The Ramsey Show - App - Discover the Truth About Money (Hour 3)

Episode Date: August 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 the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones this hour as we talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225.

Elizabeth starts off this hour in Washington, D.C. Hi, Elizabeth. How are you? Hey, Dave. I'm good. So we are an active duty family and currently on baby step four through six. Despite hearing your name as a staple growing up, it wasn't actually until the past year that I started following your steps closely.

We currently own our house but are now leaning to selling it when the military moves us again in probably about one to three years, even though I really love it. I love the house. I love the house. I love the location. We'll probably come back here. But, you know, trying to follow your plans is probably better not to be a long-distance landlord. Agreed. My question is, how do you know where to put any extra income, like, for instance, bonuses or save money from deployments?

So we have several sinking funds, like a new computer, replacement vehicle, etc. At what point should you put the extra income towards sinking funds or paying down your mortgage? Well, it just depends on how the – all a sinking fund is is you're saving up to buy something. That's all it is, right? And are you on track to be able to buy that? In other words, are you on track to be able to buy that? In other words, are you on track to be able to buy the next car?

Are you on track to buy the computer when you want? Are you on track to have Christmas at Christmas? You know, so you have savings as labeled for each one of those things. That's all a sinking fund is. And if you're on track for everything, you know i would throw extra bonuses at the mortgage above that but uh but if you're coming up short you know we don't want to throw everything at the mortgage and then not be able to buy a car when it's time to buy a car right okay so just kind of run it out and go i think we're going to make the car thing fine and so this bonus check

can go over here it can go to something else or we've got this other thing we need to do. The point is, I think the point is to do it on purpose, and you are doing a really good job of doing everything on purpose. Out of the two of you, you're probably, like me, you're probably the nerd. You're the planner, the detail person. Yes. Yeah. And free spirits don't call me with questions about sinking funds. That's true. And free spirits don't call me with questions about sinking funds. But the thing is, to give yourself a little bit of attagirl along the way,

is because you're doing things on purpose, you're probably not going to make any big mistakes. In other words, if you put it all in the car fund and then later went back and did more on the mortgage, that'd be fine. Or if you're on track on the car, as long as you're not going to come up short on the car and you throw the rest of it at the mortgage, you're going to be fine. But you're the type of person who's going to know that because you don't feel comfortable without knowing it. Right? I agree. And that's going to cause you to win. Your intentionality is going to cause you to win more than the details of the answer to this question, is my point.

The fact that you're doing stuff on purpose, ding, ding, you win. You get the trophy. That's it. Do it on purpose. Do it on purpose. And split it out and detail it. You're doing all of that. You're right on track.

Raleigh is next. North Carolina, Debbie's calling. Hi, Debbie. Welcome to the Dave Ramsey Show. Hi, Dave. Hi. How can I help? Well, I have a question. My parents are in their 70s,

and they sent a letter to my sister and my brother and I just a month ago and asked us to buy them out of their home. They owe like $120,000 on their house that's worth $350,000. And they want to spend, they don't have any retirement savings. And so they want to spend the money to go out to eat, to golf, and to take day trips because they have no savings and they have no money. And we're not really sure what to do. My dad was a dentist. He made good money. They've had all their retirement things that they have, like buildings, office buildings,

my dad's practice that they sold, they've spent all their money. And what happens when they run out of this money? Well, that's it. That's when my brother and sister and I, my sister's taking your class, and my brother, I think, has too. And so they were offering to pay for them to go to your class because it's offered at their church, but my parents aren't real hip about that. And now they're telling us that if we don't buy them out of their house,

they're going to get a reverse mortgage. Well, I mean, they can do whatever they want to. I guess they're adults. That's stupid. And they're not going to hardly get any money out of it because they're not going to give them a reverse mortgage over 60%. That's 70 years old. The way the actuarial tables work with a reverse mortgage,

they're going to get almost nothing out of that. So that's not going to work. And reverse mortgages are crashing all around us, so they're going to lose their homes, what they're going to do. So here's the thing. The way I look at this is you're telling me, you said it, that your parents are misbehaving with money. They're bad at handling money.

They're being immature, and they're spending money they've already gone through a big pile of it and this little pile if you guys bought them out it's not going to last much longer no they're they're headed to the wall with their foot on the accelerator that's what you're telling me you think that right what can we do it's terrible yeah that's what you think i agree with you by the way but that's what you have come to the conclusion, and your brother and sister, too, before you called me. And so the question is, do we participate in their harm? Because to participate in their misbehavior is to participate in bringing harm to them.

It's the old saying, do you buy a drunk a drink? Well, he'll feel better for the night because he don't feel real good right now. He's got the DTs, right? But you give him a drink, he'll feel better right now. But did you help him? Well, for the short term, yeah. But for the long term, you really brought harm to him because you participated in his disease. You follow me right

and that's the thing here that's what your brothers and sisters are saying i don't want to participate in their disease because i love my mom and dad and so the loving thing to do is to bow up and say we love you so much we're not going to participate in your insanity because the way you guys are living you're not going to make it you're gonna end up homeless and threatening me with you taking out a reverse mortgage that's not a threat to me that's like oh if you don't do what i say i'm gonna hit myself in the nose what that's like a kid's gonna hold their breath till they turn blue and pass out you know right if you don't do what i say mommy i'm gonna hold my breath well i have at it bubba you'll pass out and start breathing again i didn't want to do that one time it's great

i won't say which one but you know that's all this is and so that's you know if you don't i'm gonna do something even dumber if you don't do my dumb deal and uh so no mom and dad we love you too much and you know we're really sad for you. We're concerned for you. We think this cocaine addiction you have is a bad thing, although it's not a cocaine addiction. You see what I'm saying, though? We think this thing you're doing, and we're not judging you, but you asked us to participate in what we think is unhealthy behavior, so we're not going to. We might help you with some money here or there. We might help you with some solutions. It there. We might help you with some solutions.

It's not going to involve you continuing on the same track you're on. And so Financial Peace University is in your future if you want my help. Because I want you to win. I'm not going to participate in your harm. That's what enablers do. And I'm not an enabler. I love you too much to enable your bad behavior. One question I get asked all the time is, do I need life insurance?

Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated.

And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Chris and Lisa are with us. Hey, guys, how are you? Great.

Better than I deserve, Dave. Welcome, welcome. Good to have you. Thanks for hanging out. Where do you guys live? From Hawkeye Country. Des Moines, Iowa. Oh Country. Des Moines, Iowa. Oh, Des Moines, Iowa.

Very good. Cool. Well, welcome to Nashville. And all the way down here to do your debt-free scream. You got it. Very fun. And how much have you paid off? We paid off $80,000.

Wow. And how long did that take? Four years, but within the last year, we paid off $41,000. Okay. All right. Cool. And what's your range of income during that four years? During the journey, we made $40,000 and then up to $76,000.

Wow. Nice raises. Good. Okay. And what do you guys do for a living? I'm a coaching specialist for a Fortune 100 insurance company in Des Moines. Cool. And I am currently a stay-at-home mom, but during the journey, I was a house cleaner.

I delivered newspaper, and I worked at a tax accounting place. And Dave, I also delivered pizzas as well. Anything you could do, anything you had to do. You got it. Good for you. Work like no one else. Later, you get to work like no one else. That's right.

Very good stuff. So what kind of debt was the $80,000? $8,000 was a car loan. And then we had 14 on the van. Yep. And then the rest was student loans. Okay. So you're kind of normal.

Yeah. Yeah. All right. All right. So what happened four years ago? And then what happened one year ago? So four years ago, our aunt and uncle, Julie and Joe, gave us this book at Christmas, and it completely changed our lives.

It was the total money makeover written by some guy you might know, Dave Ramsey. I've heard of him, yeah. And we read the book, and they said, if you want to go through the class, we'll put you through the class. And that's when we got connected with FPU. And we went at it. I like to call it wildebeest intensity. It wasn't quite gazelle intense. We paid off about $1,000 a month for the first three years.

And one day we just kind of looked at each other after church. Pastor Mike in Hope, West Des Moines, was preaching on Romans 12. Be not conformed. Yeah, it smacked me in the face and said, you need to do something to help the body of Christ and really push that forward. And what we did was we became coordinators at that point. Oh, whoa. Okay, so going through the class gets you at an eight.

Leading the class puts you at a 12 out of 10. 15 out of 10. Yeah, you just went completely gazelle at that point. Yeah. That's interesting. That sounds like something I would do. Yeah, well, it was... Teaching a class, you're just too embarrassed to not go all in.

Right, right. And we got to the point where we had been working hard and had been sacrificing in certain areas and had not gone 100%. And I said, you know what? We've had it. We're going to go 100%. And we went 115. I mean, I worked 12, 15 hour days, three days a week. Wow.

And really just sacrificing family, sacrifice to you know having my friday saturday nights i was out delivering pizzas yeah so i'm just going to go completely crazy here yeah well there you have it folks if you want to get out of debt go to financial peace university if you want to get out of that even faster lead a class as a coordinator for financial peace university that's great i love it you know what that makes total sense though that's completely logical as weird as it sounds. Yeah. Very cool. So what do you tell people now that you're coordinating a class that the key to getting out of debt is?

For you guys, it was hard work. Yeah. It was. It was hard work. Really, what the key is, I think you say it best in the dumping debt lesson. And it's, you've got to run! Run! Run!

Go! Go! It's you got to run, run, run, go, go. You have to act as if there is a cheetah chasing you and you need it's life or death. Yeah. Right. I look over here and I see our three little girls and looking at the legacy that we're leaving for them, not just monetarily, but in, in how to live life and how to manage money. That's the biggest thing.

Your why has to be bigger than your but, and too many times people's buts are bigger than their why. Wow, that's very good. I love it, I love it, I love it. And the girls are even dressed in their Hawkeye stuff here. Oh, yes, absolutely. That's Ohio State. Oh.

No? No. See, I don't even know anything about these Midwest colleges. That's Iowa. That's Iowa. I got the wrong place. Oh, my gosh. The? No. See, I don't even know anything about these Midwest colleges. Oh. That's Iowa. Okay. That's Iowa. I got the wrong place. Oh, my gosh.

The wrong state. You got the wrong state. Come on, Ramsey. You can at least get the right state. Oh, my gosh. Oh, man. All right. So the girls' names and ages are what you brought them with you to do the scream, right?

Yes. We've got Lillian. She's seven. We've got Serene. She turned six just a couple weeks ago. And then we have Letty, who is three. Awesome. Okay.

So Letty's come along while you were doing this then. Yeah. And she had some issues when she was born. At four months old, she had surgery to remove part of her colon. And I think that's part of the reason that we, it just, it was a God thing. It all came together at about the right time. And he said, it's time to really get intense. Cool.

And your aunt and uncle are with you, right? Yeah. This is our aunt and uncle, Julie and Joe. They came all the way from Tulsa to be here with us and do the debt-free screen. And this is all their fault. It's all their fault. Yeah. Blame them.

Very cool. Well, congratulations, you you guys very well done very proud of you thank you have more cheerleaders or detractors as you went along uh i think we had about 50 50 uh we had some people that said we were crazy and they didn't know why we were working so many jobs we should just enjoy life and uh we had others that were in our corner and cheering for us and uh for those that cheered us on, thank you. And for those that didn't, thank you. Having a how you like me now moment.

There you go. Good answer. Good answer. We've got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story, that you become millionaires and outrageously generous as you go along. Thank you. Very, very well done. All right.

It's Chris and Lisa, Lillian, Serene, and Charlotte, all from Des Moines, Iowa. $80,000 paid off in four years, making $40,000 to $76,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're dead free! There we go. I love it. That's how it's done right there.

Man, that is fabulous. Oh, never gets old. Never gets old. Andy is with us in Luxembourg. Hi, Andy. How are you? Hi, Mr. Pete. I really can't complain.

I guess you're better than you deserve. Yes, sir. Things are predictable here. How can I help? I had an idea that I wanted to run past you. I inherited some money last year from my Scottish grandmother, which is in British pounds. But because our life here is in euros and the exchange rate at the minute is absolutely terrible, it's currently sitting in a British checking account earning pretty much nothing. So I had the idea to buy

an investment fund denominated in pounds that I currently own in our retirement account in euros, and then sell the euro denominated fund in order to free up that money to upgrade our car, pay off the mortgage, et cetera. We're currently in baby step four, five, six. I feel like it's quite a smart idea, but that's probably a red flag, so I want to see where I'm going wrong. Okay. Well, I'm not an expert on exchange issues.

Let me just kind of think through the logic with you. Okay, so you're talking about buying an investment in pounds and liquidating another investment of the same amount that is in euros. Did I get that right? Yes. And then waiting until the exchange rate gets to an acceptable level at some point in the next 30 years, whenever that happens, and then waiting until the exchange rate gets to an acceptable level at some point in the next 30 years, whenever that happens, and then switching it back.

Okay. The trend is which direction in the last two years? With Brexit, everyone's getting away from pounds. Yeah, but the euro is weakened to the dollar as well, right? It goes up and down depending on whether, as you say, North Korea burps or Trump burps. Yeah, exactly. Okay. All right. Interesting.

Well, I'm not an expert on currency exchange. I don't recommend that people play currencies to try to gain money. And so that's the only thing that makes me nervous about this because it's very difficult to predict if it will ever go where you want it to go because it's based on so many different factors, and they're none of them based on the strength of a company doing well or something like that, like when you're buying a stock, as an example. So I might play that game for 18 to 24 months

and just try to catch a high point to get out of it, but I don't want to play it for 30 years. I don't want to play currency exchange games for 30 years. I wouldn't have that as my strategy. But if you wanted to mess with it for a little while and see if you can catch a high point, that I probably would do. Good to talk to you. Interesting question. Listen up, my friends at Churchill Mortgage. Want to put some cash back into your pocket? Go to ChurchillMortgage.com today and enter the $3,000 end-of-summer giveaway. Whether you're buying a new home or evaluating your current mortgage, you know I'm going to recommend talking to Churchill first.

I trust these folks to save you money. I'm talking thousands. And the team at Churchill will take great care of you. Churchill Mortgage is the only mortgage company I'm aware of that takes what I teach and applies it to your loan or your refinance. They've helped so many of my listeners and team members by making sure they are in a mortgage that doesn't bust their budget. Go to ChurchillMortgage.com today to learn more.

And while you're there, don't forget to enter the end of summer giveaway. Call Churchill Mortgage today at 888-LOAN-200 or online at ChurchillMortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Welcome back to the Dave Ramsey Show. Joining me this segment, our own Chris Hogan, Ramsey personality, number one bestselling author of the book, Retire Inspired, America's Trusted retirement yeah you guys welcome back chris good to have you thank you sir good to be with you you guys hear me talk about the seven baby steps all these decades now our proven plan and

it works for everyone you know chris i spent about half of my life and you do too defeating the lies you know it's like i'm gonna dave you know i need to use a credit card because i'm gonna the airline miles man or dave i'm gonna you know you can't you can't live without a car payment you can't have a car without a car payment and the the mythology that floats around money the myths that people believe the problem is not the myth the problem is not the lie the problem is that when you act on information that you believe to be truth when it's not the truth it takes you in the wrong direction it's like if somebody gives you a map that that you're sitting in tennessee

where we are in the and the map says how to go to flor, but it takes you towards Canada. You know, you've got information in front of you that's just straight up wrong. It's a lie. It's a myth. And when you believe a lie, you're heading towards Canada instead of Florida. Now, if you want to go towards Canada, that's cool. But I said the map said Florida. And so if the map is to take you to being wealthy and you believe lies and it's sending you in the exact opposite direction and benefiting someone else, it shuts the whole thing down.

It really does. And it sets you up for failure. And so what you have to do, my friends, is start to look and understand what is the truth. What is the thing that's going to allow you and your family to have a better future? And that's exactly what we've been telling people for years if you've grown up listening to that lie and you've started to believe it it takes some change to get that out of your head yeah you've got to change your thinking yeah you know i remember growing up people say the little man can't get ahead a little man gets ahead all the time that's a lie they do get ahead all the time and i had one friend of mine he said

you know dave getting out of the hood was easier than getting the hood out of me. You know, changing the way you think and believing in what you believe because you act on those beliefs and it takes you to Canada. It takes you in the wrong direction. You know, there is a truth, and the truth is independent of your opinion. There's actual things that work and actual things that don't work. And one of those things is the only way to be a millionaire is inherit it. The only way to be a millionaire is win the lottery. The only way to be a millionaire is quick, easy, instant wealth, being a rock star, a country music star, an actor or an athlete, or hit the lotto or inherit it.

That's the only way to be a millionaire. And this study that you and the team just finished destroys that. Blows it out of the water. That's the only way to be a millionaire. And this study that you and the team just finished destroys that. Blows it out of the water. I'm so excited to introduce our brand new book, Everyday Millionaires, by, of course, our own Chris Hogan. This is how ordinary people build extraordinary wealth and how you can, too. It tells people the truth. It lets you know the real facts. Listen, we studied over 10,000 millionaires. Net worth millionaires. 10,000!

10,000! 10,000! Seriously. My God! These are ordinary, everyday people who have worked hard to make their living. They've made their money because they followed a plan that actually works. The reality is that you can too. The American Dream is not dead. It's available to you.

What you have to do is start to think different, start to understand where you are, and start to work a plan. And you can preorder my new book, Everyday Millionaires, for only $20. And you can get over $50 in free bonus items. Now, Dave, we talk about bonus items. People are like, okay, well, what is that? Well, we've got some videos. We've got a video in there from you.

We've got a video from me talking about Retire Inspired. And we also are going to give you the audio book of Everyday Millionaires, and you're going to get the e-book when the book releases. So you've got a great opportunity. All you have to do is go to DaveRanzi.com or go to ChrisHogan360.com, or if you can want to call us, call us at 888-22-PEACE. And listen, we're giving you this huge bundle that we've never offered before, and it's huge. Why? Because we want you to be successful. Now, this bundle includes not only my new book, Everyday Millionaires, our number one bestselling program, Financial Peace University. Listen to me, this course, this membership has helped people over 5 million families, okay, nationwide to really begin to understand the truth about money, how to be able to pay off debt, and how to invest the right way.

Dave has said it for years. We want you to live like no one else so you can later live and give like no one else later. So the all-inclusive bundle, it's the best deal we've ever offered because what we figured out was that the millionaire everyday millionaires by the way the subtitle is awesome how ordinary people built extraordinary wealth and how you can too that could sound like a book about getting rich and financial peace university could sound like a program for getting you out of debt and what you don't understand is these things are together yeah the way you get rich is you get on a plan to get out of debt you follow the baby steps and that leads you they're a one-two punch they go together so the the full bundle is 129 and that's the price you would have paid for

financial peace university now you're getting the book which comes out in in january and it's going to have the e-book and the audio book with it in january and in the meantime we're going to send you a d a video from Chris talking about Retire Inspired and a talk from me that everybody loves. It's okay to be wealthy because you kind of like need permission in this culture now to be wealthy. And we want to tell you, before you get wealthy, it's okay to be wealthy. That's right. We want to show you how, but you're not going to go if you think only bad people become wealthy.

Because of these 10,000 millionaires, you know how many crooks we found almost none we didn't find any bank robbers they don't i guess they don't do surveys but i mean you know i mean we didn't find any drug dealers we didn't find a bunch of people stealing money a bunch of greedy you know the guy on the movies or something you know you know wall street that's not who we found we found doctors lawyers teachers we we found farmers we found people on dry cleaners we found. We found doctors, lawyers, teachers. We found farmers. We found people on dry cleaners. We found regular people that had done common sense stuff that we teach in Financial Peace University. It's $129 to go through that.

And now it includes the Everyday Millionaire's book, How Ordinary People Built Extraordinary Wealth and How You Can Too. The book will come to you in January. You can go ahead and get in Financial Peace University now. You join a group. You go through the nine lessons. So about the time you finish up the nine lessons, boom, the book's going to hit on your doorstep, and you're going to just keep moving, baby. Just keep on moving.

Just keep stirring. Keep pushing. Keep churning. And on top of that, we're giving away some money. We sure are, Dave. You can also enter to win our Millionaire Kickstarter Giveaway. We're going to give $5,500 away. That's the exact amount you can put in a Roth IRA to two lucky winners.

Now, all you have to do is enter. You can enter daily to win, and you can also purchase our brand-new bundle at DaveRamsey.com or go to ChrisHogan360.com or call us at 888-22-PEACE. There's no longer a secret. No purchase necessary. No purchase necessary. You don't have to buy anything to enter for the money. But while you're there, you can check out these bundles.

You can either get the book with the add-ons or you can get the thing. Now, I know this sounds like an infomercial to you guys, some of you. That's okay. Just send me hate mail on Twitter. I can deal with that. But listen, we're excited about this because what it amounts to is the things i've spent my last 30 years working on and people been popping up millionaires all around me as a result dave ramsey doesn't know anything about showing how people build wealth whose investment returns are unrealistic and all this crap but what we found was the people that knew us and people that

didn't know us had followed essentially the same, not the exact same steps, but essentially the same principles. That's right. They had several key ingredients. It was enough to give you the recipe to make the cake. That's right. Well, and the reality is, is how many of us out there have felt like we weren't in the know, you know, that there was a secret that you didn't know?

Well, Financial Peace University is the information. It is a great opportunity for you to lay out and see detail by detail the steps you need to take. You don't have to be in the dark anymore, my friends. Turn on the light. Dave, I don't know. Are you sure you're authorized to offer this sale? I think it might be the best deal we've ever done. But the thing is, 10,000 people said yes.

This is how you're a millionaire. And it's not what people believe. Because if you believe that the little man can't get ahead and you're the little man, then why would you try? If you believe people like me, the neighborhood I come up in, the race I am, I didn't go to the right schools, I didn't do this, I didn't do that. People like me can't get ahead. If you believe that, then you won't get ahead. That's right. And so this is such a hope-filled message.

It has nothing to do with greed. Not at all. It has nothing to do with anything except just showing you that this is your time, baby. We got this for you. It's your gift. This is your time. We want you to do this stuff. Chris, thanks for hanging out with us. Thank you for having me, Dave.

Folks, these are good times around Ramsey Solutions. Don't you want to read what 10,000 millionaires said about how they did it? If you don't want to read that, something's wrong with you. You don't want to be a millionaire? Even if you're trying to give it all away, why wouldn't you want to be a millionaire? I mean, I don't care

what your philosophy is on life. You can put some zeros with it and do more of it, whatever your philosophy is. Just shut up. Seriously. DaveRamsey.com. Get this bundle. Get yourself going, baby. We're here to help you.

This is The Dave Ramsey Show. Our scripture of the day, Leviticus 25, 14. And if you make a sale to your neighbor or buy from your neighbor, you shall not wrong one another. Milton Hershey says, give them the best quality. That is the best kind of advertising. Our question of the day comes from Blinds.com. You do not need a second mortgage to make your home over. You need to get brand new custom blinds, and that's without paying custom prices. You can do that at Blinds.com with free samples, free shipping,

and the promo code Ramsey. Rules and restrictions apply. Tanya's in North Carolina. My husband and I are ready to get started on the program. We have about $18,000 in debt. We have $19 in savings. But right now, I'm the only one working full-time. I guess you meant $19,000.

My husband and I just graduated from college and is looking for a job. Should we pay off the debt now or hold on to that until he has a job? I don't know what you're making working full-time here, but your most direct line to financial prosperity is to get control of your income again and not have it all going out in payments.

If you're able to make the payments on your income, which it sounds like you are, then I'd write a check today and pay off all the debt. You got $1,000 left, which is perfect, and you're debt-free. You cut up all your credit cards. You raise your right hand and say, I'm never going to borrow again ever, no matter what happens. And then you begin to save your emergency fund of three to six months of expenses.

That will happen really quickly when your husband lands a job. And once that's done, then you start saving 15% of your income into retirement. But no, I wouldn't hold the savings. It's giving you a false sense of security that's not really there. Now, if your income is unstable and there's a chance that you're going to be completely unemployed, that's a completely different thing. But just because you're the only one working, that doesn't mean that's going to happen. Justin's with us in Kansas City.

Welcome to the Dave Ramsey Show, Justin. Thank you, sir, for having me. I appreciate it. Sure. What's up? Well, my question is, I'm very new to the show, so I'm certainly looking for your guidance here. My wife and I got our start in the Army, where we didn't really save a lot for retirement. But I do have a question for you.

One of the things that's been on your show the last few times is never borrow money to make money. Well, my wife and I were very frugal in the Army. We were both officers. And so we left the Army with a fair amount of cash. And so we moved from a house and moved into another house and we took some of that cash to buy an investment property. And by I mean, put 25% down on. So we owe on a house that we used to live in that we're renting out. We still owe on a house that, you know, a duplex, if you will, that is an investment property. And then we still owe on a house that, you know, a duplex, if you will, that is an investment property,

and then we still owe on the house we currently own. And I guess my question for you is, should I cash out everything I have on my investment properties and sell them to put towards my current home, or should I maintain them? Okay. Do you have any other debt other than the three real estate properties? No, I own my truck and my wife has a company car. Good. And no credit card debt or student

loans or anything? None. The Army paid for our student loans. Gotcha. Well, not student loans, but they paid for our college. Gotcha. Well, thank you for your service. We appreciate it. And what do you guys do for a living now? What's your income? My wife's a district manager for an electrical distribution company and I'm an operations manager. Our household

income's just south of $200,000. Good. Man, you're killing it. Way to go, just south of $200,000. Good. Man, you're killing it. Way to go, dude. Well done. Thank you. And so how much do you owe on these two rental properties? The house we used to live in, we only lived there for two years. That's why we rented it out because we'd barely break even by selling it.

That's been three years from now. So we owe about $200,000. It's worth about $260,000. The rental property, we owe $130,000 on, but we did put $48,000 down on it. Yeah, where is it located? It's in Kansas City. What about the other house? In Manhattan, Kansas.

Okay. Two hours away? Yeah, I'm paying a property manager for that one okay um that one that one's breaking even um the duplex that i own uh between both sides which are rented out most money comes from section eight housing so almost guaranteed we we get $1,900 in cash a month, and our 15-year mortgage for that is $1,200. Okay. And you owe what on your home? I owe $300 on the home. It's worth $360.

Okay. Good. All right. Well, I love real estate. If you've listened for very long, you'll know that. I own a bunch myself. Of course, it's all paid for um and so my goal for you if you were following the our principles um that build wealth would be to get you to debt free as quickly as we reasonably can

and i would not use this methodology that you've used to this point to build wealth with meaning that once we get you to debt free if you want to buy another piece of real estate you save up and pay cash for it if you want to buy another, you save up and pay cash for it. If you want to buy another one, you save up and pay cash for it. And you're making really good money. And with some paid-for real estate and your great income, you would be able to do that at a fairly regular basis to scratch the real estate itch that you've got. But don't be borrowing money to do it. See, the difference is this. The amount of money you can make on real estate that's paid for is substantial versus you've got $260,000 worth of risk sitting in Manhattan, Kansas.

It's not making you anything. Right. That doesn't sound like fun. It's not. We did put it on the market last year, and it sat for four months. Yeah, I would get that one sold. Manhattan is just a smaller market, and so it's going to be a little tougher to sell a property of that size there.

But my goal, I'm not going to panic and give it away, but my goal is to get rid of that. It's not a blessing. Okay. If it's over the next year or two years, I don't care. Again, we're not panicking, but, you know, five years from today, I don't want to be owning that thing. It's not fun.

It's long-distance landlordingording and there's no margin in it if you want to keep the other one and beat on it and pay it off with your great income sure do that let's have a three-year plan of being debt-free on it and another two years you're debt-free on your house or something like that right you look up five years from now the one in manhattan sold and everything else is paid for that'd be a pretty cool place. Okay. And, I mean, I guess my question is, you know, to dovetail with that is, you know, we are both putting away the max that we can in our 401K is $18,000 a year. Yeah.

And we are maxing out our Roth IRAs. Well, we tell folks to put 15% of their income away. You're probably a little bit in excess of that, but not much with the numbers you just gave me. You're putting about 30 in. You're right at 15%. Well, we wanted to put the pre-tax in so we'd qualify for the Roth IRA. Yeah, yeah. Because if we didn't do that, then...

Well, you can do a backdoor Roth. You can do what's called a backdoor Roth if you need to, where you open a traditional after tax and then roll it into a roth that's what i do i don't qualify either but you can still do that there's a loophole in the market but are in the tax law but anyway aside from that if you're putting in 18 and 18 oh both of you are putting in 18 we are yeah yeah you're up over you're up%. You know, if you want to back off on one of your 401Ks a little bit, I'd drop it down to about 15% of your income going into retirement until you get these other properties paid for. And that way you're still putting in a substantial amount towards retirement,

but then also this paid-for duplex and a paid-for house is part of your retirement plan as well. So I'd back that down to 15. I'd dump the house in Manhattan as soon as is reasonably possible without doing it a panic price. And then I would start cleaning up the debts on the duplex and on your personal residence. That would be the game plan I would use to get after this. So very good question.

Very cool. Thanks for calling in. You know, Corey and Pam are in Connecticut, and when they first started budgeting with their EveryDollar app, So very good question. Very cool. Thanks for calling in. You know, Corey and Pam are in Connecticut, and when they first started budgeting with their EveryDollar app, they had $80,000 in debt. Now they've paid off $60,000 of that already. Way to go, guys. You're getting there.

That's what the EveryDollar budget's doing for folks. So jump on EveryDollar.com and download your app for your iPhone. It's free. And for your Android, either one, it's free. And start doing your budget. It takes about 10 minutes to set your budget up and it will revolutionize the way you handle money. When you start handling money on purpose, it changes everything.

Something to think about, guys. Really, really something to think about. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer. Blake Thompson is our senior executive producer. Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey, your host. We'll be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word.