The Ramsey Show - App - Dreams Don't Accidentally Come True (Hour 1)

Episode Date: May 14, 2019

The show about you

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is known, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. This is your show. We're talking about you today. It's a free call. The phone number is 888-825-5225. It is free, and some say the advice is worth exactly what you pay for it. The phone number, 888-825-5225.

What's interesting is you're going to hear very, very simple things from me, always. Because some of the most profound life-changing things are easy to understand the problem is they're hard to do because a lot of it has to do with controlling the person in my mirror and he's got issues that's what we talk about around here getting out of debt it's the shortest path to building wealth the baby steps walking through a program here living on less than you make being outrageously generous living like no one else so later you can live and give like no one else being weird in a culture gone mad normal is paycheck to paycheck broke i don't want to be normal normal sucks

these are the kinds of things you'll hear around here every day we're glad you're with us the phone number again 888-825-5225. Lena starts off this hour in Little Rock, Arkansas. Hey, Lena. Welcome to the Dave Ramsey Show. Hey, how are you doing today? Better than I deserve. How can I help?

I have a question for you. I have listened for a long time, and I've never heard this question asked. So I figured I'd have to ask you myself. We are due with our first baby in July and we are currently on baby step 3B. We own, well, we don't own our house. We have a house that we have a mortgage on, and we are working to get back up to our six-month emergency fund after we had to buy a new AC and heater system. Okay. And so we're just a few thousand dollars away from that, so we'll be doing step four next to invest. Right. But what I'm wondering for our baby that's due in July,

we do believe in higher education. We both have college degrees. However, I just don't necessarily know what that's going to look like in 18 years. And so I would like to save for college or higher education, but I want to know if there is a different type of savings account that you would use other than an ESA that is only limited to college. Does that make sense? Yeah. No, there isn't because the only one that grows tax-free is the ESA or the 529.

They're basically a Roth IRA. So here's your numbers, okay? If you put in $2,000 a year for 18 years, you put in $36,000. If that grows at a typical mutual fund rate 18 years later, that $36,000 will have grown to over $128,000. So you have roughly $100,000 worth of growth in that account that is going to be taxable if it's in a different kind of account. And so this is a $25,000 to $30,000 discussion we're having.

Okay. So I'm going to take that risk. I don't know what college is going to look like in 18 years either. I sure hope it is different because guaranteed federally insured student loans have been done away with. I think we ought to stop guaranteeing loans for students. Because it's a debacle. It's hurt more people than it's helped. And the government should get out of the business of hurting its own people.

And so, anyway, that's just an opinion. But I don't know what's going to happen. I know that there's a $1.6 trillion problem on the horizon that somehow is going to be addressed so uh but all of that to say i suspect that let's say uh let's say elizabeth warren became king queen okay um if she became queen and just waved her wand and did away with college cost to the individual and the government was going to raise taxes and pay for college, which is her wish, okay? Socialized college, which I think would be a disaster, but that's what she wants to do.

So let's just say that that happened, okay? And you had the money in this account. I suspect part of the legislation for changing our whole world would involve freeing up that money for you. I don't think they're suddenly going to penalize you because you saved for college. Right. I don't know. They might.

They're liberals. You never know. But it's not. It's kind of a brain disease. So I don't know. But we'll see what would happen. But, you know, the I'm going to save for college with what I know, with what's in front of me right now, if I'm in your shoes.

I've got six grandbabies under the age of five. All of them have ESAs. They do. So that's, you know, because I don't know. I'm with you. I don't know what's going to happen. I think there's, you know, there's crap on the horizon without a doubt. Something's going to change because we've got too big a problem to not address it.

It's going to cave in on itself if they don't address it. So they're going to have to address it. But the policy wonks that be, what they're going to do with us regular people, who knows. But in the meantime, the ESA esa i'm going to load that sucker up or the 529 and the 529 you only do the kind where you control your investment options not where they're auto controlled for you and it's not prepaid college it's saving for college in mutual funds that you select and they don't get moved unless you move them. That's the proper kind of 529. That's all you can do with an ESA. So awesomeness.

Sarah is with us in Charlotte, North Carolina. Hi, Sarah. How are you? Hi. Doing well. Thank you for taking my call. Sure. What's up?

So we just had our first baby last year, and we are in step two. And I have a congenital heart defect, so I cannot get life insurance. Should we have a larger savings account due to that, or what would be our best options? Well, obviously, to the extent you build wealth and get out of debt, the need to cover the loss of your life, the loss of the income or the services you provide to the household or whatever, goes down. So if your husband had a million dollars in the bank in a mutual fund, right, and you had no debt at all, house or anything, that would mean you would be self-insured, right? He would be self-insured, right? He would be self-insured. So, yeah, building, you know, working a plan, a financial plan is very wise, and you've got yet another reason to step on that and do it. In the meantime, do you have a home mortgage?

Yeah, it's about $300,000. Okay, you can probably get mortgage life insurance. It's about five times as expensive as traditional term insurance, but it's guaranteed issue, meaning they will issue it to anyone in any medical condition, virtually. And so, you know, you can pick that up, which would take the burden of the mortgage off of him if something should happen to you. So that's a way you can get insurance. It's rather expensive comparatively, but it'd be nice to have at least that much taken care of if something happened.

And then in the meantime, as you're carrying that, you go about your business of getting out of debt and building wealth and becoming self-insured. This is big news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands, or better yet, reduce the time until you're debt-free. Can you imagine how it would feel to no longer have that payment

looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. thanks for joining us america it is book launch week around here we'll talk with ken coleman a little bit later in the hour he's in uh chicago today and doing a book signing tonight in chicago the proximity principle um was up to i I think, number 70 on Amazon this morning when I was drinking my coffee, and so it thing is going zoom, zoom, man. You guys are going to make this book a big deal.

Well, it is a big deal. The proven strategy that will lead to the career you love. The Proximity Principle by Ramsey personality Ken Coleman. Ricky is in San Angelo, Texas. Hi, Ricky. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call.

Sure. What's up? So I've been listening to your podcast, or really on the radio for the last three months or so, and I'm trying to get my wife on board. You know, after doing our taxes and looking at what we make and what we don't have in the bank, I kind of want to change how we're doing things in the future. So I just wanted your advice and a little bit of help on how to get her on board.

She's just hesitant or pretty hesitant about it. Okay. What's she hesitant about? Well, really, she thinks we can't do the program. She thinks it's just something that, you know, is unrealistic as far as living that way and cutting back and budgeting and that type of thing. She just thinks it's unrealistic, really. That's one of the things. Okay.

So what's your household income? We make about $160,000. Okay. So it's unrealistic to live on less than $160,000? Right. That's what I'm thinking. But, you know, I've explained it and gone over, hey, you know, I listen to this. This is what I want to do.

I want to change our, you know, future-wise. And a lot of the debt that we have is mine under student loans. And, you know, we both have credit card debt and two vehicles and that type of thing. Mm-hmm. Okay. So you make $160, 000 a year and you're broke and that's okay and that's okay well i mean you know we live how we're living now as far as not a big savings and that type of thing and that's what i mean you're broke numbers yes sir

you look good on the outside but when we look behind the door there's nothing there right yeah which makes you kind of normal i mean most people they got two nice cars a student loan that's been around so long they think it's a pet and a house you know yep and you know and they're just all their money comes in all their money goes out and they think well this is it this is all there is we're just a rat in a wheel right that's what most people think yeah that's what i think so a facade, though, and it's a lie. So, okay, I don't know. I can't tell what's going on here.

Did you go at her hard throwing the Dave Ramsey thing around? We got to do this all enthused. And so she's backing off because you came at her so hard? I wasn't trying to do a hard sell. I just was trying to say, hey, you know, this is a good, I think it's a good program for us. I think we can do it. And, you know, I'm enthusiastic about it because, like I said, I listen to you every day. But I want to get started on it.

I'm just trying to get her on board because I know, like you said, I don't want to do the ish. So I don't want to do it, just me trying to do it on my own. Okay. Well, I think you need to dig in a little bit and find out what's really going on. I can't put my finger on it with what you're saying. You've got to find out what her real objection is. Because if her objection is truly that you're stuck and that you can't succeed making $160,000 a year. Honestly, that's just weird.

Right. I mean, that's strange. If you made $16,000 a year, I could understand how you felt stuck. But $160,000, my gosh, I mean, you know, you're in the top 1%, 1.5% of income earners in America. And so you're doing great income-wise, but you're just horrible managers of it. Yep. So maybe it starts with a dream discussion like Chris Hogan talks about.

And you just say, okay, let's dream about where we could go in the future if we got our crap together. You know, let's dream about what it would be like to be worth several million dollars. Let's look at that. If we had money, what would you want to do? Would you want a bigger house? Would you want to travel? Would you want a better car? And then, you know, then you go, okay, well, you know,

let's look at what it takes to get there because it's actually doable with our income. Right. And I hear it all the time. You know, when you're talking about it right here, other people come on. You know, they're making significantly less, and they're paying off their debts. And I'm looking at it like, man, I want to be in that group. Yeah, absolutely. Absolutely.

But the point is, you don't want to pay off debt just to pay off debt. You want to pay off debt so that you get to do other stuff, right? It's the so that that I'm talking about. And maybe you started talking. A lot of times with guys, we go in and start telling people what we're get to do other stuff, right? It's the so that that I'm talking about. And maybe you started talking. A lot of times with guys, we go in and start telling people what we're going to do instead of why. And you might want to talk to her more about the why. Okay. Like the dream, dreaming in HD, in high definition.

And so if she says, I'd like to travel more, then let's get on some websites and start downloading some color pictures of what that looks like. Okay. Well, you know, where are we going to go? Are we going to be sitting in one of those funny little boats riding through Venice? You know, I want to write that down. I want that on the wall, right? And that can happen, but we're going to have to be – it's not going to accidentally happen. There is no Lone Ranger that is coming to save the day.

We are it. And so once you establish and you get excited about dreaming again, how long have you all been married? We've been married for 13 years, Dave. Yeah, okay. Once you get excited about dreaming again, like you were an 18-year-old kid or something, and you go, man, I could do anything anything you remember those days and you get to thinking like that again then it makes it worth it to make the moves and the sacrifices to do something with your life but hopefully you

don't you can have a created a created emotional crisis that you create for yourself that the two of you create for yourself where you artificially look at this and go hey everything's kind of going good but you know what it still sucks right and i'm not living like this anymore and that's a created crisis you're not in foreclosure or repossession or collections you haven't lost a job you're not about to go bankrupt you don't have a real crisis you've got a worse problem is is that you're mediocre and okay with it you can get stuck in that more than you can get stuck in a crisis because at least in a crisis you know things suck right right you know and so you've got to create an emotional crisis out of this but i think the way to do that is to look into the future and see in hd in high definition

you know i remember the first time i saw an hd tv man it blew my mind because i grew up in a you know with black and white tv with a little rabbit ear things on top with three channels and man when i you know and then it got better we got flat screens i got a plasma right remember those and uh then i got an lcd and then man we got i walk in and you can you know you can almost smell smells from that hd i mean it's unbelievable right and that's how you've got to look at your dream it can't be like this distant vague thing detail out what it is i want a bigger house okay what's the house got in it how many bedrooms how many square feet how many fireplaces what's

the kitchen got in it that our kitchen doesn't have what color is it what's the style of architecture detail it out you may never build that, but when you build it in your mind, it gives you something to sacrifice for. Discipline is not a natural human event. It is the emotional maturity to delay pleasure for a greater good. That's what discipline is. It means you're a grown-up. I'm going to back away from the cookies because i'm

tired of looking at this gut okay and so that it is a it is an emotional thing i'm not gonna live thank god it's friday to oh god it's monday the rest of my life no discipline seems pleasant at the time but it yields a harvest of righteousness the bible says so it doesn't nobody likes it but we like what it takes us to i saw a bumper sticker the other day i thought was pretty good it said nothing tastes as good as it feels to be thin and i thought i'd like to experience that someday but anyway back away from the cookies dave right know, this is my internal tapes, right? So chocolate chip cookies are my downfall. But yeah, my mouth is watering.

That's awful! Anyway. Yeah, see, that's how discipline works, though. You've got to have a greater good that you're reaching for. Otherwise, it makes no sense. It's not logical to sacrifice in the moment. Unless it's no sense. It's not logical to sacrifice in the moment unless it's for something. And the for something, the so that, the why is what matters here.

It's a great discussion, man. Thanks for calling in. Well, there is a lot going on around Ramsey right now. I'll just tell you, a lot of stuff happening. Number one, we launched Ken Coleman's book this week, The Proximity Principle, the proven strategy that will lead to the career you love. He was in New York City yesterday doing media there in Chicago, today doing media, and they are doing a book signing tonight in Chicago, the Barnes & Noble up at Skokie Old Orchard area there. And you guys know where that is.

And it's 6 o'clock tonight in Chicago, for those of you there. Thursday night here in Nashville, right here just down from our offices in the Cool Springs area at that Barnes & Noble, the corner of Mallory Lane and Moores Lane, 6 o'clock Thursday night. Next Tuesday, he will be in Phoenix in the Mesa area at the Barnes & Noble at Village Square at Dana Park. And again, 6 o'clock. And then Friday next on May 24th at Sacramento at the Barnes & Noble there on Arden Fair. And that's part of his book tour process. So Ken is out running around all over America promoting the Proximity Principle.

Each of those book signings will have a $450 cash giveaway plus a $50 gift card to a coffee shop. So you can practice the Proximity Principle by hanging out with someone that will move you forward in your career. People and places are the things you want to get in proximity to. Also, our live events are in full swing. Some big, new, exciting things that I am going to be doing and some of the other Ramsey personalities as well. Coming up in the fall, we'll be announcing those in a week or so, a couple of weeks or so.

Meantime, tonight in Minneapolis, Anthony O'Neill and Meg Meeker are doing a Smart Parent event. There's about 1,500 of you scheduled to be there. It is virtually sold out, but you can get in. There's a few tickets left, like 100 or something, so you can still get in. Jump in jump on davramsey.com and you can get your tickets to any of our live events that includes the smart parent event tonight with meg meeker and anthony o'neill and then they will be doing that same event one week from tonight in sacramento and uh there's a i think there's a few hundred tickets left of that one it's's up over 1,000 sales. I looked at the report this morning. So it's going to be a great event, perfect size.

And Meg Meeker and Anthony O'Neill, I mean, Meg's America's mom. I mean, she is the parenting expert. And Anthony has spoken to and with more teenagers than anyone you've ever met. He burns jet fuel like nobody I've ever seen. He is all over the place, man, and is spending time with America's teenagers and has his finger on the pulse of what is working there and what's not working. So this Smart Parent event, very, very big deal. Les Parrott and Rachel Cruz, the very popular money and marriage event, the last one of this season is uh well this year for that matter is going to be uh this thursday may the 16th uh while ken coleman is signing books

here in nashville the two of them will be in dallas doing the last money and marriage event of 2019 rachel will not be working in the fall because she's got a baby coming she's announced i got her third on the way and since she has two girls um papa dave and her husband winston are real thrilled that we have a boy on the way this time so uh they're getting this figured out it's a good thing so anyway she's not working in the fall she can be doing pregnant mommy stuff and uh so there won't be any money in marriage events this year other than this one that is this Thursday in Dallas. And you can still get tickets to that. It is virtually sold out as well.

Those are very, very popular events. And Les Parrott and Rachel, honestly, the two of them, they should have just been in stand-up comedy because they're both just a hoot. And so you will laugh and you will leave going, I think I can do better at my money and at my marriage. Business Boutique is on sale for the fall. The Big Business Boutique Conference with Christy Wright, a full lineup there. The Ontario Leadership Master Series is about half, I'm sorry, Ontario Leadership Summit is about half sold out for next May at the Gaylord Palms Resort and Spa. Going to be a huge lineup there.

Headlining with our team is Mike Rowe and Damon John and Carly Fiorina and Craig Groeschel and Benjamin Zander. I mean, a great lineup on that. It's going to be incredible. The SMART Conference is over half sold out already for November in Sacramento. So that's a couple of fall events. But this week and next week, we've got the Smart Parents and Smart Parenting events. We've got the Money and Marriage events. We've got Ken Coleman events everywhere in terms of book signings.

So we're all over the place. And I'll be up in Kansas City this coming weekend speaking at Westside Church for my friend Pastor Randy Frazee there. And so if you don't have church plans for Sunday, come out to Westside Family Church there in Kansas City. Church is free. So come on out. We'd love to have you.

And I'll be doing the three morning services there in Kansas City. And then we're doing an event that evening called Outrageous Generosity that is sold out. So completely sold out. But, hey, a lot of fun stuff going on, man. We are all over the place. And there's more to come. Oh, yeah, the Live Like No One Else cruise next March is completely sold out.

And it has a waiting list, but you can join the waiting list because some of the people put down a deposit won't probably follow through. So you may be able to get on still, but that cruise is going to be the first one of those we've ever done off the chain. It's pretty incredible. Jeff Foxworthy, Stephen Curtis Chapman, all the Ramsey personalities and other celebs as well. It's going to be a great, great week and a high-end, very nice cruise. All right, Jeremy is in Las Vegas, Nevada. Hi, Jeremy. Welcome to the Dave Ramsey Show.

Hi, Dave. Thank you for answering my call. I appreciate it. Sure. What's up? So I was wondering if I should sell my house and baby step two or if I'm just being psycho brain and getting emotional. Do you not like your house? Oh, we hate it a lot.

The quick rundown of what's gone on is a sex offender lived across the street, stabbed by his girlfriend seven times, found a drug overdose person laying in our driveway one time. Another time. Why do you still live there? Because we bought the house in 2007 in july yeah but who cares i'm gone man about the third one of those crazy butt things you just described i'm out of there all right well i mean so what's your house going to sell for uh we bought it for 205 000 and it's showing it's around 170170,000. I have meetings with three ELPs at the end of this week.

Yeah. I'm moving because of what you described, okay? But now here's the thing. If you're in debt and you're in baby step two, you may be moving to a rental for a little while. Right. We're planning on going to a rental. You're certainly not going to move up in-house. No way.

Okay. But we're getting out of this crazy butt thing you got yourself into there okay have you got kids we have one yeah i mean there's stuff being described around there man that would make me want to sit the front door of the shotgun across my knee man i mean it's unbelievable so not a shotgun a handgun but well you know it's just whatever's more effective but yeah i'm kidding around but i mean my gosh i i don't know that i'm not putting up with weird stuff around my family so i'm out of there go rent something and and then finish up your baby step two get baby step three done your emergency fund your debt free save up your down payment

make another purchase and an area where you don't have weird crap going on around you all the time. Wow. That's crazy, man. That's nuts. Crazieland. Wow. Sorry you're facing that. But yeah, I'm with you.

I'm out of there. And that's not emotional. That's just like, no. About the second time stuff like that happens in the neighborhood, it's like, I think we misjudged this place. We're done tap out but don't use that as an emotional excuse to move up in-house and to buy something that's too much because here's what i here's what i hear sometimes we the bible says out of the abundance of the heart the mouth speaks now i'm not saying you're doing this jeremy but i've heard people in these situations say stuff like well well, there was mold in the house.

Well, there was a bad neighborhood. There was this. There was that. So I was forced to move. You weren't forced. But as soon as you say you were forced, you adopt the thing that I'm a victim, not a victor. And so you have the dignity of making the decisions here. And I would take the dignity of making the decision, and I'd be out of dodge.

I'm with you on that. But then don't act like this forced you into some stupid financial decision like buying too much house or renting some super expensive thing. You're not forced to do something dumb because of these events in your neighborhood. You are choosing to get out of there, but you're going to do something wise as you do. My car broke down. I was forced to buy a brand new $32,000 minivan. No, you were not forced.

They did not have a gun. Ashley's in Kansas City. Hey, Ashley, welcome to The Dave Ramsey Show. Hi, Dave. I have a question about saving for college. My husband and I have a kindergartner, and my husband has transferred his GI Bill to her. So as of right now, the GI Bill would cover a four-year degree at an in-state public school. However, we know there's the potential for those benefits may change over time and that they may not be as great as they are 12 years from now when she needs the money. So my question for you is if you were in our shoes,

would you set aside some money for her for college? And if so, how would you decide how much to save? Yeah, I would not save as much for college in an ESA because I think that GI Bill, I hope that's stable. I hope that's not one of the things that those characters in Washington decide to cut because you guys, I mean, you've earned it. We appreciate your service um but the um who knows you never know but uh i think you're very wise to say that's not a hundred percent lock and also it doesn't cover everything i mean you're going to have a room and board and you're going to have books and other stuff that might not be covered and so right, as it stands, she would get an allowance for housing and also some money for books as well.

Oh, I missed that. Okay. And she would also have the ability to transfer any money she doesn't use to a dependent. Right. Okay. Okay. I might not save anything in her name then. That doesn't mean I'm not going to build wealth. And so if you build wealth in a mutual fund in your name and it's over there and got just a side mutual fund, you're just doing investing. And it's got $100,000 in it.

And then something comes up that you need some money for college well you've got money in there right and so uh there's no reason you can't go ahead and build wealth but um you know you could have a mutual fund in your name and you just said okay this is the the name on the outside of the file where you put the mutual fund papers is in case the gi bill blows up fund right you know kind of thing right it's like now you could take that one step further depending on what you want to do um when our kids were growing up they did not have esas and 529s so we used what's still available today called an UTMA, Uniform Transfer to Minors Act, UTMA. Now, all that means is the mutual fund is in the kid's name with you as a custodian. The benefit is that it grows at the kid's tax rate, which is zero for the first so many thousands of dollars that it makes every year. And after that, it's a reduced amount or a reduced tax rate because obviously they don't have an income.

So our kids had that. And here's what happened. I did that for college. And then by the time they got to college, we had built some wealth. And I just paid for college. I cash floated out of my pocket and so those uttamas that were in their names or just their head start into wealth building for themselves when they came out of college because the downside is it's in their name because when they're 21 it's theirs

you can't control it anymore so if they're doing heroin it's going to be well-financed. So that's the downside, right? And so we always laughed and said, so let the beatings begin. But, you know, that's the Ramseys. We're weird. So, you know, and I said, you know, if you're doing heroin, I'll just steal the money. You'll have trouble finding it. But put me in jail. Good luck with that.

And, you know, I'm not going to finance your craziness, in other words. But you really don't have a lot of legal leg to stand on there it is not your money anymore once you put it into their name so that's the downside but it turned out really good in the case of all three of ours because all three of them turned out and the money just and their college was paid for so this is just like extra money to start their lives with. And it was very cool. It turned into a real family tree-changing kind of mathematics. So you could go that route, or you could just open a mutual fund in your name. But I'm with you.

I don't think I'm going to do an ESA. I think there's a high enough probability that 12 years from today, the United States of America is still honoring its promise to veterans uh on the gi bill i'm gonna go with that i'm gonna call i'm gonna call out the nobility of us as a people and as a government that's kind of oxymoronic but uh anyway of us as a people to make sure that our elected officials don't screw you guys over who have served your country. That kind of thing. So, yeah. And if you build wealth on the side and it does blow up, you've got some money.

So you can either put it in our name or your name. But I'm with you. I don't think I'm going to put that in an essay. Not in this case. Thanks for the call. Open phones at 888-825-5225. Eric is in Richmond, Virginia. Welcome to the Dave Ramsey Show, Eric.

Hey, Dave. Thanks for taking my call. Sure. What's up? Hey, so I'm 30 years old. I currently make $75,000 a year pre-tax. After tax, it's probably like $47,000-ish. Three years ago, I made a dumb decision and bought a $45,000 car.

I put $5,000 down and took out a loan for just under $40,000. I currently owe $17,000, and my monthly payment is $630,000 at a 3.9% interest rate. Currently, the car is worth $25,000 to $27,000 with a trade-in, or $30,000 to $32,000 if I private sell, which seems unlikely. My question is, should I cut the poison before it spreads, or should I hang on to it and eat the payment and then just drive it until the wheels fall off?

Good rule of thumb, which would keep you from ever doing this again, is don't own things with wheels and or motors all total in your life that equal more than half your annual income. Because things with wheels and or motors all total in your life that equal more than half your annual income. Because things with wheels and or motors go down in value, and you've got too much invested in things that are going the wrong way. And so you violated that when you bought the car. Today, when you call me, it doesn't violate that. It's worth 25 to 30, you make 75.

Okay? And so if you like the car and you can pay it off inside of two years and be debt-free, not counting your house, inside of two years and your baby step two, we call it, I would keep the car. What kind of car is it, and do you like it? Yeah, it's a Volkswagen Golf R. I really love it. I could probably get it down in two years,

but currently the maturity date is three years, but I could definitely push for two if I had to. I'm sorry. I thought you said you owed $17,000. Correct, yes. How much other debt do you have? Zero. Why could you not pay it off in one year?

I have bad spending habits, which I'm working on on the side, I guess. Okay. Well, that's kind of obvious with the car you bought. But, yeah, I think that's what you've got to work on. If you're not going to get yourself in order to pay it off within two years, you do need to sell it. Okay, cool. But you ought to pay it off in one year.

Oh, and by the way, $75,000 is not take-home pay of $47,000. Something's screwed with your math. Possibly, but I think it's pretty close after insurances, 401K, all that stuff. Oh, that's not take-home pay. Take-home pay is after taxes. You're buying some other stuff out of your check. Okay. And you're putting money in a 401K?

Yes. Yeah, stop that until you get this car paid off okay so you're new to this whole thing that we're talking about here right yes um but for the 401k like i get matched at four percent should you think i should go down to four percent and keep that or should i just kill it all together until this car is paid off well it depends on if you're going to do what i teach okay let's stop a second what we teach folks to do is to walk a process to become debt-free build your emergency fund so that as you build wealth you're not being counterproductive okay and so i would teach you first to have a thousand dollars in the bank

second to be debt-free the third to have an emergency fund of three to six months of expenses and only then would you start your 401k regardless of match because it's so important to lay a foundation of debt free and an emergency fund under your financial house as you start to build it. And so as a temporary measure, yes, I would stop the 401k 100%. But again, that's only if you're going to get this freaking car paid off so you can get back in the 401k. Okay, so you got to play in the 401k. Okay? So you've got to play the whole thing together or it doesn't make sense. Hold on. I'm going to send you a copy of the book, The Total Money Makeover.

You read through that. It outlines exactly why and what I'm saying to do. And then you'll start to understand what I'm talking about here. Because it's a more encompassing answer than I can give you in a minute and a half on the radio. So hold on. I'll give you a copy of that. Good questions, Chris. Appreciate having you as a new member of our audience. This is The Dave Ramsey Show. 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.