The Ramsey Show - App - Get on the Shortest Path to Wealth (Hour 1)

Episode Date: June 21, 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 as we talk about your life and your money right in front of you. The phone number is 888-825-5225. That's 888-825-5225.

Christiana is with us in Evansville, Indiana. Hi, Christina. Or it's Christina. I'm sorry. Hi, Christina. How are you? Hey, Dave. I'm doing well.

Thank you. Sure. What's up? Thank you so much for taking my call. I'm nervous oh that's okay we've never lost a patient what's up okay okay so my husband and i uh first started the total money makeover um at the beginning of our marriage which was about 15 years ago and we have been contributing to retirement for a while now and so my question is about retirement. I'm just a little bit concerned because I want to make sure our money is working the most that it can for us. My husband is a minister.

He's actually a staff pastor. And the organization that we started contributing to, a 403B plan, at the time was a different denomination than we are now. So we have about $70,000 in that 403B, but we cannot keep contributing to that. And we also have a couple of different rods that we are contributing to. But a great benefit at retirement, because as ministers, if we do a 10-year payment plan on that 403B at retirement, where we would get a monthly installment, and if we used it for housing or anything related to housing expenses, it would be tax-free.

So it goes into the account pre-tax dollars, and then we can be tax-free on that. However, if we are not using it for housing, then it's like taxed at 20%. So my question is, I don't know if I should move that money. There's a little bit of a penalty with that. I think it may be 10%. I just don't really know what to do if I'm missing out on the compound effect of that money with RODS. How old is he? How old is he?

My husband just turned 40, and I'm 39. I would roll it to an IRA because you're going to build more wealth than the benefit of it being tax-free for housing because of course our goal is to have your home paid for when you get to retirement anyway so your housing costs shouldn't be high at that point right so you're going to build more wealth and you won't need it for housing if you follow through on the other stuff that you've learned over the years um right and so yeah I would I would get with a SmartVestor Pro, and I would roll that to an IRA. And, you know, across the four types of mutual funds, we talk about all the time, growth, growth and income, aggressive growth, and international.

And then going forward, of course, you're making sure you are investing 15% of your income. If you're at baby step forward, it sounds like you are, into your retirement plan every year. And that can be Roth IRAs and or the plan that the current denomination has available to you, whichever it is. But in either case, we want to go Roth first. We want to go match first, up to the match. And then other than that, we want to go Roth and then pass that traditional. But in this case, this account is, like you said, it's dead. They're not adding anything to it, and you're not allowed to add anything to it,

so I would go ahead and roll it. Elliot is with us in Albany, New York. Hi, Elliot. Welcome to the Dave Ramsey Show. Hi, Dave. Nice talking with you. Short-time listener, but I'm enjoying it so far. Thank you.

How can I help? Absolutely. So, here's my question. So, I'm a physical therapist. I graduated school a few years ago, and my goal was to get rid of my student debt. So, I started doing travel physical therapy because of the tax benefits, because of the non-taxed housing stipend and meal stipend. And I've been able to clear my student debt. How is your housing and meal not taxed? Because it's considered short-term living. Oh, it's a business expense. I pay rent at home.

A business expense of traveling. Correct, because about every 90 days I move. Okay. And so what are you making? So I'm making about an average of $7,500 a month after tax. Wow. So you're knocking down like $120. That's sweet.

Right. That's sweet for a PT, man. You're doing good. All right. And how much debt did you pile up? So, let's see. I started with a little over $100,000, including car loans. And I've paid off about $75,000 of the debt. You're almost done.

Yeah. Way to go, man. Well, thank you. So, now the next crisis, I feel like, and I'm trying to figure out what you would advise, is I still have about 25 or so between two cars. And, you know, the travel thing, you know, I have a kid that's one and a half now and one on the way. So I'm thinking we're going to try and settle down relatively soon. So buying a house comes into the picture.

So now I'm trying to juggle am I going to keep aggressively paying those car loans or save up for a house? Now, you don't buy a house while you have debt. We need to clear the car loans. Either sell the cars or pay them off before you buy a home. I want you to be debt-free. I want you to be through what we call Baby Step 3, and that's debt-free and have your emergency fund in place, plus save your down payment, your emergency fund of three to six months of expenses. If you move into a house and you've still got debt, you're asking for Murphy to move in the home with you.

You're going to need an extra bedroom just for these cars. And your house will not be a blessing. It will be a curse when you move in on a wing and a prayer and a pile of debt. So clear those cars. You've done really well. Just go ahead and play through. Knock those out. Either get them paid off or sell them, one of the two. But either way, that debt's

gone. And then build your emergency fund from there of three to six months and then start saving your down payment. We have enough money to pay off the loans. Oh, I'll do it today then. But if we've paid most

of the interest, why? You haven't paid paid most of the interest, why? You haven't paid the most of the interest. You have a traditional car loan. What's your interest rate on your car loan? I think it's 4.1 on the one. Okay. You do not have a rip-off finance company loan that has the interest prepaid. The reason the interest is higher at the early parts of the loan,

the dollar amount is higher, is because the balance is higher. The only interest you paid is what's called simple interest, which means you have paid interest. The amount of your payment going towards principal has increased because your balance has gone down, so the interest paid is going down. Right. But you haven't prepaid any interest you paid the exact interest every month that was due on the outstanding balance plus something on the principal but as the balance has gone down you put more and more towards principal but it wasn't prepaid at all now you need to pay those cars off and i would write the check and do it today today oh that's difficult it's so scary to have so little in the bank.

It ought to be scary to have $25,000 in car loans. Okay. Hey, you do what you want to do, but that's what we're teaching around here. The shortest path to wealth is not having any payments.

How would it feel like to have no payments? And with the money you're making and the money, the progress you've been making, you'll have money back in the bank next month. I mean,

you'll have money back two months from now. You're going to have a big pile of money. By Christmas, you'll have money back in the bank next month. I mean, you'll have money back two months from now. You're going to have a big pile of money. By Christmas, you're looking for a house. You're doing good, man. Play through. Play through. This is the Dave Ramsey Show. Folks, turnover is bad for business and it's expensive. That's why I recommend ZipRecruiter. ZipRecruiter is a place where growing businesses connect

qualified candidates. They make it so easy. When you post your job with ZipRecruiter, they send it to over 100 of the web's leading job boards. But they don't stop there. With their powerful matching technology, ZipRecruiter scans thousands of resumes to find people with the right experience and invite them to apply to your job. As applications come in, ZipRecruiter analyzes each one and spotlights the top candidates so you never miss a great match. It's so effective that 80% of employers who post on ZipRecruiter get a quality candidate through the site within the first day.

With results like that, it's no wonder that ZipRecruiter is the highest rated hiring site in America. And right now, my listeners can try ZipRecruiter for free at ZipRecruiter.com slash Dave. That's ZipRecruiter.com slash Dave. ZipRecruiter, the smartest way to hire. How would it feel to have actually, actually have control of your money? You know, most people just live their lives out of control or clueless, oblivious to what's going on with their finances, and they struggle all the time. There's always stress. There's always fear. There's always the impending doom around the corner. You know,

you can tell your money where to go instead of wondering where it went. You really can. Rachel Cruz, Ramsey personality, my daughter, number one best-selling author, is teaching a free lesson on how to save that baby step one, that $1,000, really fast. We've helped millions of people here at Ramsey win with money with this step-by-step plan. And if you're ready to start saving big and you're ready to get control, you not want to miss rachel's lesson on the very first step maybe step one you can start taking control of your money reserve your spot for rachel's free live lesson it's on june 26th that'll be next tuesday just go to DaveRamsey.com or call us at 888-22-PIECE, 888-227-3223. And you can participate in this webinar that Rachel is doing completely free on June the 26th. I get tickled on Twitter.

I've been doing this for 30 years, and it's always kind of interesting to me that someone wants to help me understand what I'm doing wrong after all these years of doing it. And Twitter is good at finding people who want to help you understand what you're doing wrong. So a guy tweets, Dave Ramsey doesn't know anything about inflation. He's been telling people to save $1,000 as baby step one for 25 years. And I'm like, well, yeah, actually, Dave Ramsey does know about inflation. been telling people to save $1,000 as baby step one for 25 years. And I'm like, well, yeah, actually, Dave Ramsey does know about inflation, and it doesn't actually apply. Your critical thinking skills suck because here's the situation.

We don't tell you to get $1,000 and keep it and stop there. That's the only way that inflation would apply. The $1,000 baby step one beginner emergency fund is very temporary and uh it isn't you know what it is designed to cover has not changed in 30 years it's not designed to cover much at all about a thousand dollars worth of stuff you know that's about it that's right and you're not going to have that emergency fund. If that's all you do and you stop there, then inflation would apply. But inflation doesn't apply because, you know, it's just there for a few months. The average person is debt-free house except for their home and baby step two and then goes back to that $1,000 account and begins to raise it to a fully funded emergency fund.

And that is inflation adjusted because how do you calculate your fully funded emergency fund? Three to six months of everybody say it with me. Expenses are expenses. Have expenses changed in 30 years? Yes. So has the properly done emergency fund that you do keep around for a long period of time adjusted for inflation?

Yes, it is. Ta-da! Almost like we knew what we were doing before Twitter got here. Who figured this out? Isn't that amazing? So, yeah, the $1,000 is a temporary thing. The typical person is debt-free except their home in Baby Step 2, paying off everything but their house, working this total money makeover, Financial Peace University, Dave Ramsey stuff, right?

Working that baby step two with gazelle intensity. Listing your debts smallest to largest. Paying everything in that order. Minimum payments on everything but the little one. Attack the little one. Sell so much stuff the kids think they're next. Take an extra job. Don't go on vacation and don't see the inside of a restaurant unless you're working there.

You're getting out of debt the person who does that is on average debt free in 18 to 24 months and as soon as you finish that and you're debt free in 18 to 24 months then the one thousand dollars is no longer relevant because you're going to add to it in baby step three and raise it to three to six months of expenses. So that's why there's no reason to inflation adjust that $1,000. And that's why your critical thinking skills suck, because you didn't understand how the baby steps work, and instead you found some nuance that you wanted to appear you knew something about.

Rose is with us in Dayton, Ohio. Hi, Rose. How are you? I'm doing great, Dave. How are you? I'm doing great, Dave. How are you? Better than I deserve. What's up? Well, I'm calling because my husband is about to get a pretty large bonus at work. We are in baby step six, and we're trying to decide what to do with it.

We're not sure if we should put it toward what's remaining on the mortgage or if we should put it into our kids' college funds. Either one's fine. How big's the bonus? Okay. About $30,000 after taxes. Yay! I hate it when that happens.

So what do you owe on your house? We owe about $66,000 on the mortgage still. Oh, you're getting close. Yeah. Getting close. That would almost bring it up in Simon. You got it down to a car payment once you do that, if you throw it at the house. So how old are the kids?

They are going to be nine in a month. They're triplets, so they're all the same age. Okay. And how much do you have saved for their college now? So we have about $6,000 for each of them, and so that's why we're wondering about the college funds, because we haven't been as serious about saving for the college funds as we have about paying off the debts and doing the other things. So we get a little nervous because all of them will be in college at the exact same time. What's your household income?

It's about $160,000. There's not a wrong answer. It's whichever one you want to do and you could throw 10,000 in each of those and it sure would beef them up and then you're still gonna you're still gonna knock off your house in probably what two years yeah that's the thought and you might knock it off in one year if you do it the other way and then you you know so really what's going to happen is is five years from now you're gonna a paid-for house and a substantially funded college fund. Agreed?

Right. So it's just a matter of which one you're going to do first. Okay. And that's going to free you up to do the other one. So there's not a wrong, wrong answer here. I mean, you easily could throw $10,000 each and be done with the house and into the children and then be done with the house in two years. or you could throw it at the house be done in one year and then just stack up on that college thing and finish it off the next few years okay is that is that logical to you yeah that

makes sense to me my thought was just because i knew the money in the college funds would grow that maybe it would be better to get it in even a year earlier if that would make a difference when they're 18 or not? Not much. I wasn't sure. No, okay. It'll make some difference, but not enough that it persuades this decision. Because we're only talking about nine years of compound interest.

If you're talking about 20 years of compound interest, ding, ding, you start to talk about some money. But nine years, it's not going. There's some effect, but the math on it's not huge. So you're coming closer to cash-flowing college, pre-funding college, than you are investing in the investments growing for college because you're late enough in the game at nine years old that you're not going to see tremendous investment returns in that nine years. And all three of them lining up there.

That's awesome. Either way is fine. What would I do? I'd probably pay off the house. I'm probably moving that way. That's the way you all were heading anyway, and then I'm going to turn around and catch up on the college real quick because I love the idea of that house being paid for,

and it's right there within reach. But there's not a wrong answer. If you go the other way, you're just fine. Good question. Thank you for joining us. Jason's on Twitter. Do you recommend home warranty plans? No.

I don't recommend extended warranties of any kind. If you want to open an extended warranty company, here's how you do it. You calculate the probability of the repair you're going to have to pay for. If you insure 1,000 houses that have 10-year-old air conditioners and you're insuring the air conditioner, you can figure out that the actual cost of covering those 1,000 houses is an average per house of X. And then you take X, that's your cost to provide the warranty, and you add overhead, profit, and you add a big, fat marketing fee

when it comes to home warranty plans. About half of what you pay for home warranty goes to the marketing. The rest of it goes to profit, and about 12% of it actually goes to the probability of the item breaking down, meaning you could put $88 in your pocket on average and spend $12 on the repair and self-insure through the repairs and come out ahead. Otherwise, your home warranty company would be going broke because they wouldn't be making a profit if you're making money on this transaction on average. So on average, you're not.

So self-insure through all of those items. No extended warranties, no home warranties, no auto extended warranties. Do not purchase warranties. This is the Dave Ramsey Show. I talk about the importance of term life insurance all the time. But how many of you actually have it or have the right amount? I know you think this is a hassle. You think it's too expensive or that you have plenty of time to buy it later or that you're afraid of making a mistake, so you do nothing. And I end up getting calls all the

time trying to help families through the financial mess left behind. Listen, if you're married, if you have a family, a mortgage, or other debt, people relying on your income, then you need term life insurance. And the reality is it's not a hassle it's actually pretty simple term life is not expensive and the rates have never been lower you can lock in rates for 15 20 even 30 years and then focus on getting out of debt and growing your savings no mistake there call zander insurance at 800-356-4282 or go to zander.com and make sure your family is protected. Maybe I won't have to take those heartbreaking phone calls as often. In the lobby of Ramsey Solutions, Sarah is with us. Hi, Sarah.

How are you? Hi, Dave. I'm great. Thanks for having me today. I'm honored. Welcome. Where do you live? I'm from Olympia, Washington.

Oh, very cool. And all the way to the other side of the United States to do a debt-free scream. Yes. Very cool. How much have you paid off other side of the United States to do a debt-free scream. Yes. Very cool. How much have you paid off? I paid off $119,000. Wow. And how long did that take?

About 21 months. Oh, look at you. And your range of income during that time? It started out at $97,000 and went up to about $150,000. My goodness. Nice raise in two years. How'd that happen? So I worked a lot of extra shifts, and then I had a job change in there,

so I got to increase baseline pay for that, and then I just kept working lots of extra shifts as well. Hard work. Yeah. What do you do for a living? I'm a physician assistant. Ah, very good. Yeah.

Very good. And so 119, I'm guessing, might be med school? Yeah, so the vast majority of it was PA school. It was $110,000 just in student loans, and then I had $9,000 on a car. Gotcha. When did you get out of school? August of 2015. Okay, so pretty much came out of school and decided to get after the debt.

Yeah, pretty much as soon as I started getting paychecks, that was it. I just started going crazy with it. What made you decide to go this hard at it rather than just kind of languishing it like all your peers um well that sounds miserable but um i just i kind of grew up in like a financial peace baby both my parents took financial peace university when i was growing up and i'm pretty certain i have memories of taking like a children's version of the financial peace university class so um and my entire extended family is just a bunch of dave ramsey fans so i just kind of grew up knowing about it you know what i mean you didn't have a chance I didn't have a chance you're just stuck yeah look at that so you you come out of school with a hundred thousand bucks in student

loan debt you're terrified oh I was so panicked it was I was 26 years old when I first came out and it was looking up at that amount of money and just knowing I had to get out from underneath it all by myself and there wasn't really anything that I could pay off. I could sell my car, but I'd only get like $10,000 for it. It wasn't going to move the needle at all. I was absolutely panicked that something would happen. I'd become disabled, lose my job, lose my license, something like that. There's no way to pay that off without being able to do what I do, basically.

Well, this is impressive. Very well done. I mean, basically $55,000 a year for two years, living on between $100,000 and $150,000 total coming in. So that means you lived on nothing. It felt like nothing. I kept living like a college student, which I feel is rare for people who are providers in health care.

Yeah, very rare. I'm looking at a unicorn. Wow. Good for you. Good for you good for you very well done so if someone is in that situation listening they've got a hundred thousand dollars in student loan debt they're making 100 to 150 you did it in two years yeah tell them what to do what should they do how do you do that um i think the biggest thing is just keep living like a college student. It's like I did not live in nice apartments. It's a nice car, but it's not an expensive car that I drive. I didn't really buy a whole bunch of clothes.

You just got to keep living cheaply and just do it while you're still used to that lifestyle because it's going to be that much harder if you try and go buy a Tesla and a house and all that kind of stuff and then try and cut it back down after the fact. So just keep living like a college student when you first get out is the biggest thing. So you're not even 30. No, I'm 29. Yeah, look at you. Wow.

Well done. Rockstar millennial right here, baby. I'm looking at her. This is good. Excellent. Good job. Good job. So, hmm, what are you going to do to to celebrate i've already done a couple things so um i've been

to new orleans i like to travel so i've been to new orleans i've been to costa rica i've been to northern california on a camping trip um i've been to lake tahoe for a snowboarding trip i've done a couple things to have fun um i usually spend my time traveling, so those are like the biggest things. I mean, when you've got no payments, you're single, and you make $100.50, you can do some stuff. Yeah. It's pretty awesome. You can fly down to New Orleans on Southwest for lunch. That's true.

That's true. Have you a little trout down there. Good stuff. Good for you. Well done. I love it. That is great. I'm proud of you. I know your parents are proud of you. Is that who's with you here? Yes, my mom and dad. Good stuff. Good for you. Well done. I love it. That is great. I'm proud of you. I know

your parents are proud of you. Is that who's with you here? Yes, my mom and dad. All right. Were they cheerleading you along? Oh, absolutely. And they were my biggest examples. You know, one thing I would, if I can give them a shout out, is back in like 2007 or 2008, my dad got laid off and I was a full-time college student undergrad and my parents were paying for my college. And my mom was working part-time and supporting the entire family off of her part-time job. And they were able to float that whole thing. They paid for my college. They paid for my dad to be retired for a year and he loved it. And that was just the biggest example they could have ever given to me is just the kind of freedom you can have when you have no payments. You know,

they didn't have a mortgage. They didn't have any debt of any kind. It was can have when you have no payments. You know, they didn't have a mortgage. They didn't have any debt of any kind. It was just huge. You know, I mean, your kids are paying attention. It's huge what you can see, what your parents do. It just makes such a difference. Rachel always says more is caught than taught. Yeah.

And that example is powerful. Yeah. Yeah, very cool. Well, I got to tell you, there's a lot of financial peace babies running around out here. And you're a good one you did good i'm proud of you thanks i know they are very well done very well done this is great i mean you're gonna be so wealthy it's gonna be ridiculous i mean it's gonna be ridiculous i mean you're a 29 year old pa with no debt in the freaking world i mean you're gonna be the generosity factor that you're going to be able to do, you're going to give away more money than you ever made in your life. I'm very excited about that.

You're going to be in an incredible place. Congratulations. Thank you. Very, very well done. We've got a copy of Chris Hogan's retire-inspired book for you. That is the next chapter, to be a millionaire, an everyday millionaire, and outrageously generous as you go along. So, well done.

Sarah from Olympia, Washington. $119,000 paid off in 21 months, making $97,000 to $150,000. Live like a college student when you come out of college and work like a maniac. And there you go. That's what she did. Well done. Count it down. Let's hear a debt-free scream three two one this is how it works right here this is how it works right here. This is how it works. So you've got a nine-year-old. You've got a seven-year-old.

You're just starting Financial Peace University. You're getting on a budget. You're learning how to live. Fast forward 20 years. If you want to know what changing your family tree looks like, you just listened to it. You just watched it. You got an 8-year-old, a 9-year-old, a 7-year-old. 20 years later, it could be her.

That could be who you're raising. You could be, should be changing your family tree. See, the way you change your family tree is not make so much money that you turn your kids into trust fund brats. The way you change your family tree is you show them by you living your life properly, living on less than you make, living on a budget, saving and investing, being generous, staying away from debt, getting out of debt, weathering the hard times without debt. This is how you change your family tree.

They're watching you, she said. She just said that. They're watching you. And then you teach them how to do that. And then leave them a pile of money. Then leave them a pile of money then leave them a pile of money that changes everything doesn't it what if you did so well that you could pay cash for your kids first house so your children never have debt of any kind under the condition that they never borrow.

You get agreement from both of them. The spouse, we're not going to borrow ever again. We're going to pay cash for the house. You know how many 30-year-old millionaires you would have? Yeah. Well, they paid for a house, and they make money, and they know how to handle the money, and they live on less than they make, and they're conservative and reasonable and generous. They'll be millionaires by the time they're 30.

Certainly by 35. Oh, and if you're a millionaire by the time you're 30, do you know what you are by the time you're 40? I'll help you. It's called a deca-millionaire. $10 million in that worth. Oh, and if you're that by the time you're 40, you're catching on, aren't you? Yeah. It's called changing your family tree, darling.

It's what we're showing you how to do. It's real. It's real. This is the Daveave ramsey 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. Some of these guys are just scum. But then there are the collectors that are just plain crooks. These are the guys that take it a step further, and they violate the Federal Fair Debt Collection Practices Act on a daily basis. They're breaking the law and they need to be stopped. The truth is debt collection is the most abusive, out-of-control industry in America today. But you don't have to put up with it. If you have collectors calling you multiple times a day, calling you at work after you've asked them not to, cursing or threatening you in any way,

then you need to visit CollectionBully.com. These folks will connect you with an attorney who I know can help you. These attorneys know how to stop collection agencies from bullying and threatening you anymore. CollectionBully.com. Go to CollectionBully.com today. That's Collection bully dot com. Stephen is in Denver.

Hi, Stephen. Welcome to the Dave Ramsey show. Hi, how are you? Better than I deserve, sir. How can I help? Yeah, I'm 12 years old and I bought the Teen Entrepreneur Toolkit. I started my own business for mowing grasses. Cool. Not even going to help yeah um i'm 12 years old and i bought the teen entrepreneur toolkit i started my own business for mowing grasses cool i even designed like my own like cart for like carrying my equipment neat and and i was uh because i'm making my good money now i was wondering what should i do with the money okay what do you want to do with it? I don't know. I don't

got bills. I don't do any of that stuff. Which I save up for. Who's going to buy your car when you turn 16? Half and half. Parents are 50% and I'm 50%. Okay. Well, there's three things you can do with money.

You can spend it and enjoy it. You can save it for a future goal, like a car, and you can give it. And we always recommend you do some of each. And so I would have some that you constantly give. If you attend church, that you would give some there. I would have a long-term goal that we're saving for, for instance, that half of the car. I mean, the more you save save up the bigger this car is because whatever every dollar you save is worth two if they're going to match you that's pretty

cool and of course i want you to enjoy some of it so i i always think it's it's a bad idea to uh not do over a long period of time not do all three of those if you don't spend any money on yourself and all you do is save it and give it, that starts to be weird. If all you do is give it, that starts to be weird. If you never give it, that starts to be weird. If you never save it, that starts to be weird. So you need to do all three at some level. I don't care what level, but you always need to give some, save some, and spend some. Joe is with us in Orlando, Florida. Hi, Joe. How are you? Doing very good. How you doing, Dave? Better than I deserve. What's up? Well, I got about $30,000 in debt. I make about $38,000 a year. I just started my budget. I have my $1,000 saved up. Great. And I have a question about my loans that I have. The debt's broken down,

$18,000 in a car, $9,000 in a loan from family, and $3,000 on a personal loan to the bank. Okay. And you make $38,000? Yes, sir. Okay. Are you single? Yes. Okay. All right. Big car debt for 38. Yes, sir. Yeah, I had some debt rolled over from my previous car. So the car itself is only worth about $12,000, maybe $13,000. Oh, okay. So the first plan was to pay off the $3,000 debt. Yep.

And then I was actually going, instead of paying off the $9,000, I was going to move to the $18,000. No. Because if I pay off... I'll just go ahead and pay off the $9,000 debt. And then I was actually going, instead of paying off the $9,000, I was going to move to the $18,000. I just go and pay off the $9,000. Pay off the $9,000? Yeah. Are you paying payments on it now? Yes, I just started. The $9,000 is actually a loan from family. Yeah, you said that.

But how much are you paying in payments? On the $9,000, I'm paying $300,000. Okay. That being freed up as soon as that's gone. I mean, because those two together are not even half your debt. Yeah. You'll be just down to the car and then just start wailing on that car with everything that comes up. And so, I mean, you've probably got two years from the time you started to to knock out this 15 000 a year making 38 that's if you're a single guy you can probably do that get on beans and rice

rice and beans other thing i do is try to do something to kick your income up temporarily let's use that car and go deliver some pizzas or something and let's do some other things to get uh income up because an extra thousand dollars1,000 a month, $12,000 a year, changes your life. It changes this math dramatically. And, like, gets you out of debt almost a year sooner. That's how dramatic. Instead of two years, you can almost do it in one. So if you can find and line up a really good, high-quality, high-paying part-time job, boom, that's where I would go.

Joy is with us in Madison, Wisconsin. Hi, Joy. How are you? Good. Good. How can I help? So we are on Baby Step 4, and we had previously met with the ELP. And last night we met with him to really start in our investing since we're in Baby Step 4 now.

You mean a SmartVestor Pro? Yeah, sorry. That's okay. I'm just making sure I know what you're doing. Okay, good. And so we started going through everything. And he said right now through their company, they're making like 2.2% on the investments. And we went ahead with it and set it up, but I'm just worried if that's low for what we're investing.

What did you invest in that's making 2.2%? Can I say the name of the company? Yeah. Okay. So it was with Thrivent, who is name of the company or yeah okay so it was with thrivent who is one of the smart pro investors and um it's their aggressive mutual funds okay um i don't know i don't know what you've gotten into here you say say it made 2.2% when? Last month? Yeah, so far this year, I guess, over the last.

Oh, okay. What you're looking at is your long-term track records here. Okay. So they say long-term they're at like 10% as an average. Like last year they were at like 22. Okay. All right. I thought you were talking about I couldn't figure out why in the world anybody that we endorse would be putting anybody into a 2.2% rate of return.

But, yeah, I may have a mutual fund that's made 2.2% since the beginning of the year. I don't know. I don't watch them that close. Okay. But I'm looking at long-term track records, 5, 10, 20-year track records. What's the average annual return on that? That's what I'm always looking towards. And if they're the four types of mutual funds, we talk about growth, growth, and income, aggressive growth.

It sounds like you got into an aggressive growth that's not done well this year. I don't even know what the aggressive category has done this year. I haven't looked at it. I don't, again, I don't track it that close because it's all long-term investing for me. I'm not panicking about what it's doing in a given month or given six-month period of time. I generally look at my stuff about once a year, unless I just get curious for some reason because something come up on the air. But what you need to do is to go back if you're nervous and make the decision, not because Dave Ramsey sent you there, not because somebody said to do it, but because you understood it. And what you came out of their understanding was two point two percent.

And you shouldn't have done that. But if you came out of their understanding, it's not made money this year, but, you know, over the last 10 years, it's averaged 10 or 12, then that's okay. If that's what you understood and you're comfortable with that, then that's okay. But you need to make the decisions based on you understanding what's going on with investments for the rest of your life, with anything having to do with money for the rest of your life. Kaylee is with us in Anchorage, Alaska.

Hi, Kaylee. How are you? I'm good. How are you? Better than I deserve. Hey. How can I help? So I'm calling because my husband is enlisting in the Air Force, and we have been debt-free our entire marriage.

We've been married for three years, and we have no intention of ever needing to get a loan out or anything. So I guess I just don't – I look at the numbers and everything, and it kind of freaks me out because right now we're making about $5,000 a month, which is really not that great in Alaska anyway. We have two little boys. But now that we're going to the military, we're making much less. I'm not working, so I don't want to work because I want to be home with my boys. So I'm just kind of looking for reassurance that we're going to be okay if we keep doing what we're doing, and it's all going to work out. So he took a job with the military making less than he's making now. Yes.

How much will he be making? So he's going to be making about $1,800 a month, not including his BAH. And Alaska is considered an overseas base, so if we end up getting stationed here, we'll be making overseas pays as well. Why did he do that? So we have not been stable. We've been kind of job hopping, job to job. He didn't want to do school because he had a really hard time with it.

So we were looking at trade, but this just seemed like with insurance and housing and everything, it just seemed like a more stable environment for us, as crazy as that sounds. Okay, so you've done it, and this is what you're going to make. And you want me to tell you what? That it's okay? Basically that we can still save. If I say it's not okay, you're still doing it. What was that?

If I say it's not okay, you're still doing it. You just signed up for the military. That's a one-way ticket in. You don't unsign that. So you did it. That's what you're doing. So get on your budget. Make it work.

It was the decision you made. 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. 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 getting you down? Are you confused trying to navigate your options? Do you wish you

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