The Ramsey Show - App - Don't Rationalize Your Stupid Credit Cards! (Hour 1)

Episode Date: August 7, 2019

Rachel Cruze, Home Selling, Home Buying, Debt   Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE   Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

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 am Dave Ramsey, your host.

Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. You jump in. We'll talk about your life and your money. This is common sense for your dollars and cents. Ashley starts off this hour in Missouri. Hey, Ashley, how are you? Good. How are you? Better than I deserve. What's up? Me and my husband have some high future goals, and we are wanting to possibly downsize with three kids dramatically

and try and have a paid-for house within 10 years. So I was just kind of wanting your opinion on if we should downsize our newer built house, if you think that would be a good idea for us. Okay. What's your household income? Last year it was about $66,000. Okay. And what fields are you in? I am basically a secretary at a hospital, and he is a manager at a chemical application company.

Okay. All right. And what do you owe on your home? We bought it two and a half years ago, so right now we owe $233,000. Okay. All right. And how old are you? I'm 31.

He's 34. Okay. And so you would sell this house and move into what? We're wanting to dramatically downsize into a townhouse. Okay. You said we are. Both of you are wanting to do this. Yes.

We were just wondering if it makes financially sense. We're on baby step, just started baby step four, and if we stay in our current house, we got a 30-year loan, and it's already at the top of our budget. So we don't really have the money to even do 15%. So we're thinking if we dramatically downsize, then that will free up $500,000, $600,000 a month to, you know, make our retirement goals quicker, pay off a house quicker.

So how much is your house payment? It's going up because of taxes, so $1,670. And what's your take-home pay? Ends up being about $4,670. And what's your take-home pay? Ends up being about $4,000? Yeah, if you don't count, like, take-home, yes. If you don't count insurance and retirement and all that, yeah. So your house payment is 45, 40-something percent of your income, of your take-home pay.

It's very difficult to prosper with a house payment that's that much of your income. So unless your income is going to be going up dramatically, you've overbought on house. Yeah. I mean, if you see your incomes going to, you know, $90,000 in the next three years as the two of you grow in your careers, then you're probably okay to sit it out. But, you know, if you're going to be sitting with 3% raises every year or something, you're not going to prosper because you can't even put the 15% aside because your house payment, your house poor. It's eating all your budget up, right?

Yeah. So if you don't see your careers on a pretty steep income change up, then, yeah, you do need to move down. Okay. We're thinking we could get a townhouse and get a 15-year loan and still have extra to pay extra and probably pay it off in 10 years. But people think we're crazy because we have three kids, and moving to a townhouse with three kids, I think we're crazy,

but I don't really care. Well, yeah, what people think doesn't matter. I don't know if a townhouse is your answer, but you have a house payment that's too big for your income. Yeah. That's your bottom line, isn't it? And so whatever the change is that you have to do to fix that needs to happen because you're going to struggle to move forward until you do something different. Erica is with us in Illinois.

Hi, Erica. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call. Appreciate it. Certainly. How can I help? So I have a current car, and I'm going to get a new car that will be paid for in cash.

But I want to know if I should be keeping my current car after I get the new one. The reason I'm asking is because I have a second job, which requires me to drive, and so I don't want to put all the miles on the newer car, but yet I want to make sure, you know, that I'm being financially responsible with having two cars. Gotcha. And so how many miles do you put on a car in your second job?

Just kind of depends on how much I work. Probably 350 a week, maybe 400. Okay. So that's like 50,000 miles a year. Yeah. Yeah, you're putting a lot of miles on a car if you're working that much. Mm-hmm. About 1,000 miles a month.

No, no, that's like 12,000 miles a year. I did that wrong. I'm sorry. Oh, my, that's like 12,000 miles a year. I did that wrong. I'm sorry. Oh, my gosh. That's okay. Yeah. I'm probably going to be working less because I'm going to have to... What's the value of the car you're buying? What are you paying for it?

About 20. And what's your household income? 76,000. No, I would drive the new one. Really? Yeah, 12,000 miles a year I would drive the new one. Really? Yeah, 12,000 miles a year is what your current rate is, and that's not a huge amount of miles. If you were putting 35,000 or 40,000 miles on the car extra,

that would be different. But, you know, 12,000 miles a year, if that's all you put on it, now obviously you're going to use it for other things, so it won't be all, but that's a low amount of miles to add to a car in a given year. Okay. That's about average. That's about average. So, whatever you do in addition to that is going to put you slightly above average as all, and I wouldn't worry about it. Are you doing something that brings harm to the car other than the miles?

No, I'm just driving'm driving for door dash okay um so i've been making about fourteen hundred dollars a month just from doing that cool um so that's pretty much how many miles i'm doing you know per um month but i checked with the insurance and it would only be a hundred dollars extra to keep both cars but obviously there's wear and tear and you know i have to pay for the sticker every year and things like that but well and and that other car is going down in value too anyway so you're not destroying the new vehicle with the amount of miles you're talking about it's it's not that many miles so um you know if you're but if you were like a your job was to travel and you put 50,000 or 40,000 miles a year on a car,

now you're destroying that vehicle's value. 12,000 miles a year does not do that. And so, you know, we're talking about 1,000 miles a month here roughly, and you're not even probably going to do that because you're probably going to slow down a little bit, and it just doesn't justify keeping that other car. I wouldn't. Hey, good question. Up next is Phil in Florida.

Hi, Phil. Welcome to Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. How can I help? Great. So my fiance and I are getting married in December, and we're planning on cash flowing the wedding.

Congratulations. Thank you. She has about $90,000 in investment fund that she inherited, and I currently have $18,000 in student loan and car. rent to buy um house and so our contract is to we didn't want to buy anything before we got married so it starts um we will actually end up purchasing in may um so my question is should she go ahead and already take out down to 20 of the down payment about 45 000 now and put it into savings no just just wait until you're ready to do the deal. And after you all get married, you'll pull out enough to get out of debt, and then you set your emergency fund aside, and then above that, the money's set aside for your down payment in May.

I just let it ride there in that account until May comes up. So, hey, congratulations. This is the Dave 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. Thanks for joining us, America. This is the Dave Ramsey Show. Open phones at 888-825-5225. At the bottom of the hour, Rachel Cruz, Ramsey personality, will join us. If you'd like to speak with her, you can call in right now. Kelly's opening up some lines for Rachel. Rachel Cruz, number one best-selling author, will be with us here at the bottom of the hour in about 15 minutes. The phone number, 888-825-5225.

Mike is with us in Pennsylvania. Hey, Mike, welcome to The Dave Ramsey Show. Thanks, Dave. Thanks for taking my call. Sure. What's up? Yeah, well, I wanted to thank you, of course, for taking my call. But the other thing, too, is to give some thanks where, if you will, for a number of years, I was sort of lost financially in discovering your program here at a bit of a later age. It's been a big help. And so one of these things here, too, because I've had some outstanding student loans,

and recently I was contacted by a private loan consolidation company, and there were some figures and so forth that seemed workable to do for consolidation, but there was one or two other parts about it that just seemed a little sketchy, and I thought I'd run it by you for your opinion. Okay. So how much student loan debt do you have? So I have $53,000. Okay. And how many different loans? I have three different loans. What's your current interest rates?

The interest rates, actually, I don't know. I should know that. Okay. And what were they offering you? They are offering here, let's see, I got the figures. I can just look at it here. Okay. So there were $240, excuse me, five $240 payments initially. Then it was $20 over 240 months. That's 20 years. Now they had said, that the interest would accumulate, and this would total to a $66,000

discharge, and then there were a couple of other recertification payments. So, that's not a good, the discharge sounded good, but they did mention that... We don't need anything discharged. We just need to pay the loan off. What's your income? I've been an adjunct teacher, so that's where the struggle has been. My income is pretty modest. It's about $24,000. Okay. What are you doing about that? I'm going to finish my doctorate. I actually called not too long ago asking about that, your opinion about that. But yeah, I'm doing my my best to get full time and get out of this sort of rut and get in a better financial position. Yeah, the terms you're describing are not terms that you want to engage in.

The only time you would do a debt consolidation loan is with student loans, and the only time you would do that is if you save on the interest rate. If you get a lower interest rate and you get a fixed rate, not a variable rate. So if you can get a lower interest rate than you currently have and get a fixed rate, not a variable rate, then you would look at refinancing. But paying some payments up front and then paying $20 and staying in debt 20 years and having some of it discharged. No, none of that works. None of those things sound right. So you want a lower interest rate on a fixed rate. And, you know, we're back to the same discussion,

which is get your income up so that you can attack this by pursuing either part-time work and, you know, the furthering of your career like you're talking about, or both. And probably both is what it sounds like. Hey, thanks for calling in. Open phones at 888-825-5225. Kayla is in Florida. Hi, Kayla.

Welcome to the Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. What's up? I'm so excited to talk to you. I have a quick question for you. So I recently got married.

September will be one year ago. We've had some things happen since. My question is, we have a home. We're looking to potentially sell our house. We also have an investment property that we just paid cash for. We're thinking of selling our home to live in the investment property for about a year in order to pay off some of our debt, or most of our debt, actually. So we're trying to decide if that's a good way to go or if we should stay in our home and just tackle the debt another way.

What's your income? What's your household income? We bring home a little under $12,000 a month. Okay. All right, cool. And how much debt have you got, not counting the house? Not counting the house, $106,000 a month. Okay. All right. Cool. And how much debt have you got, not counting the house? Not counting the house, $106,000. Okay.

And the house that you're selling, how much equity would you get out of it if you sold it? Well, we're thinking, we're hoping to get between $60,000 and $70,000. Okay. So that $60,000 to $70,000 would go on the debt, plus you would use your $140,000, $150,000 income to attack the rest of the debt, right? Yes, sir. And the investment property is paid for, and you'd do this over about a year,

and then what would you do after that? Well, then we would hopefully be debt-free, and then our monthly payment on the home would go from like $1,800 to like $600. So that would make it easier for us to tackle that debt. I thought the investment property was paid for. Okay, so taxes. Taxes and HOA fees. Are $600 a month.

Is what we would pay. That's $600 a month. Okay. Yes, sir. All right. But after you finish getting out of debt a year from now, and you're living in the investment property, your other house is gone, you're debt-free, what's your next step?

Our next step would be to save, I guess, to buy another home. Okay. I would sell the investment property to buy the next house. Okay. Yeah, I would not keep an investment property unless I could pay 100% down for my personal residence. I want you to be 100% debt-free before you start buying investment real estate. Well, we went in with our in-laws, so that's the other catch.

I don't care. Okay. So make sure that's there. That's another reason to sell it. Gotcha. Right. Not be in partnership with the in-laws. That's a good thing.

Okay. So even if we would only make on our portion like $12,000, just put that toward our debt, stay where we're at, and keep paying, working toward paying our debt off? No. I'm okay with your plan. When you're debt-free and you're living in the investment property and the house you're currently in is gone and you're making $150,000 a year, then I would sell the investment property and buy my personal home.

Oh, yeah, yes. That's the plan. Yes. Okay. I wouldn't keep the investment property at the end of this story. No, no, no. We're going to sell it and put that towards the new house plus some of our savings. Gotcha.

Okay. That's the plan. There shouldn't be any savings. All the savings ought to go towards all the debt until the debt's gone. So we should take our savings. Then you would build savings, yeah. Okay, because we have about $20,000 in savings that we just have. Perfect.

I would throw that at the debt, too. Oh, okay. Yeah. We teach a thing called the baby steps. Baby step one is you take all money that you have that's not retirement, and you have $1,000 in the bank as baby step one. Two is you pay off all your debts using all money you can get your hands on that's not retirement money. That would include savings.

Okay. And then you're debt-free. Once you're debt-free, you build your emergency fund of three to six months of expenses. Once you do that, then I would start saving towards a down payment on my home. Okay? So it's okay to not have that three to six months for like a year or so? It won't take a year. Okay.

We got 60 to 70 coming out of your other house towards the 106, plus 20 is 90, and you make 150. You only have $30,000 in debt left. Okay. So it's only going to take a few months, and you're going to be debt-free. You know, probably about four months, but you'll be debt-free in about four months. Then you build your emergency fund of three to six months of expenses. Then you build your down payment, and that's the process that we teach.

Hey, thanks for joining us. Open phones this hour. Again, if you want to talk to Rachel Cruz, Kelly has opened up some lines, and she'll be joining us here at the bottom of the hour. The phone number is 888-825-5225. I've got to tell you, when the light bulb comes on in my life, here's how it sounds. This guy, Randall, sent this email in. Really fun.

I have friends who say you have saved their life. My stubbornness said BS. I'm age 56. I'm looking at my finances, and I'm in a mess, and I'm not even close to being able to retire. I'm doing my financial checkup while watching and listening to YouTube videos. I'm listening to the end of a Buck Owens song. When I look up and see which video I want to see next, and I click on a Dave Ramsey rant.

You called me stupid in the video, and you were right. Long story short, I made a budget, and I'm going after my dad. Thank you. That's fun. Get after it, Randall. We're on your team, man. This is the Dave Ramsey Show. We'll be right back. Joining me this half hour, Rachel Cruz, number one bestselling author and host of The Rachel Cruz Show, Ramsey Personality. The Rachel Cruz Show, a massive hit on YouTube.

And if you didn't know, a new Rachel Cruz Show comes out once every couple of weeks. And I guess we had another one come out this week, right? We did, yes. A new episode is launched. It's out. Very good. And so you can get that at YouTube. If you don't subscribe to the Rachel Cruz YouTube website, you should.

Or YouTube site, you should. And if you subscribe to a site, if you didn't know, some of you don't know about this stuff. I didn't. It took me a while to learn about it then you have the option of having them send an email when a new video is posted on that site do that with this show's site the dave ramsey show site you can do that with rachel cruz you can do that with any of our ramsey personalities for that matter and so what are you guys talking about this week we're doing a two-part series. So this week and then in two weeks, another one will launch all about credit cards. So this is the ugly truth about credit cards episode.

Ugly truth about credit cards. So what is the ugly truth about credit cards? It's the one type of debt that I hear people that come up to me say, oh, my goodness, I love all your stuff, but we have a credit card and we pay it off every month. And, you know, I use the airline miles and all of this. And so it's just,

you get to the reality where do people pay it off every month? Sure. There are people that do that. Are there people that use miles to go on a trip? Sure.

But the majority of people don't. The average family owes $15,000 on their credit cards. And so the last number I saw, 78% don't pay it off every month. So somebody's lying. Somewhat. There is a major gap. And the part that is difficult is the assumption that I'm going to get one, use it for emergencies,

use it just to pay for gas, use just a couple of things here and there. And then it ends up leaning and being the emergency funds. And you look up and there's $5,000 charged to it. And so that's the reality that most people are facing. And so we're just combating it hard. And the fact that statistically speaking, there's more store credit cards now that people are applying for and getting versus even just traditional credit cards. And so the store credit cards are like the worst, the interest rates and the fact that even like stores will dock employees hours that don't sign people up for enough credit cards. I mean, the whole system is just so,

it's so messed up. And'm like man it it's one of those things that it's again people's intention behind it is somewhat pure is what they think it's rationalization though that's it and so we're debunking they posted stuff because of the because of your show they posted stuff on my twitter account and uh you know all these goobs are on there all these broke people are on there arguing with the idea that the credit card is a cigarette. I mean, the cigarette, you know, when I was growing up was cool. Everybody wanted to smoke. And it was advertised widely.

And then somebody actually started talking about, then a lot of people started talking about, then a whole lot of people started talking about, it kills you. Yeah. And suddenly it wasn't cool anymore. And my prediction is, is the credit card, eventually you're going to end up looking as stupid as you are for using a credit card. Because it kills you. I have never, you know, all these people that are broke are defensive and go, well, I use mine. It's just a tool, improperly used.

I don't agree with Dave Ramsey. And it's all these broke people that are arguing. It's like being on a nutrition site and a bunch of fat people arguing with you. It's absolutely ridiculous. This is just stupid. I mean, it really is just crazy. Oh, yeah. No, totally, totally.

And so breaking down just like the methodology of people's rationale for getting one and then the reality of what it's faced, of what it's caused in America and American, you know, and families in America. And so we talk about that and it was funny because at the end of the day we were talking about in a different meeting with you about just like conviction and being too legalistic or versus having too much grace

and being enabling. And kind of coming to this point, I think I said it on the show, where I was like, you know what? At the end of the day though, guys, I'm good. Like Rachel Cruzz i'm going home from this shoot and i'm going to go home to my kids and my husband we're going to eat dinner tonight i'm going to sleep great like my i'm okay i'm okay but i but but there's so many people in america that they're not okay like they're they're stressed out they're freaked out because they bought into this lie that you have to have a credit card to survive in America.

And I'm like, man, you know, my world's not turned upside down if you have a credit card. But the problem is, is you're setting yourself up for your world to be turned upside down. And so why even go there? Why go there? So that's what the whole episode's about. It's a little bit of a punch in the gut for probably some people. But, you know, you spend more, too. I mean, we just took we just whole family went on a Disney cruise.

And your little room key, you can just buy anything you want to buy while you're there. And it goes on your account. Just put on my account. Just put on my account. Just put on my account. At the end of the week, you settle up, right? And you've either put up a debit card, which is what we put up, or a credit card. But you do not think about paying $18 for an ice cream cone when you just are swiping it.

Well, the ice creams were free in the Disney course. I'm kidding. I'm kidding. There were some things that were $18. But some of the stuff, the pricing on it was absolutely bizarre. Yes. Disney's got some margin, I'm just saying. And you don't even have to think.

You don't even think about it. There's no emotion. Oh, yeah. Because you do not see the cash. You just wave this thing. Yep. and there's no emotional friction yeah there's nothing that makes you stop and give pause and go what did i just pay for that what did that cost you do not do that you don't even do that with a debit card but you really don't do it with a credit card and you triple don't do it with a credit card if you're one of those stupid people that thinks they want to get airline miles.

Because you're like, oh, yeah, give me six because I get airline miles, and you needed one. Well, there was one airline, and we do the stats in this episode, but they did a companion pass that if you signed up for the credit card, then you got a companion to fly with you for free. But then you read the fine print, and you have to spend close to $15,000 within a three-month, a 90-day window in order to get this. And the average ticket

for the airline is like $276 or whatever it is. So we did the math out. I'm like, man, that means you would have to take like, it was close to, what was it? Like 36 trips a year to rationale that $15,000 that you're spending.

And I'm like, no one has time to take 30-something trips a year. Like, what's happening? I mean, if you're one of those stupid people that says, you know, I get 1% back on my Discover card. Well, that's just stupid. That makes you stupid when you say that. Here's why. That means you have to spend $ hundred thousand dollars on your discover card

to get one thousand dollars now tell me how that's a method of building wealth you moron that's just stupid that's just dumb and when you come in and you start being defensive about carrying around your discover card because you have points and you get one percent back that makes you just mathematically illiterate i mean it's just dumb i don't i just i just and and it just aggravates the crud out of me that people are still going well i just think i did i think i'm winning yeah you're playing with city bank and you're playing with chase and you're playing with first card and you're playing with the fifth third who have more focus groups on you they know more about your behavior patterns than you do,

and you're screwing around with these multi-billion dollar companies who have definitely dialed in the big brother marketing on your butt, and they know what you're going to do more than you know what you're going to do. And you're playing footsie with them, and you think you're going to whip their butt and get 1%. It's just dumb. Well said. You should have been on my episode. Did I mention it was dumb? no i know i know i know

totally so breaking down the ugly truth about credit cards now when you guys were working on this did you find uh what like victoria's secret and best buy and those guys were not giving the employees hours if they didn't sign up oh yeah the store credit card it's like that's a whole other level to me in the credit card industry well of creepy and just the mathematics of it the the higher interest yeah the interest rates compared to traditional credit cards anywhere except there right yes and then on top of that what they do to their employees to get people to sign up for credit cards that that you know they'll dock hours or they'll give more hours i mean it's just this whole manipulation of this mom who's checking out at ann taylor loft right and she you know what i mean like that like that's the thing i'm like you're you're ruining people's lives not that i'm not blaming the

employees of these stores but i'm kind of blaming the employees of these stores i'm like man you're signing people up for stuff and then these people are taking it obviously the consumers are signing up so looking at those lies and like just the reality of what does it look like to live your life not looking in the rearview mirror paying for things in the past, but truly being able to focus your attention and your money on the present and the future versus living in debt. Yeah. It makes a lot of sense.

Great show. Retro Cruise Show, the ugly truth about credit cards on Facebook and YouTube. A new episode comes out every other week. A new podcast episode airs where podcasts air every other week. Back with your calls for Rachel at 888-825-5225. I'm going to go ahead and get going. half hour Ramsey personality number one best-selling author Rachel Cruz host of the Rachel Cruz show uber popular YouTube show that comes out every two weeks most recent episode is the ugly truth about credit cards and you can get that episode on YouTube and on Facebook and of course the podcast airs everywhere that you listen to podcasts as well now your podcast is a version of the YouTube show but you add some stuff to it, right?

Yes, correct. So we'll take the audio from the show and use most of that, but with some additional teaching and kind of commentary around it. But it ends up being about a half hour podcast and show all together. Yeah. Very cool. All right. Adelphi is with us in New York. Hi, Adelphi, how are you? Oh, hi, Dave. Thanks for taking my call. How are you? Better than I deserve. How can we help? So I have a question. My employer offers tuition reimbursement, and I'm taking the idea of maybe doing my MBA online, and I was wondering if I should use, my husband and I have a lot of credit card debt. I was wondering if I should use – my husband and I have a lot of credit card debt. I was wondering if I should use the tuition reimbursement to pay off my consumer debt that's at a higher interest rate and then focus on the student loan.

I'm confused. If you use your tuition reimbursement for debt, how are you going to go to school the next quarter, next semester? So basically I would have to take out a loan initially because they wouldn't reimburse you until you complete the course. And once you submit the grades, that's when they reimburse you the money for the tuition. Yeah, I wouldn't do that. I wouldn't do that. No? No.

I would wait until I saved up the money for the first semester and then go to the first semester and then use the tuition reimbursement to go to the next semester and then use the tuition reimbursement to go to the next semester. You don't have to cash flow but one semester. They'll cash flow the rest of them for you because the cash flow reimbursement following that semester will buy the next one each time. Okay. And so all you got to do is cash flow one semester and get started and don't borrow money.

That's what I would do. Yes, because we already have credit card debt and it's at a higher interest rate than the I'm not trying to play interest rate games. You're broke. You're in credit card debt. Yeah. Last thing we need to do is worry about interest rates. We need to get out of debt.

So what's your household income? We take home on a monthly after taxes about $5,600. And how much is a school semester? I want to say it's $1,700. $1,700. Okay. You should be able to say that.

If while you're working your get out of debt plan, you put in your budget to come up with $1,700 and get started on your MBA, and all you've got to do is do that one time, that's doable. That's not going to throw your get-out-of-debt plan off that far. And, you know, I'm guessing that your company will give you a substantial raise when you complete this MBA in two years, right? Well, that's the other thing.

I think the maximum amount they will give you is $10,000, but I was considering if I don't find something within, maybe explore something out of my current employer, look for another job when I graduate if they're not. The maximum raise they will give you is $10,000 or the maximum amount of tuition they'll pay? No, the maximum raise they'll give you is $10,000 or the maximum amount of tuition they'll pay? No, the maximum raise they'll give me. Okay, good.

But then they've also paid for your school, yeah. And you can do this in about two years, I assume, right? Yes. It'll be on the online program. Well, I think we'll worry about leaving that employer later. That's two years from now. Right now we've got to get $1,700 and then we've got to work through our credit card debt.

Rachel, what are you seeing in this? Well, I just keep thinking that when it comes to college and college education, I'm seeing so many people, whether they're getting their MBA or even just their undergrad, they go in without a plan. And it's this unintentional way of living this part of their lives. And so even just the thought for you to think through like, okay, yeah, you got to cash flow one semester in order to get that reimbursement. And then from there on, right, it's cash flow throughout versus thinking the

opposite way as she did when she called in. And so being able to look and see a viable plan to say, okay, this is how you do it debt free, and that it is possible, and then making sure you're getting the ROI out of the MBA. And so getting, you know, it'd be around over $6,000, $7,000, getting a $10,000 raise, like is it worth the time? Is it worth the money? Is it worth the effort? And so just asking all of those questions, which is probably more of a personal answer for you to say, okay, yeah,

it is worth it for me. Well, the good news is it really doesn't cost her anything at the end of the story. Right, because the employer is helping with the reimbursement. So the ROI is going to be great. Yeah, yeah, yeah. So it's a free MBA. And so, yeah, let's go get that if you have a desire to have an MBA. Yeah, that's – and an MBA is a good thing.

But you're right. The idea of intentionality – and you know the other thing that comes up from her discussion when she calls in there is when your mom and I went broke, we took borrowing money off the table as an option. We don't borrow money ever for anything. And so if a problem or an opportunity presents itself we have to say do we have the money no don't have the money okay how can we get the money oh can't well we can't do that then or we got to find a way to you got to find another way to skin this cat you got to find another way to get at this problem you got to find another way to cash flow this another way to to uh cut some kind of a deal on something or find a scholarship or do something.

But until you take borrowing money off the table and instead most of the culture not only doesn't take it off the table, most of you out there, it's your first thing you go to. You go, as soon as I want a car, I'm getting a car loan. As soon as I want a hat, I'm getting a hat loan on a credit card. As soon as I want an underwear loan, I'm getting an underwear loan at Victoria's Secret. As soon as I want a whatever i'm getting a hat loan on a credit card as soon as i want an underwear loan i'm getting an underwear loan at victoria's secret as soon as i want to whatever i just i don't even think about it i just get a loan i just go borrow the money and that's just everybody just starts there rather than even pausing for a second and going no i'm not borrowing money no and if you go all the way to the other side where we are and have been now for 30 years

and we just said don't borrow money well what it does is it opens up options because i hear this even with college especially college kids going to college where they're like well i can't i don't have the money to go to school so i have to take out a student loan i'm like well you just limited all of your life into one option when you make that statement. Right. But when you remove it, suddenly you say, okay, in order for this to be true, what do I have to do? Okay, well, that means I need to look at different schools. I probably should apply for scholarships and grants. I probably could get a job.

Like, suddenly. I might have to go to community college first. Or maybe I just say no. I might have to live at home. Right. I might not be in the sorority. That's right. I might not be in the fraternity. The options are there, but when you fall back and when debt is the singular

focus it's the only option because it's honestly the easier one right it's easier just to swipe the card it's easier just to sign the name to the student loan it's the hardest on the long term that's it so that's what i'm saying though is in the moment that's the easiest to say yes to and so that's what makes everything just seem so appealing but then on the flip side you get down a few months and you say oh wow now i'm the one having to pay back these loans and pay back this card and so it's just it's the 28 year old version of you hates the 22 year old version of you oh gosh you look at him you go you're a moron well you just never did to me you just never meet someone that's like i love my student loan payments that was just such a good thing i did seriously i mean like 70 000 i wish i'd

done 80 000 in debt yeah no that doesn't come up you're right so it is it's just this when you take debt off the table suddenly you have options even though it may not be the easiest one in the moment it's the best one long term well there's almost no things in life and certainly almost no things in money that are easy on the front without pain on the back. And if you'll take the pain on the front, it's easy on the back. And it's shorter. The pain's usually shorter in the front. Yeah.

Yeah. If you go ahead and delay the pleasure, the one definition of maturity is the ability to delay pleasure, to put things off and so folks the lesson that we're teaching you here is you know rather than go how can i manipulate the interest rates let me tell you what my interest rate is on my debt zero because i don't have any you know what the interest rate on my credit card is zero because i don't have any so let's just start with this idea borrowing money is not an option now what am i gonna do oh crap i gotta figure this out i gotta have a different angle i gotta think about that i may have to work extra and come up with my you know my first tuition my first semester tuition so that i can get the tuition reimbursement going oh crap i may need to sell this stupid

and then other things you look up a month later if you've saved for it and half the time you don't even want the thing or you choose a different option in life. Like, do you know what I'm saying? Like, even just giving into the impulse of life and just putting it on debt, it may not be what you want to do in the long term anyways. Tapping the brakes may change the decision. A hundred percent, yep. Yeah, that's exactly right.

Well, when you have to pay cash for it, it does feel like it's real then. It hurts. It feels real. Like, I just really bought a freaking car. I just did for the first time in my life. I really bought one. Other than that, the bank loaned me one. You know, oh, geez.

What a different way of living. That's why we call it financial peace. Two words that don't go together. Rachel Cruz, thanks for stopping by. Yeah, thanks for having me. The Rachel Cruz Show on YouTube. Check it out. This is James Childs, producer of The Dave Ramsey Show.

Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.