The Ramsey Show - App - Don't Let Credit Card Debt Freak You Out (Hour 3)

Episode Date: September 21, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Mike is with us in Portland, Oregon. Hey, Mike, how are you? I'm doing very well, Dave.

Thank you. Sure. And bless you and your team for all that you do. Well, thank you. How can I help? Well, I've been offered a very generous separation package for volunteering to be laid off. And I'm having a very difficult time trying to decide if it's worth it, you know, what is the risk. I just really like some help. Cool.

What do you do for a living? I'm an engineering technician. An engineering... I work in an engineering lab helping design and implement our electronic devices into our customers' products. Okay. So how hard is it to land that doing it somewhere else? Not terribly difficult if I'm willing to relocate are you and not as far as i would need to okay and what is your income um combined no what is your income what is your income oh um mine $78,000 last year. Okay.

What does she do? She's an electronics assembler. And what does she make? About $34,000. With the same company? No. Okay. All right.

And how old are you? 48. Okay. And what's the package? Basically, it is 10 months plus four months of paid insurance. Okay. And if you don't take it, you could still get laid off because the company obviously is struggling. Correct.

All right. And historically speaking, they've capped the severance at three months. Okay. So if you put 10 months in your pocket, $60,000, and you land another position of any kind, making $78,000, this is called a signing bonus right absolutely so how can we do that you're going to change you have to change careers if you stay in that location huh um no i would just have to step down um no i said said $78,000. I wasn't stepping down. Okay. How can we do that?

That's a really good question. Because I want this to be profitable. Absolutely. So my intention was to start school again in January and have this company pay for that school. But now I even question whether or not they would do that if I don't get laid off. Now, what were you going to start school to study? I was going to go for my business degree. To do what?

Well, honestly, I would like to become a financial coach. Okay. All right. Don't know that you have to have a business degree to do that. Okay. Depending on what kind of coaching you're talking about doing. I mean, if you're going to do the type of coaching we do, it would not require a business degree. It would just require the ability to do budgeting and so forth and teach people and, you know,

learn some of the basics of finance. But it doesn't require this in-depth, you know, you don't have to have a master's degree in finance to do the type of coaching we do. And I don't know what type of coaching you're talking about. If you want to go in and be a financial advisor, even, you wouldn't necessarily need to go get a four-year business degree. You would simply have to start learning the principles and taking some trade type classes like start studying for your cfp or something like that to start to get some of those tools under your belt

um you can do all of that without a four-year degree um either direction so okay that's promising you know i i think what i want to do is i want to try – the big thing here is, yes, I want to take this money, but I don't want to take this money and automatically make the assumption that I have to make less. I would rather take the money and make the assumption I'm going to make more. So what can I do to make $100 thousand dollars a year starting two years from now and what steps have i got to take to get there and um and then you go yeah i'm taking the money but if you're gonna make thirty thousand dollars a year for the next 10 years then you know i think i'm staying a while and keep making my 78 until they get rid of me maybe they'll turn the corner and you don't get rid of

you you know what i'm saying true so i the severance is not tempting enough to take it unless you've got a an exit pattern that's going to take you to a better place okay that's what i and that's what you've got to calculate your way through and game plan your way through and critically think your way through. But based on the fact I'm afraid I might get laid off anyway and I would only get three versus ten months, I'm going to roll those dice and stick in there at 78 grand until I have a better plan. But if you can come up with something where you go realistically, I think you're one, I can make 40, you're two, I can two i can make 60 year three i can make 90 uh that kind of thing doing x y or z then yeah let's take it let's let's reset the career let's have an encore career take a bow and move on uh i'm in then that makes sense but let's not start with the presupposition that this has to end up net bad for you. It needs to end up net good for you. That's the way I would look at it.

Nancy is with us. Nancy's in Cincinnati. Hi, Nancy. How are you? I'm fine, Dave. How are you? Thank you for taking my call. Sure.

What's up? Well, I'm an avid listener, but this is something I've never heard you talk about. And my husband has a friend who wants him to invest in digital currency called bitcoins yeah bet he does yeah and he's saying that you know i mean these are the red flags to me that you can take 20 bill and turn it into a massive fortune and says the deadline to you know enroll is september 30th but they say they claim it's gone up 56,000% in one week, and that makes me think it's a scam. It's a scam.

Okay, so what can you tell me about digital currency and Bitcoin? It's 100% a scam. Bitcoin is not 100% a scam. The numbers you just gave me are absolute BS. Okay. That's a complete scam. This friend of his is either a moron or a crook or both. Okay.

And you need to stay away from him. You need to run from him. Now, let's talk about Bitcoin as a separate entity and as a separate issue. I mean, Bitcoin is just cyber currency. And we don't invest in any currencies because you have absolutely no control over them. I don't invest in the yen. I don't invest in the euro. I don't invest in the dollar. I don't invest in the euro. I don't invest in the dollar. I don't invest in currencies because they're too volatile. They're up and down. Bitcoin is the most volatile of all because it's a complete, it's, you know, it's digital. It's complete. It's theory. It's complete theory. No, I would not put a dime in this crap in any situation ever. I wouldn't invest in

the yen. I wouldn't invest in the euro and I wouldn't invest in Bitcoin, not a penny. And I sure wouldn't. I wouldn't even have dinner with this guy offering 56,000 percent. This guy's slime is dripping off of him. You only take a shower after dinner. This is the Dave Ramsey Show. Hey, Spencer here from Smile Love. At Smile Love, we'll straighten your teeth and help you love your smile. That's what we do, and we do it for less than you'll find anywhere else. I guarantee it. I'm serious.

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smilelove.com, promo code Dave. Thanks for joining us, America. So one of our listeners sent this article in from the Portland Press Herald. I'm assuming that would be Portland, Oregon. I don't even know. I should look it up, I guess. Wife charged with setting couple's house ablaze. I'm not going to read you the whole article, but Philip Poulin told investigators he had talked with his wife earlier in the morning on the phone and confronted Rebecca about

credit card debt. Philip said out of frustration for an ongoing problem of credit card debt, he told Rebecca she would be out of the house tonight. Phillips believes that Rebecca is responsible for the fire. After she received the call from her husband over the credit card debt and the threat that she would have to leave, she decided to burn the home down and was suicidal the affidavit says um this is enough after hearing another credit card company about an overdue bill

philip pool and says i told her she had to leave and so this lady because of her credit card debt her husband's going to throw her out and so her answer is to burn the house down uh and the article goes on to say of course they'll get the insurance money no they won't you don't get insurance your homeowners doesn't pay if you are an arsonist and so this is like this house is just burned. And looking at the pictures, it's not a really big house to start with. Bless their hearts. What a mess. But, man, that's like an extreme weird out deal there. But, you know, people get freaked out, don't they?

The stress that's out there over debt, people getting credit card debt, and the stress it puts on marriages, usually you don't burn your house down. Physically, literally. Metaphorically, sometimes you do burn your house down. By doing stupid stuff, you just fritter your life away. That's kind of like burning your house down, right? In a sense, metaphorically speaking. So after arguing about finances, Rebecca Poulin allegedly told her husband that if she no longer could stay in their home, neither could he.

She's now accused of setting fire and destroying her family's home. Poulin, who lived in the single-story home with her husband, Philip, was arrested on Wednesday by the Office of State Fire Marshal after she was released from a hospital. Oh, this is sad. 65 years old. Charged with one count of arson, a felony. Sole person in the building. She had been outside gardening when other people alerted her to the blaze. Yeah, I bet.

So you light the house on fire, go out and act like you're gardening. Let's see if that'll work. We're going to play this off. Oh, my goodness. Wow. How many of us burn our own house down? Metaphorically. And then this lady does it literally.

Over debt. I guess that's why we're here. Dan is with us. Dan's in Atlanta, Georgia. Hi, Dan. How are you? Better than I deserve. How are you, sir?

Just the same. I said that at work the other day, because I've heard you say that before, and I said that to you. She said, you listen to that Dave Ramsey show, don't you? And you ducked your head and said, oh, yeah. Yes, I do. Hey, I got a tax bill last week from the IRS. We had calculated on our taxes, apparently, to the tune of $2,700. So my question, I guess, is I've been trying to save up an emergency fund. I've been listening to you off and on since the first part of the year, and I got an emergency fund saved up. So do

I give them $1,000 out of my emergency fund? Do I have some company stock that I have sitting around from my previous employer? What's it worth? The company stock, about $30,000. Okay. Well, I'd cash enough of that in to pay off a bunch of your debt and fund your emergency fund and pay this too. So you've got money laying there that needs to be repurposed, it sounds like, in general. But let's get that cleaned up. Did you prepare your own taxes?

Yeah, my wife actually does, yes, sir. Okay. She does. Are you 100% convinced that the IRS's assessment of this is correct? Well, no, not yet. At this point, my wife's been out of town until yesterday, and she's the one that does the taxes. So, first of all, I need to verify. With that much money involved, I might have a tax preparer that's professional look at it,

and even if they charge you $100 to confirm that this is correct, I'm going to feel a lot better about paying this after someone's looked over her shoulder on it. Not saying she's incompetent. I am saying the IRS is incompetent. Sure, sure. So, first of all, assuming that the debt is valid, that was my first question. You know, the tax professional is a question I had also, and you've answered that. Yeah, I would just go to one of our ELPs for tax prep

and ask them if they'll look at this for you and what they would go just go to one of our elps for tax prep and ask them if they'll look at this for you and what they would charge you just to look at it not do a whole well they might have to do the whole return over to look at it to be right but i i uh over the years i've gotten several assessments like that and then when we look into it the irs had made some assumption about some part of my return that the assumption was incorrect and we just had to give them clarity on the assumption that they were making, and then I ended up owing nothing. That's happened a lot, more than I even want to think about, actually.

I got a pretty substantial bill from them the other day that was one of those, and it was just like, no, we don't owe that. That's silliness. And so, you know, but let's verify that it's right. If it's right, yes, I'd use some of the stock to do that. That's silliness. And so, you know, but let's verify that it's right. If it's right, yes, I'd use some of the stock to do that. By the way, you got that much in stock, I'd use that to pay off. If you're in baby step two, pay off your debts. You know, yeah, but it sounds like you have some if you're in baby step one with only $1,000.

And if not, if you have no debts except a home, then I'd cash out enough of that stock to have my fully funded emergency fund of three to six months of expenses. So I wouldn't have my emergency fund in stock. And so I would cash the stock out to do the emergency fund in a money market. And in the process, yes, pay this bill. Kay is with us. Kay is in Washington, D.C. Hi, Kay. How are you?

Hi. I'm good. Good. How can I help? Well, my husband passed away in May. Oh, I'm sorry. Unexpectedly, he just dropped dead of a heart attack. We were talking one minute and the next minute.

Wow. He just worked out on the treadmill. Oh, my gosh. How old was he? 54. Wow. So, you know, this is probably something that your listeners need to hear because life does happen really fast. Amen.

It just slams right at you. But he prepared well. And I just have some questions because I'm confused. You know, we don't have any debt, but we do have a mortgage. I mean, that is debt, obviously. And I don't know whether to pay it off. You know, I've been to three different financial planners. They all want to sell me annuities.

No. They said, no, you shouldn't pay've been to three different financial planners. They all want to sell me annuities. No. They said, no, you shouldn't pay off the house. No. You know, and I'm just like, I'm totally confused because I don't know who to talk to. And I know that Chris's 401k was, he has that aggressively invested in stocks. And, you know, I know I need to change that somehow. And you have no debt. And how much is in the 401k?

I have the 401k, which is now an IRA, is $660,000. And it's in the same stocks? That's the one that aggressively is in the 401k. And it's your IRA.

Now an IRA. Then I have another IRA, which is aggressively. Okay, good. And it's your IRA. Okay. Now an IRA. Okay, and then I have another IRA, which is $235,000. Okay. And then I have cash of $550,000. From life insurance proceeds. Yeah. Okay. And how much is your home mortgage?

$319,000. Okay. How much is the payment? No, your payoff, $319,000. That's what I want. $319,000. Okay. Here's what I payment? No, your payoff, 319. That's what I want. 319. Okay. Here's what I would do.

Slow down. Slow down. Okay. You got caught off guard by a sudden tragedy. And you guys were married for many years. And I've been married for 35 years. If something happened to Sharon, I couldn't breathe for a while. You're just now getting where you can breathe, and it was May.

Yep. Don't feel under pressure to do a whole bunch of stuff fast. Okay. Just calm down, and as you understand it, do it. Two things I would tell you. Yes, I would pay off your house, but you don't have to do it today. You've got enough cash. I'd pay off your house immediately, but only when you're comfortable with that idea.

And the second thing is you need to sit down with someone with the heart of a teacher. I'm not trying to sell you something. Check SmartVestor at DaveRamsey.com. You'll find some of the people we recommend with the heart of a teacher to coach you through this and learn and go slow. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress.

And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice and I can tell you where to go,

but it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Greg and Alyssa are with us. Hey, guys, how are you? Hey, good, how are you? Welcome, welcome. Good to have you. Where do you guys live? Greenwood, Indiana.

Okay. What is that near? Indianapolis. Oh, okay. Indy area. Good. And how much debt have you guys paid off? $127,992.

Woo-hoo! Way to go. How long did that take? Just under four years. Three years, ten months. Way to go. Okay, good. And what was your range of income during that time?

We started at $72,000 and we're currently at $117,000. Not bad raise during a three-year period of time. What did you do to get all those raises? I became a high school principal. Oh, moved up. Yep. Okay, cool. Very good.

And way to go, you guys. Very well done. What kind of debt was the $128,000? Mostly student loans and some cars in there as well. Okay. How much of it was cars? $32,000 in two cars okay yeah all right wow so uh how long have you two been married uh four years okay slow answer there that's not good but you're

gonna get better be ready to draw that pistol well okay four years however uh three years and ten months of that four years so basically you got married started in on this yeah so tell me the story what happened so we were done with um college shortly after shortly before we got married and we sat down to look at all of our debt together and i didn't even know how much student loan debt i had um so that was pretty overwhelming um my dad actually listens to you has listened to you for years and um suggests that we check out your website and your book and um from there just got started yep oh there we go okay so you you sit down add it all up and right before the wedding or oh just after. Oh, that's a nice. Yeah. Yeah. Like, oh, no. What did we get into? What have we done?

And you probably did have that old crap moment, didn't you? Absolutely. Yep. Like, oh, no. What a mess. Yep. So then you decide. Did you just decide together you were going to do this or was there any one of you want

to do it? The other one not or? No, I think I think Alyssa started the conversation. I was familiar with your work and it just made sense. We had friends that were in their 30s, 40s that were still paying on student loan debt. We decided

that we didn't want any part of that life. So we're going to lean in and we're going to tear this thing up. And you did for three years and ten months. That's a long time. What's a long time. What's the secret to sticking with it that long? I mean, you didn't do nothing else after you got married.

I mean, you just went straight in. Yeah, I think communicating, being on the same page with one another is really important. You can't sacrifice what you want most for what you want right now. And then using a tool like EveryDollar was monumental for us. We knew exactly where EveryDollar went.

We had a little bit of money that we used so we didn't go insane. So that's really important. Okay. So you were probably one of our early adopters when we first came out with that EveryDollar app. Yeah, I think Alyssa was. We were part of the pilot. Oh, wow. Yeah.

Really early. Okay. Wow. So you've had it a long time. Very good. Excellent. Well, cool. I early. Wow, so you've had it a long time. Very good. Excellent. Well, cool. I'm glad that's worked for you. That's a good job. Very good job. So the big thing is to have a plan, and that was a great

phrase. Say that again. Don't sacrifice. Yeah, don't sacrifice what you want most for what you want right now. That's the definition of maturity. The ability to delay pleasure. The ability. No discipline seems pleasant at the time, but it yields a definition of maturity. Flop it. The ability to delay pleasure. The ability. No discipline seems pleasant at the time, but it yields a harvest of righteousness. Live like no one else.

So later you get to live and give like no one else. You guys are living it. You're doing it. You're rocking. So did you have cheerleaders or detractors? I know your dad was a cheerleader, but who else? Yeah, my parents were. Really, anybody that we told our story to was just floored by what we were doing and how long we had been doing it.

So we really didn't have any naysayers along the way. Really? So we had a lot of support pushing behind us. That's good. That's excellent. Very good. So when was the last payment that you made? About a month ago.

So how did that feel? It was pretty amazing. It still doesn't feel real to us. Kind of surreal. Yeah. So how did that feel? It was pretty amazing. It still doesn't feel real to us. Kind of surreal. Yeah. It was amazing, though. Yep.

First thing we did that morning. Pushed in. It's kind of anticlimactic. Yeah. Right. Yeah. No firecrackers went off. Nobody screamed or danced around unless it was you. So, yeah, it's just like, is that all there is?

Oh, yeah. Now what? Well, now you get back to the next thing and you read Chris Hogan's book, which we're going to give you, and you become millionaires. And you become outrageously generous along the way. So that's the next thing. You live in life is what it amounts to. The difference is that your level of sacrifice will never have to be as deep as it has been right again um you'll always have to watch what you're doing be

intentional but you'll never have to be as as as freaked out and crazy as you were for the last three years and ten months and you were you did some really impressive numbers here thank you very very well done very proud of you and i'm sure your dad and mom are proud dads and moms Very proud of you. Thank you. And I'm sure your dad and mom are proud. Dads and moms are proud of you. I know they're with you sitting here, part of your crew. And you had a baby along the way? We did, yeah. And what is his name and how old is he? His name is Vince, and he is 18 months old. And we have another one due in March.

All right. Very good. Good stuff. Well, very cool. All right. Greg and Alyssa, Indianapolis, $128,000 paid off in three years and ten months. Had a baby while they were at it. $72,000 up to $117,000 income. Count it down.

Let's hear a debt-free scream. Three, two, one. We're debt-free! We're debt-free! Good job, you two. Good job, you two. Well done. That's fun.

I like it. Judy is with us in San Antonio. Hi, Judy. How are you? Just fine. Good. How can I help? Well, we are in our late 60s.

We ranch and agriculture, and we had a drought, which we're about probably $300,000 in debt right now, but going to be blessed with a couple of pipelines probably coming through us, so we will be able to pay off that debt and possibly have about $300,000 left. So we are asking kind of what we might ought to do with that other money. I'm assuming you would tell us to pay off the debt with the first $300,000. Yes, ma'am, in a heartbeat. And do you have any other debt other than that no okay good good and it sounds to me like and just based on your location that you're running a very large ranch

operation yes sir okay how many acres uh we we have about 12, 13,000, uh, that we personally, my husband and I run. And then we help with, uh, my mother who is widowed with one that's about 20,000 acres. Good gracious. I thought I smelled that. Okay. All right. And you don't have any cash much. Not much cash right now.

Yeah. Your land. A lot of livestock, a lot of land,. Not much cash right now. Yeah, you're land poor. A lot of livestock, a lot of land, but not much cash right now. Yeah, you're land poor, and you're always going to struggle for cash. And so that other $300,000, I would set that in an investment, something like a growth and income mutual fund that I can get it back out if we have another problem because I don't want you to go in debt again. And you're running a large operation on a shoestring with no cash reserves,

and I need you to have some cash reserves to run that operation. And so I probably put $100,000 in money markets and about $200,000 in a growth and income just to keep some what a financial planner or a business planner would call some liquidity, some money to get a hold of when stuff happens. Okay. And stuff happens on an operation your size, and it never happens with one zero. That's exactly right. Always got a lot of zeros to it.

So that's the thing to do is to avoid the future thing that's going to come up, positive or negative, that you're going to need some money for. And make sure you're in good shape to take advantage of an opportunity that comes up with cash, or more importantly, that you can cover some kind of a problem, a challenge with cash. So I'd put about $100 in a money market, and I'd put about $200 in a growth in income. Of course, I'd use the other $300 to pay off the debt like we talked about. If I understood you right, you've got

$600,000 coming. Well done. Interesting call. Thank you for calling in. 32,000 acres. That's a little spread. Wow. This is the Dave Ramsey Show. Our Scripture of the day, John 16, 33. I have said these things that in me you will have peace. In the world you will have tribulation.

But take heart, I have overcome the world. Harlow Curtis said, do it the hard way. Think ahead of your job. Do it better than it needs to be done. Next time doing it will be child's play. Let no one or anything stand between you and the difficult task. Let nothing deny you this rich chance to gain strength by adversity, confidence by mastery, success by deserving it.

John is in Los Angeles. Hey, John, how are you? Hi, Dave. Thank you for taking my call. I'm doing good. Good. How can I help? Yes, actually, I want to get some advice.

We started FPVU last week, and we did our first budget last week, and realized we're $120,000 in debt. We did the budget, and according to the numbers, it looks like we might get out of debt in about two to three years. We do have a mortgage that is, I think it's high, and we're planning on selling the house. If we sell the house, we can get out of debt probably between a year and two years so i'm wondering if it's a good idea to just sell the house we're not going to get a lot of profit just maybe between 15 and 18 000 and just put the money into the debt and just get out of that a lot faster so getting rid of the house doesn't get you a lot of equity.

Is it getting rid of a high payment or something? Why does it help so much? Yes. Well, the principal interest is $1,500, and just going to escrow, it's $1,100. So taxes are really high, and we just got to get rid of that high payment. So what is your take-home pay a month? Mortgage is $2,650. Your mortgage is $2,650.

What is your take-home pay a month? It's $9,700, between $9,500 and $9,800. Okay. And you have $120,000 in other debt. $120,000, yes, in student loans, cars, credit cards. How much do you owe on your cars? One is $4,000 that should be paid off in two months, and the other one is about $40,000. $40,000.

I would keep my house and sell my $40,000 car. Okay. Whose car did I just sell, yours or hers? That's my wife. What is it? It's a Prius. She drives a lot. I don't care.

She doesn't drive $40,000 worth. Your car is what's killing you. The house payment's not out of line. It's about 26%, 28% of your take-home pay. It's not what's hurting you. And for L.A., that's tremendous. I mean, that's wonderful. But you've got, you know, if you want to accelerate getting out of debt,

you'll accelerate getting out of debt more by selling her car than you will by selling the house. Now, are you telling me you've done the numbers and you think you can be 100% debt-free in Baby Step 2 in about three years? Yes, with the house. With the house. If you keep the house, you can do it in three years. Yes. The thing is that we don't really want to be there anymore

because the commute is more than an hour one way for each. Oh, I didn't know that part. So you want to sell anyway? Yes. The thing is if we sell now, we can put that into the debt, or maybe we sell later after we are debt-free. I see. Okay. Well, I mean, if you're going to move anyway and you want to sell it, but you're going to be renting until you're debt-free and rent something very cheap and closer in commute, that's fine.

But see, what this does is it moves the needle only by the difference in $2,600 minus your new rent payment, whatever that difference is. And it only saves you $1,000. Okay, so that's $12,000 a year. And it moves the needle by $18,000. Selling her car moves the needle by $1,000. Okay. So that's $12,000 a year. And it moves the needle by $18,000. Selling her car moves the needle by $40,000. So it's okay to keep this car if you want to. It's not completely out of line, but it's a big part. It's a third of your problem.

And so if you want to be out of debt in two years instead of three years, her car does that. Okay. So, I mean, it's up to to you i'm not saying you have to do that uh if you're going to move anyway i would go ahead and sell and move and i would rent until you get out of debt um and then you can make the decision later on whether or not you keep her car but um okay keep in mind her car is one-third of your debt. It is one of your three years. Right. And that's something to really look at. That's why I'm throwing it around.

But it's not out of line in that the total of your vehicles is not more than half your annual income. And I think you can be debt-free in somewhere around two to three years. So you're okay on this. It's an okay way to do it. It's just a big, you know, if your big goal is sell something to get out of debt, that's something we can consider right there. So that's what I want to throw out. Josh is with us in Minneapolis.

Hi, Josh. How are you? I'm pretty good. How are you, Mr. Ramsey? Better than I deserve. What's up? So I just graduated college in South Dakota and I graduated with about $18,000 in student loan debt. And I worked through college and I worked this summer,

brought that down from $21,000. So I paid off about $3,000 in the last three months. Good. But I'm heading off to Germany in two weeks to teach at a boarding school in Germany for about a year and was wondering, I know what my pay will be there about, and I kind of know what my expenses are, so I'm looking at a budget. And well, net, after all my expenses, about $1,000 a month for those 12 months. And I'm wondering if I should put all of that extra $1,000 toward my student loans or whether I should do maybe a 50-50. I'm looking at going to grad school when I get back and I've been accepted to a program that is affordable for me.

But I was just looking to save up a bit more money for while I'm living down there and such. Yeah. So if you are debt-free when you get back, can you pay cash for grad school as you go? That would be kind of the biggest hope for it. No, I don't do hope. I do math.

What was that? I don't do hope, I do math. What was that? I don't do hope, I do math. Right, but for the 12 months, I'll only have $1,000. I mean, that'll be about $12,000 in grad school. I mean, I still have $6,000 left of student loans to pay off, was what I was saying. But I'm going to be able to pay off all of the student loans before I get back. Okay.

And when you go into grad school, you can put them on hold again if you need to in order to cash flow grad school. Can you cash flow grad school? Yeah, I believe I can. And talking with the admissions, I have enough coming in scholarships and grants from grad school, and then there are jobs I'm going to be there for. What are you studying? It'll be for languages.

I graduated with, I know, a German and classics major. And what are you going to do with the languages in your master's? I want to teach at a university. Okay. So you're going all the way PhD program? Correct. Good. This would be on the way PhD program? Correct. Good.

This would be on the way to a PhD program. And the master's is a pretty well-recognized and well-regarded master's program on the way to a PhD. And also, you could teach probably in that field with a master's, but to have a long-term career as a college professor, you'll need to do the PhD. Am I correct? Correct. Okay. And that's been the plan. Good, good's cool you got a good path you've thought that part through critically um obviously what i'm going to want you to do is i'm going to want you to get out of debt as much as possible is there any chance of picking any extra income up and finishing this debt while you're in germany um i kind of been looking into it. I've got my contract with the Lutheran Church in Germany,

and so that's where my main income is coming from. But then I'm hoping to tutor some more and to teach at a local high school while I'm there as well. Yeah, you do that, you could finish off that other $6,000 we're talking about. That would be a really cool place to be going into a master's program, wouldn't it? Yes, it would. Now, that would be my goal, is just really bear down and let's use this boarding school

time, this cool trip to Germany and all that as an adventure. And while we're there, we're going to come up with 18 grand and come back, start the master's program debt-free. That sounds like an ideal plan. That's optimal right there. And that's what I'd aim at, man. I mean, if you're asking me what to do, because it's going to give you a lot of peace and a lot more margin, a lot more wiggle room in your life. Thank you for calling in.

Interesting deal. Very interesting. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word.