The Ramsey Show - App - Don't Buy a House When You're Broke (Hour 1)

Episode Date: January 17, 2019

The show about you

Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888 eight two five five two two five that's triple eight eight two five five two two five you jump in we'll talk about your life and your money megan starts off this hour in minneapolis hi megan welcome to the dave ramsey show hi dave i'm so excited to talk to you today. You too. How are you? Better than I deserve. How can I help?

Okay, so I just wanted to start off by saying I am finishing Baby Step number two this month, and I couldn't be more thrilled. Good. But I do have a bit of a different question for you today. So in order for us to be able to get to where we are with paying off all of our debt, my husband's brother and his family moved into our house about six months ago, and we're currently sharing all of our expenses in the home. My question is, this is a minimum of a five-year plan for us, but when they go to move out, I feel or I believe that it's fair that they be incentivized for paying

half our principal on our mortgage, how would you go about incentivizing them? They're going to live with you for five years? Yeah, we all want to knock through all of our baby steps and live like no one else, so we can live like no one else later. Wow. I have to say out loud i couldn't do that uh but if you want to if you want to it's your choice um i don't really have a precedent for what would be fair to someone living in your house for five years and sharing your expenses uh they're getting a deal are they not i mean like half rent what they would pay

somewhere else right right okay and they knew when they moved in that it was they knew when they moved in it was your house right i don't know that they need to be incentivized with half of your principal they're just paying you rent i don't i don't incentivize a renter that moves into a rental house with giving them a kickback for the principal they're paying off because they're not paying off the principal I am. I'm using their money to do it, but the income off the rental house. But this income, they moved in because it lowered their expenses overall. You allowed them to move in because it lowers your expenses overall. One of your expenses happens to be your house.

So, no, I don't think that's necessary. Again, it's hard for me to wrap my brain around it because it's just not something I would do. But I'm not saying it's bad to do it. I'm just saying I wouldn't do it. But I'm not even sure I like my dog living in the house with me. But, oh, my gosh. And I like my dog living in the house with me, but oh, my gosh. And that's my dog. I'm kidding.

Not much. Now, no, I would not incentivize them. I wouldn't do that. But if you want to, it's okay. But you're asking my opinion, and I think they're getting their deal by reduced expenses. Camille is in Atlanta. Hi, Camille. Welcome to the Dave Ramsey Show.

Hi, Dave. How you doing? Better than I deserve. What's up? Good. So my student loan, well, my private student loan is under default right now, and they are offering me a settlement at $48,000, which is not what I have. I actually feel like a good number to give them back is about $20,000, anywhere from $15,000 to $20,000, which is not what I have. I actually feel like a good number to give them back is about $20,000,

anywhere from $15,000 to $20,000. I still don't have that. So my question to you is, my roommate and I, we've been long-term roommates. We're looking to purchase a home next year as the rent keeps going up here. And I make about $90,000 a lot i have money um i paid out most of my debt so only ones left are the student loans um and so my question is if i purchased a home with her do you think it's a good idea to go into purchases home with the idea of paying it off no once we sell it no it is not a good idea to purchase a home with a roommate. Absolutely not.

Why not? Because everything that can go wrong well. We call them the D's. You're forming a partnership. Divorce, default, drug use, disinterest, disability, death. Any of those things occur. The other one of you is screwed because you're attached at the hip with handcuffs called a home mortgage, and there's no easy way to get out of that. Very, very bad idea to buy a house with somebody you're not married to.

So, no, I would not recommend that. And you don't need to buy a house anyway. You've got the student loan debt you've got to clean up. How am I going to get the 20K or 48 or whatever? Why would you be buying a house if you're too broke to clean up how am i going to get the 20k or 48 or whatever why would you be buying a house if you're too broke to clean up your debt yeah my my goal was to maybe purchase a house and then in five years sell it hope and then with the with the prayer that it it makes me money yeah and then that's that's a good way to lose money is to be in a house when you're broke so now let's let's get the things in the right order.

The right order is we need to clear up our debts, build an emergency fund, then save a down payment. You make $90,000 a year. You can afford a house when you've gotten your debts cleared. And so what is the balance on this private student loan, the total balance that they say you owe, total, not what they're offering to sell? So at the moment, because I'm in the forgiveness of the interest rate program or whatever, and it's in collections, but anyway, it's $96,000.

And they're offering to settle that for $48,000. Something like that, yeah. $0.50 on the dollar. People settle for less, just more debt. And it's a private student loan. It's not a federally insured student loan. Right. These are the privates, even though the federals are about the same amount.

But I just haven't gotten around to figuring out what the best way to talk about it. Oh, you have another $90,000 in student loan debt that's federal. That's $112,000 by this time. That's in addition to the private. Right. What is your degree in? Sociology. Sociology, and you spent 200 grand it with all of the interest and everything

um and a year's worth of um graduate school yeah wow okay well the good news is you're making 90 so that that's just going to take you a while to clean this up you need to rent as cheaply as you can possibly rent get on beans and and rice, rice and beans. And one of my very first goals, how much do you owe on your car? $80,000. I'm sorry, $8,000. I'm going to be paying that off in the next six months. Okay.

I want you to list all of your debts, smallest to largest, pay minimum payments on everything but the little one, attack the little one. When you get to a $25,000 number on that debt snowball, you save up $25,000 and you offer it to the private student loan and see if you can clear them. You're not going to get settlements on the federal. The federally insured do not settle. They will waive some late fees. Sometimes they'll waive some interest and other miscellaneous collections charges,

but they will not waive the principal because it's federally insured. The federal government is going to give them the principal if you don't. So they do not settle on that part. But, yeah, you need to clean up. You've got a ways to go here. I mean, you made a pretty good-sized mess. And so get your car paid off. Let's work through the private student loans, work through the federally insured student loans. And this is going to take you a few years.

But you need to rent something as cheap as possible. You definitely do not need to buy. And you for sure don't need to buy with a partner, with a roommate. Danger, danger, danger. Don't do it. I hope I talked you out of that. I don't know if I did or not. This is The Dave Ramsey Show. Your goal this year is to get rid of your debt, but here's the deal.

In order to keep your momentum going past January, you have to make small changes that get quick results. That's why you need to attack your debts smallest to largest. I also recommend you look for ways to find extra money to pay off your debt sooner. It's there, I promise you. Take a look at your mortgage. If you call my friends at Churchill Mortgage and request a five-minute checkup, they can help you find extra money. Churchill Mortgage Checkup has helped thousands of my listeners save big. In just a few

minutes, the Churchill team can tell you how much cash they can potentially save you or they can restructure your mortgage to pay it off early. Become debt-free in 2019. Call Churchill today at 888-LOAN-200 or visit churchillmortgage.com for your Churchill checkup. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Well, it's the middle of January. It means a lot of people are making goals for their money right now.

And there's a couple of types of strategies that you need for your money if you're going to win. You need to have offense and you need to have defense, just like a good football game. Offense is creating the budget, building your emergency fund, paying off your debt. Most people forget about the defense, though, and that's insurance. Now, insurance, most of us hate insurance. It just feels like I'm just throwing money out the window of the car driving along the interstate most people just don't and but but we know we need it because man if you don't have it when something happens boom you got a mess you don't have health insurance

you got a mess right you don't have car insurance you wreck your car it's on you got a mess and so on so it's not there to make you wealthy, but insurance is there to transfer risk. It's there to protect your money. And you don't feel like you're getting any traction. And some of the insurance agents out there agree with me on the stuff I teach. Some of them don't agree with me on what I i teach but that would be just the guys that are wrong so let's start with some basics you do need life insurance if you have a family that depends on your income term life insurance you do need health insurance everyone needs health insurance i had a guy call the other day he had fifty six

thousand dollars in medical bills and his com i said why didn't you have health insurance i couldn't afford it i said you couldn't afford to be without it cost you fifty six thousand dollars yeah i know that now yeah that's the deal so So you need health insurance. Obviously, you need auto insurance. Obviously, you need homeowner's insurance, which covers your home. Now, a lot of people rent and don't have renter's insurance. Your landlord does not have, cannot have coverage on your stuff. They do not have an insurable interest. You have to cover a contents policy when you're the tenant.

And it's absolutely vital. And it's very inexpensive. You need to get that. Long-term disability insurance. Everyone needs that. And identity theft protection. And those that are over 60 need to look at long-term care insurance. So with some of these, you can get your costs way down when you get your emergency fund fully funded. I carry a $5,000 deductible on my cars. Well, I drive expensive cars that are

nice and paid for, but that keeps my premiums way down. Some of you are carrying a $250 deductible on your car. If you'd raise that to a1,000, you'd see your premiums drop dramatically. Now, when you do that, if you go from $250 to $1,000, you are picking up an extra $750 in risk. And so if that cuts your premiums by $75 a year, that means you have to drive for 10 years and not have a wreck not likely depending on where you live right well i didn't have a wreck i know but you're probably overdue so the thing is you know people run into you you run into people stuff happens and so here's the thing if you take a 750 extra risk though and it saves you 300 a year well that's like two years and you've got your money back, right? So you need to do that.

Now, if you are starting to build some assets, you're heading towards everyday millionaire status, you're starting to have some money, you need to look at an umbrella policy. A couple of hundred bucks, two, three hundred bucks a year, you can get an extra million dollars in umbrella coverage for liability on your car, uh insurance and it's just 250 300 a year in most areas and it's really really a good idea i carry a 10 million dollar uh umbrella policy on me because if i bump into somebody they grab their back and go oh god dave

ramsey hit me i'm cashing in right and so i to, you know, it's just the way it is out there, people. So the deal. Now, what you don't want to do is the gimmick insurances. You want to avoid accident insurance and accidental death insurance. Listen, if you die, you're dead. That's how that works. It doesn't matter how you die. You can be walking across a parking lot and get hit by a car you can be walking across the parking lot and die of a heart attack you're still

dead both ways your family still needs to replace your income and the exact same amount regardless of the cause of your death you're not like double dead if you die by accident and so i get twice as much if i die by accident i'm more likely to die by accident that statement says i think i'm beating the insurance company at their game you're not if some if insurance is cheap it's because there's a very low likelihood of the thing occurring because they don't lose money they know what they're doing so you don't need twice as much insurance when you die by an accident you don't lose money they know what they're doing so you don't need twice as much insurance when you die by an accident you don't need cancer insurance a lot big gimmick insurance a lot of people buy cancer insurance you have health insurance it

covers cancer if it doesn't you need different health insurance you don't need heart attack insurance because your health insurance covers heart attacks you don't need heart attack insurance because your health insurance covers heart attacks you don't need kidney stone insurance because your health insurance covers kidney stones or it should okay and to my knowledge they're not offering kidney stone insurance but it could happen you never know you don't need cell phone insurance if you cannot afford to replace your cell phone you shouldn't buy one this is an inexpensive item seriously comparatively speaking don't buy extended warranties another kind of insurance they're all about the profit 75 to 80 percent of what you pay for those extended

warranties is profit just and marketing costs just stay away from it absolutely a bad idea you don't need mortgage life insurance that pays off your mortgage if you die it's five times more expensive than term insurance so if you have a two hundred thousand dollar mortgage go buy a two hundred thousand dollar term policy or buy 10 to 12 times your income on you which would pay off your house likely almost always um and so you need to have term insurance in place to do that and i catch a lot of crap for this these days because but there's because there's such a craze over pets i love pets i love my dogs i cry like a girl every time they die i love my dogs my shih tzu was in my lap in front of the fireplace drinking coffee with me this morning he wasn't drinking coffee i was but it'd be a bad idea for that i'll drink coffee but yeah i love. I am not spending $10,000 to keep a dog alive.

It's a dog. Maybe that's old school, but you pet lovers think I'm heartless. I am a pet lover too, but it's a dog. Now, if you've got tens of millions of dollars and you want to spend $10,000 to keep a dog alive, that's fine. But I'm not doing it. I'm not spending $10,000 to keep a dog alive, that's fine. But I'm not doing it. I'm not spending $10,000 to keep a cat alive, for sure. Cats are just, well, anyway. Yeah, so whatever.

I mean, you don't need to spend money for chemo on your parakeet, okay? I'm sorry. I know that hurts some of your feelings. I know some of you have gotten your lives twisted up about this stuff but pet health insurance i don't buy it if you can't afford to spend a certain amount of money on the dog or the cat to keep it alive and keep it well maintained then you shouldn't have a pet and then then you need to put a limit on the value of this pet's life. Oh, that just sounds so mean. I know it sounds so mean, but I'm just like what's known as a grown-up. And so I have to address these situations.

And you guys got to decide. You can decide. And if you want to spend a bazillion dollars to keep your puppy alive three more weeks that's fine you can do that i ain't doing it i love the puppies and they go to puppy heaven and it's all good life goes on i've you know i've outlived a whole bunch of them by now i've had 10 dogs in my life so far, and I'll probably have about 10 more before I'm gone. I love them, but I outlive them. And so you've got to think about this stuff. So be aware of the gimmick insurances out there, but be sure you have good defense, term insurance, health insurance, auto insurance, homeowners insurance, long-term disability insurance, identity theft, maybe an umbrella policy.

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Do not wait until it's too late and you have to go through this nightmare on your own. Go to Zander.com. In the lobby of Ramsey Solutions, Dakota and Hattie are with us. Hey, guys, how are you? Better than we deserve, Dave, how about yourself? Very cool. Is it Hattie are with us. Hey, guys. How are you? Better than we deserve, Dave. How about yourself? Very cool. Is it Hattie?

Did I pronounce that right? It is Hattie. And where do you guys live? We live in Henderson, Texas. Oh, very cool. Welcome to Nashville. And all the way here to do a debt-free screen. Yes, sir.

How much have you paid off? Just short of $50,000, $49,849. Love it. How long did this take? 23 months. Good. And your range of income during that time? We started at 34,000, went up to 80, and back down to 70. Wow. What do y'all do for a living? We're both teachers. Oh, good. Good for you. Very cool. So what kind of debt is the 50,000? We had a credit card. Well, somebody had a credit card. We had a car loan, and we had a credit card well somebody had a credit card uh we had a car loan uh and we

had student loans okay very cool how long have y'all been married two and a half years okay so you got married and started this plan yes sir tell me about that tell me about the journey what caused you to do this well we took fpu uh as part of our pre-marriage counseling oh very good best decision we ever made super excited about it cool um and and hattie wants to speak on that yeah i was not um a huge fan my mom had told me about you but i wasn't really on board i thought i knew everything i was a teenager at the time and so anyway i um met him and we um started talking about it and went to the class, and I joined on board. So we wouldn't go back to save our lives now.

I hear you. Very cool. Good for you. So how old are you two? I'm 29. I'm 25. Perfect. Okay.

Well, congratulations. Thank you, sir. Very, very cool. Big accomplishment this early in your marriage. Yes, sir. We're very proud. Yeah, you should be. You should be.

Very good. So what do you tell people the key to getting out of debt is? The biggest thing for me is communication and budgeting, planning, and having that, you know, just knowing where your money is going. That's the huge thing for me. Mine is patience. I don't have a whole lot of it. I'm the nerd. I'm the saver.

And we went from arguing about $5 being spent, and so it tested my patience. I had to develop patience. And so that's one of the biggest things for me. Okay. So you got on the plan. You're working together. You're learning to communicate over this early in your marriage, stuff people don't do sometimes for decades. Yes, sir.

Yeah, very, very cool. Who was your biggest cheerleader? Probably my dad was probably the biggest one. He kind of got us started on this after my oldest brother brought you up probably five years ago, and we just thought he was crazy. Little did we know. But yeah, he's our biggest cheerleader, and then both of our parents are magnificent and have supported us the entire way.

Very cool. Very good. So you've got a lot of family pushing you. Yes, sir. Yes, sir. Good stuff. Very fun. Well,. So you've got a lot of family pushing you. Yes, sir. Good stuff. Very fun. Well, congratulations, you guys.

Thank you. Really well done. What was the craziest thing you did to get out of debt? Craziest thing we did? We moved three different times. I drove a little hoopty, a 1987 Suzuki Samurai. Oh, my God. What a horrible car.

It's about yay wide. Yeah, that What a horrible car. It's about yay wide. Yeah, that's a horrible car. But it was awesome. I got more compliments on it than I believe anybody on a Jaguar gets. It was fantastic. So I drove that for a while to save money, and we really enjoyed it. Yeah. What did you pay for that?

It's actually my parents. They owned it. My car got totaled one night, and so they let me borrow it, and I drove it for probably three years. Okay. All right. Because it's all tricked out. I just saw the picture of it come up. Oh, yeah.

They won't sell it. When you first said that, I thought, Lord, what a disaster. But it's kind of cute. It is. It got a lot of compliments. We enjoyed it. It was a blast. Everybody wanted to buy it from us, but my parents won't sell it.

So you handed it back to them a little bit later on and bought a car for cash. And then bought a truck for cash. Love it. good well way to go you guys proud of you thank you thank you you are amazing fabulous stuff all right we've got a copy of chris hogan's uh everyday millionaires for you because you're on the way to being everyday millionaires that's your next step so very very cool stuff you guys started really early your ages again were what 25 and 29 and so when you started this you were 23 and 27 yes sir wow very good good stuff well congratulations dakota and hattie longview texas henderson texas area 50 000 paid off in 23 months making 34 to 80 to 70 counted down let's hear a debt-free scream.

One last thing, Dave. We wanted to announce that we've been holding this in for a while, but we are pregnant, expecting our first child in July. Whoa! Whoa! Whoa! So hold the phone here. So your parents didn't know? They do know.

They do know. They do know. The small family knows, but most of our friends do not know. All right. Very cool. Life is good as it gets. You guys, well done. All right, Dakota and Hattie, let's hear a debt-free scream. Ready, babe?

Yep. Three, two, one. We're debt-free! We're debt-free! Woo! Love it! Boom, boom, boom! I love it!

Fabulous. Absolutely fabulous. That is so fun. But you can't do what they just did. It's impossible. See, they don't really exist. We just made them up. They're a figment of our imagination and your imagination.

We know this because Yahoo Finance is reporting that nearly 25% of Gen Xers and millennials believe it's nearly impossible to pay off debt. It isn't surprising or new information that Gen X and millennials have higher debt loads than other generations. Mortgages, kids, parents to take care of, student loans, more financial pressure than any other generation. They're never going to make it. This is reflected in a survey. The lending division of sun trust bank wait a it's nearly impossible quote unquote to pay off significant debt i don't know if it's 50 000 significant if you're 23 years old i'd say that's significant. When they got married, Hattie was 23.

Dakota was 27. They're 25 and 29. They paid off $50,000 in 23 months. That's a long way from nearly impossible. Nerd wallet Kimberly Palmer says there's definitely cause for concern looking at their finances the takeaway is to motivate them to pay off debt especially the high interest rate debt it takes some motivation because there are steps to pay off debt faster thank you nerd wallet um appreciate that but we're meeting millennials Thank you, NerdWallet. Appreciate that.

But we're meeting millennials every day who don't think it's nearly impossible. As a matter of fact, they not only don't think it, they have proven that it's not nearly impossible. Is it difficult to pay off $50,000 in debt in your first two years of marriage when you make $70,000 or $80,000 a year? Yes. You sacrifice to do that. But you're living like no one else so that later you can live and give like no one else. It's a pretty simple thing, guys. Hope changes everything. And it is somehow a disease of the media

that it seems like the very things that they want to report on are anything that says there is no hope. There is no hope. It is nearly impossible, says a survey from SunTrust Bank. It is nearly impossible, says a survey from SunTrust Bank, to get out of debt as a Gen Xer or a millennial. And then I meet Dakota and Hattie. Well, there you go.

$50,000 paid off in 23 months. But it's nearly. You getting the idea? I mean, this is just stupid, y'all. It's just stupid. These young people are on fire. They can do anything they want to do once they believe that they can do it. And this show and the Dave Ramsey team believes in you. We're proud of you. We know you can do it. And this show and the Dave Ramsey team believes in you.

We're proud of you. We know you can do it. This is The Dave Ramsey Show. Thank you for being with us, America. Alicia is with us in Rochester, New York. Hi, Alicia. How are you? Good. How are you?

Better than I deserve. What's up? I want to thank you for the opportunity of speaking with me. I have a 16-year-old, and unfortunately, we have not put money aside for college. Do you encourage putting college on hold until there's enough to pay for in cash? What do you suggest? Well, you're 16, you said. No, my daughter is 16, just turned 16.

Oh, I'm sorry, your daughter is 16. Okay. I think you guys can make it. It just is going to be all about college choice, and it's going to be all about her working. So there's three or four things we do. The biggest mistake that people make when they're in a situation like this is they choose a college they can't afford. And so she needs to go to in-state, and she may need to do her first year in a community college. Very inexpensive. in-state and she may need to do her first year in a community college very inexpensive and knock out some of the basics and just make sure that they're the she's taking classes that

are transferable to the in-state state institution okay and go ahead and price that stuff out now once you've done all of that then you can start to set your goals and say, okay, how much extra work have we all got to do? Because that's the second thing. She's going to be working a lot, and she's not going to be working a minimum wage whopper-flopper job. She's got to make more money than that. She's going to be nannying or waiting tables or walking dogs. I don't know what she's going to do, but she's going to be doing a lot of it between now and the time college starts

and all the way through college, which, by the way, is not child abuse. Most of us worked while we were in college. Right. Okay. So if she's working, let's just pretend for a second. I'll just make up something. Okay. She's driving for Uber.

You drive for Uber. You can make $1,500 a month, but you're driving almost every night. I'm not saying that's what she would do, but there's part-time jobs out there like that that you can do. And if you can make $1,500 a month, that's $18,000 a year. If tuition is $9,000, we can cover tuition and some of the other stuff, and you and her dad hopefully can chip in some. You're getting on a budget, and you'll be able to throw some at it as we're going along. But we've got to have a plan to make more than the cost of tuition and housing while we're in school, and really, to get the first year started,

before we get to school, we've got to have that first year. However we're doing that, whether it's community college or whatever. Is there a college, a university there in your town? Yes, there is. Right? Yeah. Now, she may be living at home and going to that one. It's cheaper.

Okay? Right. okay so the point is the point is you might not have the all cushy wonderful sweet with hearts around it and skittles and unicorns college experience oh i wanted to live on campus well that's nice but we're not talking about your college experience we're talking about your education we're trying to put some knowledge in your noodle that's the main thing are you going to learn something and get a degree and And then all the other stuff is window dressing. And if you've got the money for window dressing, that's fine. But if you don't have the money for window dressing,

most people spend more on the window dressing around the college experience than they do on tuition. They go rent an apartment with a skylight, a jacuzzi, and a racquetball court, and they're freaking 18 years old. They get a car with a car payment, because I have to drive back and forth, and they eat out every night, and they join 63 different sororities and fraternities and clubs and crap. And there's nothing wrong with all that as long as you've got the money.

But if you finance all of that on your student loans and you come out with $60,000 of student loan debt that you spent 100% of that on the experience, well, that's just not wise. And that's what most people do in these situations. So I think you can do this. As a matter of fact, I'm sure you can do this. So thanks for calling in. Open phones at 888-825-5225 john is with us in baltimore hey john how are you fine thank you for taking my call how are you better than i deserve what's up

how can i help i met your phone to your phone just recently i'm sorry your phone is cutting out. You're going to start again. Can you hear me, sir? Yes, sir. Okay. I have about $133,000 in debt. It is a combination of a ton of stuff.

And the embarrassing thing about this whole thing is I make $300,000 a year. Okay. I don't know. Like, I just don't even know where to begin and about eight months ago i started putting money away in um mutual funds and i'm down about five percent now my question is should i sell those to start paying the debt off. Yeah, are they in a retirement account? No, unfortunately, I'm 42 years old, and I don't have a retirement account. Okay. So I'm just not sleeping at night. So you've got $100,000 in debt. What did you say, $133,000?

$133,000. And what's that on? It's credit cards, personal loans, student loans, a car. It's everything. How much of that's car? I would say about $35,000, and we're probably underwater if I try to sell it right now. Okay. And you're married?

Yes. Kids? Two. Good. Okay. Wonderful. All right. So if you're ready to clean this up, we can do some pretty simple math here and say 65,000 a year out of 300,000 for two years and you're debt-free.

65 times 2 is 130. But what that means is you guys are going to have to quit visiting the land of stupid around there. You all have been spending money like you're in Congress. Pretty much, yes, sir. Yeah, you're going to get on a written budget, a detailed plan. You and your wife are going to sit down and talk about it. We're not going out to eat. We're not going on vacation.

We're freaking getting out of debt. But if you start chunking down $65,000 a year out of $300,000, you ought to be able to do that really seriously. I mean, come on. You'd be debt-free in two years, and a year out of $300,000, you ought to be able to do that really seriously. I mean, come on. You'd be debt-free in two years, and if you did more than that, you'd be faster than two years. But you need to be on beans and rice, rice and beans, and need to go to a radical change in your lifestyle and on your view of money, because right now you're trying to out-earn your stupidity. Pretty much.

I tried it for years. I couldn't do it. I don't know of anybody that could. Would you take the $20,000 that I have invested in those mutual funds and sell that even though it is at a loss to start applying to the debt? Yes, immediately. And any other money that I can get my hands on that's not in retirement, and I'm going to throw it at the debt.

And I'm going to list those debts smallest to largest. We're going to get on the every dollar budget on a detailed written plan with your spouse and get in attack mode. The $20,000 doesn't move the needle. But what it does do is it gets you started and it shows your emotional commitment to a new process. But you've got to reach the point that you've got to be sick and tired of being sick and tired. You started it because you're embarrassed. Embarrassed is a good place to start.

Disgusted should come from embarrassed. And disgusted, the next thing is you ought to just get pissed off and go, that's it. I am sick and tired of being sick and tired. I make too much money to be this broke. We're going to change this thing. And when you have that moment inside of you that's when the switch will flip and you'll be ready to rock and roll i'll send you a copy of the book the total money makeover they'll show you and your wife how to do this and you two need to

sit down tonight start talking about this get on every dollar download the budget app get the thing started you like you write down where your money should be going making 300 grand you're going to just throw up in the floor you're going to go where is it all going and you're going to have this moment of disgust followed by some righteous anger not at yourself i'm not trying to condemn you we've all done stupid stuff but you have to reach a point of disgust that says that's beyond embarrassment that says i'm not going to live like this anymore so hold on i'll have kelly pick up we'll send you a copy of the book the total money makeover to help you do it by the way folks the interesting thing is that's the formula for getting out of debt you got to get mad the madder you get at the situation, the deeper you will sacrifice. The deeper you sacrifice, the faster

you get out. Because sacrifice looks like working extra and spending less. We spend nothing because we work all the time. That's what it looks like. The madder you get, the deeper you sacrifice, the faster you get out. That is the formula. There's math in there. It works, guys. It works. You can wander into debt, but you can't wander out. This is The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show.

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