The Ramsey Show - App - Doing "Ish" Makes Financial Peace a Wish! (Hour 1)

Episode Date: January 24, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Erin's in Arkansas. Hi, Erin.

Welcome to the show. Hi, Dave. Thanks for taking my call. Sure. What's up? Well, just recently, my husband and I paid off all of our debt except for our mortgage. Yay! And, Colorado. We bought it about six years

ago. And shortly after we bought it, my husband commissioned into the Air Force and they ended up moving us. So we're going to be in the Air Force moving around now for the next 10 years, and we really don't plan on buying until he gets out. So my question for you is, do you suggest keeping the condo in Denver and paying off the mortgage and, you know, using the, you know, we have tenants in there right now. The money that we make off the condo, the monthly rent, we could use that as income if we have it paid off. Or would you suggest selling it and the money we make off of it, you know, investing it

and saving it for when he gets out and we want to buy a house again? I would probably sell it and invest the money and the reason is even though i love real estate uh long distance landlording is a good way to have somebody change their harley oil in your living room because you're just not there to watch it right and stuff happens you have a company yeah i know yeah i know but it's not it's not you and yeah stuff happens and when companies get repairs done they're generally more expensive than when I get repairs done, and so on. So it's just long-distance landlording is very, very tough. This is not your plan.

You did not say, hey, we're going to be moving around all over the place. Let's buy an investment condo in Denver. No, it ended up there by default because of the way the story unfolded. It was not your plan. And that's another thing that tells me that I probably wouldn't keep it. Even though I love real estate, if I were in your shoes, I would rather have that money just sitting in a mutual fund. And we'll just call that mutual fund our future home fund and just keep dropping money in it like you were paying off a house. And then when you get out of the Air Force in a decade, you've got a couple hundred grand laying there.

And you write a check somewhere and buy you a nice place. And that's what I would do if I were in your shoes. Thanks for your service, by the way. Joy is with us. Joy is in Missouri. Hi, Joy. How are you? Hi, Dave.

I'm good. How are you? Better than I deserve. What's up? Good. So I'm a big fan of yours, and thanks to your baby steps, my husband and I just paid off our mortgage about two weeks ago. So now we're complete debt free yay way to go um thank you um so my question is um i'm a self-employed so i've been saving but i'm not sure if i'm doing uh right because i know

baby step four is recommending saving and invest 15 of the income income. So should I do 15% of my gross business income, which means before I deduct all the business expense and income tax, or after? No, after. No, we're talking about your household income, which is your net profit on your business and any wage income that you or your husband generate in addition to that. No, it's the net profit, your taxable income. What's your taxable income? Be saving 15%.

But that's baby step four. You're at seven because you're 100% debt-free, right? Yes, yes. Okay, so all you need to have is you need to have an emergency fund at home of three to six months of expenses. You need to have the equivalent of an emergency fund in business. We call that retained earnings. And, again, I would have three to six months of your business expenses

and liquidity in your business to help you grow the business, to help you ward off a downturn in the business, to do all those kinds of things. And past that, past those two savings accounts, everything else is investing. And I'm going to start piling up investments in mutual funds and in real estate that I pay cash for. And there's no limit on what you do. That 15% you ought to be doing that and more at this stage of the game. And you ought to be increasing your generosity.

What's your household income total? It's about $100,000. Good for you. Well done. Okay. Yeah, get after it. You've done it. You made it to baby step100,000. Good for you. Well done. Okay. Yeah, get after it. That's what I would. You've done it.

You made it to baby step seven. Touchdown. There's nothing left to do now but be outrageously generous and build more wealth. And be outrageously generous and build more wealth. And be outrageously generous and build more wealth. That's all that's left. I mean, and have some fun with the money, but you can't consume it all at this point. You're already too wealthy to do that.

I mean, if you eat enough lobster, it tastes like soap. There's only so much spending you can do. After that, giving and growing is much more satisfying. Rachel is with us. Rachel is in Colorado. Hi, Rachel. How are you? Hi, Mr. Ramsey.

Thank you for taking my call. Sure. What's up? My husband and I are newlyweds, and after getting married, my mom had informed me of a permanent policy for life insurance that she had had on me. She wants me to take over the payment, but I'm thinking of canceling it. Yeah. When I called State Farm, they gave me a long explanation about- I'm sure they did.

They're State Farm. And now I'm confused on what to do. Well, I'm not confused. I cancel that crap. Okay. It's trash. And your mommy meant well. It's sweet.

But she didn't know what she was doing, and the little State Farm guy probably went to church with her or some such crap. And so, no. Listen, it's a horrible place to park money inside of a whole life policy. It's just a horrible place. And so you need to be investing in good investments. And if you need life insurance, you need term life insurance. Now, how old are you? 23.

23. Are you single? No. We got married in June, and my husband is 26. Okay, great. Well, we recommend that you have 10 to 12 times your income on each of you in 15 to 20-year level term, even if you haven't started your family yet. I'd go ahead and do that. At you guys' age, it's not even the cost of a pizza.

It's a joke what that'll cost. What do you make a year? $80,000. Okay, so you need $800 to a million. What's do you make a year uh 80 000 okay so you need a you need 800 to a million what's your husband make a year about 50 okay so 600 700 on him right go to zanderinsurance.com and shop that out and you are going to be blown away as to how cheap that is and just get a bunch of insurance and then god forbid something happens to him you're totally set something happens to you he's totally set and then if you start having babies same situations in place you've got the insurance to take care of your

family and that's what you need and this little life insurance policy with state farm is a bad savings plan it's called whole life and it means they rip you off your whole life. That's why they named it that. So, now, don't put money in that stuff. It's trash. Put money in good investments like mutual funds inside your Roth IRAs and those kinds of things, and you'll go a lot further if you do that. Hey, thank you for the call.

Congratulations on your great start. And your mom meant well. I'm not making fun of her. I'm just making fun of what she got sold. She had a good heart. She just did the right thing the wrong way. Haven't we all done that? This is The Dave Ramsey Show. Thank you. Let's talk about low interest rates, baby. I know right now that Churchill Mortgage can get qualified buyers into a 15-year conventional loan for well under 4% with no discount points or no hidden fees. Listen, if you're even thinking about buying a home or refinancing, do it right now. These rates are incredibly low.

Here's what I'd like you to do. Take 10 minutes and call Churchill Mortgage and see what you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can afford, now's the time to make the move. That's why I'm sending you to Churchill Mortgage. I trust them to look out for you and your budget. Don't miss this opportunity. You can secure these low rates now for up to 90 days through Churchill Mortgage. Go to churchillmortgage.com or call 888-LOAN-200. That's churchillmortgage.com.

NMLSconsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. you know one of my favorite things is debt-free screams here on the show and they are yours too according to all the things you tell us in the surveys and the way we track what you do but you know why we like debt-free screams is not only because the burden and the stupidity of the past is behind us but we like debt-free screams because it's time to turn the page to a new chapter, Baby Step 4 chapter. Now it's time to head towards everyday millionaire status.

Now, that's when you get to live like no one else, so later you can live and give like no one else. Up until Baby Step 3, you're on beans and rice, rice and beans gazelle intensity, right? But once you break through and you're on Baby Step 4, that's when you start to enjoy yourself a little bit. You start to give a little more. You start your investing, start your kid's college. Baby steps four, five, six are running. And so we decided for baby step four and beyond, we were going to do the live like no one else cruise.

It is in just a few weeks here in March. And some, we had it completely sold out within 27 days but some of the people that bought tickets of course didn't follow all the way through they had life stuff come up and weddings or something and they had to cancel out and they you know in time to get their deposit back or whatever but now we're at the last minute and so whoa whoa that means you can get a deal yeah so you need to check on the Ramsey Cruise. There's about 50 or 60 cabins right now opened up because of people that didn't take them in the initial sellout. And all of our Ramsey personalities are going to be on there.

Stephen Curtis Chapman is going to be on there. Oh, my gosh, everybody. It's going to be an – Jeff Foxworthy is coming. It's going to be a blast. And so it's going to be a great cruise, too. It's Turks and Caicos, Puerto Rico, St. Thomas, Private Island on the Bahamas. And it's a brand-new ship with Holland America. This is first-class everything.

You don't do it on the cheap sea. No pun intended. SEA, cheap sea. Did you get that? You don't do that while you're on Baby Step 4. You go to the good stuff and so that's what this what we're gonna have a blast i'm looking forward to this all of us are gonna be on there all the ramsey personalities a bunch of ramsey folks a bunch of ramsey family

hey it's gonna be absolute fun so check out ramseycruise.com don't miss the boat see what i did there don't miss the boat yeah there's only about three weeks left and i mean it's march the 20th so what is that a month and some change right so you really do need to get on this because we're down to the last minute and there's going to be some discounts and stuff available so check it out because we got to get her sold out again ramseycruise.com. Jessica is with us. Jessica is in Ohio. Hi, Jessica.

How are you? I'm super nervous, Dave. How are you? Better than I deserve. You'll be fine. We've never lost a patient. Oh, there's still time. Okay.

So I'll just be quick. I own a business. So I'm trying to balance the baby steps while running my business. My boyfriend is accusing me of being daze-ish, so I'm hoping you can give some insight to what I should be doing because I have to run two sets of books. A business has to stay open, and so the income comes into the business. The business pays its expenses not any personal

expenses business expenses and the difference in revenues and expenses is called profit right yeah when that profit comes home you apply it to the baby steps where in this are you being ish so i opened my business last year and pretty much put 90 to 95 percent of the profit that i would have brought home back into the business okay so now in 2020 um i'm trying to bring more money home obviously because i can't live on nothing forever there you go um so i have eight thousand dollars in my savings account um at the office or at home at home but i don't have a business savings account okay i just run a one person so what what kind of business are you in i run a permanent makeup studio okay and what kind of business are you in? I run a permanent makeup studio. Okay.

And what kind of money are you making, gross and net per month? Last year, it's so it's okay for the year. That's fine. What did you make last year? What do you think you're going to make this year? That's good. I made around $80,000 gross revenue last year. If I hadn't put everything back into it, just bare bones,

I would have brought home somewhere around $50,000. What did you buy putting in when you put everything back in? More makeup? I got a storefront, equipment, just the whole build out, everything. Okay, so what do you think you're going to net this year, 50? Hopefully more, but conservatively 50. Okay, all right. Good, that's nice. Okay, and if you bring all that home and you apply all that to the baby steps, that is not ish.

You do not keep a savings account at home, that is ish, but you do need a savings account at work. So the next, what I would tell you to do is take a percentage of your net profits each month and keep it as retained earnings. For instance, do your books each month and figure out what your net profits are each month. If you're not doing that, you need to do that. And close the books for the month after the month is over. And when you get ready to bring money home, say, all right, I'm going to bring home X percent,

and I'm going to leave Y percent in my business retained earnings. And I don't care what that is. I'll give you an example. You could do 85 comes home, 15 stays. 90 comes home, 10 stays. Okay? okay and so you would build up you would build up several thousand dollars in six months as a little bit of a starter retained earnings account by doing that um and then you'll be just fine there and i would cut the uh you know is your income ever zero or

is it really fluctuating it does severely fluctuate for example in january i won't bring any money home why that's the other just it's a slow month in the beauty industry so after i pay bills um i just haven't made it so why don't you why don't you uh put stuff on sale and create some business stir something up i do i i'm done no you didn't you didn't make any money um yeah you're right okay um i did make a few thousand dollars this month but it's covered bills yeah you just barely you know just barely stayed open all right well i don't want you to go broke by having no savings in the next three months okay so you may want to set aside 5k of that eight and just set it over in the business and take another two and throw it at your bills and keep one let's let's set five over in the

business okay and don't touch it yes sir okay and then and then let's just run 90 10 let's do that 90 comes home and whatever you bring home you have to set aside a fourth of that for taxes right correct you'll get in trouble all right so when let's say you have a set aside a fourth of that for taxes, right? Correct. You'll get in trouble, all right? So let's say you have a $10,000 profit month, which will be the biggest month you've ever had, a woo-hoo month, right? You're going to leave $1,000 in the account for retained earnings. You're going to bring home nine. You're going to set aside 25% of that for taxes,

and the rest of it's going on your baby steps. Have we got a plan? Yes, sir. All right, get after it. You're doing good. You're really doing good. Your business is sir. All right. Get after it. You're doing good. You're really doing good. Your business is booming. You're obviously good at it.

I mean, that's a pretty impressive startup that you can have that kind of gross, that kind of net in the second year coming out. I mean, you really are getting after it. So you continue to work like that, continue to grow, and in those down months, come up with some creative ways to keep the revenue flowing. You're going to be in really, really good shape, and you'll be able to clean up the rest of stuff so i think you just needed some fine tuning i i would not accuse you of ish i think your boyfriend might have been overly harsh uh issues when somebody half butt does something or makes up their own plan if you want to do that that's okay but don't call me up and tell me you're doing my plan and then tell me how you're not doing my plan. I will pounce on your butt. Okay, don't do that. If you want to do ish, that's fine. If you want to do your plan, that's good. You can have a plan.

Mine has a proven track record. Yours doesn't. So try mine. It works, but it's not, you know, and so ish is I'm kind of kind of make up my own baby steps. Ish is I'm going to keep some money in savings just because I'm a fraidy cat and I'm not really going to get after it with gazelle intensity and I'm still going to restaurants. That's ish. Okay, that's I'm not getting out. I've still got one credit card just in case because it's like your little baby security blanket.

Like your little baby couldn't get over its blanket. Some of you walk around with your credit card in your pocket just like that. That's all it is, is your emotional children. That's all it is. You can't, you cannot stand on the concepts and it's whipping your butt. That's what's going on. Hey, you got this. You can do it. You can do it. That's what Ish is, just in case. And Ish makes the whole thing a wish. Keep that in mind. She's not Ish. She's getting it. Proud of you, kiddo.

Keep after it. This is the Dave Ramsey Show. Business leaders, right now you have the opportunity to take your business to the next level this new year. You can start by hiring the right people to help your business grow. At Ramsey Solutions, we post on LinkedIn Jobs because they are the best at matching the right person with the right job. Thank you. post in front of qualified candidates who match your business requirements perfectly. That's how LinkedIn makes sure your job post is seen by the people you want to hire, people with the skills, qualifications, and other interests that will help your business grow. It's no wonder a hire is made every eight seconds on LinkedIn. So this year, set your business up to succeed. Get started today and get $50 off your first job post. Visit LinkedIn.com slash Ramsey. Visit linkedin.com slash Ramsey.

That's linkedin.com slash Ramsey. Terms and conditions apply. Jennifer is in Florida. Hey, Jennifer, welcome to The Dave Ramsey Show. Hi, Dave. Thank you for taking my call. Sure, what's up? I am on baby step two. I encountered a pretty serious financial hit in November that left me screaming towards your program. So I'm fired up and I'm ready to go.

So I have a household income of $100K and I have consumer debt of $90K. And then I've got, that part's simple, but I've got two rental properties with mortgages and other challenges that I need your help on. Okay. with mortgages and other challenges that I need your help on. The rental property, the first one is upside down by about $15,000. So I want to know kind of where to put that in the snowball. Do I kind of, because it's a long-distance rental and there are people in it and all that, do I kind of get rid of that kind of risk first?

What is it worth? It worth 78 is it going up in value i'm sorry i got my numbers wrong i'm sorry it's worth 78 and my my mortgage is 93 okay is it going up in value oh is it going up in value no so it's it's not going to get better over time? No, it is not. It is a duplex in a neighborhood of duplexes on the wrong side of the tracks, and it's getting worse over time. Gotcha. Okay. Tell me about the next one. House number two is my departure home.

I just relocated to Florida, and it is worth about $240,000. The mortgage is $183,000. So that one I have some equity in, but I've got two problems. One is it's going to cost about $5,000 to get it ready to sell, flash rent, do whatever. And the only reason I'm considering still renting it is because part of my relocation benefit with my company is tied to that house. When I moved here, I took the rental benefit,

the cost of living rental benefit for my company, which means whatever the differences in rent from my departure city, which was Huntsville, Alabama to my new city, which was Huntsville, Alabama, to my new city, which is Miami, the company will cover that difference for a small period of time. What is the small period of time? Even though I didn't rent, well, two years. Okay. So it's not so small.

But the thing is, because that was tied to what it would cost to rent my departure home. They tell me I can't sell that home. Otherwise my benefit disappears and I would lose. I'd have to pony up an additional thousand dollars a month if I sell it. So right now my lease here in Florida is not up until August, so we're looking at like $7,000 a hit. How large is the company that you work for? It's a pretty large firm. Okay. Like how many people?

At this office, 200, but nationwide, gosh, I don't know, probably 10,000. It's a very large law firm. Okay. So you're an attorney? Yes. Okay. I would talk to the exec committee or the HR committee about a waiver on this and just tell them you've got a mess and you need to get this house sold

and they need to pony up the difference anyway and see if you can't get a waiver. I'll bet you can talk them into it. And then, yeah, I'm getting rid of all this real estate as soon as I possibly can, as soon as is reasonable. What kind of debt is the 90? It's a 401K loan, credit card, student loan, signature loans, no cars. Nothing to sell. Actually, I have, I am going to sell, I have two cars myself that are paid off,

and I'm selling both of those and getting a Dave car. Okay. No, you're getting a cheap car. Your Dave car is after you get rich. Oh, oh, oh, okay. I'll throw in some dollars. Getting a cheap car, your Dave car is after you get rich. Oh, okay. Your finest automobile you've ever owned in your life is your Dave car. Okay, anyway.

Oh, gosh. No, people do that all the time. I just make fun of it. It's okay. It's okay. All right, so, yeah, anything we can do like that. And is there anything you can do to drive your income up? Do you have hours available to you or caseload or anything you can do to drive your income up you have hours available to you or caseload or anything you can do to get your income up um is this is i am not sure in this

new office yet um i will try but but i already have a plan in place actually to get rid of that 90 within the first year if i separate from the um How? From... Well... What are the two cars worth? My two cars. What are they worth? $21,000. Okay. I leave $70,000 and you're making $100,000.

Right. You're right. But no, but then I'm cashing in my non-retirement investments, and that's worth about another $20,000. Okay. I'm selling everything that's not nailed down. I've got fitness equipment worth several thousand. Good. Take the $20,000. I'm selling everything that's not nailed down. I've got fitness equipment worth several thousand. Take the $20,000 and get rid

of the condo. Or the bad duplex. Okay. So do that first. You're feeding it. It represents a continuous liability that's getting worse daily. The other stuff is very quantifiable, the consumer debt, and you're going to get

to it fast enough anyway. Let's get a waiver on the departure house, I think you called it, and get a waiver on the rent subsidy from HR and just say, Hey, listen, I'm not wasting the money. I just need to get rid of the stinking house. I'm trying to get out of debt. You guys help me out here. I'm on the Dave Ramsey plan. Let's see if that carries any weight.

We'll see in a law firm. All right, yeah. Hey, I think you got it dialed in. We'll see in a law firm. All right. Yeah. Hey, I think you got the dialed in. The good news is that you're paying attention now. Whatever knocked the crap out of you got your attention. And sometimes you just need to get knocked down to get your attention. I'm sorry that happened to you. I'm really glad you're paying attention because once you start paying attention, somebody smart like you, you're going to get it. You've already started to dial it in. All you're asking me is which knobs to twist and i'm helping you twist them a little bit i enjoy getting down in the sandbox with you and working on this but you're gonna do just fine you're heading in the right direction all right al is wait a minute al is next and he's up here if i can learn to push the

right button on this phone al how are you hey mr better than i deserve to be mr randy take my call i really appreciate it sure how can i help i love your show okay i'll make this very brief a couple of years ago i co-borrowed i know i'm stupid i co-borrowed on a car oh no for my ex-girlfriend oh my! For my now ex-girlfriend. Oh, this gets nastier. Every time you add a sentence to this, it gets worse. Oh, no! This is awful.

It gets worse. Okay. So she had a history of paying it late. I bailed her out a couple of times with past due payments. Now she filed for bankruptcy, Chapter 7. Yep. So who's liable for the debt? You.

Stupid. Mr. Stupid. Mm-hmm. So I did some research, and I found out because I co-borrowed, not co-signed, that I have some rights to the vehicle. The name? Your name should be on the vehicle. My name is on the vehicle. My name is on the contract.

My name is on the vehicle. Are you on speaking terms with said chick? No. Oh, crap. So I went to an attorney. I got a consultation with an attorney, and he just told me, listen, just go get the car. It's your car.

She's not paying she fought for chapter seven she filed a reaffirmation to keep the debt and it was denied in the bankruptcy court yeah i want you to get a second opinion i'm not an attorney but when you go just pick something up out of someone's driveway that starts to sound like grand theft auto to me. And I really don't want you to end up with a, uh, yeah, like a felony or get shot or something like that while you're doing this. And the other thing is if the, if she's in a bankruptcy, there's what's called a stay on all creditors and injunction on all creditors. and you, my friend, are a creditor. And I think you picking up and repoing the car might be considered an action against the bankruptcy court, and that's

federal bankruptcy court. There's two possibilities here that are really negative for you. I think you need a second opinion on your attorney there, like a different one, because I think he's scaring the crap out of me. Listen, I'm all about taking action and being bold and all that. I'm not about going to jail. And so let's just kind of balance this out. Scary. What's the moral of the story? Never co-sign.

And never, ever, ever co-sign for your girlfriend. This is the Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money. And the perfect place to do that is on board our first ever live like no one else cruise in March.

That's right, just a couple of months away. But get this, it's not too late to book your cabin, so don't miss your chance. This Caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to ramseycruise.com today to reserve your room. Luciana is with us. Welcome to the Dave Ramsey Show, Luciana is with us. Welcome to the Dave Ramsey Show, Luciana. Hi, Dave.

Thank you for taking my call. I didn't think I was going to get through, but I was seeking your advice on something. I am thinking about quitting my full-time job to pursue my business full-time. I have a pretty good job, pretty good income. And basically, I am getting very tired of corporate America. And I don't believe what I do, not what I do, but where I am today.

I don't believe it's for me. I don't feel like I'm ever going to be happy. So I wanted to see. So what do you make of your day job? With bonus, about $200,000. Yo! Combined with my husband, $250,000. What do you do?

I do cybersecurity. You do what? Cybersecurity. Cybersecurity. Okay. And what's the new side hustle? Cybersecurity consulting. Oh, good.

And how much are you making already on the side? I own it with my friend, friend slash mentor. And so far up to today, because we're only doing it with my friend, friend slash mentor, and so far up to today, because we've only been doing it part-time, close to $80,000. But all that money has been reinvested into the business. I'm sorry. You did this with a friend? With my friend, mentor, yes.

We own the company together, yes. Oh, yuck. I hate partnerships. The only ship that won't sail is a partnership. Why did you do it together? It was his business originally, and then he brought me in. So I own a percentage of the business. Yeah, so you don't have any control at all because you don't

own it you don't own it i don't have uh i don't have uh the majority no yeah so he can just decide to do anything he wants to do and you you legally have to go along with it yes yep theoretically yeah no not theoretically that's the dadgum facts yeah you're you're jumping out of the fire into the frying pan i love the idea that you told me about this i mean if you told me you were making 80 on the side and i was going to tell you to turn it up and go make 150 on the side and then jump ship and into your own thing yeah that's great let's do that but into something you don't even own half of, where he can just decide tomorrow that you don't work there anymore.

You are in a very disadvantageous position. You have a very, very weak position. You are little more than an employee. Danger. Danger. Danger more than an employee. Danger, danger, danger, danger, danger. Yeah, I would go out on your own, but I would go out on your own if I were you and go build something and then leave corporate America. That's what I would do. I don't think you're going to listen to me, but I'm going to get to talk to you later when this falls apart after you don't listen to me. All right, Christopher is up next. Christopher's in New York. Hi, Christopher, how are you? Hi, Dave, how are you? Thank you for taking my call. Sure, what's up? I have three properties. One is my primary residence. The other two are investment properties. I have no other

debt. All three properties do have mortgages on them, and I need to know where to put extra money that's coming in. Should I put it towards my primary residence, or should this go towards the investment properties? What's your household income? Household income is about $180,000. Good for you. What's the balance on these puppies? So my primary home that I live in is around $100,000 that's left on it. Home is worth about $200,000. One property is worth about $50,000. There's $25,000 left on that.

The other property is worth about $75,000, and there's about $45,000 left on that one. Okay. Normally, all things being equal, which they're not here, I would tell you to pay off the house first. But you've got two little dinky butt mortgages that are a little more than a car payment. So I'd probably just knock them out and then knock your house out. I'd probably just debt snowball this smallest to largest. It's okay if you do it either direction. But it's just like making $180,000, you're going to knock $ gonna knock 25 out so fast it's gonna feel good

you know yeah yeah and i max out my 401k max out uh roth ira that i have good good so i have all this extra money coming in and i've been putting it towards the house and a little bit towards the rental properties yeah um i don't care which one you do but i would focus exclusively on one until it's done and then on another until it's done and then on another. Okay. All right. Sounds reasonable. Thank you. Yeah, you'll want to see the traction that the focus will create. But, and really, I mean, $25,000, you'll be done by probably summer. I mean, with your situation.

So, I mean, maybe not quite that fast, but by fall anyway. And then you do another one, and you've got those two paid for, and they're cash flowing like crazy because they don't have any mortgages, and they're not very big, but they're going to make a little bit of money. All right, Brent is with us. Brent's in Kentucky. Hey, Brent, welcome to the Dave Ramsey Show. Hey, Dave, thanks for taking my call.

Sure, what's up? We've got a vehicle that we bought new back in May, and we started your baby steps in August of 2019. We are upside down, obviously, and we're trying to figure out a way to accelerate our debt snowball. So we're upside down on a private Kelley Blue Book about $6,000 on what we owe versus what we could get. And I'm trying to figure out the best way to approach that. What's the total load?

$38,000. On that car? Yes. Good Lord. Okay. And what's your household income? About $120,000. Okay. And how much other debt have you got other than this $38,000? Other than the $38,000, we've got roughly $16,000, $17,000.

Okay. Other than the house. Now, that's not counting mortgage. Okay. And who do you owe the $38,000 to on the car? Who's the lender? It is a federal credit union in Indiana. Awesome.

Okay. You might talk to them about just letting you sign a note for the difference. Okay. Because they have an unsecured loan. They have an unsecured loan for six and a secured loan for 32. They just hadn't admitted it yet. Right. We've got a pretty good, I mean great it's a 5.4 interest rate i

don't care what the interest rate is we need to get rid of this thing right okay that's why i was because i didn't know if we took out a loan um for the remainder if the interest rate would hurt us more than no because you're gonna have six thousand dollars in debt instead of thirty eight thousand dollars in debt i mean you're not gonna you're not gonna quadruple the interest rates if you go to from five to seven or five to eight, it's not a big deal. The nominal dollars created here, the actual math dollars, are not that big. And you're going to knock the crap out of the rest of this because you've got a good income. There's just this one big wart in the middle of it, and it's this car.

Right. Yeah, we've paid $10,000 on our snowball since August. Yeah, yeah. So, I mean, we just want to get this thing out of the way, whatever we have to do to – What are you going to drive when you get rid of it? I don't know. That was another, you know, I don't know whether we should save cash or, you know, because we have two kids, so we need something, you know, fairly –

and we get some winter weather here, too, so. Yeah, so, I mean, maybe you maybe you borrowed 10 grand from the credit union to cover the six and a four thousand dollar car but you still went from 38 to 10 right right and that's still a better situation and it clear you know it's a big that's a big move so this is not moving from 13 000 to 10 000 it's moving from 38 to 10 you to 10. So that makes it worth getting that loan arranged and getting rid of this thing. And, yeah, that thing's – it's the glaring problem in the list of things you gave me that you're working on. So you've got it dialed in. I can hear the way you're talking about it.

You've also figured that part out, and it's just a matter of best way to move on this. You can just pay down the six and keep the car for a little while longer or you could borrow 10 and dump the car and get you a you know get you a four thousand dollar car that's reliable a little bit of four front wheel drive or something since you get some weather and two kids and all that uh and uh you get a lot of car for four grand if you watch what you're doing so again this is not like some a permanent we're never going to drive four thousand dollar cars the rest of our life some of you want to do that that's okay that's not what i teach i want you to drive like no one else so by god later you

can drive like no one else i want you to drive junk your whole life drive junk so you never have to drive junk again that's the idea i don't drive junk now, but boy, I did for a while. Some embarrassing crap I had. Wow. This is the Dave Ramsey Show. Hey guys, this is Blake Thompson, Senior Executive Producer of the Dave Ramsey Show. Did you know over 15 million people listen to The Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country. To find a station near you, head to DaveRamsey.com slash show.