pay via a cashier's check, make a copy of that check along with a copy of that letter, keep it in a file. That way you can make sure that everything is clear as time goes on. Yeah, they have bad memories.

Yes, they do, Dave. They get amnesia. They do. And Alzheimer's. Selectnesia is what I'll call it. Yeah, it's bad. Always in writing and always keep a hard copy in your file when you do settle a debt anywhere. Definitely. Good question. Sorry you guys are facing that.

Abraham's in Georgia.ia hi abraham how are you hello jay um first thing i want to say is thank you thank you to you and uh chris for always being there for us on behalf of me you've given us hope and i need hope right now um my question sir is what's the best way to get rid of my car loan? Currently, the loan is estimated to be at $34,819. The value, I reached out to AutoNation, and they're willing to give me $22,000 for it, which leaves like a $12,000, almost $13,000 negative equity. Yeah, but that also means it's probably worth $27,000.

Right, yes, that's correct, sir. I looked up Kelly Blue Book. They gave me a value about $25,000 to $27,000. Yeah. The issue with the whole situation I'm in, sir, is that I'm actually unemployed now due to COVID-19. My last employer took a really hard hit, and they're not projecting to actually be within, you know, I'm not projecting to be hired back within the next year or two.

I'm also finding it might be an issue for me to actually get employed because I have a disability. My left arm is paralyzed. What were you doing before? I was working in IT. Why can you not do that now? I'm still searching for a job right now, sir. Okay.

But, I mean, your issues with your arm didn't keep you from being in IT before. No. I've tried. It's just that I have medical debt as well. I have credit card debt. And I'm trying to – I don't have that I have medical debt as well. I have credit card debt. And I'm trying to, I don't have, I have not taken your plan, your financial peace plan. So again, the car is worth, let me stop you again, the car is worth $27,000 and you owe how much on it? $34,819.

Okay. What were you making before? The thing is, is that I was, well, my last employer i was making if i would have worked the whole year i would have been around 80 000 okay so you need to sell the car no matter what and you have a career crisis an income crisis more than you have a money crisis you need to work like a crazy man to get re-employed hold on i'm going to send you a copy of ken coleman's book uh theple, to help you with the employment side. And Kelly's also going to sign you up for a 14-day free trial in our class, Financial Peace, and get you started in that. You can do both, and we'll help you with both sides of it, brother.

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Insurance. Their team will shop all the top companies, find the best rates for the coverage you need, and get this done quickly. Go to zander.com or call 800-356-4282. Your timing is crucial, so please get this done. It sure is good to see people back in the lobby at Financial Peace. It's not Financial Peace. This is the headquarters of Ramsey Solutions. Man, that's a throwback. That's an old habit.

Financial Peace Plaza is the old building. There may be people in that lobby, too, but we're not talking about them. We're talking about these people. Scott and Kirsten are with us. Hey, guys. How are you? Hey, Dave. Spectacular.

On the debt-free stage. Does that mean you're debt-free? It does. I love it. Oh, yes. Where do you guys live? Mainville, Ohio. Oh, cool.

Welcome to Nashville. Thank you. And how much did you pay off? $37,000. How long did it take? Ten and a half months. Good for you. And your range of income during that time? $58,000 to $90,000. How long did it take? Ten and a half months. Good for you. And your range of income during that time?

$58,000 to $90,000. Nice jump in ten and a half months. How do you explain that jump? So I changed jobs about two years ago, and it took about nine months to really get rolling, just to get some traction. Okay. So sales or something like that? I am a personal terrorist which is synonymous with uh personal training

i like his style i like his style that's good that's very good yeah somebody needs to do it i love it very good so you had to get the pipeline the customer base built and all that kind of stuff yeah exactly very that is fantastic so what did you all pay off? What kind of debt was it? It was two car loans, two student loans, and a small medical bill. Yes. Kirsten, what do you do? I'm a massage terrorist.

Ah, okay. Sounds like a team to me. It is a team. Love it. He hurts them, she makes them better. Right, absolutely. Yeah. Yeah.

Yeah. He makes you sore, she heals you with a sore good good so what caused this uh metamorphosis this uh fire to be lit under you 10 and a half months ago uh well we got married in november of 18 oh okay yeah so in the i had heard of you here and there just little bits and pieces. So I just saw that you had something called Financial Peace. It was some kind of plan. So I'm like, we're going to do this. And, yeah, that's kind of what got started. Uh-huh. Okay.

So I'm interested, the career field that the both of you are in, you're in the transformation business. Yes. And yet over on the other side in the wallet part, you got into your own personal behaviors. Yes. You're used to teaching people to change their behaviors. Yeah. Their eating habits, their workout patterns, their whatever, right?

Yes. And you had to turn around and apply that to you. How did that – did you see the correlation or was there a correlation in your mind? In my job, behavior change is true behavior change. It's one of the hardest things to really do. So, yeah, I mean, just practicing at least what I preach. Yeah, yeah. And I think, too, kind of the analogies you give with weight loss, because I know I lost like 60 pounds out of high school.

Wow. And it's just this, it's not hard, or it's not complicated, but it's hard. Of like, you just have to do it. And the same thing with massage. Someone will come in and be like, I have this problem in my arm. But really, it's in their neck or their shoulders. And so just like, not just treating the symptom, but getting to the root of the issue. And really working it out and addressing it for where it's coming from. And then how to also build that maintenance of, well,

don't sit like a turtle when you're at your desk. And just really fixing that. So just kind of like the debt and then treating the symptoms and the problems and along the ways and just having that stuff to set you up for the future as well. Chris, she might have been talking to you. Were you sitting like a turtle? We both just kind of straightened our backbones.

But she's awfully judgy. You're awfully judgy. Scott, when you go through something tough with someone, you start to learn a lot about them. What did you find out about your wife? How disciplined and how, uh, I would say how, how disciplined she can be. Yeah.

Uh, and disciplining me in the best of ways, uh, which I know that that sounds kind of weird, but, uh, you know, um, just like anybody else, I have my hobbies and my interests and kind of, you know, her talking some sense into me. Come the end of the month, like, well, you know, you need to save for that. What was the hardest part of this for you guys? I think the discipline. That's weird because you're in the discipline business. Yeah, I know. It's ironic.

But definitely a budget. It sounds so juvenile, but a budget. And sticking to a budget, that's one of the key things that really helped us through this. And keeping them disciplined and keeping them on the budget. Just like that. Now we see how she does it i think too just um seeing lots of uh family friends or um you know church different people going out and doing different things and just having to say no um which i not a super go out all the time person but um just that fomo side of me

um just saying like no it's okay there's better things coming. Live like no one else so later you can live and give like no one else. What do you tell people the key to getting out of debt is now that you've done it? The budget. Sticking to it. Towards the end of the month when you've budgeted X amount of dollars for the groceries and you go to the grocery store and you're over the budget, it's time to go home and pick for the groceries. And you go to the grocery store and you're over the budget. It's time to go home. Pick through the pantry. That's exactly right.

You guys, we stand at this crazy time right now in our country. And here you are with the audacity enough to stay focused, committed to a process, and standing on a debt-free scream stage right now. Does it feel surreal to you? It feels amazing. Yeah, absolutely. Part of my background and my story is growing up for a brief period of time or a couple of years, actually, my family was homeless and we always had a roof over our head, but we lived at our church, at friends' houses, at family's houses, in a hotel for a large part of that. And different people in my direct family lines have filed bankruptcy

when I was in my young 20s me and my friends thought it would be awesome to move out to California so we packed up our stuff and moved out there without a plan which is dumb and then ended up like losing money and I got my car repossessed and came back and really had no money no car I was living with family friends and they let me graciously stay there for several years. Thank you, Bridgerson. And just in that time, God really started transforming my heart around the money aspect because there's so many other aspects of my life that I was so surrendered to him. But that whenever I heard money, all I knew was chaos and survival. And so just to have that plan and to have that step-by-step. Because I'm very goal-oriented.

I'm very planned. I'm like 7-3-2-8 on the Enneagram. So I'm like, I like fun and people and plans and challenges. So this was perfect for that. So I think really one of the secrets is just do it and just trust the plan and surrender to it. And it just walks you through. And I also there's a verse that I love and it's Matthew 11, 28 through 30 in the message version. And there's a part of it that just stood out like lit up off the page when I did it.

And it's come and work with me and I'll show you a real rest and I'll teach you the unforced rhythms of grace and live with me. And I will teach you how to live freely and lightly and just how much when you just do this plan, God shows up every turn of the way and you really do feel so light and free. And again, I grew up where with money, I was just uneducated. I just knew chaos survival and just kind of had a plan for everything as an emergency. And so to have that is just this huge burden lifted. And that lifted before I paid off the debt. I lifted as soon as I had the plan. So you had a huge why. Yes. You've broken the cycle. Yes. You changed your family tree. Yes. A good man leaves an inheritance to his children's children.

And that's who you are. You guys are incredible. You're rock stars. I'm so proud of you. Thank you. I've got a copy of Chris's book for you, Everyday Millionaires, because that's the next chapter in your story. You are on the way.

All right. It's Scott and Kirsten from Cincinnati. $37,000 paid off in 10 and a half months, making $58,000 to $90,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt free! Yeah!

Woo-hoo-hoo! Yeah. Boy. Got a big enough why. That was in her. That came deep. That came deep. Yes. She a big enough why. That was in her. That came deep. That came deep. Yes.

She broke. Deep inside. You hit the nail on the head, Dave. She broke some cycles. Yeah. It's broken out. Broke them cycles. And she's building new limbs on that family tree.

That's fantastic. This is the Dave Ramsey Show. folks i love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern, minimalist belt made of high-quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable.

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We deal with a little bit of everything around here. Money's part of it. Today's question from blinds.com, satisfaction guarantee. They have a 100% satisfaction guarantee. Even if you screw up and you mess up your window blinds, you'll get free samples, free shipping, and with the new promos they run every month, you save even more use the magic word ramsey chris our question is from nick in wisconsin is it better to invest 15 for retirement pre-tax into the company's 401k without any

company match or invest 15 post-tax into an ira that i would set up with a smart investor pro oh well here's the beauty of it. You know, pre-tax means you're going to pay taxes later. Post-tax means you're dealing with a Roth. You've already paid taxes on it. So if you have the Roth as an option, definitely go that route. If not, then what you can do is invest up to the match with the 401k and then move from there to the Roth,

still giving you some post-tax action. So in your case, you don't have a company match. Match is best. Yes. So we'll skip on to the next one. What's it right after match? Tax-free growth in a Roth. Yep.

So if your 401k has a Roth available or buy an individual Roth from a SmartVestor Pro, either one of those is fine. The individual Roth with a SmartVestor Pro, you have a greater selection of mutual funds. There's about 8,000 mutual funds you can do a Roth in. In your 401K, you might have 12. Right. So you've got an option of, you've got more options if you're with a SmartVestor Pro. But if you had excellent options with your 401K and it was a Roth,

or you picked the same exact mutual funds in a Roth IRA with a SmartVestor Pro, but if you had excellent options with your 401k and it was a Roth, or you picked the same exact mutual funds and a Roth IRA with a SmartVestor Pro, there's zero difference. They would work exactly the same. Traditional pre-tax is the last option, but it's better than nothing. Yes. Nothing means the government takes money and you get no tax-free growth, so nothing is not a plan. No. So it's match beats Roth beats traditional, kind of a one-way rock-paper-scissors thing.

All right. Sheena is with us in Florida. Hi, Sheena. Welcome to the Dave Ramsey Show. Hi. Hey, what's up? How are you guys? Good.

How can we help? Sorry, I'm very nervous, but I'm excited to talk to you. Excited to talk to you. How can we help? I am calling because there's discussion about layoffs at my job. There has been no dates given, and so I'm just curious if I should continue the baby steps or just start saving cash in case. Ooh, Sheena, so this is real pressure. So you said they've talked about it, but nothing has happened yet, correct? Yes.

For the contract, I guess they're supposed to give us a head start. They're supposed to give us, you know. Well, we hope, but you never know. So what baby step are you on right now? Baby step two. Okay, so tell me, what debts do you have left? I have a credit card, two credit cards, and I have student loans plus my house. Okay, how much is the student loan debt?

$30,000. Okay, and then how much is the student loan debt? $30,000. Okay. And then how much is the credit card debt? Total with both cards is about $10,000. Okay. And then what's your income right now? About $60,000 a year. Okay. And do you have any money in savings at all? $3,800. Okay. All right. So, Dave, you speak in it. I would tell you right now, if it's pending and they're talking about it, I'm probably going to go into conserve mode. Yep. And that means I'm going to make minimum payments on everything, but everything else has got

to go, Sheena, over into that savings account. This is not a slush fund. This is not fund money. This is survival money. Because if that layoff comes, you're going to have to live on that money. Now, let's say it never happens. Now, what I would do is go to that dollar amount in the savings account and apply it to your debt smallest to biggest and move forward. Okay. So, push pause on your baby steps and pile up cash until you get the other side of the storm.

When the storm clouds are clear and the sun comes out and everything's stabilized, either you have a new job or this one is stabilized, you push play again, you clean out the cash down to baby step one, and you know what that is. It's not 3,800. It's 1,000. Okay? But at the point the sun comes out and the storm has passed you pile that you clean out the cash down to 1 000 and throw it at your baby at your baby step two debt snowball

and work again but yeah you know you're scared enough i can just tell in your voice you lose almost nothing by stopping for a month or two and piling up cash. All you're going to lose is the interest on the debt you did not pay off versus the interest you receive in your savings account, which is almost nothing. But, you know, the difference, the math on this, the actual dollar change is not that big a deal. The comfort of the cash and the options that cash will give you in the event of a layoff is worth the trouble. But now, as quickly as the storm clouds go by, don't sit inside and go, oh, well, there was a storm yesterday.

No, there was a storm yesterday, so we're going now. Okay? Once they go by, you push play and get after it again. That's exactly right. But, Dave, somebody called in on my show, and they said, you know, Chris, the idea of pause and said, I feel like I'm not being intense. And what it was, it was, it's right. But I said, you're shifting, you're downshifting into neutral right now. And then I said, but here's the deal.

As soon as your income gets stabilized, you're going forward again. So it was almost like they had become so intense. It was hard to downshift. Oh, well, yeah. I mean, it is, but it's just a different kind of intensity. It is. It's survival intensity versus progress intensity. Yeah.

And the good news is if you don't need the money, it's not going anywhere. That's right. If you don't go buy a bass boat with it, right? That's right. You'll be fine. You do something stupid with it after the storm clears. Now you've got something to regret. That's a whole other issue.

Yeah, you don't want to do that. Yeah, that was not on our list of recommendations. Do something stupid after the storm clears. All right, Kevin's in Washington. Hey, Kevin, what's up? Hey, how are you guys doing today? Great, man. How can we help?

Well, my wife and I just finished a 14-day trial of Financial Peace University. Thank you so much for that offer. Sure. And we have a question in regards to life insurance. Okay. I know that on the plan it says that we should have 10 to 12 times our annual income in life insurance. I am currently insured at about eight times. And we are, good Lord willing, approaching retirement in a few years.

And just wondering, as we enter that stage and we downsize, you know, sell our home, move to a smaller property, and our obligations are reduced, does that 10 to 12 times ratio still come into play? Or do we, you know, how do we look for some guidance on how we adjust that? Here's the thing. As your debt goes down and your savings goes up, meaning your net worth is increasing, your need for life insurance goes away. So let's say that you had one year you had $250,000 in mutual funds and a paid-for house. Okay?

You need enough life insurance to offset what the $250 won't create for her. But then you look up a few years later and you've got $750 in mutual funds in a paid-for house. Well, you would need less life insurance because you've got $750 to take care of her. Or maybe no life insurance. Understood. So as your nest egg that provides her an income increases, your need for insurance that provides her an income in the event of your death goes down. Okay.

And so most people, if I talk to them and they said they had $2 million in mutual funds and a paid-for house, even if they had a 2-year-old and a 3-year-old, they still wouldn't need life insurance. She could probably struggle through, you think? Agreed. Yeah, so you're on the other end, though, and I'm guessing you've got some assets building up, do you? We do, yes. We have a net worth of about $600,000. Okay.

Some of that in property, some of that in investments and IRAs and 401Ks. Yeah, so ask yourself, how much would that create for her in income versus what she needs if you died today? Now, if the difference, okay, she needs another $30,000 beyond what it creates. I just made up a number, okay? Sure. Then let's do 8 to 10 times that number. Okay. So that you have an increased nest egg to offset what you don't have. And so it actually diminishes or decreases your need for insurance as you build assets

and do away with that. That's fantastic, Dave. Went through the free trial, got the information he needs, and he's on the path. On the way. I like that. Well done. Well done. Free trial. 14 day free trial. First time in 30 years we've done that.

Just to help you guys out right now. Financial Peace University. Go to DaveRamsey.com slash hope and sign up. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.