The Ramsey Show - App - Do You Have Too Much Invested in Vehicles? (Hour 1)

Episode Date: February 20, 2019

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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, America. We're here to help you with your money and your life. It's a free call, 888-825-5225. Jason starts off this hour in Los Angeles. Hi, Jason. How are you?

Hi, Dave. I think you'll like this. I lost my library book, not your book, a different one. The librarian said, rather than replacing the one you lost, why don't you bring me Dave Ramsey's Total Money Makeover instead? So I got that book, and before I bring it into the library, I stayed up until about 2.30 a.m. last night reading through it. Wow. And I'm ready to take action, Dave. Cool.

Good for you, man. Good. So my question is, about a year and a half ago, we had to replace both of our old cars, and my wife and I, and my question is, did we buy too much car? I'm having a little bit of buyer's remorse. I'm not sure what we should do here. We have a mortgage on our condo, and we have about $70,000 in savings besides our 401K. And we owe about $16,000 on one car and $15,000 on the other.

Okay. And what's your household income? About $235,000. Okay. The cars are not out of range. They just shouldn't be in debt. And so write a check today and pay them both off. Okay.

So I'm toying with that, or should I sell it for the value of the loan and then buy a $10,000 car instead. You make $200,000 a year, dude. You can afford $30,000 worth of cars. They're not killing you. They're not a problem. The debt is the only thing that's a problem, and you've got the money to pay it off today. So, no, I would not.

The reason we have people move down in car is if their total of their vehicles, things with a motor in them, if you own a total of things with a motor in them, more than half your annual income, then you've got too much invested in things going down in value. And so that's one reason I'd have somebody sell cars. The other reason is if they can't get out of debt anytime soon, if it takes them more than two years to get out of debt, and this is not obvious, neither one of these are an issue. You're way under half your annual income these cars are not out of line in terms of the ratio to your income

does that make sense it makes perfect sense um so then if i if i write the thirty thousand dollar check then i have about 40 left000 left as my emergency fund. There you go. There you go. So from there, do I then start putting that towards retirement? Yeah, well, you leave your emergency fund alone, and if we call $40,000 in the emergency fund, if that's enough, if that's three to six months of expenses, which is probably enough,

you set that aside. You don't touch it for anything ever except emergencies. Keep your hands off of it. Then, yes, that takes you straight up to baby step four, as you read last night at 1.30 in the morning. And that means you're putting 15% of your income into retirement. Do you have children? We have a two-year-old and one on the way in May.

Then baby step five is the next thing. We start saving for their college. And six is we start paying off the condo. Baby steps four, five, and six, you work simultaneously. Okay. And so 15% going into your income. Let's get something started with the sit down with your investment professional. If you don't have one, click smartvestor at DaveRamsey.com.

We'll hook you up with a person. You can drop down a list of people we recommend recommend you can choose the one you want in your area they'll sit down with you help you get your kids college funds started maybe even the 15 thing going at baby step four if you need to and then pass that uh any other money you run into or can you know find in your budget you just start throwing it at the condo let's get the condo paid off as fast as we can. You're on fire, man. You got a really good head start because you got a great income and you've not been too out of control with your spending.

We know that because your savings is enough to take you out of debt, not counting the condo, and up through baby step three with your emergency fund. So you've done a really good job. Well done, sir. Well done. Folks, thousands of women are realizing their dreams by using their God-given gifts to start their very own businesses. Ladies, there's so much pent-up economic value with a lot of you ladies that in many cases have more education than your

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has been created around her passion for seeing women live their dreams. Business Boutique, equipping women to make money doing what they love. Dean is with us in Dallas. Hi, Dean. How are you? Hey, Dave. Good to talk to you. How are you doing?

Better than I deserve. What's up? So I just finished graduate school, starting up my first career out here in Dallas. I came out of school with zero debt or any other debt for that matter. How'd you do that? A lot of hard work, a lot of scholarships, putting in a lot of time. Good for you. What's your graduate work in?

What's your degree? My degree, both undergraduate and graduate, is in mechanical and aerospace engineering. Wonderful. Good for engineering. Wonderful. Good for you. Congratulations. So now you're out and all that's behind you, and now you landed the job. Yes, sir. Cool.

How can I help? So just getting started, and my question's in regards to saving for retirement. I currently have about $7,000 in a target fund IRA and another $3,000 in a 401k from a former employer. And my new employer that I'm just getting started with, if I put in 8% into my 401k, they will actually contribute an additional 10%. Phenomenal. Bring me up to 18%. So my question is to be at my 15 contribution so i have

that additional seven percent if i should put that into that into that 401k or something else oh definitely five percent no no no no the 15 is you putting 15 of your income into retirement their match is just extra gravy on the biscuit yeah so you take 15 of your income and start putting that into something certainly we want eight percent of that to go in there to get that match it's a wonderful match if you have the opportunity for the 401k to be a roth that's the first thing i would choose so roth with a match like that is a freaking home run man and then make sure you're putting another 7% somewhere, whether it's in that 401k or you're opening up your own Roth IRA in addition to that. But we need to get up to 15% of you putting 15% of your income into

retirement in good growth stock mutual funds. And dude, you're going to retire a millionaire. Good question. Thank you for joining us. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen. Their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible,

let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Thank you for joining us, America. We're glad you are here.

Greg is with us in San Antonio, Texas. Hi, Greg. How are you? I'm doing good. How are yourself, sir? Better than I deserve. What's up? Awesome.

Awesome. I have a question. I am the church accountant to a church that has been active for two years. We are currently renting a recreational center on Sundays, so we rent five hours. So we spend anywhere from $800 to $1,100 a month, depending on how many Sundays are in a month, for only five hours. We have about $ thousand dollars saved um and i actually have everything ready to send off to a loan officer to see about purchasing a building the church is debt free right now but if we purchase something obviously we're going to be in debt what advice can you give me? You found an actual building? We haven't, no.

The reason we went to a loan officer is because we want to see how much the church will qualify, and that would go off of the past three they're co-signing for and being under his name. Yeah. Okay. And how many people attend? We have about 200 members. Okay. And in two people attend? We have about 200 members. Okay. And in two years, that's pretty good growth. Congratulations. And so your annual budget's running what, $400,000? The $400,000. Your annual budget for the church, about $400,000?

Yeah. Well, no. No, no, no. Last year, the church brought in $89,000. That's what you're asking me. Okay. This young congregation is not yet giving then, okay? Correct. Yes. They're all fairly young, and it's in a side of town where the income ratio is not that high. Gotcha. Okay. So here's what we have seen in working with about 75,000 churches in the last 15 years. Some of them, because Financial Peace University is in there,

are very open with us about their struggles. And what appears to make sense on the surface if you project your current income and project your current growth trends out into the future it appears to make sense to buy the problem is when people buy the dynamics and the chemistry of the church changes even the giving changes and it's not unusual for you to actually get some shrinkage and i've got a good friend who's a pastor of a church that was about 600 people and they bought and moved eight miles and it went to 200 people oh wow and uh guess what that did to that debt problem it made his life miserable he's got less staff now

i had to lay off a bunch of people um and you know and when the financial troubles hit the church that hurt it even more on its growth curve and so what i would tell you all to do is just sit right where you are spend your five hours there are some some people who it actually should be their ministry to set up and tear down. That's what we do. We set up and tear down. Yeah, lots of people do this all over America, as a matter of fact. It's a wonderful thing. And I've actually had people, I've talked to people who, when the church bought the new building,

you would think everybody would be relieved, but the guy doesn't have a job anymore. He lost his ministry. His set up and tear down ministry is he's gone he leaves goes someplace else or sometimes you lose people to something that wild so it's not always the way it seems on the surface that this is a no-brainer as a matter of fact it's far from a no-brainer so i'm going to tell you to bible says the borrower slave to the lender i'm going to tell you save up and pay cash for whatever you buy. You've already got $20,000 set aside. That's pretty dad-blame good in two years.

You've grown to 200 folks. The 200 folks, you'll probably grow some more in numbers, but I think they'll also grow in their faith walk, which will affect their giving as well. And that will then in turn affect your budget and how fast you can save. Your budget's a little low for a church your size is my point, not just being in the neighborhood it's in, but also the fact that it's the spiritual age, not the chronological age of the people involved.

You've got a lot of people that just met God in the last few years in there. You're doing a good job of reaching out into the white space instead of sheep swapping, right? Mm-hmm. Am I guessing right on that? Yeah, yeah, yeah. Yeah. And so usually the process is when somebody first meets God, they don't walk in and start tithing. That's not normally the first thing they do.

Because when I first met God, i couldn't spell tithe i didn't even know what it meant you know and so it takes a little while in their spiritual maturity for the giving to come up and um not always sometimes pastor does a good job of preaching or teaching on it sometimes it can the generosity can become a part of their faith walk early and i hope it can be so all of that to say i would sit there and save up and pay i would avoid that bank like it was the plague brother i think you're gonna get yourself in a mess um may not be what you guys want to do but you asked my opinion and i'm an expert on my opinion so that's what i would tell you to do hey thanks for the

call open phones at 888-825-5225 erica is with us in portland oregon hi erica how are you i'm good how are you mr duncey better than i deserve what's up um so a question for you um i lost my job my husband's the only one working um we're saving money for the step one and step two we're looking to save some more money but since i lost my job we're trying money for the step one and step two. We're looking to save some more money. But since I lost my job, we're trying to figure out which steps should we take now. Also, my husband has taken out his 401K twice, and so he has a little bit of money on there. So what do you think will be our next step?

Okay, don't touch that 401K ever again. That's killing you every time you do it. They're hitting you with a 10 penalty plus your tax rate so you're getting hit with about 35 or somewhere around there and of your money's going out the door when you do that so leave that stinking 401k alone from now on now number two what what did you use to make at your job i used to make 45 000 a year okay how long ago did you lose a job that was back in in December of last year. Okay. So what are you going to do? Well, I'm looking for a job right now. I'm receiving unemployment

right now. Any leads? No, not yet. What do you do? I'm an administrative assistant. Okay. All right. Well, the economy is pretty good in Portland, Oregon. I think you'll probably land something if you get out there and hustle and grind and knock doors and turn over rocks something will run out i need you to get something get back in there uh in the meantime what i would do is not do the baby steps i would just push pause on this video and pile up cash and protect cash any cash you got protect it and any cash you've got extra coming in out of the monthly budget and you do a really tight beans and rice rice and beans budget and have a big garage sale and let's pile up as much cash as we can because you will interview better if you're not starving when you're

desperate when you're desperate your interview doesn't go as well you know what i'm saying yes yeah but when you go in there all cool, calm, and collected, you're cool, calm, and collected. It just makes you more appealing as a potential hire. And so I want you to stay in that position rather than going in there on two knees and in the prayer position going, please hire me. You don't want to be in that position, right? So pile up cash as big as you can pile it. Protect it.

Don't spend any money on anything. And don't pay extra on debts until you get this new job landed. But go get you the new job. And this time I want you to make 55, not 45. You weren't making enough. Then that layoff turns into a blessing. You catching on? Hey, thank you for joining us. Open phones at 888-825-5225.

Dave, speaking of the tithe, do you tithe off your tax return? Well, that depends, I guess, on what you tithed on in the first place. A tithe is a tenth of your income for evangelical Christians, Orthodox Jewish folk. And those of us that fall in that category, we give a tenth of our income, or we're called to scripturally, we believe as a part of our faith walk, to our local church. Now, I tithe on my gross income, meaning before taxes, not gross revenues to the business, gross taxable income. I tithe on my taxable income. If you do that, then your refund is you've already tithed on it. Because you tithed before there was withholding, and a refund means you had too much withheld.

So you just got some of your own money that you'd already tithed on back. You just have a bad savings account at the IRS. That's what pays no interest. That's what pays no interest. That's what a refund is. So if you're tithing on your net after taxes, then mathematically you would tithe on a refund. But again, God loves you either way, kiddo.

Don't get all twisted up about this stuff. Just be in the business of giving. 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. Call 888-LOAN-200. That's 888-LOAN-200. Or visit ChurchillMortgage.com.

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You can follow me there. Is there an age when you're too old to have term insurance? Most of it cuts off around 70. Different companies have different guidelines. The trick is that you probably don't need it when you get there for two reasons. Let's pretend, number one, you're broke. Okay. If you're broke, you need enough money to bury you so that your funeral is not a burden to your family.

If you have $5,000, $10,000 somewhere, then that takes care of that. If not, maybe some kind of little burial policy through your bank checking account or something like that is in order more than traditional term insurance. And talk to your family about it if you're that broke. That's kind of one side of the coin. But if you're broke and you're 73, 99.99% of the time, no one is counting on your income to eat. And so your income that you're creating is probably negligible, and you're probably not the source that people are using to eat out of, to survive out of. And so you're not leaving three little kids and a wife typically in that situation as

broke. And, you know, like if you're 32, that's a different world. And so the second scenario is, is you've got a lot of money. Well, you would just take care of your own burial, of course, out of that money that you've got. And you're leaving an inheritance to people. And again, no one is left behind without any money. So you're more than self-insured at that point, even if you're kind of in the middle space.

You've got a little bit of money, but not a lot, but nobody's there. The big thing is there's not any dependents. That's the big thing. And so in most cases, life insurance, the need for it goes away based on the fact your kids grow up and leave, you become debt-free, you build an emergency fund, you build wealth, you become self-insured. That takes care of any need you have for insurance and the other thing that happens or you just simply get old and the people that are counting on you aren't they're not counting on you financially and so that's the process so but again for details on that just get with zander insurance

that's who we recommend for term life insurance and have for over 20 years. They're great people. They do a great job. They shop among a gazillion companies, get you the best price. And if you've got a situation like that where you're 76 and you need some term insurance, they probably can figure out a way to do that. I don't know. Sit down with them and talk to them. They'll help you with it.

The unusual type of situation there. Rob is with us in Detroit, Michigan. Hey, Rob, how are you? I'm doing great. How are you? Better than I deserve. What's up? Well, I had a quick question. So my wife and I make about $110,000 a year. And while we were in school, we were pretty stupid and lived off of loans. So my master's degree and her bachelor's degree left us with $140,000 in student loan debt. So yeah, that was dumb. I'm looking at possibly getting a career change. I currently have a pretty lucrative career in IT and I personally make about $70,000. And I want to go back to school to go to medical school. So we can pay off our debt in about two and a half years.

Good. Or I could save up cash and cash flow medical school and go to that snowball again once I get that higher doctor's salary. What's your opinion on that? What would I do if I woke up in your shoes? How old are you? 28. Okay.

So if you were 34 in med school and had it all paid for and were debt-free, that'd be okay. Okay. Yeah, pay off the debt and then save up and go to med school. Yeah, we're looking. So two and a half years from now, I'd be 31-ish. That'd be six years. Two and a half, you'd have it paid for. But then I'm talking about you'd be debt-free and then turn around and save up your med school after you get your debts paid off.

During that time, your income's going to go up, too, because you're in IT. It's going to go up dramatically, probably. So you think I should pay off the debt first? Because the way we were thinking about it was potentially saving it up and then having the choice to either pay everything off in one big payment or pay for medical school and then triple my income. So I wasn't sure. Yeah, that's assuming you graduate.

Right. Well, I'm not going to start something like that and not finish. Well, I mean, there are people who don't graduate from med school. It's not 100% and tripling your income. Going from 70 to 210, maybe, depending on what field of medicine you're studying. But I'm with you on your dream, but I think you clean up your mess. I would get out of debt, and then I would save up my med school money, and I'd go to med school.

You have the income and the career field to do that, and it's not going to kill you. And, you know, IT is lucrative, wonderful career. And I think you're in a good shape there to be able to. You're probably making, you could double your income during this period of time. That's very possible if you continue to learn and grow in your tech field while you're doing this, which I would always recommend you do. So, yeah, I would do that.

And I'd clean up the debt, and then I'd save up the money and go to med school. That's what I would do if I woke up in your shoes. And, no, I would not stay in debt and go to med school. No, I would not do that I woke up in your shoes. And no, I would not stay in debt and go to med school. No, I would not do that if I were in your shoes. But I would pursue your dream. I just don't want it to turn into a nightmare. That's what I run into all the time. Herb is with us in Springfield, Missouri.

Hey, Herb, how are you? I'm great. Better than I deserve. Is that right? That's how it works. How can I help? Well, sir, I'm looking for some advice today. First of all, I'm 66.

Work full-time. Got a part-time job. Love them both. Just refinanced my house on a 15-year with Churchill, by the way. Great people. Good. And I've got money left over at the end of my month. I've been through the every-dollar budget, and I need to know how to divvy that up.

I'm, like I said, 66. I've got some savings, some 401K. How much? I've got about 35 in a 401K. I've got $13,000, which is my emergency fund. What's the balance on your mortgage? $119,000. $113,000, which is my emergency fund. What's the balance on your mortgage? $119,000. $119,000.

And your household income? After taxes, monthly, roughly $6,000. Okay. Well, you're doing good there. So your question is house or retirement? Yeah. And how to split up what I've got left over at the end of the month yeah i'm gonna put 15 into retirement of your income of your household income annually and i'm

gonna throw everything else at this mortgage as fast and as hard as i can because we need to get it paid off okay before you retire and uh then if you as soon as you get it paid off if you're still working and making money then i just i just load up retirement let's just see how big a pile of money we can build but um you know let's see if it takes five years you're 71 the house is paid off and um you would have saved um 150 000000 during that time, too. Yeah, yeah. I've got $3,000 up toward the end of the month,

so I don't know whether to split that half in savings, half towards the house. Yeah. I'm going to go, yeah. Your household income is about $70,000, right? $72,000, yeah, $72,000 plus, give or take. Yeah, so 15% of that. Let's see here. Do that.

I want to do it in my head. $11,000 bucks a year, that for five years is 55,000 plus growth. It's going to be more like 100,000 added to this. So you'll have like 100 and a half in your retirement when I'm paid for a house five years from now if we do this. So what's the plan? And again, if something happens and some good stuff happens, or you tighten the budget down even tighter, just throw it all at the house above 15%. Quick as the house is done, let's just load up that retirement.

Let's get it as big as we can get it. There's no harm in that. Nobody ever retired and said, I have just too much money. Nobody ever called me with that problem, ever, in almost 30 years here on the air. This is the Dave Ramsey Show. Thank you for joining us, America. We're glad you're here. Josh is with us in Fort Wayne, Indiana. Josh, welcome to the Dave Ramsey Show.

Hi, Dave. How are you doing? Better than I deserve. How can I help? I'm having a problem. I recently read your book a couple months ago. I can't hear you. You need to talk directly into your phone, please.

Can you hear me better now? Yes, sir. Thank you. Sorry about that. I read your book a couple months ago. A friend of mine has been doing the baby steps for a while now, and he bought it for me. And I'm totally on board with the plan.

And we started doing the budget, and we're doing pretty good with that. But I'm having a hard time talking to my fiance about all the baby steps and why we do it why we're supposed to do some of the things we do i'll give you an example uh she's uh almost done paying off her car good but but she's almost a hundred thousand miles on her car, and she's of the opinion that once the car's paid off, she's going to go get another car and trade that in and start a whole new loan. Mm-hmm. Okay. So I'm not sure how to get my point across on how this is supposed to work without sounding mean

or like I'm telling her this is what we're going to do because I know we need to do this together and this is something in order to make our marriage work once we get married. Right. Well, you don't need to do money together until you're married. That would be a bad idea. But we need to discuss it. We need to discuss it. And so when are you getting married?

In August. Good. Okay, fun. All right. Well, here's how a conversation could sound. You could sit down and say, you know, I've gotten kind of interested in this stuff since so-and-so gave me a copy of this book. And the more I read about it and the more I understand, I found out that the number one thing that couples fight about and the number one cause of divorce is money.

Money fights and money problems are the number one sticking point in marriage. And so if we found out that the number one cause of anything was X, we would deal with X, right? Right. If it was blue socks, we would avoid blue socks. You know, I mean, it's that simple. Whatever it is, we would just say, if the number one cause of having the flu is wearing blue socks, that's obviously absurd. But you would quit wearing blue socks, right? Right.

So, you know, you might sit down and just say, based on the idea that it's the number one problem in marriage, that means you and I should work on this. We should work on this we should work on this really really hard because if you kill the number one killer of marriages your marriage has got a really good shot and so i want to make sure that our marriage because i love you i want to make sure our marriage is is starting off right and also has the foundation to go and that means we've got to get this money stuff figured out together. And so, you know, I read this book. Why don't you read this book, and let's talk about it together. Well, that's the problem, too. I tried to get her to read the book.

She's not much of a reader. You didn't do it the way I just said. Well, that's true. You're right. I didn't. You just said, hey, read this book. I did. That's correct. Yeah. You're about. I didn't. You just said, hey, read this book. I did. That's correct.

Yeah. You're about as subtle as a brick through a window. Which is exactly what I was when I was your age. So it doesn't work. We're going to have to try a little more honey on the bread. So, you know, my point is, baby, if this this is you're talking to your wife if this is the number one thing we don't want the fact that we love each other to be messed up by this number one thing so we've got to work on this together it's a huge deal i'm really concerned about it because i care

so much about you and so we've got to do something together on this money thing we got to figure this out and and then let her get involved in why you get out of debt because getting out getting out of debt just to get out of debt is not fun but getting out of debt so that i have money oh why would i want money oh so i can live a good life right i can have a car and pay cash for it i can go on vacation and pay cash for it. But you can't do that if you're in debt. But she hasn't seen a reason to do all of this yet. She just heard you yakking about baby steps. If you're not careful, you're going to turn my name into a cuss word.

I think it already is. Yeah. So maybe you start this conversation with an apology. Like, I started this whole thing wrong. I've kind of been doing it wrong. But you need to understand my heart. It's because the number one cause of divorce, and I'm really worried about that. Let me ask you this.

Your mom and dad fight about money in front of you? Honestly, I don't know. I know there were money problems, but I don't think they ever did it in front of me. Okay. You remember feeling the stress of money in your house growing up? I don't. I just remember after my mom died, my stepdad found hidden credit card bills that he didn't know about. Okay.

Use that story. Okay. I don't ever want to be there. How about her parents? Yeah, I think you could use your baby steps, too. Okay, but I mean, ask her. Have you seen your mom and dad fight about money? We don't want to be there.

I don't want to be where my stepdad is. You don't want to be where your parents are when they're fighting about money. Because, by the way, Josh, most people have fights about money. It's the number one thing people fight about. I know that. So, I mean, you know, if you bring that up, I mean, you get her talking that way, that this is a marriage issue. It's a relationship issue that we deal with this subject.

And if you can get her to go to the Financial Peace University class with you, I will give it to you as a wedding gift to get you guys started. But do not go to this class by yourself because you don't need any more weapons in your belt. You've got plenty of weapons you've been using. We need honey on the bread instead. So, honey, I got this free class for us to go to. I got this class. I gave it to me.

I'm giving it to you as a gift. And that will help you get your life started off right. It's one night a week for nine weeks. It should be part of every pre-marriage counseling plan to go through this class on how to handle money. And so we're doing this as part of our pre-marriage counseling. And we're going to be on the same page together because I don't want to be like my stepdad. I don't want to be like your parents. I love them, but I don't want to be in those situations.

I want the stress that most people have. I don't want to be in those situations. I want the stress that most people have. I don't want to be in that situation. Pam is with us in Philadelphia. Hi, Pam. How are you? Good. How are you, Dave? Better than I deserve.

What's up? Great. I was hoping to get your opinion on my situation. Last year, I had a drastic reduction in my income, so I've fallen quite behind in all of my credit card bills. Even before then, I was still just paying the minimums. How much credit card debt have you got? It's 57K. That's just credit cards. 7K is student loans. And I did take out a 401k loan to help me last year, which is $15,000. Okay.

How much do you owe on your car? Nothing. I don't have a car note. Okay. And what was your income, and then what is it now? My income at that time was $58,000. I've since picked up a couple of jobs. Your income was 58, but when you took the new job, it dropped to what?

Oh, it was 58 before the drop. I'm sorry, it was 64 before the drop, then dropped to 58. Oh, so it only dropped $6,000? Yes. Okay. And you picked up some extra jobs to make up some of that difference? Right. It hasn't made up the full amount.

Gotcha. How much is your house payment? $920 a month. That's not a problem. How many kids you got? I have two, but my oldest is already out of the house, and my youngest is a sophomore at college. I'm single. Correct.

Okay. Which is kind of like makes you normal. Normal just doesn't work. Yeah. But now I'm stressed. Yeah, now you're stressed out for sure. Yeah. Okay.

So it's going to take you a little while to dig out of this. And, of course, the more income you can create, the faster you'll dig out. No kidding, Dave. But that's true. But we're going to have to get you on a plan for the first time in your life. And what are you, 50? Correct. Yeah, good.

Okay. Perfect. Well, I'm 57, so I want you to go through our class, Financial Peace University, and I'm going to show you how to do it. Cut up your stupid credit cards, stop all of your investing temporarily, get on a beans and rice budget, take six extra jobs, and you're going to tear through this. And by the time you are 54, you are going to be 100% debt free. And I'm going to show you how to do it.

If you'll follow what I tell you, it'll work. And you call me if you need some more help. Hold on. Hey, it's Blake Thompson, Senior Executive Producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.