The Ramsey Show - App - Don't Listen to Financial Advice From Someone That Is Broke! (Hour 1)

Episode Date: July 17, 2019

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Music Music 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, America. Open phones at 888-825-5225. That's 888-825-5225. Michael starts off this hour in Orlando.

Hey, Michael, how are you? Doing good. How are you doing? Better than I deserve. What's up? Not too much. So I just wrote down some notes here. I don't want to try to mirror your experience.

You're going to have to speak directly into your phone. You're breaking up. All right. I apologize. Can you hear me now? Yes, sir. All right. Sorry about that.

So I just wrote down some notes just to try to run through this as clear and concisely as I can for you. So I'm 24 years old. I graduated back in December last year with a Bachelor of Science in IT Security. I'm currently on Baby Step 2. I have $24,000 and done. Hoping to have all that paid off by January of 2020. Still trying to live like a college kid. Go ahead.

Good for you. Trying to keep costs down as much as I can. Go ahead. And I'm hoping to have a six-month emergency fund totally finished by April. You're rocking it, man. Well done. I'm trying. Thank you.

It's not been easy, but you know what? You just stay dedicated to it and put your mind to it, and you can get it done. So right now, I take home $3,700 a month. My gross annual is $59,000 per year. I already have $25,000 in retirement and a Roth IRA. It's diversified in, I believe, just different mutual funds. No single stock. So just trying to keep it diverse.

But my main question to you is actually regarding a home and a mortgage. So I'm actually looking to move out of my father's home and looking to get a small house in the area. Hopefully going to get a mortgage that's 25% of my take-home pay, not gross. I'm trying to keep it affordable. But my mom is actually currently renting. My parents are split. And so I live with my dad, but my mom rents her own place. But I brought up the idea of buying my own house, and she said she would rather pay me the rent instead of saying where she's at right now.

She can pay a minimum of about $700 a month, guaranteed. She has a good job. Now, you're talking about after you're out of debt and have your emergency fund. Correct, yes. Because I would like to try to save up about $15,000 to $20,000 by April of next year. That's not including a down payment for a house or anything like that. But like I said... So by this time next year, you're looking for a house is your plan? Yes.

Yeah, hopefully late spring, early summer of next year is when I'd be seriously looking to buy a house. So that way I'll have a full-fledged emergency fund ready to go. Okay. So what's your question? So my question is, like I said, since she can pay about $700 a month guaranteed, I know that for first-time homebuyers we can get mortgages down in Florida at 3.5% down. So I would think that it would make it a little bit easier to afford a house if the monthly payment is still afford my take-home pay. And especially if my mother rents from me, even though the house would be completely in my name, would I have to wait to save up a 20% down payment for a traditional mortgage, or would it be okay to do a first-time

homebuyer mortgage with a lower down payment with still an affordable monthly rate, especially if you actually pay? Most of the first-time homebuyer programs are FHA-based. They're a bond issue by the local community or the state, and they're FHA-based. And most of the time, your fees are higher when you get down into the actual cost of it. Now, the APR may or may not be. The down payment usually is little to nothing. So just make sure your costs are not.

What you need to do is sit down with a good mortgage company like Churchill Mortgage and have them do a comparison for you between that particular first-time homebuyer program and all the fees and interest rates and a traditional, conventional Fannie Mae loan without putting down 20%, like you put down 5% or 10% and did a 95% or a 90% loan. The 20 down is just recommended. We don't slam our fist on the table about that just because it lowers your cost because you don't have PMI. And PMI runs you about $75 a month per $100,000 borrowed.

And so if you can get the 20% down, fine. But for first-time homebuyers, we say, hey, if you're really dying dying to get a house you really want to jump out there and get it that's fine um i i gotta tell you i i think you've got a lot of uh potential downsides to having your mom as a tenant okay uh what potential downsides do you see because that's another reason i called well they're just i mean just relationally they're going through a split. She's not having a good time right now. Oh, they've been split for six years. Oh, okay. Well, she's, you know, if she got in a pinch, you're going to end up supporting her in your home.

And let's say that you started dating someone very seriously. You've got to move your mom out when you get married. Or you've got to talk about living with your new wife and your mom, which would be really unusual and potentially difficult. So you just don't want to build this whole thing. If you want mom to be there for a little while, that's fine. But I don't want her renting from you for six years. I want her to rebuild her life and move on and buy something, too.

And I want you to have the freedom to build a high quality of life as the sharp young man that you are. So I'm not saying don't, but you need to have some really frank discussions about what, you know, if stuff happens, what are we going to do? How are we going to deal with it? Because you can't have this conversation and go, yeah, but it's my mom. And, you know, but that's always there. Yeah, but it's my mom, you know. It's a problem. So, yeah, you're fine to next summer do that with whatever down payment you can scratch up.

It sounds like you're right on track and following our steps very very well done i love it and uh it sounds like you got a great career field you're in just um just be very careful about entering into deals where you're dependent upon a roommate uh paying you rent uh your mom uh or anybody else for that matter and uh you're not you can make it work on 25 of your take-home pay and then this will just lower your overall cost i get that part um but then there's the fact that it's mom so you just got to figure this out it's not it's not all skittles and rainbows in those situations and you just got to be very aware very wise very kind um but also just be thoughtful about what are all the downsides what could happen she lost her job you got into a relationship with someone she got into a relationship with someone

she starts misbehaving in her personal life she starts violating boundaries and treating you like you're four years old when you own the freaking house i mean there's all kinds of things that can go on here um and it's it's fraught with danger uh there's more downside than upside here as far as her moving in but if you want to do that for a little while i'd probably say let's put a one-year limit on it and i just say for a year that's fine but after a year we need to plan on going our separate ways and that'll give you some some good boundaries on the front end of this deal so hey man thanks for the call sounds like you're doing very well proud of you this is the d Ramsey Show. 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. Thank you for joining us, America. This is the Dave Ramsey Show. Carly is with us in Sacramento. Hey, Carly, how are you? Hi, I'm good, Dave.

How are you? Better than I deserve. What's up? Thank you so much for taking my call sure um so me and my husband have 19 000 left in debt that we're paying off right now and our plan is to you know after our debt save up our three to six month emergency fund and then start saving for a down payment on a house good that. That's what we teach. Recently, my husband's been talking about that he wants to start saving, putting money aside for his retirement now. And I wanted to get some advice on that.

You know, I've been kind of saying we really need to stick to the plan of just focusing on our debt right now. I wanted to see what you had to say about that. Well, I mean, I've told people the same exact thing for 30 years so stick to the plan right i mean what do you want me to say yeah because it works okay you guys are broke you're in debt so your husband's financial opinions suck okay i gotta look look i got a grandpa belly right on the front of me if i hire a guy who's got an eight pack as my personal trainer and he says dave don't eat pizza three days a week

you're not gonna ever get rid of that belly if you eat pizza three days a week. And I say, yeah, but I think I want to eat pizza three days a week. He's going to go, you wasted your time paying me and bothering me, isn't he? Yeah. I asked the guy who's an expert who has a proven track record on abs what to do to get rid of the belly and then i argued with his advice that's not logical yeah i just i wasn't sure how to how to convince him like i'm like i'm doing you it's not logical his best opinions about money have got you all where you are. My best opinions about abs have got a belly on the front of me. Right?

I mean, you've got to submit yourself to a proven system, or you're not going to get the results of the proven system. Now, you guys can do whatever you want to do god knows you've been doing that for years right yeah well yeah um it's always funny to me that people have strong money opinions when they're broke yeah i mean yeah i mean your husband's are you know argument is illogical it's like it's like me calling up somebody you know and giving them advice on trying to grow hair on top of their head i have none by the way and so i'm not very good at that i i'm not good at growing hair on my head so i really shouldn't be giving people advice on that i shouldn't take you know you know so on so that you know you've got to decide so you know and he's got to decide and as a couple you've got to look at your life and go hey if we keep doing what we've been doing using our best judgment which sucks we're going to

keep getting what we've been getting let's try sticking to the plan which is what you're saying carly and that's what needs to happen um but it's just guys do this more than girls too carly uh guys are the worst we're you know we'll stand and look at something and still have our own opinion and it makes no no sense at all. I mean, I do it too. So I understand where he's coming from, but it's just illogical as crud. It just doesn't make sense. Dustin is with me in Bristol, Virginia. Hi, Dustin.

How are you? Hi, Dave. I'm good. How are you? Better than I deserve. How can I help? Okay. First, just really quickly, got into a relationship years ago.

We got married a year ago. Collectively, we brought in about $48,000 in auto loans and about $10,000 in credit card and consumer loans, and we were able to pay those off last month. Yay! Way to go, dude. We're debt-free except for the house. Yay! Good for you. My question, though,

my wife just graduated college. She's got her teaching degree, and she's getting ready to be a second, third grade teacher. Wonderful. She has the option for a 401k. It says 401k or 457 deferred compensation plan. She has the option for a 401k it says 401k or 457 deferred um compensation plan she has the option for a 401k

roth and a 403b i have paperwork in front of me and i i don't know what the mumbo i don't know what the mumbo jumbo is and i was hoping someone could explain those to me and it sounds like she's got a lot of different things she can do the 401kk Roth is going to be the best choice, and here's why. The Roth, of course, grows tax-free, and 401ks traditionally have much better mutual fund selections in them than 403Bs. Okay. They don't have to. It's not always true, but by and large, the insurance goobs get in these 403Bs and start selling teachers crap in there.

And sometimes the investments are substandard in there, not always. And then the 401K has a much better shot at having really good performing mutual funds in it. Okay. Just one more quick question. On Roth accounts, is there a maximum household income? Not on a 401K Roth. On a traditional Roth, there is. I mean, on an individual Roth, if you make over $200,000 a year,

the only way you can do a Roth is what's called a backdoor Roth. What's your household income? It's not over 200 i'm sorry friends may be listening yeah that's okay if you're under 200 then you're okay you can do a an individual roth and you can do she can do the 401k roth both okay but there is no income limits on 401ks. Excellent. Thank you, Dave. Hey, thanks for calling in, man. You're killing it. Proud of you.

Keep it up. Keep trucking, man. Keep trucking. Nancy's in Los Angeles. Hi, Nancy. Welcome to the Dave Ramsey Show. Hi, Dave. How are you?

Better than I deserve. How can I help? I discovered your show just a few weeks ago, so I'm really excited to get your thoughts on my situation. Cool. My boyfriend of three years and I split up a few months ago. We share a 14-month-old. Oh. Nothing.

It's okay. Yeah, having the baby before marriage was a boo-boo. Now I see that in hindsight, but it's okay. I'm excited to move on. So nothing about custody has been formalized. We don't want to go through lawyers. We just, things have been civil. And all I've asked from him is to pay for half of what I give my mom for

child care and half of the baby's insurance, which his share has come to a little under $600. And so it's fine. I just haven't been able to find any information on what, you know, standard child support should be. I just want to ask for what is fair, and I'm not sure what that is. The baby is with me five nights a week and two nights with him, and he is very involved and consistent with his payments.

And, yeah, our relationship isn't acrimonious or anything. Well, it's not acrimonious for him to take care of a child that he brought into the world. That's not acrimonious at all. I mean, that is a reasonable thing, and it sounds like he's willing to do that. And what happens is, over time, some of the civility can unravel. Does that make sense? Yeah. And so what you guys need to do while you're discussing this is you need to contact an attorney not to create a fight,

but to help you put the proper paperwork in order that he needs to sign. He needs to sign an agreement to provide child support that the law requires in California. I'm just worried that if I, you know, tell him, like, oh, I've hired a lawyer... No, I'm getting some legal advice. My financial coach told me to have everything in writing and that we have a child support agreement. And that's a reasonable thing that he pledged, not to you, but to the child, that he's going to support them, and that that is done according to California law in writing. And that's what I would do. And I'm hiring an attorney to produce the document, not to pick a fight.

This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members. I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities,

but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait. One hire can change the direction of your company. Post a job today at LinkedIn.com slash Ramsey and get $50 off your first job post. That's linkedin.com slash Ramsey. Terms and conditions apply. Mark is with us in Denver. Hey, Mark, welcome to The Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. Sure. What's up? So I am planning on getting engaged in the next couple months. Congratulations. Thank you very much. And my fiancé-to-be has $80,000 of student debt.

And I'm wondering if I should stop all my investing, start cash-filing as much as I can right now to get ready for when we say I do, or do I just continue to invest, try to build my wealth on my own, and then, you know, kind of live my lifestyle as normal until I'm married? No, I agree with you. I'd stop everything and start piling up cash in a, you know, super, super large savings account that your plan is to write a check out of that account when you get home from the honeymoon to get a jump start on that $80,000, right?

What do you make? My take-home is about $65,000. Cool. What does she make? She makes about $35,000 take-home after taxes. Cool. What's her degree in for $80,000? My degree? Hers. Oh, her degree was in business sustainability.

Okay. All right. And that's not been real sustainable as far as an income goes, huh? Not quite as much, no. Oh, interesting. All right. Well, I mean, you're going to have a $100,000 household income, so you're going to churn through that 80 very quickly.

And on top of that, you're going to get a head start during the period of engagement by piling up cash here. So, yes, I would do all of that. And you guys have talked about this, and you're both in agreement that this student loan has to be gotten rid of, that Sally Mae needs her eviction notice, and we don't borrow money anymore, and you've talked about the money stuff, we sure have good very good cool well congratulations man yes i would go ahead and prepare for that your worst case scenario is uh that from a financial

perspective is that uh the whole thing blows up you't get married, and therefore you have a pile of cash in your bank account. Oh, darn. Oh, darn. You know, you could probably figure out a way to get that invested, right? Absolutely. Yeah, but as long as the marriage goes through and the engagement and everything's smooth and come home from the honeymoon, you got $30,000 in there to jumpstart on that $80,000. That sure would be sweet, wouldn't it?

It sure would be. Yeah, that's a good plan. Very good plan michael is with us in fort worth hey michael welcome to the ramsay show hey dave big fan thanks for taking my call my pleasure how can i help uh so me and my wife are trying to figure out uh what the best thing to do is um we owe right now 360 on our mortgage and uh have a house that's valued at about 4460,000, so probably about $100,000 in equity. And we have a house in our sister neighborhood that we really, really like. We have about $105,000 in student loans. And so I'm wondering if you think it makes sense to sell our house.

And right now, our house is under a 30-year mortgage, so buy this other house, put 5% down, get a 15-year mortgage, and then use the, I don't know, maybe 50K that's left after realtor fees and all that to pay down our debt faster, because I think we could get out of debt, you know, out of those student loans within about eight or nine months if we were to do that. How much is the other house valued? $438 is the self-price. So about the same price then. we were to do that. How much is the other house valued? $438 is the sell price. So about the same price then.

A little cheaper, actually. Yeah, a little bit cheaper. Yeah, I'd do that, sure. You're not moving up. You're moving down or sideways. And you are picking up a little bit of extra cost in terms of your monthly payment because you're going from a $30 to a $15, and you're not going to have the equity quite because you're throwing some of it at the student loan.

So you're upping your payment. Is your payment going to be more than a fourth of your take-home pay when we do all this? It's not so far. It would be about $4,300, I think, on a 15-year note. Me and my wife take home about $14,000 a month. Oh, you'd be fine. Yeah, you're fine. So you don't think that would be a bad idea?

If we only stay in that house three to five years, do you think that changes the equation? No. You should be fine. You need to stay there three probably because most cases it takes about three for the house to go up enough in value to not lose money on the transaction net of fees. Sure. And so, I mean, it depends on the appreciation rate of the neighborhood, right? If the neighborhood is going zoom, zoom, you might get to stay there one year and make money. I mean, if it's going up 25% a year.

But if it's not one of those white-hot situations, if it's just a normal neighborhood, it usually takes about three to get out with your skin intact. But, yeah, I'm going to do that for sure. You're not harming yourself here. Now, if you told me you're moving to a seven hundred thousand dollar house while you got a hundred thousand dollars in debt i'd tell you to wait i would move up from a you know 450 to a seven or something like that i just wait till i got my debt paid off and then i'd make my move but um this is a down move slightly and it's

freeing up cash and while you're at it you're sticking it on a 15. So I'm loving it. Very good move. Lou is with us in Syracuse, New York. Hi, Lou. Welcome to the Dave Ramsey Show. Hey, Dave. It's good to talk to you. You too, sir.

How can I help? I had a question about retirement investing. I am in baby step four. No 401K would work, but I do have a Roth IRA that I am maxing out, but I'm not hitting the 15%, so I'm looking to see what kind of accounts I should be putting the remaining $3,000 into. Are you married? No. Okay.

Do you have any side hustle income, self-employed income? No. Okay. Well, you've done all you can do. If there's no 401k and you've maxed out your Roth individual, then that's all you can do in terms of retirement. The only other thing that's left is just straight investing. And, you know, talk to your SmartVestor Pro about it, and they can help you place the money in some low turnover mutual funds. And that means they don't sell the stocks inside the mutual funds very often so

you don't have any taxes on the growth until you cash it out because when something goes up in value you don't pay taxes on the increase in value unless the stocks are turning over okay okay and so uh it's like if you buy a if you bought a rental house for 200 000 it went up to 300 000 in value you don't pay taxes on that $100,000 until you sell it. Stock's the same way inside a mutual fund. And so a low turnover mutual fund allows you to have that capital gains growth. Good news is, too, when you cash that out someday, of course, there's no penalties on it at all. It's after-tax income going in. But your gain on it, your growth on the money, will be taxed at a capital gains rate, not at your ordinary income rate.

So 15% maybe instead of 30%, probably about half the taxes on it that you'd have on other kinds of accounts. So a low turnover is a really good place to park some money as a supplement to a retirement situation. I actually do a lot of that in addition to what I'm allowed to do into retirement accounts. And then sometimes I take that money when it piles up and move it over and buy some real estate with it, with cash, that kind of a thing. Open phones at 888-825-5225. Our question of the day comes from blinds.com. Find out for yourself why they are the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Use the promo code RAMSY to get the best possible deal. Today's question comes from Alexandra in New York. I'm done with Baby Steps 1 through 3. Woo-hoo! Debt-free with my emergency fund, except for my house. I know that in Baby Step 4, I'm supposed to invest 15%. I'm unsure how to start this step and how to go about it. Any advice on how to get this step started?

Sure. I kind of remember it this way. It's kind of like rock, paper, scissors. Okay? Match. If you've got like rock, paper, scissors. Okay? Match, if you've got a match, that's the best. The next best is Roth. And the next best is traditional. Now, whether that's 401K or individual or 403B, if you've got a match at work, you take of that first seldom does that get you up to 15 most of the time they match three percent five percent six percent or nothing at

work okay then you want to do roth if they've got roth 401ks that's great you can put it all there if you want to and that could get you up to 15%. And or you can do Roth individual, regular individual accounts up to 15%. Of course, each individual can put $6,000 a year into their Roth if they have that as an earned income. If you're married, of course, that means $12,000 can go in there. So Roths are next. If you've maxed out your Roths, individual and at work, and you're still not at 15%,

then you can go to traditional 401ks if those are available, which is a pre-tax investment but grows tax-deferred, not tax-free. Thank you for joining us, America. We're glad you're here. If you're a tax professional, our team needs your help. If you didn't know, we have an entire program to help people find the best tax pros in their area. Endorsed local providers. People we endorse that are local and you provide the help. So we're looking for CPAs and EAs to do this elite network who love coming alongside people

on their journey to help them win with their taxes, win with their money. If you're passionate about this, get in touch with us, and we can help you with your business by sending our listeners to you guys once we vet you. So, DaveRamsey.com slash tax program. DaveRamsey.com slash tax program, and you can become one of our tax ELPs. Open phones at 888-825-5225 alan is with us in houston texas hey alan how are you hey dave how are you sir better than i deserve what's up great um just wanted to ask you something about uh multi-family apartment complexes. I live in Houston. You know, they seem to be very expensive here in Texas now. For the past, you know, I'd say like between five and ten years,

prices have really shot up. Now, when I look at states like maybe Ohio or parts of Tennessee, I've noticed, you know, you can get many, many doors for a lot less money. What are your thoughts of buying, you know, cash-flowing assets like that, you know, like some type of an apartment complex out of state and just, you know, giving it to a management company and have them deal with everything? Well, if you know what you're doing in the real estate business to the point you're ready to do a $10 or a $20 million deal or something like that, then yes, you could vet a quality

high-end management company, and then you know if you know what you're doing, you know that it's not over, then it just begins. And so you have to manage the management company. You don't just turn it over to them and walk away and get checks in your mailbox. You have to stay on top and manage your assets. You have to know what's going on with them. Now, as far as the value of a multifamily per door, it's not per door, it's per dollar. The way income properties are valued is a multiple of the net operating income.

So the gross rents that come in minus a vacancy rate, minus the expenses of operating the building, including management fees or whatever other expenses, gives you your net profit or net operating income. We call it in the real estate business your NOI. And then a cap rate, a capitalization rate of that number gives you your value. A lot of people in the apartment world where you're buying multifamily then translate that to so many dollars a door, 25,000 a unit, 35,000 a unit, 50,000 a unit, whatever it is. But you would never pay a certain number of dollars per unit without knowing what the dollars that unit is going to generate to your bottom line.

That's what gives it value. And so if you want to make 10% on your money, then you take the NOI divided by 0.1, and that's a 10 cap rate, and so on, whatever you're wanting to make on your money. And that's what you're looking at out there. And when prices are going zoom, zoom, people are willing to pay more, meaning they're willing to make less on their money. So it might be an eight percent cap rate instead of a ten percent cap rate in order to get the thing and it depends on the type of property it is and those kinds of things but um it's not necessary what i'm saying is it just because you pay a cheaper rate per unit does not mean you got a good deal right you could be getting so much less rent that you got a worse

deal per dollar invested uh and so what you're looking for is a multiple of your net operating income what rents do these units generate and so if you buy a unit for 50 percent per door of what you would pay in texas but it's only generating 25 of the same money then you did not do a good deal does that make sense yeah absolutely um so uh i've i've got no experience dealing with um any type of real estate i've never been a landlord so you would not recommend jumping into like a uh like a small apartment complex i don't mind you jumping into it um i i prefer it's in the area where i can lay my hands on it i'm very experienced in real estate i got my real estate license in 1978 a thousand years ago and uh i own a bazillion

dollars in real estate i love real estate i've been doing it my whole life and so i'm very comfortable with it and i don't own any property that's income generating outside of my immediate area i want to see it i want it to be in the area i can feel what's going on in the market i got a sense of what's happening with the property itself i don't have to go over there and micromanage every water heater that's not the point but um there's something about it being in your neck of the woods instead of you living in Houston and you own an apartment complex in North Dakota. I mean, that just, it's, you do a better job of keeping your hands on it. Real estate makes you more money, if you do it right, than mutual fund investing. But it's more hassle.

Because you do have to look at it. You have to think about it. You have to make decisions about it. And with mutual funds, you just open up the mailbox and there's a check. I mean, you're not making any decisions. But you've got to go, okay, here's a dadgum $25,000 cooling unit on the back of this thing that just went bad all right well get me three bids i'm before i drop 25 grand on something i gotta know what in the world a stupid thing what are my options how can we repair it should we repair it do we replace it if so what

what level do we want to replace it with and how long we're going to hold that property and so you got to think about it a little bit you know it's not a big deal it's not overwhelming but all it helps if all of that is in the general area now if you're you know you bought something over in san antonio or something that wouldn't bother me from houston you know or something over in the hill country right that wouldn't bother me um but if it jumping you know a plane ride away yeah i wouldn't be my recommendation for your first real estate deal. It really wouldn't. It doesn't necessarily have to be right there if you're buying a big deal, but you need to be able to get to where you can know a little bit about it.

Hey, thanks for the call. Open phones at 888-825-5225. Todd is with us in Indianapolis. Hey, Todd, what's up? How are you doing, Dave? Better than I deserve. How can I help? Great, great.

Hey, the question I have, I have an auto loan question. I bought it about a year ago. I've been making double, triple payments on it just to try to get it paid off as quick as possible. Good. They said, you know, according to the people I bought it from, I'm paid up. I could go without making a payment until March of next year. No, I'm not trying to pre-pay. You don't want to pre-pay interest. You want to pay principal only.

So is that what I'm doing? I'm pre-paying interest? Apparently. If they say you don't have to make a payment. Well, okay, I'm still making the payments. I know, but I'm saying if you paid next April's interest, that wouldn't be what you'd want to do. You wanted the whole thing to go on principle. Correct.

I kind of thought it was basically washing itself out by making double and triple payments. It depends on how they're calculating it. When they start telling me I don't have to pay a payment for 10 months, it starts to scare me that they've booked this as next April's payment, meaning they've already collected next April's interest, and I didn't want them to do that. I wanted the whole thing, I wanted the principal reduced. And that's what you're trying to get them to do.

So get back on the phone and make sure you're getting the benefit of this principal going down. Are you charging me less interest because I've given you all this money, or are you charging me for next April's interest? I don't want to pay next April's interest. That is not a plan. We want to pay the car off, not give them all their interest. We want to pay it off so we don't

have any more interest to give them. I'm not interested in paying your interest. That's the whole idea right there. So, hey, thanks for the call. Open phones at 888-825-5225. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniels, our associate producer, and phone screener. I am Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register.

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