The Ramsey Show - App - Don't Play the Student Loan Forgiveness Lottery! (Hour 1)
Episode Date: October 29, 2019Savings, Home Buying, Retirement, Home Selling, Debt Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Bu...dgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR
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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios,
it's the Dave Ramsey Show, where debt is dumb, cash is king,
and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.
I'm Dave Ramsey, your host.
Thank you for joining us.
Open phones at 888-825-5225.
That's 888-825-5225. That's
888-825-5225.
Andrew starts off this hour
in Virginia. Hi, Andrew. Welcome to the Dave Ramsey
Show. Hey, Dave.
How's it going? It's good to speak with you.
You too, sir. What's up?
So I had a question regarding
Baby Step 3B.
We did the $1,000 emergency funds.
We paid off all our debt, $97,000 in a year.
Way to go.
And then we did the three to six months.
How's that feel?
Funded emergency.
Yeah, it feels awesome.
Oh, my goodness.
You don't have any debt and you have money in the bank.
Life is weird.
It's definitely different than what I'm ever used to.
Amen.
Good for you.
Well done, sir.
So we're looking to either do 3B or start investing in our 15% into our 401k and the Roth.
But my question is, at our age, I'm 34, my wife is 33,
how long should we do the 3B?
Max of three years.
Okay.
All right.
I think we're going to be able to do it in a year and a half
just to put down a sizable income.
We're a suburb of D.C., so it's pricey.
Yeah, amen.
Well, if you jump over, for instance, onto like Chris Hogan's website,
and you use one of the calculators like the RIQ thing, and you said, okay,
a 40-year-old saving 15% of your income would have at 65 how much money,
you're going to see millions of dollars on that answer.
Okay.
And so that's where I'm getting at.
I'm just saying the point is just don't wait until you're, you know,
don't put it off a decade or something and miss out on all of that compound interest.
We want to get started as soon as we can, but, you know,
if it takes you a couple years to get your down payment together,
you're in your 30s, you'll be okay.
The point is to be on a plan and continue to make progress towards the baby step four
because the sooner you start chunking that 15% away,
the sooner you're going to become wealthy.
Understood.
Understood.
Hey, thanks for the call, man.
Appreciate you joining us.
All right, Derek's in Kansas. Hi, Derek. What's up? Hey, Dave. How are you for the call, man. Appreciate you joining us. All right, Derek's in Kansas.
Hi, Derek.
What's up?
Hey, Dave.
How are you?
Better than I deserve.
How can I help?
I am 23 years old, and I am debt-free.
I've just about got my emergency fund built up.
But I wanted to know what your opinion was on when the time comes, and I've got the money for it,
about possibly buying a
duplex and living on one side, renting out the other side. I want to know what your opinion was
on that topic. Cool. So it'll be your first home purchase? Yes. And your first rental property,
obviously. Right. Okay. Well, the good news is your renter is right next door. The bad news is your renter is right next door.
Yeah, that makes sense.
You know, you got access to them.
They got access to you.
So we've got to have real clear boundaries in our relationship.
And they can't be knocking on your door at 11 p.m. to change a light bulb, you know, that kind of crap and so you know as a new landlord that can make it tough because you're
going to learn some of those ways to be firm with people but still fair and kind and that's the trick
to landlording well is to have a balance in that process um the other thing to consider is just the
purchase of a duplex in general um the upside obviously is you've got someone helping you pay the bill, uh, because
half of it is rented and that's a good thing from the economic or financial perspective.
Uh, the downside is that when you get ready to sell a duplex, 90 something percent of
the time, your buyer is going to be an investor, not a retail homeowner and so you're dealing with a wholesale minded buyer
and that tends to hold prices on duplexes down uh more than it does the similar square footage
single family because the little cute couple coming in to buy the perfectly staged and
freshly painted single family will pay full freaking retail right
and yet the investor is always looking for a deal they're always looking for a wholesale purchase
and so that tends to cause duplexes to not appreciate as much all things being equal now
if you got a premium duplex in a premium neighborhood versus a single family that's
not premium and not in a premium neighborhood, we all outperform it.
But the downward pressure on it is just because your market for resale is primarily a wholesale
buyer, and it holds it down.
So I've owned a bunch of duplexes in my life.
I've done much better on single families.
They rent easier, they stay rented better, and they appreciate faster.
But it's not light years different.
It's not like it's 30% difference or something like that.
It's a couple of turns of the dial, a couple of clicks on the dial is all.
It's enough you'll notice it, but it's not enough to keep it from being a good deal.
So just know that those are your upsides and your downsides
if you're going to move into a duplex.
And be very careful that, I mean, there are duplexes in every city
that are in a duplex neighborhood that's become a trashy rental neighborhood,
and it's just really unappealing, and you don't want to be in that.
But if it's a duplex in an area that's well-kept
and there's um you know
the there's some pride of ownership in the processes that's where you can come out okay
with it and something to go with so hey thanks for the call open phones at 888-825-5225
megan is next and megan is in delaware hi, Megan. How are you? Hey, Dave.
How are you this afternoon?
Better than I deserve.
How can I help?
Glad to hear it.
So my husband and I have been married for nine years, and we have a combined household income of about $160,000.
Wow.
We are currently on baby step four, five, and six.
And we have three young kids.
We have a four-year-old girl, a two-year-old girl, and a seven-month-old girl.
Each of them have 529 accounts that we opened up for them this summer.
And I understand now we're on baby step four, so we need to put 15% into retirement.
And then the question is, how do we go through baby step five and six?
My idea was to get each of our children's 529 up to, let's say, $10,000 for now,
pause and let that build, throw the rest of the money at the house to pay off's say, $10,000 for now. Pause and let that build.
Throw the rest of the money at the house to pay off the mortgage.
And then restarting our $529,000 investing.
That's a great plan.
Okay, because we wanted to be sure we were saving enough.
And they're young, so they have time for their $529,000 to grow.
But I also feel like... Well, with a paid-for house making a couple hundred grand,
you'll be able to cash flow a ton of stuff in addition to $529,000.
So, yeah, that's a great plan.
You're going to have something substantial in there because that 10 will, you know,
that 10 will probably become 30 by the time they become 18.
Okay.
If it's invested at their young ages, if you don't add anything else to it,
and then you can add to it later on in the game easily and or just look up and say,
we can cash flow the crud out of this
and so we got a good chunk in 529s but we're also going to cash flow above that uh because we put
ourselves in a position to do so there's that's one way to do it another way is just load the 529
so full that it has enough in there that it's going to grow to enough to send them to college
and then check that box and move on another way is to do a minimum amount in a 529 go kill the house faster when the house is knocked off then come back
and load it up but you're kind of hitting in the middle you're going to hit a 10 and then move on
then move back that's fine it's a great plan the good news is you have a plan wow this is the Dave
Ramsey Show.
Folks, let's cut through the bull.
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NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Sonia's with us in Idaho.
Hi, Sonia.
How are you?
Good.
How are you, Dave?
Better than I deserve.
What's up?
Okay. So my question is, well, 17 years ago, we purchased a mobile home, like a manufactured home,
and found some land and moved the manufactured home from a trailer park that they headed at to three acres of land.
The bank had told us if we put it on foundation, it would be considered real property,
and later on, we could turn around and sell it when we were ready to.
When we had just started our family, we were just barely married.
And so our plan was to stay in there for a little bit and then turn around and sell it.
Well, when we tried to sell it, we've run into the problem that banks won't lend on it because it's a mobile home or manufactured home and it's been moved more than once.
And so for the last 10, we've outgrown our home.
We have six kids now.
And so my question is, we have two ideas that I don't know what to do.
My oldest son says that he could rent our house out for a couple years
and we can claim that as rental income so that we can move out and
accommodate the rest of our kids now, or should we stay in it for the other two years and pay it off
and then build a bigger house on the property? So you're within two years of paying it off?
Yeah, we can. We only owe like $23,000. Yeah, and what's your household income?
About $78,000.
Yeah, let's pay it off.
Just pay it off?
And then get rid of the trailer and build a house.
Build a house and then get rid of the trailer. And that's the other thing is that my husband doesn't want to tear down.
He wants to keep it as income on the property.
It's up to you, but it is deteriorating every day.
Yeah, the bank, when I spoke to the lender, she says,
I shouldn't even upgrade, put anything money into it because it's not valuable at all.
And whatever you put into it, you're going to lose.
It's going down in value, and it is literally physically deteriorating, isn't it?
It is. It's like falling apart yeah and so you know if you want a uh a 30 year old tin can on your property right next to
your house with some renters in it and i don't know what kind of renters you're going to attract
to that that's where you're headed five years from now, right? Right. Yeah. Nah.
Yeah, what?
Not a plan.
I'd build a house and get rid of it and just go,
that was something I did 17 years ago,
and there's a lot of stuff I did 17 years ago I wish I didn't.
And so you just chalk it up to stuff I shouldn't have done, right?
Okay.
So just pay it off and then build.
Well, yeah, you pay it off because you've got to get the land cleared.
Yeah.
It's not really about the trailer.
And the good news is you can actually suffer through living in the trailer long enough to get it paid off
and then start the build on the property, and that'll keep you from having to move twice.
So, you know, that's the thing.
Yeah, we've got to move on from this idea.
It's not a good idea to keep it.
So, yeah, when you made a make, you know, when the horse is dead, dismount.
When you've made a mistake, don't keep riding, you know.
Let's move in a different direction.
And so, you know, I think I want to keep it as rental property. Your husband says, it's a mistake.
When the horse is dead, dismount.
You know, get off.
All right, Samantha's with us in Michigan.
Hi, Samantha. How are you? Hi, Dave. How are, get off. All right. Samantha's with us in Michigan. Hi, Samantha.
How are you?
Hi, Dave.
How are you?
Better than I deserve.
How can I help?
So we're looking to cash out my fiance's 401K.
He has about $10,000 in it.
He no longer works for that company, so it's just sitting there, and another one is opened.
We have about $32,000 in debt.
So I'm wondering if we should take that out, put most of that into our debt,
and then build ourselves an emergency fund and just get us current on everything?
No.
So we should leave it.
You ought to roll it to an IRA.
But if you cash it out, they're going to charge you a 10% penalty plus your tax rate,
probably around 30%. And so it's kind of like saying, hey, Dave, I want to borrow money at 30% interest
to pay off some of my debts and have an emergency fund.
Well, that would be ludicrous.
Of course you wouldn't do that.
Right.
So we're not going to do this either.
Yeah, roll it to an IRA.
Why are you behind on your bills?
Well, I had stopped working when my father passed away,
and then we just started falling behind after that.
Okay.
When are you getting married?
We decided to call it off until we were ready to be able to afford it together.
Well, it doesn't cost anything to get married.
True.
I guess
I wanted
a nice wedding.
I'm sorry, say one more time.
I wanted a nice wedding
for us, so once we decided
that we wouldn't be able to afford that,
we called it off.
Just for now. I mean, we're still together.
But how old are you?
24. And you had children with him right yes one in the background okay he doesn't want to be quiet
yeah yeah that's okay um my grandbaby was up here this morning he won't be quiet either so that's
the way it works um but the uh uh yeah i listen if you were my daughter, here's what I would tell you to do.
And you're not far from the age of my daughter.
So what I would tell you to do, get married immediately.
And talk about celebrating it fancy someday when you get your freaking financial act together.
But right now you have a child together.
You have a future together.
You know, you're getting these things in the wrong order and they're going to cost you long term there's all kinds of data
points that say let's do these things in the right order so you know you need to combine your finances
and combine your household and you don't need to do that unless you're married and then you need
to get on a budget together and let's get caught up on our bills, and let's get everything dialed in here and start working together in a proper way.
And you're going to see success start to come your way then.
But, you know, dancing around the edges of these things and doing things out of order is not going to get you there.
So that's what I would tell my own daughter.
I would say, get married this weekend.
Call the pastor.
Run over there. Stand in his office. Call the pastor. Run over there.
Stand in his office.
Kiss the bride.
Go back home.
Get your bills straightened out.
Work your butt off.
Then you can have a big celebration in two years and say, you know, we just delayed our celebration.
Because we had kids before marriage.
We had bills before marriage.
And so since we got stuff in the wrong order, we didn't get to have the big wedding.
So we're going to do it a different way.
We're going to have a big celebration two years from now.
You know, we got married and we're out of debt celebration or something like that.
You know, you can just decide to do it differently because you did it differently.
Open phones at 888-825-5225.
This is the Dave Ramsey Show.
We're glad you're here.
Nazia?
I don't know if I got that right or close or not.
Oh, there it is.
Nazia.
Nazia.
There it is.
Hey, Nazia, how are you?
Hi, Dave.
Thank you for taking my call.
Sure.
How can I help?
So I have a question.
So I have about $400,000 in student loan debt.
Good Lord.
I know.
Are you a doctor?
Yeah, I'm a pharmacist.
So it is a doctor of pharmacy.
You got a $400,000 pharmacy degree?
I know.
It's crazy.
It's about like $45,000 a year.
And then on top of living expenses.
No, it's not. You did.
No, you get a pharmacy degree for $150,000, but you spent $400,000?
Yeah.
Oh, my God. Did you pass your boards? Are you out?
Oh, yeah, yeah.
Good. What do you make?
So right now, I bring home about like $8,500 a month.
Okay.
And so I was wondering if I should go the loan forgiveness route where, you know, like if you work for a public sector.
No.
You know why?
Uh-huh.
You can Google it if you want.
Google loan forgiveness epic failure.
And here's what will come up.
Oh, I know.
The 1%, like only 1% got accepted.
Yeah.
Yeah.
So why would you count on something that 1% got accepted?
Yeah.
Why would you do that?
That's not logical.
I don't know.
There's a little bit of hope.
Well, there's a little bit of hope.
It went in the lotto, too, but that doesn't make you be dumb enough to buy a ticket.
Yeah.
No.
No.
You have to live on nothing and work overtime in the ER as a pharmacist on the weekends
and pick your income up to $160, $150.
Well, you're at $140 now probably, but get your income on up and let's just dial your
dadgum lifestyle down to nothing.
Beans and rice, rice and beans.
And it's going to take you five years of living on beans and rice to clean this mess up. And that's what you've got to nothing. Beans and rice, rice and beans. And it's going to take you five years of living on beans and rice to clean this mess up.
And that's what you've got to do.
Note to our audience, don't spend $400,000 on a degree that should cost $150,000.
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In the lobby of Ramsey Solutions on the debt-free stage, Aaron and Julie are with us.
Hey, guys, how are you?
Good.
Good.
Welcome, welcome.
Where do you guys live?
We live in central Massachusetts.
All right.
Well, welcome to Nashville.
Good to have you.
Thank you.
How much debt have you guys paid off?
$240,000.
Woo!
And how long did this take?
It took 100 months.
100 months.
All right.
Almost 10 years, huh? A little over 8 years. A little 100 months. 100 months. All right. Almost 10 years, huh?
A little over eight years.
A little over eight years.
Yeah.
All right.
And your range of income during that eight years?
75 to 175.
Cool.
What do you guys do for a living?
I'm a solutions architect for an IT solution provider.
Perfect.
I'm a stay-at-home mom.
Very good.
Very good.
Cool.
So what kind of debt was this $240,000?
$45,000 was consumer debt, a car, a student loan, and a family loan.
And then the rest of it was our house.
You paid off your house?
Yes.
I'm looking at weird people.
I love it.
Man, oh man, you're breathing some rare air.
Well done, guys.
Thanks.
How old are you two?
I just turned 40.
I'm 38.
And how long have you guys been married?
15 years.
Okay.
So halfway through your marriage, something happened, and you said, we're knocking off
the consumer debt, and we're going all the way knocking off the house.
Tell me this story.
This is great.
Yeah.
Well, actually, I wasn't ready for that yet, but the church we were attending at the time was offering FPU,
and I didn't really want to go.
I thought I had everything figured out.
I was that guy who, don't tell me how to handle money.
But my wife really wanted to do it, and she encouraged me to go, and we did.
And by the second week of class, I was hooked.
And what it took was the net worth worth calculation because i'm a math guy ah so i was
excited to do that and uh put all the numbers together and figured out my net worth was about
zero at that point i was ready to i was ready to jump all in on your plan something needs to change
yeah so julie what made you want to do this want to go to the class um i don't know really i would
just say god um I was just prompted
to go. I was a new Christian at the time.
And I just felt like the Lord was like, go here.
And I was just like, okay. So I showed up
and like he said,
he didn't want to go, but he took him
along and he's a numbers guy. And so
once we were in it, he just ended up
taking over and I just kind of followed suit.
Once a numbers guy gets their hands
around these numbers, it causes us to go bananas yes yeah yeah it does that to us numbers nerds or whatever you
want to call us but very cool you guys and so how quick did you knock off the 45 uh 22 months all
right very good yeah and then so you ended up with about a six-year plan on the house yeah yeah a
little quicker than average.
Yeah, good.
Yeah, and we went pretty quick to pay off the consumer debt. And then, you know, just like anybody goes through, we went through some difficult times.
So for a couple years, we didn't make a lot of progress.
It was kind of slow.
And the past two years, we really kicked it into gear and got it taken care of.
Put the icing on the cake, baby.
Yeah.
I love it.
I love it.
Well, the average is the family going through financial peace.
They pay off their debt in two years, and then it takes them about another seven to
pay off the house.
Yeah.
So you guys are right on.
You're a little above average on all that.
But excellent job, guys.
Thank you.
Thank you.
Wow.
How's it feel?
You don't have a freaking house payment, man.
It feels great.
It does.
I love spending money.
That's true.
It puts you in a different position completely. Yeah. It does. I love spending money. That's true. Puts you in a different position completely.
Yeah, it does.
I love it.
So when people ask and they find out how young you are and that you have a paid-for house,
and they say, how'd you do that?
What do you tell them?
I say it was a lot of things, certainly the budgeting and working together.
But for me, it was hope.
It was seeing other people go through this program and really understanding that it does work.
And even though it took us a long time, eight years is a long time,
never giving up hope that we could do it and we can get there
and always keeping that in the back of my mind.
Well, and you had that ebb and flow, the slow down and then the speed up.
Yeah.
You know, with the different rhythms of life that happen while you go through eight years of anything.
Right.
So, very cool.
Thank you.
Very cool.
So, Julie, what do you tell people the secret to getting out of debt is?
Talk to your husband.
Talk to your spouse a lot.
I think for me the biggest thing was communication.
Because more than anything, what we learned, not just about paying off the mortgage or paying off this,
and I think you've talked about this a lot, is it taught us about each other more than anything in the entire world.
We learned things about each other that we loved and hated.
The best thing, the only thing I think that worked for me
is we would constantly communicate, even if it was an argument.
We would go back and talk, but we were always talking.
We were always learning about each other
and at the same time how to do life or money together.
Way to go.
Very cool.
Who were your biggest cheerleaders outside the two of you?
Some friends at church.
Yeah.
Yeah, I got to teach FPU earlier this year for the first time.
And so, you know, getting some people involved in the same material as us and some people there learning that we've been going through this process and we're pretty close to paying off the mortgage.
And some family members as well have been very supportive.
Very cool, guys.
Thanks.
Great job.
Great job.
And did you bring the kiddos with you?
We did.
All right.
What are their names and ages?
George is 12, and Anna is 6.
Okay.
All right.
Very cool.
Good.
All right.
So we made a trip all the way from Boston area to do your debt-free scream.
Aaron and Julie, George and Anna, we got a copy of Chris Hogan's book for you,
Everyday Millionaires.
That's the next chapter in your story for sure.
Thank you.
You're on your way to do that.
I'm proud of you guys.
Congratulations.
Thank you.
You're heroes, man.
You changed your life.
Thank you.
Way to go.
Very cool.
All right.
It's Aaron and Julie, George and Anna from the Boston area.
$240,000 paid off in 100 months, making $75,000 to $175,000.
Count it down.
Let's hear a debt-free scream.
Okay.
Ready, guys?
Yeah.
Ready?
Three, two, one.
We're debt-free!
Love it!
Well done, you guys.
Very, very well done.
That is awesome.
That's about as good as it gets right there.
Well, eight out of ten of your friends, neighbors, and coworkers are living paycheck to paycheck. So when he teaches Financial Peace University, this church, he can show people that this is doable.
They wander into that class as new Christians, she said, eight years ago.
And now here they stand 100% debt-free, house and everything.
Wow.
You want to show somebody how to do that?
Become a coordinator.
Thousands of regular folks have become coordinators
and shown other people how to get out of debt and build wealth
and become outrageously generous, and you can do that too.
So start helping people break this cycle.
We need some coordinators right now.
If you would like to be a coordinator for Financial Peace University in your area, just let us know.
You don't have to have special skills or anything.
All you have to do is love people, and we'll show you how to do the rest.
So get started by texting LEADFPU to 33789.
That's LEADFPU to 33-789.
And that'll get you going.
Open phones here at 888-825-5225.
Dan is on Twitter.
My mother-in-law recently lost a rental house on their property due to fire.
The rental was paying a small mortgage and her retirement income.
She's trying to decide whether to rebuild or to invest the insurance money
and enjoy the larger yard.
What would you recommend?
Well, I think I'd look at the dollars involved and her age.
Does she want to go through a building project?
Does she want to rent her right there in her backyard like she had?
It sounds like she'd like the larger yard to me.
Honestly, a well-purchased piece of real estate, if she didn't overbuild it and spend too much on the rebuild,
the rental in most areas will pay more than a good mutual fund will pay,
but it has a hassle factor to it that the mutual fund doesn't.
You invest in a mutual fund, the only hassle is you have to just open up your email
and see what your balance is.
That's all you do.
There's not that much to it.
Obviously, with a rental, there is a lot of variables,
the human element that you're dealing with.
And so it's just what she wants
to deal with and um the way this is worded my mother-in-law and you know it makes it sound
like she's probably a lady that's retired or approaching retirement and um so she may not
want to hassle with the rental even if she made more money with it.
Either one's okay.
There's not a wrong answer.
The only wrong answer would be just to blow the money on something and have absolutely nothing to show for it.
That would be the wrong answer.
So, hey, man, thank you for following us on Twitter, Dan.
We appreciate it.
This is The Dave Ramsey Show. Stephanie is in Missouri.
Hey, Stephanie, welcome to The Dave Ramsey Show.
Hello.
Hi, what's up? We will be
getting a large deferred compensation check next month that cannot be rolled over into anything.
It's a 409A. Would a donor advised fund be a good tool to lower our tax liability and make that amount go further. If you're going to give it all away.
We are.
I'm almost 51 and Doug's almost 52,
and we have grown up in church and tithes and do all that.
How much money is going to be rolled over?
We are going, the amount we're going to get is uh 420 000 and what is the rest
of your nest egg um we have um 1.2 million in our 401k we're going to pay the house off with part of
it because we only have 92 000 left that. And we have our emergency fund.
We're going to put some away for a car.
But we thought that would take us maybe until we're 65.
And if we wanted to retire at 60, we could do that.
And then we'd have our tithing already tucked away.
And what is your household income? Right now it's about 145 okay so you're going to use the
donor advice fund and to in a sense prepay your tithe correct um we i figured it up i've been a
tax preparer the last 12 years and i figured it up and it looks like we would uh save about 37,000 dollars
in taxes because you would put how much into the donor advised fund uh 110,000 well we'll we'll
give 42,000 to the church when we get it and then put 110,000 into the fund. And pay off the house?
Yep, and then we'll have enough to pay off the house.
We'll have enough to put some away for another car.
That is not going into the fund, obviously.
Correct, yep. Okay, so the only donation to the actual donor advice fund is $140,000?
Yeah, $110,000 to that fund, yeah. Okay, all right. That's a lot different than $400,000. Yeah, well, $110,000 to that fund, yeah.
Okay, all right.
That's a lot different than $400,000.
No, yeah, we're not going to put the whole thing in.
Yeah, there's nothing wrong with that at all.
That's a great plan.
Okay.
And then you're just going to use it to make your tithe check,
and then as your income continues for the next few years,
instead of actually taking your tithe check out of your income,
you use your income then to do other stuff, right?
Yeah.
What my plan is is I'm going to take my house payment
and put it into a Roth next year in 2020,
and then we're going to take what we would tithe
and put it in a savings account in case we want to live, in case we want to go on a trip.
So the only thing the donor advice fund is doing for you is you're getting a tax break this year that you're going to give back in the coming years.
Correct.
You're taking your tax right off early.
Right. That's all it is. It's not a net savings on tax other than the present value
of the money
that's fine
if I didn't put that if I didn't do that
then I'd have to pay more taxes
on it
and the fact that you're not tithing in the
other years is going to increase your tax burden
right
but not like it would this year.
It's just, well, it's just delaying it.
I mean, you're taking it early is all you're doing.
Okay, that's fine if you want to take it early.
There's nothing wrong with the strategy, and it all fits with where we are,
and it's not out of line with ratios with your net worth and everything else.
Congratulations on being an everyday millionaire.
Very well done.
Excellent job.
Renee is with us.
Renee is in Missouri.
Hi, Renee.
How are you?
Hi, Dave.
How are you?
Better than I deserve.
How can I help?
I have a question for you.
My husband and I, we're on baby step two, and we have about $25,000 in debt.
And we're thinking about refinancing our house to pay that off.
Why?
Just kind of want your input on that.
Why?
What's that?
Why?
Well, it just seems like the little things every month, what we're paying in debt are just like chipping away,
and we can't like really get ahead or save for anything.
Because you're not really paying off your debt.
You understand that.
You're just moving it.
Right.
But we have a lot of equity in our house.
Yeah, but you're moving it.
You're still in debt.
Yes.
You just changed the name of the debt and chose not to deal with it.
So what's your household income?
$70,000.
Okay.
And how long have you been working on this?
About 18 months.
We've paid off about $17,000 to $18,000.
Okay.
I would not, no.
I think you're running on a speed about 50% on tightening up your budget.
I think you guys need to, the two of you need to work together,
look at the budget very carefully every single month, write it out, and stick to it.
I think you're doing ish you're doing you're not doing
a bad job you're just not doing a good job you should have paid off more making 70 000 than you
have and 25 000 shouldn't be an insurmountable task making 70 000 and so um how much is your house payment? About $1,100. That's not out of line.
Okay.
How many kids have you got?
We have two.
Okay.
Husband's not on board all the way.
Well, maybe so.
Yeah, okay.
All right.
There's an anchor while you're trying to get this boat moving.
It's like, you know, I tried to ski one of the kids this summer,
and I forgot to put the anchor in, you know,
and the boat was just dragging this anchor, you know,
and it feels like there's something holding this thing back.
It ought to be going faster than it is.
And I can't figure out what it is exactly.
I was looking for it in the numbers, but it's not in the numbers.
It's in the spouse.
So, yeah, just sit down with him, and you guys readjust and recommit and turn up the fire on both of you to gazelle intensity level.
You've got it down there at rabbit level.
Let's kick it on up to gazelle level and get it moving
and cut your lifestyle down and a commitment to not going out
to eat and not going on vacation and beans and rice rice and beans and we're going to work extra
and we're going to sell stuff and we're freaking getting out of debt man that's what you got to do
and when you do that when you kind of get that thing going in your voice that's when everything
changes hey thanks for the call you know what's weird is guys that um doing this for 30 years we've seen anecdotally and with actual
data points in our research with our team with our tribe out here that um it's weird it's because
i'm a math nerd and this drives me bananas The numbers don't predict your income versus the debt you have don't predict whether you get out of debt.
The only predictor is how pissed off you are, how intense you are, how sacrificial you're willing to live.
And you can't really put, like, quantify that.
It's not like a number you can put on it.
But when somebody gets that thing in their voice that it's not like a number you can put on it but when somebody gets
that thing in their voice it's like you know and they're ready to kill it that's the ones that are
getting out of that i mean it can be a single mom making 18 000 and she'll whip a hundred thousand
but you know because ain't no stopping this chick and And then I talk to somebody making $110,000, and they're like, today, today, today, we can't seem to get there.
And it's not got anything to do with the numbers.
It's got to do with how are you sick and tired of being sick and tired?
Are the two of you on the same page?
Have you got your every dollar budget out?
Are you dialed in?
Have you got this roar going?
Are you going to get after it, baby?
You sell so much stuff, the kids think they're next.
The dog's named eBay and the cat's named Craigslist, baby.
We are moving some stuff around here.
We are not living like this anymore.
It's not happening, man.
You got to move something.
And that's the only time it moves.
That's really what happens in your life everywhere.
If you really want deep transformation and change in some area of your life,
it requires that kind of passionate focus,
a visceral reaction to saving your marriage,
a visceral reaction to causing your kids to straighten up and fly right,
a visceral reaction to shifting your career,
a visceral reaction to changing the way you handle money.
This transformation stuff is not quantifiable with math.
It's all about game on, baby.
This is The Dave Ramsey Show.
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