The Ramsey Show - App - Dream Really, Really Big Debt-Free Dreams (Hour 3)

Episode Date: January 23, 2019

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where dad is dumb, cash is king, and a paid-off home mortgage has taken the place of BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in. We'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Jason starts off this hour in Bowling Green, Kentucky. Hi, Jason.

How are you? Doing better than I deserve, I'd say. Cool. How can I help today? Well, I've been trying to figure out a budget, trying to get everything on track, and I've got an irregular income, and that's where I'm running into problems, because sometimes it might be $1,000 a week, sometimes it might be $500 a week. Okay.

Okay, cool. What do you do for a living uh i'm uh i'm a truck driver okay cool all right well uh when sharon and i first started teaching this stuff um 30 years ago we had um an extremely volatile irregular income because i was in the real estate business in some months i might make literally, and some months I might make literally zero. And some months I might make 20 grand. You know what I mean? It was really crazy up and down. And so we had to figure out how to do that. Here's kind of how it's progressed.

Do you have a copy of the book, The Total Money Makeover? No, I don't. Okay, I'm going to send you one at the end of the talk, at the end of us talking. I'll put you on hold, and Kelly will pick up and get you one. In the back of that book, there's a series of budget forms that teach you how to put together a monthly budget. One of the forms is called the Irregular Income Planning Form, and here's how it works. Just to show you, you can do it with Yellow Pad, but here's how it works, okay? Number one, you know that in the last several years, you've never had really a week under five hundred dollars

right yeah that's basically where i'm where i'm at right now yeah that's your baseline so we're going to start with a regular budget on five hundred dollars a week or two thousand dollars a month right and we're going to lay that out and say okay the first two thousand we're going to go ahead and preset that and that's going to take care of food first lights and water second rent third car payment you know the basic necessities we're going to get those out of the way with the two thousand and we're going to go and spend two thousand dollars on paper on purpose before the month begins because that much we know we're going to get agreed yes yes that's what i've been trying to figure out. And then above that. I've had a lot of problems with that part of it because.

Well, above that, you don't know what to do, right? Yeah. Basically, I've ran into a big roadblock on that. Okay. So what you got then is you make a list of everything that didn't make it, wouldn't fit inside the $2,000 budget. Things you need to do or want to do. You know, we're saving for Christmas. We're trying to pay off a debt.

I need to do this or that. Whatever it is, it's on the list. Even if it was a debt payment you couldn't get to in the $2,000, you make a list of those things, and then you look at that list, and you ask yourself, if I make $10 more than $2,000, what's the next most important thing that didn't make it in the original list for the $2,000 that's on this other list? And you put a 1 beside that number and that item. Yes. Okay? And then you say, if I can knock that one out completely, it's got a dollar amount beside it, okay?

I'm going to pay off this credit card for $140. It's got a credit card, $140. That's the number one thing I'm going to do after my $2,000 if I make $2,140. Now, if I make more than that, what am I going to do? And you put a two beside that. And if I make more than that, what am I going to do? And a three beside that and so on until everything has a list in order of importance, a label. And then you rewrite that list after the $2,000.

What's the most important thing? Number one, down through number whatever. And that list needs to be longer than you're going to make in money that month. And then when money comes in above the $2,000, what do you do? You go right down that list because you've already prioritized it. It's a prioritized spending plan. Now, you can also do that with the EveryDollar budgeting app by just jumping in and changing it as you go. As you get money, you adjust your budget up on the income side, and you go ahead and label every one of the dollars. So once you know what your check's going to be on Friday, you jump in every dollar and

update the income side of it, and then go ahead and spend that money that week, which has the exact same effect of having prioritized your spending. And that's the route to go. So, hey, hold on. Kelly will pick up. She's going to give you a copy of the book, The Total Money Makeover. We appreciate you listening. Allison is with us in Cleveland, Ohio.

Hi, Allison. How are you? Good, Dave. How are you? Better than I deserve. What's up? I have a question for you. My husband and I have been listening to you for a little while now,

and we've been following the baby steps. And we just got through finishing off, like, all of our debts. We just paid off our car, and we're now building up our emergency fund. Good. And we should be there within, like, a month or two. Good. Have it completely funded. So the next step is obviously college for our kids.

We have three. And retirement. I think retirement comes first, for our kids. We have three. And retirement. I think retirement comes first and then kids' colleges. Right. And that's 15% of your income, right? Mm-hmm. Okay. And so my husband's work gives them a big lump sum that goes into every year into their 401Ks.

And it's about like $20,000 or more. And we don't have to match it. That's just what it is. What do you make? What does he make? $100,000. Okay. And what do you make?

I'm a stay-at-home mom. Okay. Cool. All right. So the company's throwing 20% of his income approximately into the 401K. No, it's $20,000. Well, $20,000 is 20% of 100,000. Okay.

Okay, I'm sorry. Yes. So 20% of 100,000 in there on average in a given year as just an extra bonus, but it all goes in the 401k. Yes. Excellent. That's wonderful. Yes.

So I guess I was, my question is, is I don't know, do we, we have currently, we want to start paying down our house quite a bit. And I was wondering if it was what you would think to do about not putting the money, that 15% towards our retirement, since that's a given we automatically get that 20,000 on the 20% already, and then just start putting that money towards our retirement since that's a given we automatically get that $20,000 on the 20% already and then just start putting that money towards our home and then putting the other, you know, the 15% towards our kids' colleges. Yeah, so what's the balance on your home? $192,000. Okay, and your kids are how old and how many?

We have three and our oldest just turned three. We have a year and a half, and our other one is eight weeks old. Okay, all right. Well, what the company is doing is voluntary, okay? And if their profits are down one year, they might not be that generous. It's possible, okay? They're not locked into that. If it ever slows down, then you've

got to change your game plan. Keep in mind, 15% going into your 401k on $100,000 is $15,000. $15,000 against a $190,000 mortgage does not really move the needle that much. It doesn't really change how fast you pay off your house to not

do 15%. But given how much money you're getting, I might back it down. I'm not going to back it all the way down to zero. But if you want to back it down to 10% instead of 15%, and then throw the other five at your kid's college, and then anything else you can get your hands on at the house, I'd probably do that. And you're going to get that house paid off anyway

because you're working hard and you're on point and you're focused. You're doing great. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees, and we never turn off your data. No contracts, no hidden fees, and if you're thinking our low cost means less coverage, think again. Our voice and data service covers 99% of Americans, and our 4G LTE network provides the fastest internet speeds like more expensive carriers we operate on the largest

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you are living in a cave or you're in denial. All of us know somebody that's struggling with money, you are living in a cave or you're in denial. All of us know somebody that's struggling with money. I'm betting every single one of you do. And a lot of folks are hurting and they cover it up pretty good. A lot of people are doing better than you think they're doing. That's okay, too. Either way, you can learn more about handling money. And the best place to do this is to volunteer to lead a Financial Peace University class in your community, in your church.

We need some coordinators to get some classes started right now. Our nine-week class has helped almost 5 million people change their lives and take control of their money, and we're always looking for more coordinators to lead these classes. Now, they're not a trained coach. You don't have to be a trained coach. You don't have to be a financial expert. They're just people like you. You love people.

You have an interest in this subject in general, and you want to influence folks. These coordinators are the heartbeat of Financial Peace University. Without them, we couldn't offer the classes that help all these millions of people. So if you're ready to lead a class, one of these life-changing classes, you can sign up to become a coordinator. Just go to DaveRamsey.com or call us at

888-22-PACE. 888-227- 3223. We're glad you're here. Open phones at 888-825- 5225. Our question of the88-825-5225. Our question of the day comes from Blinds.com. With Blinds.com, you get free samples, free shipping,

and with the new promos they run every month, you're going to save even more. Always put in the promo code Ramsey, and you'll see the best possible deal out there. That's the magic word, Ramsey, at Blinds.com. Michael is in Florida. Dave, how long does it take to lose your credit score? I want to buy a house, but I want to wait until my credit score is zero. Michael, we don't know for sure. The experience that we've had with people doing this, meaning getting out of debt, closing

all accounts. You cannot have an account open of any kind, and you cannot have any bad debt outstanding. All accounts are zero and closed and no outstanding anything on your credit bureau, nothing active. And it appears the experience that we've seen among our people that do this Dave Ramsey stuff is sometime within the next six months after that last account is closed, your score will become indeterminable or zero.

You have a zero credit score, in which case you will have a lot of trouble borrowing money. Thank goodness. That's the goal. We're not in the business of borrowing money. It doesn't make you rich. Being out of debt is your shortest path to being wealthy. Now, then how do you get a house? Well, you get a house with someone like Churchill Mortgage or any other mortgage company, for that matter, that knows how to do manual underwriting.

We recommend Churchill. They're our endorsed advertiser for almost 25 years now, and they can do manual underwriting. But a lot of mortgage companies are stupid. The only way they know how to make a loan is a FICO score. They just look at one number, and based on that number, they make you the loan. Now, that's stupid. They don't really have to think, in other words. A monkey could make that loan, right, and just make the loan, right?

That's all you've got to do. And so these loans, you actually have to look, see if people have jobs and have a down payment. We actually do real underwriting on the loans. It's called a manual underwriting process. And you can get a loan that way with zero credit score. But the truth is, Michael, it's a little bit, it's up to FICO. When do they drop it out?

And you can't have anybody reporting anything to your bureau if you do it'll drag along and you know you'll end up with a 500 credit score or something with one person reporting or something and it gets all screwed up and tangled up so you got to make sure everything is zeroed out and closed and verify that be anal about it i mean jump all over it make sure check the credit bureau. Make sure nothing's popping up. All this stuff. And then somewhere around, most credit bureau rhythms, FICO rhythms seem to be on a quarterly basis. So one to two quarters, three to six months, we usually see them catch on that there's no activity on the account, and they can no longer calculate a credit score. Indeterminable, which makes you have a zero credit score. And again, that's what I've had for well over 20 years.

I just don't borrow money. I don't have any accounts at all in my name. Mickey is with us in Chicago, Illinois. Hi, Mickey. How are you? I'm better than I deserve. Thanks. And you?

Better than I deserve. How. And you? Better than I deserve. How can I help? Yay. So I am calling because I am 23 years old. I'm financially stable and out of my parents' house. But my parents have continued to pay my cell phone and car insurance bills because I'm on the family plans or whatever. And I've tried to talk them into letting me start taking over that responsibility

because I'm financially stable and everything, but they want to keep on helping me out. And so I was wondering what you thought about how hard I should try to convince them to let me take those over. I don't think it matters. I think it's a nice gift that they're giving you. It's not causing you to be entitled. It's not causing you to be a brat. You're financially stable.

You're a very mature 23-year-old out here doing your own thing. Congratulations, you're out of the nest. And they're giving you a nice little gift, and I wouldn't worry about it. If I thought it was the other way around, I'd put the burden on you. If I thought you were being a little participation trophy chick, I'd get all over you, right? But you're not that girl. You're the girl that gets stuff done, right?

I guess so, yeah. That's what it sounds like to me. I mean, you told me three times early in the conversation, you're financially stable. A lot of people don't do that, right? I know a lot of 53-year-olds that can't say that so what's your income it's about 33 000 a year good for you what do you do for a living i'm actually a science graduate student so i get a stipend for that oh okay all right so you're doing your graduate work and they're supporting you a

little bit while you're continuing your education by covering your insurance and your cell phone. I don't think that's a problem at all. Now, if you're 44 and you call me back, I think you probably should have gotten off their plan by then. But right now you're a 23-year-old grad student who's doing a great job managing their money. You're personally responsible and mature emotionally, and I don't think this is crippling your relationship with them or your ability to emotionally mature yourself yourself i think you're doing great i personally

just leave it alone not worry about it but again you look up in five years or something and you're on your own you're married yeah you need to get off their plan that's a good plan it's a good way of doing it thanks for the call open phones at 888-825-5225. Julie's with us in Youngstown, Ohio. Hi, Julie. How are you? Hi, Dave. I'm good. How are you?

Better than I deserve. What's up? Well, I just discovered you a few months ago, and thankfully we didn't have any debt. So coming in at steps four and five right now. We haven't actually set up those accounts yet. We're planning to move this year, so I didn't know if I should just go ahead and open up those investments, or should I wait and pile up some money for the move and then open them up once we get settled? That wouldn't hurt

anything to pile up some money for the move. One year delay. How old are you? 37. Okay. And what's your household income? My husband owns, he's a partner in a business, but we take home 65, and I am home with our one- and three-year-old right now, but I am just going to go back a little bit here and there, so I'll be contributing a little. He's partners in a business, and you're going to move? No, we're just moving houses. Oh, in town. Yes, in town.

Yeah, we've grown out of this home, so we are going to buy his family home. And I just didn't know. I know we're going to probably need money to maybe fix up this house. We're going to be using the equity we have in our home. Yeah, I think you're probably going to need some cash for this transitionary time between your house and the other house you're moving into and put down as big a down payment as you can. Yeah, I'm going to take one year and throw it at houses.

Okay. can and yeah i'm gonna take one year and throw it at houses okay and then so that you end up with as little of debt on the new house as possible the family home when you get into it and you put that on a 15 year fixed no more that's the plan yep it shouldn't be any more than a fourth of your take-home pay when you do that and then that's an okay move and then you know and then when you get settled in, you unpack the boxes, dust settles a little bit, then let's make sure we get baby steps four, five, six going. Four is 15% of your income into retirement.

Five is kids' college. And six is pay off that house early then. So you're setting yourself up to do all of that. The good news is you're actually thinking about it. You're doing it on purpose, not wandering through life wondering what hit you. This is The Dave Ramsey Show. What will your family do if you die? Did I get your attention? Good.

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That's zander.com or call 800-356-4282. In the lobby of Ramsey Solutions, Michael and Maddie are with us. Hey guys, how are you? Hey, we're great. Welcome, welcome. Where do you guys live? Hamilton, Illinois. Now, what's that near? Quincy, Illinois. Illinois, Iowa, and Missouri, right all where they meet. Okay, perfect. Quincy area. Okay, good. Cool. Well, welcome. Good to have you guys. And here to do a debt-free scream, how much have you paid off? We've paid off $216,048 months. Look at you on fire. And what kind of range of income during that time? We started at $150,000 and worked our way up to $180,000. Now we've kind of dropped back down so we don't have to work like crazy anymore. Man, what do you guys

do for a living? I'm a pharmacist. And I farm and then do construction work to fill the summers and winters. Gotcha. Okay. You guys are working like animals. Yeah, even do weddings now. That wasn't on the plan, but just worked out after we got married. Well, there you go. You learned something, huh? Good job.

Well done. So four years, you pay off $216,000. What kind of debt was that? $96,000 were my pharmacy loans, and $120,000 was the new construction loan for our home. You paid your house off. Yes, sir. I'm looking at weird people. Totally weird.

I love it. Very well done. So, awesomeness. How old are you two? 28. And 30. With a paid-for house. Yeah. What's this house worth?

Well, it's probably worth around $250,000, but I'm sorry to tell you we did overbuild the neighborhood since there's nobody around us, but we're not planning on going anywhere for a long time, and we've still got a little work to do on it. I'm looking at pictures that are showing up on YouTube here. So there must be a crop around the house. Yes, sir. What is that? Corn.

It's corn. Oh, it's young corn. Okay, it's just not that tall. Okay. Wow, what is that? I can't tell in the picture. Okay, good. What is that? Corn. It's corn. Oh, it's young corn. Okay, it's just not that tall. Okay. Wow, what is that? I can't tell in the picture. Okay, good. Cool.

Wow. So how much acreage have you got with it? We've got only about an acre around it right now, but hopefully in the future, my grandfather owns a lot of the property around it, so hopefully we can buy ground in the years to come. So as you save up, you'll buy some tracks off of him then? Yep. Good. That's good. That's a good way to do it. or maybe he'll just leave it to you since it's adjacent

to your house that'd be good too that'd be nice done you guys well done thank you man you're 30 years old everything is paid off you got crazy four years ago you're like 25 26 years old what and is that when you first got married you decided to do all this yes we actually started doing fpu as a premarital counseling and just got the strategy and we're gung-ho ever since both of us though were ready to never operate under debt anyway and i in my last year of pharmacy school going on rotation some of my preceptors have been graduated for seven years and we're just paying minimums i know they're just talking about being a slave to these. And I was convinced on that moment, I will not do that. And luckily, this guy right here, he was totally on my side and he was ready just to kill it as fast as I was. So I actually paid off all of my student loans in 14 months.

You guys went berserk. This is amazing. Very, very well done. So did you grow up in families that taught you this, or was it just a personality style? You said, okay, we're going to do this, or the class? Because this is impressive. Yeah, my family was definitely conservative, and my dad had always taught me a lot. And, I mean, I didn't even understand you couldn't pay off credit cards um at the end of

the month i didn't even understand that that credit card debt was a thing you thought you had to pay them off you thought it was the law yeah and half the stuff you go through in the class i was like is that that's real people do that and i mean i was i was living at home until i was about uh 25 regrettably a little bit, but it was because I was saving to buy a house. And my mom enjoyed getting projects done around the house. My dad said, you know, we're going to give you until about 25. Then you're probably going to have to get out of here. It had a foundation and stuff in the ground, and he was helping me a lot.

So he gave me a little grace almost to 26 until I moved into that house. Oh, wow. At least got heat in it. Yeah. All right. Cool. What about you, Maddie? Were your parents conservative as well financially?

Very. And they taught me to be very responsible, take ownership of your actions. And yeah, they were just ingrained in me at a young age as well. Yeah. Very good. And then you look up and you go, okay, house debt. Okay. Pharmacy debt.

Going down. Yes. Going down. Got a game plan. And you guys, then you just went and you go, okay, house debt, okay, pharmacy debt, going down. Yes. Going down. Got a game plan. And you guys then you just went to work. We did. Both of you, working all the time. Yep.

How does it feel to be completely free, house and everything now? It was incredible. I mean, I'm super proud of Maddie because in this whole time she's, you know, rolling in the money doing pharmacy work and at the same time she's driving around the thousand dollar car she got in high school and until we paid our house off she had that car the entire time and then once the house was gone took us about three or four months to move her up to a twelve thousand000 car and it feels pretty good now. I bet. That's a big jump.

12 times better car. I like it. That's fun. What do you tell people the key to getting out of debt is? Because you're living a wow life here. You're living a life people don't think can be done and yet you've done it. What is the key, the key things you did that they should do if they want to be you? You absolutely have to want it.

A strategy helps just to be intentional with every decision you make. It gives you empowerment when you take responsibility of all of those choices. Talk it out with your spouse or your significant other, whoever, your accountability partner. And you just have to continue to dream really, really big dreams. Just something that gives you the motivation to continue to dream really really big dreams just something that gives you the motivation to keep taking steps forward and for me it was also creating we made a debt-free treasure map our last the very last year that we were paying these off oh yeah there it is we were around seventy thousand dollars left on the house and we were just kind of a little

stuck we just needed a little just really turned into a grind it. And I was actually training for a marathon at the same time, so I hung this poster right next to the treadmill. So all of those miles, I was just going to town, staring at that, ready. Every box was $1,000. So we were just ready to put those jewels on there to finish this thing. Good for you. So dream big dreams. That's cool.

And what do you tell people, Michael, the key to getting out of debt is? You just have to pay attention because it's not that hard when people understand what they're actually doing with their money. But when you sit down and understand how everything's working and where you're going, it's a lot easier to be motivated to change your habits and to change what you're doing. Yeah, but for four years, how many hours a week have you guys averaged working? More than 40, I'll tell you that. More than 60. Because we love to travel, and after we had the student loans down, we did do a little bit of traveling, but it was we would get off work and we'd get on a plane or get on the car and go to where we were going,

and as soon as we would time it back, if she had to get back to work in the afternoon we would vacation until that morning and then boom it was back to work and just just 100 all the time and it was it was fun i mean even even if something were to happen one of us i always ask myself that this question if something were to happen to one of us now would it be worth it doing that and it's only brought us closer in our marriage and we're so excited to tackle the world together now after doing that and you got gazelles on your shirt so you were gazelle intense for sure right yes christmas present from our sister-in-law was she making fun of you or supporting you she was supporting us we've had nothing but support from our family. Yeah, because you never know with this.

Yeah, you two are nuts. We're giving you gazelle shirts. I was hoping for a little more masculine gazelle. Well, it does have the benefit of standing out. Yes, it does. We'll just leave it with that. Give her that. It's got the contrast you were looking for. Well done.

Good job, you guys. I'm very proud of you. I know your families are. You're a great example, and you're inspiring. Absolutely inspiring. And I've got a copy of Chris Hogan's retire-inspired book for you. That should be the next chapter in your story, that you're millionaires, you're well on your way, and that, of course, you're outrageously generous as you go along.

You're set for life. You've done a great, great job. Congratulations. Thank you very along. You're set for life. You've done a great, great job. Congratulations. Thank you very much. All right. Michael and Maddie, Quincy, Illinois, area 216,000 paid off. That's everything. House included.

48 months it took them to do it, making $150,000 to $180,000. They worked their butts off. Count it down. Let's hear a debt-free scream. Three, two, one. Freedom! That'll do. That'll do.

Well done, you guys. They are free for sure. Man, that's exactly how you do it. That's powerful right there. Not even 30 years old. Boom! This is the Dave Ramsey Show. Thank you. Our Scripture of the Day, 1 Corinthians 9.24 Do you not know that in a race all the runners will run, but only one receives the prize?

So run that you may obtain it. Franklin D. Roosevelt said, to reach a port, we must sail, sail, sail, not tie at anchor. Sail, not drift. It's an intentional act. No one wins the Super Bowl and says, how did I get here? I have no idea how I won. No one becomes wealthy and goes, well, that was an accident. No one has a great marriage and goes, oh, that just happened. I have no idea.

And if they do say that in any of those cases, they're lying because they know. Winning is an intentional act. It's a series of behaviors that causes you to win, a series of habits and character qualities that causes you to win, and they're all choices, and they're all intentional acts. And the good news is you get to choose today. Wayne is with us in Boise, Idaho. Hi, Wayne. How are you?

Hi, Dave. Fine, thank you. Thanks for taking the call. Sure. What's up in your world? My company offers a retirement medical savings account, and I'd like to get your recommendation on whether I should invest in that or put the money in my 401K. I'm nearly 50 years old,

and I can put $12,000 in this savings account over a 10-year period. And if I do that, my company will match it 100%. And then the money in that savings account earns a little over 1% in interest. So I can either do the same money in my 401K, and I'd like to get your advice on which I should put it in. You don't get to choose what it's invested in on your HSA? No, it's just a savings account that's managed by my company. Yes, it's not a help. I think it's an account that my company runs internally.

Oh, really? Yeah. You're 100% vested from day one? You own it? Yes, I would be vested in my own contributions, Are you 100% vested from day one? You own it? Yes, I would be vested in my own contributions, and my company matches it 100% as well. Are you vested in their contributions?

Yes, once I retire, I will be invested in their contributions. Oh, you're not vested in their contributions until you retire. Right, I have to retire first. No, I wouldn't fool with that. Okay. I would put the money in the 401K and Roth IRAs. If you run out of stuff to put money in because your house is paid for and you're looking for ways to place money somewhere, the last few dollars that I had at the bottom of the list, I would throw at that.

But there's too much going on between now and retirement, and you've got money stuck in there. You can't get out. That rate of return obviously sucks, except for the match. Yes. The match makes it. Right, exactly. But you don't have access to the match,

so that just made it less appealing instantaneously. I mean, you can do it if you want to do it, but I wouldn't do it. I'd put it at the bottom of the things I did. I would max out everything else that I've got control in, that's got matches, that's growing tax-free, that's invested better, and everything else before I went that direction. So, hey, good question, man. Thanks for calling in. Never heard of one of those.

Kayla is with us in Lexington. Hi, Kayla. Hi, Dave. How are you today? Better than I deserve. What's up? I am a new graduate, and I just started a new job, but unfortunately, it is time for me to start paying back on my student loans, and my issue is I've got, I'd say, 15 different loans with 15 different interest rates. All have to be repaid coming up in six months. Some aren't having interest right now. And I don't know how to tackle these. I know the snowball method, but I don't know how to apply that to the different interest rates. The snowball method doesn't apply to interest rates.

It applies to the balance. Okay. So you just make a list of these loans, the 15 loans, smallest to largest. What's the smallest one? Probably about $2,000. Okay. And what's the largest one? Probably $15,000.

Okay. So what do you got, like $60,000 or $70,000 in debt? It's about $50,000, I think, close to that. All right. And what's your degree in? I actually have two degrees, one in biology and one in medical laboratory science. And what's your income? It's going to be $47,000.

And you're single? Yes. Okay. All right, good. Do you have any other debts other than these student loans? $2,000 in credit card debt. Okay. And right. Good. Do you have any other debts other than these student loans? $2,000 in credit card debt. Okay. And that's on one card?

Yes. Okay. Well, that's probably your smallest debt. In case of a tie, I list the highest interest rate first. And so if the credit card debt's $2,000 and the first student loan's $2,000, we'll put the credit cards first, cut them up, pay them off, and then we'll knock on that $2,000 student loan is $2,000, we'll put the credit cards first, cut them up, pay them off, and then we'll knock on that $2,000 student loan.

If you get further up in there and there's a $4,000 or a $5,000 student loan and there's two of them, we'll then put the highest interest rate one first when you get to it and the debt snowball. But just list your debts, smallest to largest. So making $47,000 single, newly out of school, used to a college standard of living, not an overly opulent standard of living, how quickly do you think you're going to pay off 50? How much are you going to pay a year? 20, 25? As much as I can right now.

My housing is completely paid for. My car is paid off. I have no other than utilities and car insurance. How have you got free housing? My boyfriend's dad owns a house, and he's on contract in another state for a job, so we are living for free for at least 18 months. Very good. Okay, cool. Well, that's a good deal on that.

So, yeah, that means you really ought to be able to plow into this. So I would want you to pay $2,500 at least a year. Okay. So $2,000 to to 2,500 a month on these that means the credit cards are gone month one the first student loan's gone month two okay that's how fast it's going to go away okay you're going to get to see some real traction write all of that out and put big red lines through it on the refrigerator door as you're doing it you know so so you get to emotionally feel the progress that you're making, and that'll keep your intensity up because the more intense you are,

the more you'll stay focused and sacrifice. Right. And that's how you play it. How old are you, 23? I am 25. 25, okay. You're right on track. Get after it.

You got the game plan there, kiddo. You can do this. If I can help more, you call me back anytime. Eric is with us in Philadelphia. Hi, Eric. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? I wanted to get your opinion on a situation that I have.

So I have a goal of moving back to Georgia and starting my own videography business. So I want to save up as much money as possible this year. But I have about $12,000 in consumer debt, a few credit cards and a car loan, and then $75,000 in student loans. I wanted to get your opinion on potentially settling the consumer debt and then just paying minimums on the student loans and saving up as much as I could throughout this year to start my business back in Georgia.

Well, you wouldn't be able to settle on them unless you haven't paid them. Are they not current? Are they in default? They are actually in default. I haven't been paying on them for about a year because I just got a job in Philadelphia that paid me a lot more, but the job that I had back in Georgia before I moved to Philadelphia wasn't paying me enough to. It was just a pizza delivery job. Gotcha. Okay, cool.

All right. Yeah, well, yeah, if you don't have any money but you're just now starting to get some and you've got some old bad debt, yeah, I would go you know, if you don't have any money, but you're just now starting to get some, and you've got some old bad debt, yeah, I would go in and settle it. Be sure you do that in writing, or you don't give them any money, and you don't allow them to have electronic access to your checking account, because they lie and they will clean you out, okay? So keep them to their word, whatever you settle with, and then, of course, you're going to get all that cleared up except for the student loan debt,

and then you want to save to start your business. Okay, now what are we talking about spending to start the business? It wouldn't be much. I'd really just have to get a little bit of camera and audio equipment, maybe about $6,000. Okay, and what do you make now? Right now my minimum is about $6,000. Okay, and what do you make now? Right now, my minimum is about $30,000, and

it could potentially go up to about $42,000. I get paid more when I travel, because I travel for work, and they pay me extra when I'm on the road. Gotcha. Okay. I mean, yeah, if you can clear this debt and have $6,000 by the time you leave a year from now,

that would be a reasonable goal. And I wouldn't go much more than that on the business. Let's get the business started, and let's know that the business is going to make you more than 42, because that's what you've got the ability to earn. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for The 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. We would love for you to come to Nashville and tell Dave your story.