The Ramsey Show - App - Do I Need a Good FICO Score to Rent an Apartment? (Hour 1)

Episode Date: November 12, 2018

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. It's common sense for your dollars and cents. Maureen is with us in New York City to start off this hour. Hey, Maureen, how are you? Better than I deserve. How are you? Just the same. How can I help? I'm 23 years old. I actually said I'm living in New York City with a full-time job. I've never had a credit card, and I don't want one. It doesn't fit well with me.

But lately, a lot of my coworkers and friends are telling me that I, quote, have to get one to build credit. I've only had one $1,500 student loan that I paid off within six months of graduating. I have a month-to-month living situation, so I'm not under a lease and I've never had one. But I'm looking into moving into an apartment next year where I'd be signing my first lease. So I'm afraid that I'll get denied an apartment because of my lack of credit. But I want to know is no credit significantly worse than average credit? And if so, is there a way for me to build credit otherwise? Okay. Well, the only way to build your credit score or to build credit is to borrow money.

Why? So that you can pay it back. Why? So that you have the opportunity to borrow more money and raise your score. Why? So that you can borrow more money. Why? So that you can have the opportunity to raise your score and borrow more money.

This is a dog chasing its tail that keeps bankers rich. The only reason you build credit is why? So you can build credit. Why? So you can build credit. Why? So you can build credit. It's all about going into debt, the whole thing is, and staying in debt,

which you have just said that your broke friends don't think is a good idea. Well, if broke people are making fun of your financial plan, that's generally a good thing. Right. Now, the reality is that the downside of living with a high credit score, if you have an 800 credit score, it basically means you've paid roughly $100,000 in interest over the last few years because it's an I love debt score. It's the only way to build a credit score is to go into debt. It's the only possible way. There's not another way to do it.

And so worshiping at the altar of the great FICO as your provider in life is a really bad altar to worship at. It'll keep you in debt the rest of your life. So if you want to play that side of it, you can play that side of it. There's not a really good middle ground is the problem. You've either got to sell out to FICO or you've got to sell out to I'm going to avoid FICO because the middle ground means you have a low credit score, which means you paid a bunch of interest and still didn't get the benefits of having a FICO score. So now, what does that mean in reality?

I do not have a FICO score. Okay. Okay. I'm a multimillionaire. So what that means is I can go down to the local apartment complex that requires a FICO score to rent an apartment if that one does. Not all of them do. And I walk in and a 26-year-old property manager says,

No, Mr. Multimillionaire, we cannot rent you an apartment. Now, I can write a check and buy the complex, but I can't rent an apartment there. That's how dumb but asinine this whole idea is. And so what it amounts to is this. Can you find an apartment in New York City that does not require a FICO score? Yes. Will you get turned down for some that require a FICO score? Yes. Will you get turned down for some that require a FICO score?

Yes. And I would face exactly the same obstacles that you are facing. So you're either going to have to find people who will work with you and do business with you without a FICO score over the scope of your life, or you need to go worship at the altar of the great FICO. There's not a good middle ground. And so you're going to have the challenge of being in debt the rest of your life, or you're going to have the challenge of occasionally someone, because you don't have a FICO score, will not let you do something.

And believe me, I personally have experienced that type of FICO score-ism. It's a type of, it's an ism. It's like sexism and racism and, you know, it's prejudice is what it is. And so I've been turned down for things. My auto insurance is higher because I don't have a FICO score. It's just illegal, but they just do it. I mean, it's just wrong, but they just do it. And so, you know, you're going to run into stuff like that and you just

have to decide which game i'm going to play overall because there's not a really good middle ground you see what i'm saying if you sort of build your credit and i'm sort of in debt you sort of have a fico score and your fico score will suck and then that's worse that's worse than not having one i think you could go into an apartment manager who has a brain, not all of them do, and say, look, hey, I'm 22. I don't have any debt. You know what that means? I got a lot of money. I can pay the rent.

That's what it means. If somebody comes to me, I own a bunch of rental property. If somebody comes to us and says, I have no FICO score, that means you have no debt. That means you have the money to pay the rent. I like you as a tenant, but I have a brain. And not everyone has a brain that rents apartments. And so you're going to run into people that aren't allowed to or choose not to think in our culture because the FICO score has become so ubiquitous. And it's out of control.

So that's what your thing is. And, you know, you have to get a credit card. No, that's just people trying to justify their stupidity. You don't have to, but you can make a choice to. You can decide to go that way and go into debt so that you can go into debt so that you can go into debt so that you can go into debt and be a dog chasing its tail for the rest of your life. Open phones at 888-825-5225. You jump in.

We'll talk about your life and your money. John is in Fort Wayne, Indiana. Hi, John. How are you? Good. How are you? Better than I deserve. What's up?

I have a question in regards to long-term disability insurance. I believe I have long-term disability insurance that work, but I've been trying and trying to find out if I do for sure, and I'm not 100% sure that I do. So I've been thinking about getting a long-term disability insurance through Zander Insurance. No. Not until you find out if you have one. Okay. You only need one. If it's furnished through work, it's a whole lot cheaper.

HR can't tell you? What size company do you work for? I work for a company that is a large company. Don't they have an HR website that has your benefits listed on it? No, they've outsourced everything to a third-party company. Don't they have a website that has your HR benefits listed on it? No, all they give me is a 1-800 number to call and a representative to talk to. Did you talk to them? Yes, I did.

And they cannot confirm for sure that I have long-term disability insurance. That's strange. It's a simple thing. Yeah, it's a simple thing. You either do or you don't. It's furnished by your company, and they pull up your company's package. Correct. Yeah, I would make that my hobby for the next two weeks.

I'm going to bug the crap out of everybody around me. Your supervisor, his supervisor, her supervisor, I'm going to call 16 people at the third-party company. I'm going to call HR 14 times because they outsourced to a company that can't find their butt with both hands. And so, yeah, let's get an answer to a simple question. This is really not hard. And I'm guessing you do have it furnished. That's my guess. Probably covers about 60 to 70 percent of your income, which after taxes is not far off. And you probably do not need to buy long-term disability. That's my guess. This is the Dave Ramsey Show. You've heard me talk about ID theft for years and how it's only a matter of time before you become a victim. But I ran across some numbers that even surprised me and shows the

real nightmare that people go through when they become a victim. Of the 16 million victims of identity theft last year, yes, 16 million, 26% of them had to borrow money from family or friends. 22% of them lost even more money by taking time off work and 900,000 victims took out payday loans. This stuff is a freaking nightmare. That's why the only plan I have for my family and my entire team is through Zander Insurance. Zander takes over all the work to solve these problems and more, along with the systems to reduce your risk and protect your money

if your accounts get hacked. Visit Zander.com or call 800-356-4282. It's the smartest, most affordable way to protect yourself. Gabrielle is with us in Washington, D.C. Hi, Gabrielle. How are you? How are you doing, Mr. Dave? I'm good. Good. How can I help? Okay, so I just accepted a job offer for after graduation, and I'm just trying to see how I can best approach paying off my student loans after I graduate, whether that be like staying at

home or leasing an apartment. How much student loan debt have you got? i have about fifty thousand dollars in student loan debt and what will you be making at the new position uh around sixty five thousand a year good for you good for you thank you what are you going to be doing um i'm going to be working as um i'm going to be working in analytics okay what's your degree in? Economics. Good for you. Good job. Well done. And you're what, 22? I'm 21 right now. Okay, cool. And you graduate when? I graduate in May of 2019, and I should be starting up in June of 2019. Perfect. And of course, the reason you asked the question is your parents live in the same city where you're going to be working.

Yeah, so my parents live in Laurel. It's very close to D.C. It's about an hour and a half commute with rush hour. Oh, that's brutal. Okay. Well, I mean, if you were to live with your parents, if I were in your shoes, I would want it to be for a short term, as short as possible, and use that time to aggressively pay down the debt.

I'm probably not going to live there enough to get completely debt-free, but maybe get a good run at it, because I'm not going to want to make an hour-and-a-half commute very long, and I'm not going to want to live with my parents for very long if I'm a young man making $65,000 a year. Yeah. not going to want to live with my parents for very long if i'm a young man making 65 000 a year yeah and so what's um and i'm gonna guess and tell you this i'm gonna guess and say in the field you're in in the city you're in if you're smart and if you work really really hard like you work while you're at work that you will probably get some pretty good raises within the first 12 months even. Oh, definitely, definitely.

Yeah, because the field you're in, you know, with two years' experience, will pay you double what you're being paid. Mm-hmm. And so, but you're going to have to have a couple years under your belt. But my point is you've got a pretty good escalating thing. And so what I would do is set a mark and say when i get my student loans paid down to x and my income to y i'm moving out okay and let that be like your your decision making flow chart kind of thing in other words it might be that if i paid off half my student loans and

my income went up ten thousand dollars i'm out of here okay or something like that that leaves you at the house for like six months or something yeah but not not three years yeah definitely not three years yeah and so i'm thinking six months probably but if you want to stay a little bit longer that's fine um if you don't want to do it at all you're just going to slow down how fast you get out of debt. That's all you're going to do. I mean, whatever you spend on rent, you can't put on debt. And whatever you spend on electricity and food that your mom makes, you know, you can't do. If they're going to let you live there for free, you can put almost 100% of your paycheck towards the debt.

Yeah, and pay it off a lot quicker. Yeah, and so if you got like $25,000 knocked off in six months, which you ought to be able to do um then um you know then you're ready to go kind of thing or your income goes up during that six months and you leave a little sooner something like that you figure out the number i'm just making this up while i'm talking to you so you'll put a little more thought to it than i have but that's the concept i would go with um kind of a middle ground instead of saying no don't move in or or no, stay forever. No, we're not going to do that. Let's get somewhere between those two and land in something kind of logical that has a little dignity to it and gets rid of that stinking commute.

Mary is with us in Hartford, Connecticut. Hi, Mary. Welcome to the Dave Ramsey Show. Hi, Dave. It's an honor to be speaking with you. You too. How can I help? I have a question as to whether or not you think maybe we need life insurance.

It's just my husband and myself. I'm 51. He's 56. And our annual income is about $60,000. Savings is about $300,000. And we have a 401K as well. How much is in the 401? $350,000.

And what's the savings invested in? The savings is just sitting there. In a savings account? Yes. Oh, good Lord. Let's get that invested. $350,000. Where'd y'all get this money?

Well, the $350,000 is from my 401k. I'm sorry, $300,000 sitting just in savings making 1%. Yes. Oh, crap. Okay. Yeah, you're losing $30,000 a year. Okay. If that were invested making 10%, it'd be $30,000 a year.

And when you say invested, in what message? Growth stock mutual funds. Growth stock. Yeah, and go to DaveRamsey.com. I'm not in the investment business, but, I mean, mutual funds average well in excess of 10% over long periods of time, but you don't need this money. You don't need it today. And so if you had it, click SmartVestor at DaveRamsey.com and sit down with one of the SmartVestor pros.

It'll drop down a list of them, and you can pick one in your area and get the help. Now, so then back to your question. You've got $650,000. Some of it's in 401K, and you're in your early 50s. Some of it's invested. Are you self-insured? If the $650,000 produced $60,000 in income for you, if he died, then you'd be okay, right? Yes.

But it won't, because you can't get to the 401k money until you're 59. Right. And so I'm probably going to keep life insurance for a little while longer. Okay, well, we don't have any at the moment. That's why I was just calling to see if you thought that was advisable. Yeah, how old is he? He's 51. Is he healthy?

He's 56, yes. He's very healthy. Okay. And you're 51. Right. Okay. And you're 51. Right. Okay. If he's in good shape, it's not that expensive, even at his age. I mean, I'm 58.

I just bought something the other day. Yeah, I think the estimate we received is about $142 a month. Did you check Zander Insurance? He was on there. I'll have to look into that and see. You can price it. It takes about 10 seconds at zanderinsurance.com to price it out. And, yeah, I mean, I'd pick up about $500 or $600 on him for like five years, you know, or something like that.

Because by then, your $300 will have grown. Your $350 will have grown. You're doing a great job with money. Oh, thank you. I mean, you've got a lot of money. You've done really well. Well, the other factor is we do have critical illness insurance. Does that play a different factor as far as whether you...

No, because it doesn't pay you if you die. Okay. If he dies, does he make the 60? Yes. If he dies, 60,000 stops coming in. Right, right. You need 60,000 to eat. Critical doesn't pay that.

Okay. You see? You need $60,000 to eat. Critical doesn't pay that. You see, it's a gimmick insurance. It's not one I recommend. It only pays if you're in ICU, basically, if you're in critical care of some kind. And so it'll give you an income during the time that that happens. It's kind of a short-term disability policy gimmick style. And not a big fan of spending money on that crap. But I'd rather you spend the money on the life insurance, honestly. But the whole thing is, do you have an investment that will pay you what he is being paid

if something happens to him? Once you do, then you're insured. If you're counting on his income to eat, that is. And you're self-insured at that point. You're almost there, but no more than it costs for, you know, $500,000 for five years. It's just not that much to make sure you're taken care of, and that's what we're after here. Again, go to ZanderInsurance.com, and when you check their website,

they're an independent insurance broker, which, by the way, folks, we're talking about long-term care a minute ago, our long-term disability insurance earlier in the show, a couple segments back, and all way, folks, we're talking about long-term care a minute ago, our long-term disability insurance earlier in the show, a couple segments back. And all of these things, when you're dealing with insurance of any kind, work with a broker. A broker is someone who shops several different companies, is not a captive agent. A captive agent has one company they sell for, whether their stuff's bad or good,

whether it's expensive or cheap, that's the only thing they can sell. And so it's always the best thing. If you ask a State Farm agent, they've always got the best thing. And if you ask a nationwide agent, they've always got the best thing because it's all they sell. And honestly, you can find insurance cheaper than either one of those companies in almost any category. And so you get an insurance broker, an independent broker, and they shop a gazillion different companies. And in your situation for long-term disability, for life insurance, for property and casualty, which is car and homeowner's insurance, they'll shop it and get you the best deal out there. And you can check ELPs at our website, and they'll help you with every bit of that.

Xander will help you with the life insurance quote. And that's how you buy life insurance at the best possible deal, or insurance of any kind at the best possible deal out there. That's how I buy mine in every case. 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 prepackaged loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years. Call Churchill Mortgage and get custom solutions from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money.

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Redwood, Tennessee 37027. Cody and Sarah are with us in the lobby of Ramsey Solutions. How are you guys? Good. How are you? Welcome, welcome. Where do you guys live? Lexington, Kentucky.

Cool. Well, welcome to Nashville. Thank you. Thanks for visiting us. And all the way here to do a debt-free scream. Yes, sir. And how much have you two paid off? About $85,000.

Cool. And how long did this take? About four years. Good for you. And your range of income during that time? Between 50 to000. Cool. And how long did this take? About four years. Good for you. And your range of income during that time? Between $50,000 to $60,000. Okay, cool. And what do you guys do for a living?

I'm an electrical engineer at Kentucky Utilities in Lexington. It's the state utility. Right. I've done a couple different things. I used to be a teacher, and then I managed a day program for adults with special needs, and now I'm a stay-at-home mom. Oh, cool. Very good.

So what kind of debt was this $85,000? It was a couple credit cards, medical bills, and our house. You paid off your house? Our house. It's ours. I'm looking at weird people. Woo-hoo-hoo. Way to go, you guys.

Thank you. How old are you two? I'm 35, and she's younger. I just turned 33. Thank you. How old are you two? I'm 35 and she's younger. I just turned 33. Very good. And you have a paid for house. Yes, sir.

Wow. How weird are you? Very weird. Very weird. I love it. Congratulations, you guys. Thank you. Very, very.

What's the house worth? I think it's in the 150s now. Yeah. Excellent. It's risen about 20 grand in a few years because of the market. Yeah. Very good. Good for you guys.

That is fun. Very fun. So what made you go on this journey four years ago? Tell me about it. This is impressive. This summer, we had taken your class as a pre-engagement, and then we led the class last year. And the more we thought about this legacy stuff, we just had a baby, Madeline, in June. And then just to set her up in the future, decided to pay the mortgage off.

Okay. So how much was left when Madeline was born? How much was left on the mortgage then? I'd say about 40. Okay. So how much was left when Madeline was born? How much was left on the mortgage then? I'd say about $40,000. Okay. So you guys just rolled up your sleeves and leaned into it, huh? Yeah. Two weeks after she was born, we paid it off.

Wow. Yeah. I loaded her up in the car and met Cody at the bank and paid it off. Yeah. We had some savings and some gift money we had saved up. Okay. And then just chipped and added over the few years. Okay.

So you were just working your normal Baby Steps four, five, six from taking the class. And then when baby step six looked up and was in reach and baby comes, that's your motivation. Just reach over and knock it out. Yep. That and we've had a little extra motivation. Cody's actually waiting on a liver transplant. So knowing that that's ahead of us, we just wanted to go ahead and knock it out as soon as possible. And just having that out of the way, it's such a blessing knowing that with knowing medically what's ahead of us, that we're going to go into that completely debt free and not have any worries, can just really focus on recovery and healing.

It's such a blessing. Oh, yeah. It takes all the financial pressure off of working on the right stuff. Yes. Yeah. And I have to brag on her a little bit. She was actually unemployed while we were dating and got herself out of debt. And then right when her unemployment quit, she was out of debt and then got a job. It's like, huh, maybe the Lord knows what he's doing.

Just like that. That's so fun. Well, what advice do you get? You've gone through the class, you paid off your home, you're 35 35 and 33 what advice do you have to people listening that want to get out of that what do you tell them they have to do just like you said just roll up your sleeves and do it um you know and i've walked them through the steps of what we went through with your class and um so i've had a lot of people ask me when we tell them we paid the house off they're like wait what and we just tell them what we did with the class and tell them they just stick to it. They've got to stick to it. You can do it.

I mean, during our four years of getting at it, there were some times that it just seemed more challenging and overwhelming, like we're never going to get it paid off. And the next thing we knew, we could do it. So we just tell them to just keep at it. You can do it. So we just tell them to just keep at it. You can do it. And it's more just staying encouraged than it is the math. Because like you said before, if we were doing math, we wouldn't be in debt. Yeah, and I would say, too, to really just set your goals

and know what you're working towards. Because when we first started, I have to be honest, I wasn't really that on board with it just because I knew it was good, but it kind of just seemed like the thing to do because everyone else was, well, not everybody, but a lot of people were just on this get out of debt kick. And I was like, yeah, that's great. But, you know, what's really the of debt we can really attack those and really have the kind of life and the legacy that we want to leave for our children then it made it so much more real and seemed like it was so much more important at that point very good good job you guys thank you very very well done love it love it love it congratulations

thank you and you brought miss Madeline with you. Yes, she is here. And how old is sweet Madeline? Four months. Four whole months old. Oh, my goodness. Well, and we got a copy of Chris Hogan's book for you, Retire Inspired. And that is the next chapter in your story to be not only debt-free but now millionaires. Thank you. And outrageously generous as you go along.

Very proud of you guys. Well done. Thank you. Who was your biggest cheerleader? I'd say our family and our close friends at church. And each other. It's a good point. Yeah.

Well done, you guys. All right. It's Cody and Sarah and little Madeline from Lexington, Kentucky. Eighty five thousand dollars paid off in four years. That's their house and everything. Count it down. Let's hear a debt free scream. Three, two, one. Praise the Lord.

We're debt-free. All right. I love it. Congratulations, you two. Very well done. Absolutely love it. Absolutely fabulous. Open phones at 888-825-5225.

Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure, you pick the wrong color, they will remake your window blinds for free. Site-wide savings is happening right now, plus take an additional 5% off at blinds.com slash Ramsey. That's blinds.com slash Ramsey. Questions from Shelly in Wisconsin.

Instead of buying a bunch of Christmas toys that the grandchildren won't play with, we want to invest money into their future. What do you suggest? I suggest you do some of both. Toys and Christmas and grandchildren all go together in Papa Dave's mind. Investing for their future all goes together in Papa Dave's mind. That's my grandpa name. So, yeah, I would do both.

If you want to do some investing, there's a couple of things you could do. If the parents are not doing any investing at all, you can do an ESA, an educational savings account, and you're allowed to put up to $2,000 per year per child into that. And I would put that in a good growth stock mutual fund, and it will grow for their education. It grows tax-free for their education. Now, you have to name an adult as the custodian watching over this money until the child gets ready to go to college.

You can name yourself the custodian, or you could name their parents the custodian. Either one is fine. Either way, you should just be in communication with the parents, because all of you together cannot put but $2,000 a year in. So if they're already doing a $2,000 ESA, you can't do another one. And so you would do a 529, or you would do something else. So be in communication with mom and dad. And you don't have to put the whole 2,000.

You could do $500 in that if you want to. But I also would buy them some toys, Shelly. Christmas and toys go together. It's just part of the plan. Okay. And so I agree that they're not going to use them. But I'll tell you something interesting. I was doing a talk in Phoenix last Friday to business leaders,

and an illustration that I used in that talk is not relevant to this question, but it was a Hot Wheels car from my Hot Wheels collection from 1968. Now, I don't remember if my grandparents bought the Hot Wheels, or my parents did, but I was eight years old. It's kind of cool to have an antique Hot Wheels car in your collection. I've got a bunch of them, just because I kept all my toys. That kind of stuff. Not all of them, but a lot of them. So, there you go. Toys are good.

They're not a bad thing. But I agree with you. All toys makes Jack a dull boy. But let's do some investing. Check SmartVestor at DaveRamsey.com and you can sit down with SmartVestor Pro and they can help you plan that out for your giving to your grandkids for Christmas. What a cool thing to do. This is the Dave Ramsey Show. Michael is with us in Indianapolis.

Hey, Michael, welcome to the Dave Ramsey Show. Thank you, Dave, for taking the call. Sure. What's up? The wife and I are going to be selling our house. We should be closing next month. And I was wondering, we will come out with equity, and we started building on some property we have. But my question is, do we use all of the money to finish our house

and not have any mortgage or use most of it to pay off the rest of our student loans and other debt that we have? We'll be living with some family members, so we will be able to save some money each month to tackle the debt even more. Okay. Well, I would be debt-free except for the mortgage by the time I move into the house. In other words, it sounds like I have to choose between a debt-free house or debt-free other stuff. And I'm going to do debt-free other stuff before debt-free house.

Okay. If you have to choose. We were able to do around $2,000 last month paying off. This is our second month using your every dollar. Cool. And I think by the time we should start building, we should have everything paid off except for one student loan, which is around $20,000. Okay. I didn't know if I –

Go ahead. I would try to get there, you know. I mean, it sounds like you're going to be close. And you start building, and by the time you start building, you're not finished building. It takes another year, right? Close to it, yeah, because we'll actually be building it ourselves. We won't be hiring out. And that extra year, doesn't that give you the other $20,000?

I would think so. It should be very, very close, yeah. So I'm going to just map that out so that when you move in, worst case is you have a very, very small mortgage. Okay. Best case is you've got nothing. Yeah, mortgage. Okay. Best case is you got nothing. Yeah, because we don't want anything more than a 15-year. And we were probably looking at by the time we pay off the student loans and everything, our mortgage would probably maximum be only $40,000, if that.

Well, no, you said $20,000. That would be what we need to pay off the student loan. Yeah, $20,000, you'd be debt-free, not counting the mortgage you're talking about? Correct. Okay, so if you pay off that student loan, and then you would have an additional $20,000 in expenses that you couldn't cover. Is that what you're saying? Roughly, yeah.

Okay, well, then you're not going to make it. You have a little tiny mortgage, but you don't need a 15-year on a $40,000. How's your household income? This year, I've worked some extra overtime to pay off some of the debt. Right now, it's right around $70,000. Okay. And so you pay off $40,000 in five years. Okay. Yeah, you put that like it's like a big car payment.

A ridiculous car payment, but it's like a big car payment, right? Right. I mean, it's a small mortgage. I agree. And what you do is just go to the credit union and you get that with no closing costs because this house is going to be worth what? That I'm not sure because we're building, it's only going to be a 12 by 40 square or 12 by 40 house with a basically. Yeah, but the house and land is probably worth 100 grand anyway isn't it yeah i would if not more yeah and so 40 is a very very small mortgage and it's too small a mortgage to get with a traditional mortgage company they don't want to write something that's small

so go to the credit union and you're looking for zero closing cost fixed rate five or seven year loan if you have to take out a loan at all okay depending on how it goes but first goal is be debt free second goal is be mortgage free that's your order of priority okay all right sounds good thank you so much thank you good job man all right nicole is in chattanooga hi nicole how are you hi i'm good how are you doing, Dave? Better than I deserve. What's up? Awesome. Yeah, so I have been following your baby steps, actually. I learned about it when I was 14 years old and have been following it my whole teenage and adult life. Wow. I'm now 23 and 23.

Yeah, I've loved it. It has been amazing. I started working when I was 14, and that's when I started using the principles. Wow. And so I am now married at 23 years old. when I was 14, and that's when I started using the principles. Wow. And so I am now married at 23 years old. I've got two semesters of college left, debt-free. My husband has graduated from Auburn University, debt-free. We are completely debt-free.

We are on baby step four. My question to you is we just moved to Chattanooga where he has a new job and we're trying to decide what we want to do next with that baby step four and also a house. Do we know that we're going to want a house within, you know, within the near future, but at the same time, we want to start that baby step four. We're just not sure what the best opportunity would be. We do have about $25,000 in savings and then about $30,000 in our emergency. Wow. So we do have enough for like a small down payment on a small house. It just kind of freaks me out to take it all out and do that.

So I just wanted to get your thoughts on it. Well, you need to use it all except the emergency fund as your down payment so that you take the least possible debt because the goal is to turn around and get it paid off. It's easier to pay off if it's smaller. So we're going to throw everything but the emergency fund and certainly not any retirement accounts. But no retirement accounts and no emergency fund.

Everything else goes at this uh down payment equation it would be very easy to say we're gonna temporarily pause baby step four and just pile up as much cash as we can pile up because at 23 if you wait one year and start your baby step four you're fine you're gonna be fine okay okay it's not a big deal it's not like you're 63 okay you're not getting ready to retire so you can pause baby steps baby step four for one year and see how much cash you can pile up and uh so what's your household income yeah uh right now since i'm still in school um i'm stay at, but just him, we're pulling in about 75. Okay, and when will you graduate?

I will graduate in December of next year, so about a year. Okay, and what will you be doing? I'm going to be a dietician, so the median income when I'm able to get out of that and get a job is going to be about $60,000 is typical from what I've done research on. I would not buy a house until you guys are both in your big jobs. Okay. And then from there, so that gives you a year to save. Right, okay. So just kind of stockpile as much as possible from his and then when i

convert um kind of see what we've got and then proceed from there and then maybe hold off on that baby step four exactly and if it's if it's 18 months instead of 12 because you land your big job that's fine because you'll then qualify for the mortgage based on your larger income and you'll make a completely different decision on everything it puts you on a whole different whole different trajectory and so you're going to be just fine about 25 you guys are going to be sitting in some really really good position you already are in an unbelievably good position so um very well done wow amazing for 23 but you're a financial peace baby so you grew up on it and that's what happens.

Raise your kids on this stuff, folks, then you end up having somebody as sharp as Nicole. I mean, can you imagine being 23, having zero debt and $75,000 in the bank, still in school, husband making $75,000? I mean, wow, that's like killing it, you guys. That's ridiculously good. Very, very well done. Morton is on YouTube. Dave, I'm 40 and married we're fifty thousand dollars in debt how do i buy a house have children save money for retirement um one thing at a time you uh have children whenever you have children that's not in the equation you don't buy a house until you have the debt paid off,

and you don't start saving for retirement until you have the debt paid off. And that's where our Baby Steps program comes from, Morton, is what to do first, what to do second, what to do third. And it's based on two major things, well, three major things. One is personal finance is 80% behavior, so we manage it from that equation. The second thing is that to do good financial planning, you have to lay a solid foundation. And the third thing is the quickest way to wealth is to free up your income from debt. So baby step one is $1,000 saved.

Two, you pay off all your debts except your home using the debt snowball, listing your debts, smallest to largest, and attacking them in that order. Once you're debt free, and in your case, Morton, that's $50,000 from now. Breathe that in. I don't have any payments anymore. Wow. Almost on cue. Cha-ching. That's what happens, isn't it? Now you've got money now. And guess what you're going to do then? You're going to build up your emergency fund. Guess what you're

going to do then? Save up for your down payment on your house. Guess what you're going to do then? Maybe step four, you start retirement. Wherever you have kids in through there is fine with me. I don't care. You and God decide when you're going to have kids. None of this should stop you from doing that. That puts this hour of The Dave Ramsey Show in the books. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year.

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