The Ramsey Show - App - Emotionally Driven Money Decisions Can Lead to Bankruptcy (Hour 2)

Episode Date: July 25, 2018

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Scott is with us in Sioux Falls, South Dakota. Hi, Scott.

How are you? Good. How are you doing, Dave? Better than I deserve. What's up? I had a question. I was wondering if it was worth it for me to buy a house or not

anytime soon. I'm a truck driver. I'm single. I don't have any kids. And right now I live in the truck. I'm working on getting out of debt. I'll be out of debt in about two years. And then I'm just trying to make a plan for what to do after that

okay that's a good idea it's good thinking um long term over the scope of your life owning a home is a good idea because rents go up and so do values in real estate and it's um you know you you're locking in what it costs you to live. A large portion of what you spend to live is your housing. And when you lock that in and it doesn't go up anymore, plus then the value of it goes up, it's a double hit in the good direction, meaning your expense of housing doesn't go up because you're locked it in. And the value of the house goes up, which obviously is a wonderful investment. So long term, yes, you want to own.

Is it okay to wait until it fits your lifestyle? Yeah. I mean, if I'm on the road and I'm living in my truck, I don't have any need to have a house sitting somewhere collecting dust. That's just kind of, you know, and pipes bust while I'm out of town or something. No thanks. I mean, I think you're cool. You're a single guy living in the truck, paying off debt. That's what I would do right now.

And like you said, you get your debts paid off in two years. Then we're going to look up. How old are you? I'm 32. Okay. So, you know, when you're 42, I suspect your life's going to be different, wouldn't you? Yeah, I was kind of thinking about putting money, like you say sometimes, in like a S&P 500 for a house. Yeah, that'd be fun.

In 10 years, I can just go write a check for a house. That'd be cool. But, I mean, you might not be an over-the-road truck driver the rest of your life. You might be doing something different. You might have a family. You might have a lot of different things, right? And so we don't know what ten years is going to bring. But the first goal is get the debt cleared and build your emergency fund.

We do that before you buy a house anyway with everyone and then yeah let's start building a house fund so that then you've got choices that you can make to decide you know when i get ready to buy but over the scope of your life yes you want to own but is it okay um in a you know a period of time right now where you are to not own? Sure, sure, absolutely. I think you're wise to not own today. Good question. Mark's in Portland, Oregon. Hey, Mark, how are you? Thank you, Dave.

Good. How can I help? How are you doing? Better than I deserve. What's up? Well, we are looking at buying a new-to-us vehicle for our family, and we're wondering, in all the research that we've done, it's hard to find good advice on when you should go ahead and make that purchase.

Okay. In terms of what kind of a measure are you looking for? Well, for example, they say, you know, once the repairs pass a certain like you know once they equal your payment you should probably stop doing that and get a new car well we don't have payments on it and and we're going to pay cash for it gotcha so what's the car worth you're driving oh probably about three thousand bucks okay what are we talking about moving up to uh probably something around fifteen thousand and you got the cash to do that yeah and your household income is what uh between 85 and 90 cool and your other car is worth what uh probably the same about three or four thousand okay, it's time to move up. Okay.

Here's the thing that I look at, and let me tell you what the measures that I use. Number one, cars go down in value. You and I know that. And anything with wheels and motors loses value. So if you add up all the stuff with wheels and motors in your life, if it's more than half your annual income, you have too much tied up in things that are going down. We're trying to go up in wealth, not down in wealth. And so we don't want to buy a bunch of depreciating assets and then scratch our head and wonder why we're broke.

So you wouldn't buy two $30,000 cars making $90,000, in other words. Dumb people do that, but you're not going to do that. Okay? So, I mean, I've been that dumb person too, but we're not doing it today. Okay? So you're not that guy. So that's rule number one then as far as repairs what happens is this your quality of life as a ratio to your income starts to be a problem

about where you are so you make 90 000 bucks a year you're driving a piece of crap. And it starts to be just screwing around with the car has a cost on you emotionally, has a cost on, you know, I don't want my wife driving out there in the snow in that thing or whatever, right? I mean, it reaches a point that you've got the money. It's not a good investment investment but it's a lifestyle expenditure that's reasonable given your income and given that you have the cash to pay for it you really can't mathematically ever justify trading cars because you can fix them cheaper than you can replace them all the way down to 500 buck cars you can just keep you can just keep driving them but at some point you go this is dumb you know i need to i just need to have a reasonable vehicle as a ratio

to my income and i'm paying cash for it and that's where you are you you're the car you're proposing that you're paying cash for is very reasonable as a ratio of your income. And you can't really ever mathematically justify it because the $15,000 car is going to be worth $7,000 in about two eye blinks. Right. You know, that's just part of the deal, right? But it's part of what we consume. Vehicles are the largest thing we buy that we consume that goes down in value. And the question is, can you absorb the blow and it not do financial damage to your family?

And the answer in your situation, because the ratios are proper, is yes, you can absorb this blow. It's a reasonable thing. If I were in your shoes, I'd buy a $15,000 car, and then I'd start saving and move up that other car, too. I have a $10,000 and a $15,000 car. It's $25,000 tied up in cars. You make $90,000. You pay cash for them. That's about right.

Okay. It's less than a third of your income at that point, and you have a reasonable car. It's not opulent as a ratio to your income. So all of that. You can just fix them forever mathematically, but it just reaches a point. I don't want to be on the side of the road. I just don't want to be on the side of the road. I drove my first car. It was a 1974 Monte Carlo.

Two engines and three transmissions. 350,000 miles before I got there. And it was hit on every side. Repaired most of the time but i couldn't drive apparently because i hit the car on every side i was from 16 to 20 something years old that's my first car but i ran the wheels off of it obviously just kept repairing it kept putting engines in it kept putting transmissions in it you know but i was broke college kid too so you do what you gotta do to keep rolling turn a wrench on the thing you know but wow wow been there done that don't want to live like that though had used tires on it too or or retreads you know what retreads are used tires with new tires put around the outside and they fall apart oh it's it's nasty. This is the Dave Ramsey Show.

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Download Hotspot Shield by Anchor Free today. Thanks for joining us, America. We're glad you're here. Catherine is with us in Houston, Texas. Hi, Catherine. How are you? Hi, I'm great. Thank you for taking my call. Sure.

What's up? Well, my parents and grandparents have been outrageously generous with gift money for my children. And they're a two-year-old and an eight-month-old. We've started a five-to-29 for both of them. And I'm just curious if there's like a maximum amount that you recommend putting in a 529 or if we should be doing some other type of saving because I foresee the generosity continuing as they get older and they're still so young. How wonderful. You want to be smart about the money.

That's wonderful. Very cool. Well, sit down with your SmartVestor Pro or your advisor, whoever your advisor is, and run some calculations. You can put, in most 529s, it's $10,000 a year that you can put in. And pretty quickly, at that young age, that's going to be enough. Two or three years of doing that's going to be enough. Because the 529 obviously has to be used for education. It can be used for lower education.

Now the law has changed. You can use it for high school or elementary school or whatever, private school, if you want to use it for that. But if it's just for college, you know, you can kind of do some calculations and go, well, there's enough in there. We're done. We're college. And then we're going to use the money for other stuff, future generosity for other things. So, you know, you can just sit down and calculate, okay, we're going to put $30,000 in here for a 3-year-old over 3 years,

and then that's going to grow to $160,000 or whatever the number is, and that's going to be enough, you know. And so, you know, you calculate what you think your need is and what it's going to grow to and you don't want to over fund a 529 now the only type of 529 we recommend are the ones where you control the investment it doesn't auto auto move around and it's not prepaid college tuition it's going into a growth stock mutual fund or funds and i tell you if you're going to have that kind of money in there, spread it across the four types that we talk about for investing,

growth, growth and income, aggressive growth and international, and good performing funds. And then you can, based on their track record, project out into the future what you think that money will grow to, and then also looking at colleges, what you think you're going to need. And there's some basic numbers you can line up on that with your advisor. But you're right. At some point, you're going to top out and go, that's enough in a 529.

Then the next thing you can do is going to, that is 100% tax-free growth. The money, as it grows, if you put $30,000 in there, let's say, and it became $200,000, that $170, 170 and growth would be tax free for how used if used for education you got to use it for education okay so but but past that you can do what's called an utma a uniform transfer to minors act and name an adult as the custodian of the account and that would probably be you. So you're opening a mutual fund in your kid's name is what it amounts to, and you're in charge of it until they're 21.

At 21, it's their money. You lose control of it, obviously. And so, you know, you've got to train them up. You don't want to raise trust fund babies. You know, you want to raise kids that are productive, and then this money is used to change their family tree. But that money then would be used for stuff beyond college, other wealth-building activities, right, investing or buying a home or something like that.

But, you know, and so, you know, it can really end up well. So let me kind of give you an example. With us, when we started, our kids were little. They're in their late 20s and 30s now, okay? They're a decade out of college already, right? But back when we started, our kids were tiny. There was not a 529 or an ESA. So we just did UTMAS.

That's all that was available. And it's taxed at the kid's rate. And so it's almost no taxes on the account until the account gets some serious money in it later on. And then we ended up just cash flowing college because we had the money and left their UTMAs alone. So that when they came out of college, got married, started off their life, they had this chunk of money and no debt for college to start off their lives. And that chunk of money has propelled all three of them into other wonderful things. So that's the kind of thing that can happen here. The 529s cover college.

This other money we're talking about just helps them start their life into their first home and that kind of stuff. And that's where the grandparents are changing their family tree. But now you have to teach these kids starting as soon as they can about money and about how important this is and the value of a dollar and hard work and, you know, thrift and so forth. You have to teach them because otherwise they'll think that this is a lot of money and they don't have to work or something, and that wouldn't be a blessing to a child. That would be a curse. Laurie is with us in Dayton, Ohio.

Hi, Laurie. How are you? Hey. Thank you so much for using the gift that God gave you to help others. Appreciate it. Well, thank you. How can I help today? My car had bit the dust, and last year I got another vehicle.

Now my husband's car is, we're putting more into it than the car is worth. Would it be a good idea to take money out of retirement and pay for the car? How old are you? 64. 64 or 54? 64. 64. Okay, I didn't hear you. Okay, I want to make sure I got that.

Okay, and how much is in retirement? About $300,000. And what would you take out to pay for a car? Oh, probably around $20,000 to $22,000. Okay, and what's your household income now? Around $70,000 a year. Okay. Yeah, that'd be fun. I'd probably do that. Okay.

I wouldn't do much more than that. Don't get caught up in something and get the fever and jump on up to $35,000. But, you know, $20,000 range, $15,000, $20,000 range sounds reasonable. What's the car he's driving worth um a trade-in value is around 2,500 and to sell it outright it's around 4,500 and we've put 2,000 in it in the last two months to keep it fixed up and we're having a tremendous amount of medical bills that are a problem. Okay. And yeah, on who? Medical bills on who?

Myself. Okay. I'm sorry. Yeah, I had a kidney removed and it did not go well. Oh, nasty. Okay. And is insurance covering most of that? No, sir.

I am the donor and there's no help when you donate a kidney um after two years you pick up your own medical expenses and i've had a life-altering complications and so i'm now paying for those medical bills and so there went my car money savings yeah i bet or his vehicle i got you yeah i mean that's why you've got the nest egg and you're at retirement age. You're going to pay taxes on it, likely, if it's not in a Roth, but you're not going to pay any penalties. And yes, I would do that. It doesn't do irreparable damage to your nest egg, you know, and that's why I wanted to limit it.

I don't want you jumping up and buying some super expensive car here, but, you know, $15,000, $20,000 sounds reasonable to me. Do you see how I'm getting there? Do you see how I'm doing that decision? Correct. We want something that's going to be lasting for a good long time. My husband is younger than I am. He's still got several years to work and put into retirement.

Mm-hmm. Yeah. Well, yeah, but I'm not going to use that statement to go for any more than $15,000 or $20,000. You're going to buy another car before you die, and he is too. Cars don't last forever. So let's just say, you know, it's a reasonable purchase as a percentage of your nest egg.

You're not doing damage to your nest egg. That's irreparable here. That's the point. But I'm not going to say, egg that's irreparable here that's the point and um but i'm not going to say oh he needs a car that'll last forever so we're going to justify no no no that that's the kind of stuff people say right before they do something stupid and i don't want you to do something stupid but what you're describing is not stupid it's a reasonable purchase so i would do that hey thanks for the call. Appreciate you joining us. Open phones this hour at 888-825-5225. This is The Dave Ramsey Show. Thank you. Can you believe this real estate market?

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get certified. They've helped thousands of listeners and team members here at my office win the bidding war without having to bust their budget. Call 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement NMLS ID 1591 NMLSConsumerAccess.. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee. 37027. In the lobby of Ramsey Solutions, Robbie and Julia are with us. Hey, guys, how are you? Hi, we're good.

How are you? Better than I deserve. Where do you guys live? Georgetown, us. Hey, guys, how are you? Hi, we're good. How are you? Better than I deserve. Where do you guys live? Georgetown, Kentucky. Georgetown, Kentucky, home of the famous Chris Hogan. Yes. Yes. That's where he went to college.

Yes. Very cool. And they had a national championship while he was there. Yes. Yeah, very cool. So the Lexington area, beautiful area of the country. Very pretty. Welcome to Nashville and all the way down here to do a debt-free scream, huh?

Yes, sir. All right. How much have you paid off? $260,000 in eight years. Wow. Very cool. And your range of income during that time? Well, we started our journey at $125,000.

And interestingly enough, our income went down over the eight years. We have had a couple of children along the way, and I felt a calling to stay at home. So about two years ago, I actually went part-time, and I worked twice a week. So we ended our income last year at $99,000. Cool. Very cool. What do you do for a living, Robbie? I'm a physical therapist at the University of Kentucky.

Cool. And before you were a full-time mom, Julia, what were you doing? An insurance underwriter. Okay. Very cool. And you're full-time with the kids? before you were a full-time mom, Julia, what were you doing? An insurance underwriter. Okay. Very cool. And you're full-time with the kids? Actually, I work part-time. So I work two days a week, and then the rest of the time I'm home with the kids.

Gotcha. Okay. How many kids y'all got? Two. Ah. So 260,008 years. I'm looking at this. You must have paid off your house.

We did. I love it! I'm looking at weird people. Only weird people pay off their house. Normal people have a mortgage their whole life. Not you guys. No. Wow.

Very, very cool. Well, here's what's interesting. Our team obviously knew you were coming. And Zach Bennett, one of our top production guys, combed back through the archives of the Dave Ramsey show. And there's actually a phone call from you five years ago to this month. Was it really this month? Exactly five years ago.

You called. That's crazy. We're going to play a short clip from that right now. Let's hear it, James. This is our first home that we've had. We have not tried to sell it, but I just hear horror stories about people trying to sell their house and taking a loss. Whether the market's good, whether the market's bad, whether the real estate is white hot on fire and going up, whether the real estate's in the tank and not doing well and people are taking losses on their home,

it doesn't change the discussion. You still pay off your home because in either case, you're better off. When you get to baby step six and you're ready to pour on and pay off the house you know pay the thing off as fast as you can because sitting there with a paid for house in the next five or ten years is going to put you in such a place to win long term i mean it is such a wonderful place to be hey thanks for the call so you called in and asked if you should pay off your house and i said it's going to take you five to ten years eight years later here you stand here we are yeah or five years later five years later here you stand and you did it oh that's so crazy i

didn't i remembered calling but i thought there's no way that they that they would remember actually we thought there's no way but we have a magic weapon named Zach. That's great. And Zach combed through all that stuff and found that. That's great. Absolutely cool. So, I mean, that's inspiring to me to sit here and go, I just take a call and a lady says, should you pay off her house? And I'm like, yeah, you can do it.

You can do it. And here you stand. Yeah. I love it. Yeah. Here we are. Yeah, baby. So tell people, how old are you two?

I'm 34. I'm 35. And you have a paid for house. Yes, sir. How old are you two? I'm 34. I'm 35. And you have a paid-for house. Yes, sir. What's this house worth? Probably around $225, something like that. I love it. This is cool.

So tell people. They think this is impossible. How do you do that? I mean, it took you eight years from the time you started. Five years into it, you called, or three years into it, you called me, which means you were kind of finishing up the other debt, probably. Yeah. Okay, and so out of the $260,000, how much was the house itself? $165,000. Okay, all right. So what's the trick to getting out of debt? You did it. You're rock stars. There's really no trick, honestly. We followed your program. Our debt

really consisted of a car loan at $20,000, student loans at $75,000, and then the rest of it was our mortgage. And around the time of the call, we had paid off all of the car loan, and we had paid off all of the student loan. And I was pregnant with our first daughter and was just kind of wondering. You know, when you have children, for me anyway, the tolerance for risk goes down. And it felt risky to still have that mortgage, but it's so normal, too. And so we, you know, honestly, after the call, I thought, I still don't know. I still don't know if we should, because we weren't sure if it was going to be our forever home. You hear that term thrown around a lot.

But really what it matters is, are you living there now? Yes. Do you want to have debt on this? No. So life happened. We had another child about two and a half years later. And then about a year ago, we looked at each other and we were like, you know what? We're very close.

We really could do this. So we actually last summer, actually about this month, we really dug in and took on a lot of extra jobs, a lot of extra hours. And here we are. We actually paid it off in February. I'm so proud of you. Well done. Thank you. Very, very well done. Absolutely fabulous.

I mean, you're sitting here with $100,000 household income, not a payment in the world, 34 years old. You're going to be so wealthy, it's going to be unbelievable. That's what we're looking forward to. If you just invest a house payment from now to 65, that's $5 to $10 million. I mean, you really are going to be in an unbelievable place, and you have changed your family tree. Just by being intentional, watching what you're doing, focusing, working a plan that works and uh well done you guys thank you how's it feel it feels fantastic i mean obviously with being intentional we knew this day would come um but to now like we said we've spent the whole summer saying yes to a lot of things we've taken kids

we've done vacations amusement parks on the weekends. We went to Destin, Florida for a week, and we've done amusement parks and just said yes to a lot of things. And it's been enjoyable for the whole family because for so long we were just saying no. It's not in the budget. It's not in the budget this month. But it wasn't that long. You're 34. Right.

It's true. You lived like no one else though and so now you can live and give like no one else you can say yes to a lot of things yeah generosity you can say yes to your kids uh you can say yes to investing and continue to build wealth and change your family tree like i was saying yeah you're going to be in that one of those everyday millionaires before we know it. So well done, you guys. Thank you. Very, very well done. We've actually been quite, not shocked, but before we paid our house off, we didn't really have a lot of discretionary income to give.

And so over the last year, actually two years, we started tithing. And that has really just opened up a joy in my heart that I didn't know really was missing. And we've been able to give to community members, strangers, you know, everyone that we come into contact with that has a need. And it's just so nice to be able to meet that need. And it may seem big to them, but, you know, for us, it's just such a small sacrifice to make, to make such a big difference. When you don't have a house payment, you can put tires on a single mom's car and not blink yes you know you don't think that that's not even a house payment right and you don't and that's just one month you know i mean you can do anything it's it's amazing the position it puts you and people don't grasp it and

it's worth fighting to get there it is it's worth the sacrifice to get there the scratching and the clawing and and all of that what was the hardest part for y'all? Well, honestly, a couple things for me. One, just the perseverance to do it. Eight years is a long time, and having two children, and you kind of get stuck in the grind. So we actually would listen to a lot of debt-free screams to stay motivated. And another portion is when you're in that grind with two kids, you're tired, and you

don't always feel like cooking. So it would have been a lot easier to go out every night. But staying on budget with food in particular, that was hard, but it was well worth it because I've been able to do it like a meal plan for the month. And it just helps with planning and grocery shopping, and it kind of has a ripple effect that I didn't anticipate. But that, for me, was kind of developing that system was difficult at first. Yeah, it's interesting that when you get disciplined in one of these nuanced areas, it opens the discipline up in the others. And when you get generous in one of these nuanced areas,

it opens up the generosity in other areas too. It's very contagious, this stuff, as it works its way through your life. Well, very well done, you guys. Excellent. Did you have people cheering you on or saying you're crazy? Well, if they thought we were crazy, they didn't tell us. Talked about you behind your back, didn't they? You wanted to speak on that.

But no, we had a lot of supporters, family, friends. We've had a lot of people along the way that have really also inspired us to continue, you know, during those times when it was difficult. Yeah. Shout out to our neighbors, Eric and Amy Sidebottom. They started us on the journey. 260,000 paid off house and everything at 34 in eight years, making 125 down to 99. Robbie and Julia, count it down.

Let's hear a debt-free scream. Well, first we need to give a shout-out to Gwyneth and Owen. Yep. Ready? Ready. Three, two, one. We're debt-free! The Equifax breach is being called the worst data breach in history, compromising the information of nearly half of the U.S. population and creating panic for many of those affected.

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Get a quick, easy quote at zander.com or call 800-356-4282. It's really not a question of if it will happen anymore, but when. That's Zander.com or 800-356-4282. never question when i tell you you can do something in five years you'll be standing in my lobby yelling you're debt-free because I said you could. No, it's because you do it. You do the hard work. You do the scratching and the clawing. You do the hard decisions.

And that's what causes you at 34 years old to have your house paid off. They are Financial Peace University coordinators, too, which this is the week where we're honoring Financial Peace University coordinators. It's Coordinator Appreciation Week, and they've been leading the class. And now they get to stand in front of their class and say, we paid off our house and everything. Yeah, love it. Our question of the day comes from blinds.com. They have a 100% satisfaction guarantee.

That means even if you mess up and you mismeasure, you pick the wrong color, they will remake your window blinds for free. Free samples, free shipping, new promos every month. Use the code RAMSY, the promo code, to get the best deal. Randy's in Florida. Dave, I've been contacted about the purchase of solar panels for our home. It would require that I take on debt. No.

Don't borrow money. I'm being told that it will increase the value of my home and save me money over the long haul. What's your opinion on solar panels? Are they a good investment? Yes, they're a good investment in many cases, not always, but in many cases they are, but not with debt. I would never tell you to borrow money to do that now the good news is

solar panel technology has um really really improved in the last couple decades and uh in some areas of the country in some situations you can really get in a great situation where you've got to break even because they produce so much electricity and it cuts your bill so much that it's just a simple break even. If we spend $10,000 and we save $100 a month, then how long does it take to get our money back? Well, if we spend $10,000 and we get $1,000 a month, then it takes 10 months.

If it's $100 a month, it takes 100 months. Uh-oh, that's not good. Okay, so what's your break-even? You need a break-even down around seven years or less. And the adding value to your home is a possibility. I would not buy it on that basis. I would buy it on the break-even analysis. How quick are they going to pay for themselves? Are they going to pay for themselves in, you know, seven years, five years, three years, two years, whatever? That's when you know you've got a good situation. But you pay cash for them or you don't do them. And I endorse solar panel companies in a few of the cities.

We're on 604 radio stations right now in several of the cities around the country. I endorse solar panel companies, but I do not endorse taking them out on payments. I don't endorse taking anything out on payments ever. I'm fairly consistent, folks. Brittany is with us in St. Louis. Hi, Brittany. How are you? Hi, Dave.

How are you? Better than I deserve. What's up? So my partner and I are having a really difficult time finding traction in our budget. We're in baby step two. But our biggest hurdle right now is legal fees that are because of a case where her ex is trying to get rights to a son that she adopted on her own, but during their relationship. So it's really complicated, but we are spending thousands and thousands and thousands of dollars

every month to lawyers. And she got a part-time job for a while to try to help offset the cost, but the lawyers are now saying you need to not be doing that because it's just going to look best for your case if you aren't spending time away from him. That's great, but you want to be paid. Yeah, exactly. That's what I said.

And so we're kind of in this position now where we're putting everything we can towards that, but we still have this huge amount of debt. And we don't want to completely ruin our children's futures or our future by going further into debt to pay lawyers for this case. But we we can't afford to lose our son either if that makes sense so it's it's just i mean it is very personal finance at this point it's so emotionally driven um and i'm afraid that you know we're gonna she's gonna take out a loan or you know something and we're just gonna end up in a bigger hole and be on the other side of this and be 10 years and if you do not resist using debt in a crisis scenario it will bankrupt you i and that is exactly how i feel and i am like it's not it's not a feeling it's a fact yeah it's a mathematical fact and so you've got to apply some kind of limitations to the expense,

and you've got to have some kind of end game where this doesn't go on forever, and you've got to be able to afford it. And I'm with you. You fight like crazy when it comes to kids i got that but the uh uh and what you have to do is you have to balance that out here and and go all right well i know it looks bad with a social worker but we got to pay the lawyer because not paying the lawyer bankrupts us not paying the lawyer means we're going into debt we're either in debt to the lawyer or in debt on a credit card to pay the lawyer.

And also we can sit at home and twiddle our thumbs and look good to the social worker. That's not going to work. So, I mean, you have to pay these bills. You have to manage this crisis as you're going through it or it will sink you. Because what happens is anytime you get to a point where you go it doesn't matter what the cost is we're going to do it we're going whatever it takes then you know when you start saying stuff like that that's that's my drama queen voice that i say to myself sometimes right and um you know when i get in that drama queen mode in my head is when i get ready that's right

before i do something stupid because you're you're taking all reason off the table, all wisdom off the table, all limitations off the table because it's worth it to any degree. And you're making emotional, fatalistic statements to yourself, and that's right before you go in $100,000 in legal fees and credit card debt, and then you look up and you're bankrupt. But the social worker's happy and the lawyer got paid. That's not a plan. So, yeah, you're going to have to put some limitations on this, and you're going to have to work and pay for it as you go. Sorry, it's just going to mean your household's stressed because your household's stressed. Mike is with us in Pittsburgh.

Hey, Mike, how are you? Hey, Dave, how are you doing? Better than I deserve. What's up? Well, I was reminded when I listened to you on break that we coordinated as well, and I just want to let everybody know that it was very easy, and it definitely deepened the relationship, so it was definitely worth it. Cool, thank you. You're welcome, yes. My question today, we've got no debt, we have a new baby. We're hoping for more. And we make about $70,000 household income, have about $70,000 in retirement, and we're about 32, 31 years old.

But we're pausing retirement right now to try to buy our house in cash, and we have about $100,000 so far. But we'd like to get to maybe about 130, and that might take about another year for us to do so. Very cool. So we're just, I'm a little bit worried. I want to save up a little bit more just to find a house that we're not going to have to move out of, you know, in three or, you know, so years,

and really make sure that we have a good location. I wouldn't sweat that. You're going to move in this house, and you're probably going to move in five years. That's okay. It's going to go up in value, and you've got no house payments while you're doing this. Keep paying yourself a house payment and move up. Okay. How do you recommend, or what do you recommend if we did wait another year and pause retirement?

I would. Do you recommend against that? No, I think that's fine. You're young. You've got plenty of time. You're being very intentional. You're going to pay cash for a house, dude. You're how old?

Yeah, 32. Yeah, ding, ding. I mean, how many 33-year-olds you walk up on the street of Pittsburgh, pay cash for a house? None? Yeah, not many. Right? Okay, so that's the thing.

Yeah, you go do that, and then you're sitting there with no house payment, and think about it. Right now you're paying rent and saving money. What if you didn't have any housing costs at all except taxes and insurance? You'd be in a really strong position. That's absolutely incredible. Yes, you have a very good plan. Play it through. Play it all the way through.

Well done, sir. Proud of you. Wow. Man, 33, 34-year-olds paid for houses. That was the theme of this hour. I love this. You can do this, people. You can do this. This is the Dave Ramsey Show.

Hey guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show. Hey, this is Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another. That's nothing to be ashamed of. It happens. And many of us know the embarrassment that comes with those harassing calls from collectors.

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