The Ramsey Show - App - Everyone Manages Money Better on a Budget (Hour 1)

Episode Date: January 23, 2019

The show about you

🎵 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. You jump in, we'll talk about your life and your money, it is a free call at 888-825-5225. That's 888-825-5225. Jen is with us in Philadelphia. Hi, Jen. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. Sure. What's up? Okay, so I had borrowed from my 401k not too long ago, and I feel like that was a big mistake. And I still pay into my 401k, and I have about $31,000 in debt between student loans, credit cards. I don't own a house or anything, and I am married. And our income is only $60,000.

So I don't know if I should temporarily stop putting into my 401K and just pay off the loan that I took from my 401K or just kind of like temporarily stop it or just pay off my other debt. I don't really know where to go from here. Gotcha. Okay, here's what you do. Here's what we teach. We teach a thing called the baby steps.

The first thing you do with money after you get on a written budget and go to every dollar and get the app downloaded that's free to do that, every dollar, once you're on your budget, the first thing you do is you save $1,000. Do you have $1,000? I'm actually working on it. I downloaded the $1,000 app. you have $1,000? I'm actually working on it. I downloaded it. The answer is yes or no.

The answer is no. Okay. You don't have $1,000. So we're working on baby step one. Baby step one is $1,000. Okay. You need to stop any saving and any investing until you get back up to baby step four, which I'll outline for you right now.

So stick with me, okay? Now, so we're going to, first thing is squeeze every dollar out of your life and out of your budget, have a garage sale, take an extra job, whatever it takes until we get $1,000 really fast. Then the second step, baby step two, is to list all of your debts, including your 401k loan, smallest to largest debt. Pay minimum payments on everything but the smallest one and every dollar you can squeeze out of your life out of your budget out of your extra jobs you thought that smallest debt when that smallest debt is gone you take the money used to pay there

and any other money we can squeeze out of our budget we put it on the next one and then the next one and then the next one smallest to largest the next one. Smallest to largest, we work it in that order. Okay? Now, with $31,000 in debt and $60,000 household income in Philadelphia, Pennsylvania, that's going to take you two years. Okay, cool. Okay? Of hard work and sacrifice and no eating out and no vacations and Christmas is a craft. Yes. You following me? Okay. Now vacations and Christmas is a craft. Yes.

You following me? Okay. Now, let's back up a second. How much do you owe on your student loans? Roughly about $7,000. Okay. How much on your credit cards? Probably about $2,000, $3,000.

Okay. What's the rest of this $21,000 then? How much is on the 401k loan? It's about $3,000 and change. Okay. And then what are your other debts? You got a big car debt? I do.

How much do you owe on your car? It's about $18,000. Okay. Okay. And it looks like there's maybe one more. What else is out there? I'm not too sure, to be honest. I guess that's pretty close.

Okay. So let's look at this for a second. Half of your problem is this car. So I'm selling the car if I'm you. Because I want my life back. Yeah, I've been thinking about it. I want my life back. Yeah, I've been thinking about it. I want my life back. And now, then we're going to list our debts.

I mean, get you a beater. We're not going to drive the beater long. But, I mean, it's going to take you two years, and most of that is the car. I'd rather be out of debt in about a year. I mean, what if you're out of debt by Christmas? How would that feel? No payments but a house payment. I mean, no payments payments but your rent you don't even have a house yet that'd be a pretty cool place to be or you can or you can wait till the next christmas and you'll

be all the way out of debt with the car it's up to you if i i'd want to i mean i like cars and i want you to get a nice car i just think this nice car might have you yeah you can do what you want kiddo but that's what i would do now when you get to the 401k loan in the debt snowball when it becomes the next one in line to be attacked you cannot pay extra on a 401 you're only allowed to pay the regular payments so you'll have to save up you pay yourself for extra into the 401k savings account and when you have have to save up. You pay yourself extra into the 401k savings account, and when you have enough to pay it off, you can pay it off in one fell swoop, which won't take long. It's only $3,000, okay?

So cut up your credit cards tonight. Get your budget going. Sit down with your husband, and let's lay this out. Stop your 401k, put a for sale sign in the car window, and let's get in attack mode and get your life back. You can do this. This is very doable in your situation. If you want to wait two years instead of one year, keep the car.

But I personally would sell the car and get my life back and get on and get my emergency fund built, get my retirement started again, which is baby step four, and then start saving for a car and move up in car, and then start saving for a car and move up in car and then start saving for a house and buy you a house and so forth. But pay cash for everything from this point forward because debt has not been a blessing to you. And you know that.

That's why you called me. Carolyn is in Atlanta. Hi, Carolyn. How are you? Hi, Dave. Thank you for taking my call and for everything that you do. Thank you. I have a question today about the baby steps.

We only found your program about a year ago and it's been super helpful. So I want to say thank you for keeping us organized and getting our act together. But the question I have is I think that we kind of work them backwards before the baby steps, before we find your program and really got ahead on retirement savings, but I think they're very behind on our house payment. Is it worthwhile to pause or stop that to try and get ahead on our house payment? Nah. No?

You'll get there. You'll get there. So how much do you owe on your home? We owe $300,000. Okay. And what's your household income? $180,000. Awesome.

Good. You're killing it. Congratulations. Okay. So when you clean up the other miscellaneous debt, and you're putting 15% of your income into retirement, regardless of how much is in retirement. I'm sorry?

I'm sorry. We don't have any other debt. Oh, have you got your emergency fund done? Yes, we do. Okay, so you're at baby step four. Four, five, and six run simultaneous. Okay? Yes.

And so 15% of $180,000 is what? $25,000, $26,000, right? Yes. 26 out of 180 doesn't keep you from paying off your house early. Oh, okay. Yes. Okay, great point. It's not that big a number is my point.

You're making so much money. You've got no other payments. You've already learned how to handle money. You're already winning. You're just going to turn. Now the next thing is just turn the barrel of the gun and sight down the thing and look at it and go, oh, house payment. You're going down. Okay.

You know, and so let me, let's see, 180, your house is going to be paid off between four and five years. How old are you? Okay, we're 47. Oh, yeah. Your house will be paid for in your early 50s. You're going to be, you're right on track following the millionaire data points, as a matter of fact. You're perfectly following them. So, yeah, you're going to be just fine. And points as a matter of fact you're perfectly following them so yeah you're you're gonna be just fine and see i didn't even ask you yet

nor am i going to how much is in your retirement doesn't matter the principle still works thanks for calling in this is the dave ramsey show Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35

years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thank you for joining us, America. We're glad you are here. Open phones at 888-825-5225. 888-825-5225. Anthony is with us in Sacramento.

Hi, Anthony. How are you? I'm doing good, Dave. How are you? Better than I deserve. What's up? Not a whole lot. I just want to thank you for everything you do, first off. Thank you. Second off, I'm getting ready to start my Total Money Makeover.

I'm about three-quarters of the way through your book. Cool. I just got out of school to be a welder, and I am starting up my second time with the same company that I got hired on with right out of school. My question for you is, would you consider increasing this baby step one from $1,000 to maybe $1,500 if my income was not consistent like it is now. I just recently got laid off in the last three months and didn't have any. I didn't find you before. So in the time that I've laid off, been laid off, I found you. And so now I'm getting ready to start.

And I'm wondering if that would be a good idea. How much notice do you usually get? Well, this was interesting. I actually was told I was going to be pretty much working throughout those three months. But this particular case, I got told formally that I was laid off only about a month ago. So it was kind of a tough situation. They gave you what? How much notice?

They gave me, well, they really didn't give me any notice that i was laid off i just walked in said you're done today what's that they walked in said you're done today uh yeah i i went for vacation they told me i would have work when i came back and uh i didn't so the new gig you got is it more stable well it's the same company that's oh the issue. That's what I'm kind of curious about. Are you on a contract, or are they just hiring fire just randomly like this? It's not really on contract or anything. I don't really have a set time that I'm going to be working for them.

They give me certain jobs to go to. I travel for work. I have a job coming up for about six weeks, and then after that it's not really anything guaranteed. Okay. All right. So it is kind of like a contract in that you're going by project by project is the only security you have.

Correct. Other than you could change companies and land something as a welder steady for somebody else, right? Correct. Correct. All right, cool. And you're single?

I am. How do you make a year? Well, in the last six months, I calculated about $20,000. So if you double that, about $40,000. Right. Inconsistently, that's my issue. Okay. I would, I don't think $1,500 is enough. Okay.

I'd go the other way. And I don't know that it's necessarily a baby step one thing. I always hesitate to raise baby step one up. Instead, it's more of I'm not ready to start my total money makeover until my income is stabilized. Okay. total money makeover until my income is stabilized okay and uh do you anticipate being in a position in the future year and a half or two years where your income stabilizes and is predictable well i'm hoping i can be on with this company for longer um they have stable employees it's just i'm getting started with them i'm an apprentice so they basically bring on people and take off people as they need

them yeah last in first out right exactly yeah so once you get some seniority you'll be a little step more stable correct if you can if you can survive the volatility okay so for now what i would do is pay minimum payments on my debt and let's just build up some savings okay and let's just let's just pretend we're in the middle of an emergency and we don't really start the baby steps until we get out of the emergency and in other words in your case we're going to say when it stabilizes we'll push play and i'd probably clean that savings out down to a thousand and really throw it at your dad right but in the meantime i just pile up some money because you just got a really erratic situation here and it changes the way you think and what jobs you take and all that kind of stuff because you know you're so broke you're it leaves you vulnerable you know so uh how much debt have

you got well um i've got about 35 000 um ranging about 12 000 in credit cards, about $17,000 in student loans, and about $6,000 from parents. No car? Go ahead. No car? Nope. I have a used car. Good.

Okay. Yeah, just pay your minimums on everything, and let's pile up some cash. When things stabilize, you know, in the next eight or ten months, maybe this starts to be a little bit more predictable, you feel less vulnerable, then I would, you know, I would step on it and let's push play, pull that money out of there, throw it at your debts, and start working your debt snowball. Carla is with us in San Antonio, Texas.

Hey, Carla, how are you? Hi, Dave, good. Thank you so much for taking my call. Sure, what's up? Hey, so I've listened to you for a long time absolutely love you my family loves you uh my dad has finally come to me and ask for help um asking about long-term care insurance he's financially stable and we looked into long-term care and he was just kind of upset about it being, say, $350 a month. And then when that time comes, it only covers about three and a half years.

That's about normal. Okay. And that we just, I guess we've never really dealt with this yet. I was curious if maybe he put money of his own into, say, an annuity or something to where it grows to that pool of money of what they were kind of saying. Yeah, if you had enough money set aside, you could self-insure through this. But in the meantime, he needs insurance. Okay. So he's got about $450,000 cash. Is he single?

No, married. Okay. Well, here's what normally happens. The normal thing is 70% of the men pre-decease their wives. Right. So he typically, most of us, 75% of us die before our wives if we're of similar age, especially that kind of a thing, right? So he goes into a nursing home, uses up $350,000 of the $450,000 and dies and leaves her almost broke or broke.

So Papa goes in the nursing home, scrambles and cracks the nest egg, right, and leaves Mama in trouble. That's what I don't want. He's got a good nest egg, but he ain't got $2 million. Well, he's got land also. Well, is he going to sell that? Is she going to sell that to survive? That's what we were kind of saying, is that he needs to come up with a plan and see what he wants to do.

What's the land worth? Because it's like $3 million. Okay. Well, if he wants to commit to selling that upon going into a nursing home, is it a family farm or what? Yeah, yeah. So it's like one of your calls last week yeah third third generation but yeah they're not going to be jumping up and down to sell that to so that mama's not broke yeah so okay if he wants to commit to sell a million dollars worth of that upon entry into a nursing home to protect your mom and self-insure good do that

okay but i don't think he's going to right i don't think he wants to sell it we're just curious after three and a half years then what happens then well if they stayed longer yeah only 24 percent stay longer than three years okay so the average stay is 2.4 years. And, you know, it's just almost never, in other words, that you get into it. So it's worth taking care of that first three and a half or four years worth of risk with the nursing home care. And it costs you, you know, it does cost you $3,000 to $5,000 a year in premiums to get your monthly. That's what it's going to be. And so the average annual premium is about $2,500.

How old is he? 65. Okay. And he is 2. Yeah, that may be why it's a touch higher. But shop around and get with a broker, one of our ELPs. And the average claim lasting more than, the average claim that lasts, if it lasts a year, longer than a year, it stretches out to about 4.2%. And only 17% of the claims go longer than five years. Okay. And so they would not burn up their nest egg, is my point.

Hardly ever would they burn up their nest egg if they had three and a half to four years covered. And so that's why we recommend it. Now, again, you get $3 million. If he wants to sell a million dollars worth of that property or more upon entry into the nursing home, he and your mom commit to doing that in order to make sure she's okay. I don't want her with no money and $3 million worth of dirt. That is not a good place to leave her. So only if he'll sell it, then he can self-insure if he wants to.

But that's the risk he's taking. This is the Dave Ramsey Show. What will your family do if you die? Did I get your attention? Good. If you're a father, mother, husband, or wife, it's your responsibility to have life insurance. No matter where you are in the baby steps, you have to deal with this right now. How will your family pay for the mortgage, put food on the table, or pay for education? How will they deal with retirement and stay the course for getting out of debt

and accomplishing something with their lives? This is what life insurance is all about. I knew when I started this show it was something my listeners had to have, so I went out and found a company I could trust to offer the plans I believe in. That's why I've been talking about Zander Insurance for over 20 years. If you haven't dealt with this, please go to zander.com or call 800-356-4282 and let them help. This is a priority. It's not expensive, it's not complicated, and you need to do it today. That's Zander.com or call 800-356-4282.

Thank you for joining us, America. This is the Dave Ramsey Show. Mike is in Dayton, Ohio. Hey, Mike, how are you? Good, Dave. How are you doing? Better than I deserve. What's up?

Well, I've got a question for you. I'm just trying to figure out how to keep my credit card debt from getting any worse than what it is. It's about $13,000, and and we don't have it's just a single income i have a wife and six children and just trying to figure out an option for me to keep from adding to that credit card debt because it's starting to get a little stressful i guess well i think i probably changed my language if i were you um i don't want to try to keep from adding to it you have to you have to stop adding to it because it's going to if you just keep on this road it's going to lead you into bankruptcy you can't just keep adding to it

um you know i don't make enough so i'm gonna put it on a credit card that there's an end to that road and it's into the wall right right yeah so you got to you know so the first thing we're going to do is get out stupid credit cards and cut them up and say okay this isn't an option we have to find an option that works because this option this option feels good by friday but this option doesn't feel good five years from now it leads to bankruptcy and stress and marital stress and everything else okay so six kids in a feed that's a that's a deal what do you make a year sir oh 52 to 55 000 okay and and you have 13 000 in credit card debt uh pretty close yeah and what other debts do you have not counting your home sir well the debt's basically just some medical and uh we've

been putting the groceries on it and uh we did have a vehicle expense in there. Do you have a car payment? We just have one payment, yes. How much do you owe on your car? We owe just a little over $2,000 left on it. Good. All right. And what other debts?

Do you have a student loan? Nope. No student loans. Nope. That's just a house mortgage after that, and that's it. Good. Good. Okay.

And how much is your mortgage payment? Mortgage payment with escrow and everything, right around $1,000 a month. Okay, all right. There's two sides to the equation and one thing you can do to increase efficiency. The two sides to the equation are income and outgo. No kidding. You knew that. Yep. You need me to tell you that. A higher income fixes some things and lower outgo. No kidding. You knew that. Yep. You need me to tell you that.

A higher income fixes some things, and lower outgo fixes some things. I don't think you guys are being crazy, wasteful, princess, spoiled brat spending. You're feeding six kids on 50 grand. This is a tight budget. So I don't think you're doing a bunch of prestige spending or buying a bunch of crap because you're emotionally immature. You're just trying to make ends meet, and it's tough. All right. My point is I don't think your outgo is probably out of control.

Your income is tough with a family that size. So, you know, the thing that we're going to do is two things. One is to address the outgo side we're going to get you and your wife to sit down and develop a detailed written budget before the month begins your income at the top of the page and give every dollar an assignment starting with food and lights every dollar has an assignment down the page each month you do a new one because months are different this month we have these bills laying here and we've got to buy food right and we we figure out every dollar before the money comes in it's already spent on paper it already has an

assignment on paper and you and your wife agree to it when you do that kind of detail and it takes the first 90 days you do it it's kind of a pain in the butt it is a pain but when you do that kind of detail you will feel like you've gotten a raise for instance when you take your two pay how many times you get paid a month i get paid every week okay you put four paychecks at the top of the equal at the top of the page and you take out your house payment and you take out your house payment, and you take out your car payment, and you take out lights and water and food, and you start taking out the things you know you have, there's going to be money left, and you're going to go, where's this going?

That's what I mean by you're going to feel like you've got to raise. I'm not saying you're being extremely wasteful, but everyone, including Dave Ramsey, manages money better when we have a written plan every month. There's a free app for your phone or your desktop called EveryDollar that we developed. It's the best budgeting tool out there. It's completely free. Jump on and get it and get started with it. That's thing one.

That'll help you control your expenses, and that's the efficiency thing I was talking about. You'll get more efficient use of the money. Then the second thing, or the second and third thing, part of the equation is the income side of the equation. Once you lay all of that out and you say, if we didn't have any car payments or credit card payments, we'd have more room in this budget, right? Right. So getting out of debt then becomes one of your things, and you say, all right, what have I got to do to get out of debt? Well, Mama's got a full-time job.

She's got six kids all right and daddy's got a full daddy's got a full-time job but he may have some extra work or some overtime for a period of time to knock out these two debts because that would give you wiggle room in the budget and that may you know that margin in the budget to be able to do things now and and then so short term we might do some stuff to get your income up and then long term i'm going to ask start asking myself the question what do i want to be in 10 years what do i want to be that makes 75 000 or 100 000 or 175 000 i don't care what do i want to be doing in 10 years because i living this tight on 52 000 with six kids is probably not my plan for the next five years. I'd like to increase my income, and what do I need to be doing?

Do I need to take a class? Do I need to change careers? Do I need to further the career I've got? Do I need to talk to my boss about what I can do to move up the ladder at this place and get paid a little more? I don't care. But you start thinking and asking yourself, if I could do anything I wanted to do five years from today, ten years from today, what would I be doing that makes more money?

And amazingly, ideas will start coming into your brain. They probably already come into your brain. But you've been just trying to, you know, trying to make Friday work every week, and you don't have time to think about the future. I'm going to force you to think about the future because I don't want you at 52K plus part-time jobs for the next 10 years just to feed six kids. And so I'm not saying you can't do it on that. I'm just going to tell you it's not going to be fun.

There's not going to be a lot of wiggle room. You guys have not done a bad job with money. If you've done a bad job with money, you're going to call me up with 50 grand in debt, not 15 in debt. And, you know, you got a little car and you got a little bit of credit card debt. But you caught this before it got out of control. So you've done a pretty good job to date. We just want to start winning instead of going backwards if I'm in your shoes.

Hey, thank you for calling, sir. It's an honor to speak with you. Natasha is with us in Fort Hood, Texas. Hi, Natasha. How are you? I'll try again. Hit the button, Dave. You know what?

It is that line one. Let's check that. It happens to me. I thought it was me, but I think it might be a little rough. Anyway, Natasha, how are you? Hi, I'm fine. Thanks for taking my call. Sure.

What's up? We're two vets, me and my husband and I, two vets from Fort Hood Army Vets, about to coordinate our first class on Saturday. Well, thank you. Thank you for your service, and thank you for leading the class. Thank you. Well, my question today is, when we first started, and we didn't have the packet and everything, when we first started,

we started knocking out the baby steps, and we finished baby step two. Good. Right when we finished, my husband lost his job, and we went from $92,000 to $32,000. Whoa! What's he do for a living? Right now, he's about to start here on post as a GS worker. Mm-hmm. And I'm already working here on post.

Okay. So what's his new income going to be? 32. So we'll go up to 64 now. So he went from a $60,000 job to a $30,000 job. Why? Because it was a cable company here in town, and they were laying people off.

Yeah, but what was he doing that was worth $60,000? Managing other... I'm sorry, I'm so nervous. That's okay. Managing other contractors going out fixing cables. Okay, good. So he knows how to do something that's worth $60. I wouldn't take a job at $30, except for the short term, just to eat. Right, that's what we're doing for short term.

Yeah, but long term, I want him to get back to $60, don't you? Yes, I do. Good, good. Well, let's not accept that lesser amount and get after it. In the meantime, you guys are going to have to really manage your budget, because you went from $90 to $30 to $60. And that's a bit of a roller coaster ride, and it's not all the way back up at the top yet.

So you're going to have to really watch what's going on and have a lot of budget discussions and a lot of can we keep this or can we live here or discussions until we get his income back to where it was. But five years from now, I don't want him making $30,000. Just because one time he got laid off back in the day from a cable company. He's proven he can make $60,000. So now go make $70,000. Don't make $30,000.

Long term. This is the Dave Ramsey Show. I'm going to go. Thanks for joining us, America. This is the Dave Ramsey Show. We're glad you are here. Raul is with us in Miami. Hey, Raul, how are you? I'm doing well. How about yourself, Dave? Better than I deserve, sir. How can I help?

Well, Dave, I'm just calling because I tuned into your live stream via YouTube the past few weeks, and I'm really engaged. And my question to you today is, should I adjust my repayment on my student loan and apply the difference to my debt snowball? I already got Baby Step 1 taken care of, and now I'm working on the debt snowball. I already got Baby Step 1 taken care of, and now I'm working on the debt snowball. Okay. And adjust your payment.

What do you mean? You're making a regular payment now, and you want to put it on a lower payment, like income-based or something? Correct. I'm in a standard repayment. I have about another four years and a half left over. Obviously, when you do the income base

the the repayment term does get pushed further but i do get like a difference about eighty dollars a month okay and uh and difference well you're gonna pay you're gonna pay it all off faster than four years student loan and everything i hope okay how much debt have you gotten? You got a student loan of how much? Student loan, I owe $17,000. Okay. What's the other debt, not counting house? Okay. The other debt, I have about $17,000 on credit card.

I got $25,000 on my truck, and then I got $12,000 on personal family loan. Okay. So, total, everything comes out to about $72,000. Okay. And your household income? Steady income is $75 a year gross and about an additional $45. I do real estate on the side, and my wife, she's a real estate closer. Okay.

So your total household income is about $120,000? It varies about $120,000, $130,000, yes. Okay, very good. All right, so how fast? I think you could pay $72,000 off in under two years, don't you? Absolutely. After hearing all your advice and guidance, I believe so. You've got to book it down.

Out of $130,000, pay off $36,000 a year. And for book it down. Out of 130, pay off 36 a year. And for two years, that's 72, right? Correct. 36 out of 130 sounds doable. Absolutely. So should I leave the student loan? I guess the point is

if it's going to be done in two years, it doesn't matter. Let me point out what I'm saying, or let me show you what I'm saying. If you reduce the payment on the student loan by $80, it increases what you can put on something else in your debt snowball, right, which maybe would be a credit card or the personal loan. So they pay off a little bit faster, but then you've got a little bit more to pay on the student loan when you get there. it's almost like you're just moving the money back and forth but the p is still under one of the shells okay the whole 72 is gonna be gone in two years and the truck is probably the last

thing to be gone and so the student loan's probably gone in you know just a little over a year year and some over a year yeah i mean if we say okay if we say 38 a year or 36 a year 25 of which is the car right on the last year because it's the big item at the bottom of that snowball uh that leaves me only 11 in the other year and so the front half of the second year everything's gone but the car you see what i'm doing and so this is just an 18 month discussion or you know a 14 month discussion and you might move some money from 80 one way or 80 another way but at the end of 18 months, it's all gone anyway, except the car, and then we're going to knock the car out.

So I guess my point is it doesn't matter. You could do either one. I probably would just leave it alone. Okay. Just leave it the way it is. Yeah, just get on your debt snowball. Get on your every dollar budget. Start punching this thing in the face as hard as you can go.

Get after it, and I think you're debt-free, everything included in two years, but you and your spouse together, you're going to have to work on it, you're going to have to have the written plan, you're going to have to cut your lifestyle, you're going to have to quit spending like you're in Congress, you guys have been buying everything in sight, and you're going to have to stop all that, but I think you're ready to, just talking to you, the tone of your voice, the way you're carrying yourself in the conversation, you sound like a guy who's ready to get it, get this done. You know, you know, I've had it.

I'm not living like this. I'm going to learn what it takes. Let's do it. You're a guy that lines it up and knocks it down. And you're one of those people. And that's I can hear that in the way we're talking. So I think you're going to be just fine. It doesn't matter.

I would probably just leave it alone just because it's over in 14 months either way. Good questions. Good discussion. Thank you for joining us. Open phones at 888-825-5225. You know, it's something to do if you're new out there. You know, like him, you just found us on YouTube, okay? Or

you just found us on your local radio station, or you found us on a podcast, or whatever. And you're just starting to figure this stuff out, here's what I'm doing when I'm talking to you guys. There's a couple of things I'm looking at. I'm doing what I call big math. I'm not getting down in the weeds on the nickels and the dimes. I'm just saying, okay, there's $72,000.

How fast can you pay that off? And I look at his income and I go, well, if he does it in two years, that's $36,000 a year. If he does it in three years, it's $21,000 a year, right? And if he does it in one year, it's $72,000 in one year out of $130,000. He might do that, but that's like serious beans and rice. Very unusual. My guess is this guy is going to be game on enough. It's not going to take him a full two years, but one year is probably a stretch.

You see, I'm just looking at the big math going, okay, the total debt divided into years against his income. Is that doable? And so I'm not trying to figure out per month. I'm not trying to figure out per paycheck. I'm not calculating the interest. You're not in debt long enough that the interest matters much when you start doing it with this kind of intensity so to just kind of look at it and go i can do that that's you know thirty six thousand dollars a year which by the way three thousand dollars a month okay game on pop it you know. And so I'm looking at that ratio and dividing the debt out by years and dividing it into your income and just looking at it.

It's really just kind of comparing it. Now, if you said he made $40,000 a year, how quick is he going to get out of that? That's tough on 72. He does $20,000 a year. It's going to be over three years so i'm gonna be talking to that guy about getting an extra job right if he calls me you know making forty thousand and seventy two and he's got to do something get his income up and what are that car sold in that case that truck's gone if he had this truck right because he no way he can make that

work you see i'm just looking at the big numbers here and going how can we have an impact impact? How can we get this ball rolling? And how can we get the ball rolling really fast down the hill called a debt snowball? And then the second thing I'm looking at is just shovel to whole ratio overall. And that's what I was talking about there with the 40 versus 72. The shovel I'm looking at is how big a shovel is your income? How can you shovel out of this? And that's your income. And what can we do to get your shovel size up? And how does the income relate to the problem? And the problem is the whole.

So shovel-to-whole ratio, again, is income ratio to the total debt, not counting the house. And then how can we address that and what's holding us up? Well, I got six kids. Well, that enters into it, doesn't it? It's a lot of baby birds to feed, right? Or I got this or that, or I got a health problem. The variables enter into it.

But overall, what is your income and what can you do to get your income up as opposed to knocking this out? I'll give you another prediction about that last guy calling in, Raul. Here's my other prediction about him. He's got side hustles going, including real estate. His wife, both, they're all working like crazy. He made $121.30. When he writes all this down, a goal-oriented person will automatically start going,

if I add $10,000 to my income, this goes away this much faster. If I add $20,000 to my my income this goes away this much faster if i had 20 000 of my income it goes away this much faster and those kinds of people are the ones that you see their income go up dramatically while they're working their way out of debt because they start looking in that they they can't keep themselves from increasing the side hustle from increasing the gig you know know, the overtime. Because it's like, man, I got this. I got this. I got this.

Pop. I'm going to hit it. And it naturally occurs. You hear it in the debt-free screams all the time if you listen. How many times do you hear a debt-free scream that their income goes up while they're getting out of debt? Almost every time. Sometimes it's necessity, and sometimes it's just kind of somebody like that's a little bit goal-oriented and entrepreneurial, and they're like, side hustle, game on, baby. Game on. This is how you do it, folks. You can do this. You can do this. Millions of people have done this. We're glad you're here. This is The Dave Ramsey Show.

Hey, guys. This is Blake Thompson, Senior Executive Producer of The Dave Ramsey Show. Did you know over 15 million people listen to The Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country. To find a station near you, head to DaveRamsey.com slash show.