The Ramsey Show - App - Get the Peace and Freedom You Deserve by Dumping Debt (Hour 3)

Episode Date: November 2, 2018

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. This is your show. It's a free call at 888-825-5225. That's 888-825-5225. Chris starts off this hour in Tampa. Hi, Chris. How are you?

Good. How are you? Better than I deserve. What's up? Okay, quick background. I'm 21. I started a lawn service when I got out of high school. I was 19. Anyway, I make about $45,000 to $55,000 a year and still live at home.

Profit? No, that's gross. Profit, I would say right now it's about $35,000. Mm-hmm. And I still live at home. I'm not investing anything. I just kind of want to know what's the next step, you know, in going forward here. Do you have any money? Yeah, I've got about $5,000. Okay. You got any debt?

No. Okay. That's good news. All right. What are you doing to increase your income? I work every day. No, that's making your income. That's good news. What are you doing to increase your income? I work every day. No, that's making your income. That's making income.

I ask what you're doing to increase your income. I'm just getting as many lawn accounts as I can every day. I've got a couple of companies that I work for that have been phenomenal and get me more work. And that's starting to grow, too. So just keep finding out more companies and getting more work. Good. That's how I'm doing it. So you've got equipment to do all this work with.

Yes. And where is the equipment stored? It's stored in my parents' house. Okay, where you live. Yes. All right. And, all right, what do you want to be doing when you're 31 or 41? Well, I would like to keep doing what I'm doing, just do it on a bigger scale, you know, more have like more lawn crews and, you know, doing more different kind of things like landscaping and irrigation and, you know, laying sod and even selling sod, you know, things like that.

I do a little bit now, but, you know, I'm still in the learning process with a lot of things. So I don't want to take on something I don't know how to do yet. I wasn't asking you to. I was just asking you where you're going. Do you do a profit and loss statement on your business? Yes. Every month? Yes.

Okay. And do you do a budget on your business? I don't do a budget on my business because I do it because I project what I would do. That is a budget. Okay. If you project your revenue and you project your expenses next month and the next month and through the end of the year or through the next 12 months, and if you project your revenue and you project your expenses, you have automatically projected your profits. You understand that?

Right. Revenue minus expenses equals profits. If you've got that projected out, you have that right revenue minus expenses equals profits if you've got that projected out you have a budget okay it doesn't have to be real sophisticated but that's all budget is is driving with the windshield not just the rearview mirror the pnl is the rearview mirror you follow me yes okay so you're man you're on top of it for 21 years old you're killing it i'm really proud of you you're doing really good so if you if you know that you're on top of it for 21 years old. You're killing it. I'm really proud of you. Thank you. You're doing really good. Thank you. If you know that you're going to make X number of dollars in a year,

then the next thing is if you were to move out, what would be your household budget, and how do you afford rent, and where would you be renting, and would you take in a roommate, or how would you do all of that? And then once you answer that question, if you can do it on what you make now, then it's time to move. Okay. And as far as, like, investing in retirement, is that something to think about now, or is that something to kind of wait a little bit until I get settled in

and see what it does? Well, I want you to get settled in, and then I want you to have an emergency fund of three to six months of expenses before you start investing, because that's your rainy day fund if something happens. Because, for example, if you got hurt, you would really have a problem with your income. Right. That would be an emergency. I mean, if you got hurt and it wasn't bad, but it just slowed you down.

Right. For a little while. You know, for 90 days you had trouble producing quite as much. But you could still work, but not quite like you could. You know, you need an emergency fund of three to six months of expenses. Once you get that in place, then I'm going to be there with you. But you don't have to have that to move out. You've just got to have the money to do the deposits and be able to

monthly, doing your budget, afford to live and pay groceries and lights and water and rent. And you need to go shop some places. If I lived here, here's what it would cost. If I lived there, there's what it would cost. And in this situation, I'd have to have a roommate. In this situation, I could park my equipment at my house, or I'm in an apartment and I leave the equipment at mom and dad's house. I move out, but I still use their place to park my stuff and so on. This is the kind of thing because, you know, some apartment complexes are probably not going to let you park four trailers

of equipment around there or whatever. so you just got to look at those kinds of things and make that decision but yeah you don't have to be financially whole and investing before you move out you just got to be able to pay your bills micah is with us in atlanta hey micah how are you i'm doing well how are you today better'm doing well. How are you today? Better than I deserve. What's up? Hey, I am just calling. I just found out about Dave Ramsey, and I wish I knew about you four years ago. I am starting Baby Step 1, and I'm currently saving. And I was wondering how long of doing the budget will I not feel constricted or will I not feel like I don't have enough money

at the end of my two-week pay period, if that makes sense? Well, the budget, you decide what's in there. You decide how constricted you are. If you're not deciding, then that tells me your income's too low and you're struggling. So the budget's not what's causing you to feel constricted. The budget's just admitting that you were constricted, right? But that's if your income's low.

But if you make a bunch of money and you're self-constricting in order to hit some goals like paying off debt and doing baby steps one and two, then that's a self-decision to feel constricted. And as long as you know you've got power over that decision, it limits how much you feel constricted. But it's kind of like when your little kids, your brother or your cousin or somebody says, you're not the boss of me. You remember that? And that's what the budget is. The budget is you're the boss of the budget until you get it written down.

And then once you've decided that, then the budget becomes you're out of bounds, Mark, or it becomes the boss of the budget until you get it written down. And then once you've decided that, then the budget becomes your out-of-bounds marker. It becomes the boss of you. But, by the way, it's your budget. So you decided how constricted you were unless you don't have enough income coming in, and then that's going to be there. You generally will feel like you've gotten a raise the first month you do the budget, but it's not going to be real accurate. You're going to make mistakes the first month you do the budget, but it's not going to be real accurate. You're going to make mistakes the first month.

It takes about three months of doing it to get your competency level up. The quality of your budget goes up every month for the first three months. After 90 days, you're going to be pretty good at it. I mean, you'll be a budgetnista, right, or whatever you call it. You'll be getting it.

And jump on EveryDollar and get the app. It'll help you, Micah. It's free. Every dollar app for your iPhone or for your Android, and jump on there and get that, or just for your desktop. Either one, it's all free. Jump on there and get that, and that'll help you do the budget quickly and easily and change it if you need to change it then.

But the constriction is up to you. 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.

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Hi, Ned. How are you? Very, very blessed, sir. How are you? Just the same. How can I help? Hey, so I went through FPU at my university to actually offer it to students. And I got inspired and I started my starter emergency fund, which is now, I'm now in baby step two. So I'm working my debt snowball. I'm 23, and I just got married, and so I am working through the process of trying to get my term life policy set up. So I went on Zander Insurance, got a couple different quotes from different agencies. And before and before with that, I just wanted to check in with you

and see since I am kind of young, it'll be expiring if I do the 20-year option, which is the one I know you recommend. If I do that, it's going to expire when I'm 43. So I was just wondering if, given my age, you would recommend extending it by five years or ten years, or if I should just go with a 20-year policy. I would go with the 20-year policy for two reasons. You're asking a really intelligent and logical question.

Basically, there's three things that need to occur typically for you to become self-insured and have no need for life insurance. One is we'd get the house paid off. You'll likely have your home paid off inside of 20 years because you listen to me and you're calling me to ask me questions because I tell people never to have more than a 15-year mortgage. So even if you wait a little while, buy a house later and all that kind of stuff, you're going to have your home paid for in 20 years. The second thing that needs to occur is you need to have a pile of money, you know, like $500,000 or $1 million in your 401ks and that kind of thing.

If you start now and, you know, you're married and both of you start investing 15% of your income in 20 years, you'll have that. So you're going to be fine there. So the third thing is, you know, we want to make sure that kids that you guys have in the future are taken care of or are grown and gone. That's the one that won't happen okay if you have three kids over the next six years or something like that the youngest one would be 14 you know in 20 years right or something like that um and and so they won't be grown and gone but we

could visit this and say uh let's say that something happened to you 20 years from today, at the 19th year, right as the policy is about to run out, and you had a million dollars saved, or let's say the policy ran out, I'm sorry, and you had a million dollars saved, and you had no mortgage,

and your wife had a 14 and a 17-year-old. Could she make it? Yeah, she can make it. Okay. Because you would have become self-insured by having no debt and a pile of money. But the best-case scenario is the kids are grown and gone before the insurance runs out, because if she's sitting there with a million dollars, no mortgage, and no kids at home,

can she make it? Oh, yeah. Like, no kids at home, can she make it? Oh, yeah. Like, no-brainer, right? So that's the typical scenario. You're starting this equation really young, and so you're asking this question. The second reason is, in other words, I think she'd be fine, even if she had some teenagers, okay? But the second reason is that you likely will reset your insurance as you go along. Okay? Okay.

I'm 57. I have bought insurance five or six times since I was 25 because my health is fine. Now, the only problem you could run into is if you lost your health and you run insurable. But what's weird is term insurance rates have gone down through my working life so much that I've been able to buy it a decade later cheaper, even though I was a decade older, than I could buy. And so I would just reset and start the clock again. So in other words, you might shop that insurance, and for a tiny bit more or maybe even less,

you could buy the same amount of 20-year term five years from now when you're 28, and you've got two or three kids running around or something, or two kids and maybe a third one on the way. You could go buy some more and reset the clock as long as you haven't become uninsured. While you're still super super young you could buy another 20-year policy so the fact that you'll probably reset your policies anyway your income goes up so you add some policies um or whatever because i've had them that overlapped and i kept the old ones and you know let them run on out and uh then i added some new ones and you know i'm just now at 57 getting to where it's getting really super expensive.

And it's not even super expensive now because I'm in pretty good shape physically. And, you know, if you're not overweight and you haven't had a big health scare of some kind and you don't smoke, you can continue to get life insurance very inexpensively in our world. I mean, when I was your age, I used to think, man, if I was 60, good Lord, I'll never be able to get insurance. You know, it's old people. You know, now I'm that old people, and I just got a policy the other day. You know, so it's not that big a deal. It's just not.

So anyway, that's the reason I would go ahead and get the 20. I wouldn't pay the extra money for the long. The only downside is if you don't follow through and do the stuff we teach about. Get out of debt, build wealth. If you get out of debt and build wealth, you'll be in good shape if something happened without life insurance. Caitlin is on the line in Lansing, Michigan. Hi, Caitlin. How are you?

Hi, Dave. I'm doing great. Thanks for Michigan. Hi, Caitlin. How are you? Hi, Dave. I'm doing great. Thanks for taking my call. Sure. What's up? Me and my husband just got done reading your book, Total Money Makeover, and we made our first budget with the EveryDollar app. Cool.

And we're looking to figure out what the best way to jumpstart our snowball is. I think we may need to get rid of our vehicle, and then the other option would be taking a penalty on our 401K. Okay. Let's answer both of them. The 401K, we do not take money out of the 401K. It says that in the total money makeover. You missed that in one of those chapters.

You do not cash out retirement unless you're avoiding a bankruptcy or foreclosure and i don't think that's where you are okay the reason is this you get charged a 10 penalty plus your tax rate what's your household income um we bring home 5 000 a. So your household income is about $80 a year? Yep. Okay. So you're in a 25% tax bracket. That means you'd be charged 25% plus 10% or 35% of whatever you took out of the 401k. Dave, I want to borrow money at 35% interest to pay off my debt.

No, I would not tell you to do that. No, you'd not want to do that, would you? No. Okay, so we're going to leave the 401k alone. How much do you owe on your car? $20,000. And you said your household income is $80,000. How much total debt do you have not counting your house?

Not counting our house, $160,000. It's just student loans and the car. Okay, car is not your problem then? Yeah. So who's the doctor? I don't know. Neither of us, which is I wish we found your teachings when we were 18. What are your degrees then? Advertising, photography, and graphic design.

For $160,000? For $100,000. for 160 grand for a hundred grand oh you said you're 160 you said you're 160 000 in debt yeah and only 20 of it's a car so that's 140 right yep okay right all right hey hey okay so you make 80 so 160 i mean you can sell the car and move down if you want. The beauty of that is not only does it get rid of a chunk of debt, but it gives you that extra $400 a month, which your $500 a month, whatever your car payment is, to chunk towards this. So let's see.

If we did $40,000 a year for four years, you're debt-free, not counting selling the car. It's going to take you three years, even if you sell the car, and that's with absolutely no life and probably working extra jobs and freelancing and everything else on the side. Right. Yep. The good news is with your degrees, I assume you're in graphic arts

and you're in photography, maybe? Yep. We do have regular 9-to-5s, and we do it as a side hustle. Yeah, yeah. You need a bunch of side hustles right now. Lots and lots of hustling on the side. But you can get there. You we do it as a side hustle yeah yeah you need a bunch of side hustles right now lots and lots of hustling on the side but you can get there you can do it and um you're gonna be all right it's just gonna take you three years but i'm glad you found the book and i'm glad you're working it um and if i can help you while you're working your way through this you call me back

i think you can do it i know you can do it it's just a a matter of, man, it's going to be a hard three years for y'all. Beans and rice, rice and beans. And stop adding to the 401k, for goodness sakes, temporarily. That was also in that book, The Total Money Makeover, that you read. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated and they have a sense of fear and intrusion. It can be overwhelming. It's scary and infuriating at the same time. People question your character.

You try to figure out how it happened and you worry it's going to happen again. Then you have to deal with cleaning up the mess. Bill collectors, credit bureaus, even the police just make the nightmare worse. And trust me, ID theft is not going away. That's why I personally worked with Zander Insurance to develop an ID theft plan that provides the best protection and value. Smart strategies to help reduce your risk so you don't feel so helpless, along with taking over all the work if you do become a victim.

And without wasting your money on gimmicks or things you can easily do for yourself. Go to Zander.com or call 800-356-4282. Do not wait until it's too late and you have to go through this nightmare on your own. Go to Zander.com. In the lobby of Ramsey Solutions, Dana and Sarah are with us. Hey, guys, how are you?

We're doing very well. Good. Welcome. Where are you from? Seattle, Washington. Awesome. All the way across the United States to do your debt-free scream. I love it.

How much have you paid off? $78,900 in 20 months. Killer. And what was your range of income during that time? I started at... $90,000. And currently we're making about $130,000. Cool.

What do you guys do for a living? I'm an urban planner. I'm a machinist. Very cool. Good, cool. What do you work on as a machinist? I work for the Navy. Oh, okay.

As a contractor or in the military? I'm not in the military. I work directly for the Navy. Gotcha. For the civilian. Gotcha. Cool. As a civilian. That's what I should have asked.

Okay. Good. Very fun. What kind of debt is a $71,000? Everything. It got so long that when we first added it up, I think that we thought it was closer to 19 or 20. But we had to keep

making a new list because we kept remembering stuff as bills would come. jewelry, furniture, anything that somebody would say yes to giving us, we felt obligated to take out on loan. Because you're just that kind of people. You're just nice folks.

We can't tell anybody no. So 90 days same as cash or we'll finance it. Press hard. There's three copies while you're signing, darling, and we'll just get you on a plan. Yes, but 90 days same as cash, pay over five years. Of course.

Because it's not the same as cash. I got you. So furniture jewelry what else um cars um a card to pretty much any store that was um so lowes home depot target we had them all yeah got you a full collection we had a big wallet okay your backache from sitting on this lumpy wallet. Gotcha. So the student loan debt? There was a tiny bit of student loan debt that Dana had, but luckily, luckily slash unluckily, most of it was just really intentional stupid decisions we felt good about at the time.

You're just kind of wandering along and picking up daisies and here we go. Yeah, I got you. I've done it too. I know how you feel. I've done exactly that. I can do that in Costco by myself. It's just like, boom, there you go. It's like federal law. You're not supposed to

leave that place without spending 200 bucks. And we never broke the law. That's it. How much did you own the cars um so it was a combination of so one car was about 6 000 another was about 6 000 we had three and the other one was 17 and so um so the vast majority of this was really credit card and consumer debt of some kind or another it was so about um maybe 30 days before we were done um on what felt like the longest journey ever um we got a knock at the door and um notified of a debt that neither one of us had known about that was six years old that was $15,000.

Whoa! Just from a decision that had been made a long time ago that we didn't realize had any type of repercussion. And so it knocked the wind out of our sails pretty intensely. Wow. I think we wanted to take it as a sign that we weren't supposed to finish this. It's like we had to start all over.

Yeah, it just kicks you in the stomach. You're just almost there, and then you get kicked. But you got that cleared, too. Every last time. Everything is cleared. So you went from, and your debt snowball must have been amazing, because you were paying off something every 10 minutes because there were so many little ones. You had so many mosquitoes flying around you.

We really did. And a lot of, we had collections also. We had pulled both of our reports and had collections that we started to attack, and a lot of them were really small. And so it really, at the beginning, I thought was motivating that we were able to kill a handful of them at a time at the beginning. Yeah. The little ones, just clearing them. That was really motivating. Yeah, it is.

It's the opposite of the $15,000 knock at the door. Yeah. Yeah. So what's interesting here is that you went from having absolutely no clue where you were and just buying stuff like, I mean, you were like way off the end of one spectrum, and you went all the way over to the other end where you know everything that's going on and you made every dollar behave. That was a very big swing emotionally, behavior-wise, relationally.

I mean, you guys have really, you turned over a new leaf in a real dramatic way. What caused that? It all started out, well, I got the position to work for the Navy. To accept that job, I needed to get certain clearances. Oh. They look at my credit, and they're like, you need to fix this. Oh. Because it has to be like some financial risk.

Yeah. That you can't have. Yeah, you can't get your security clearance. Mm-hmm. Yeah. And so I pulled up my credit report, which I hadn't done in many years. And it was full of very bad things.

Mm-hmm. And we worked together. And using principles that she had heard on the radio from you, we figured out how to pay these bills, and we paid them all, and I got the job. And then we just went on from there. We're like, oh, we can do this. Let's take it a step further.

So a little success bred more success. Yeah. We used some of the principles to our comfort level at that time, and we paid off a bunch of debt then, and that's not actually included in the total that we provided. We only included what we did on the program the way it was supposed to be done.

And then we thought, well, oh, we've never saved money before, independently or together. And so then we thought, if we can save money, we'll buy a house and we'll remodel it. And we did that. And as soon as the remodeling was done is when we started to listen to podcasts more.

And we're like, should we open up that Pandora's box and look at what all of those credit cards from this remodel say? And we did. And it was substantially different than we had thought it was. And we thought, well, if we could do it, some success using some of it, what if we went all in and did everything, and it was zero to 60 from that moment on. Yeah, you stepped on the gas, yeah. We lived on less than 37% of our income. Wow.

And we said no to everything. I don't know of anything we ever said yes to. Was it worth it? Yeah. Oh, man, yeah. How does it feel now? Great. I don't know.

It seems to me that the debt being gone is the minor part of your story. It's the change that you two have gone through. I mean, you're different people now. We really are. Like, before we started this, I was kind of the person that was oh, we'll just put that on the credit card because I want it now. And now we're all

we don't really need that. Let's not buy this. I've never learned to live without before this. I always wanted stuff and if we couldn't get it before, I felt like I deserved it and I truly was like,

I work so hard. Why can't we have these things? And then you said something one day when I was listening to a podcast about how what we actually deserve is peace and freedom and that just really hit home.

And as we were going through this we found out we were pregnant and i was like i just want stability like i want to be able to have extreme stability for our child amen and well adults devise a plan and follow it children do what feels good and you guys have flipped the switch. Yeah. And now you've changed your family tree. You did it. We did. Well done. I think that one of the hardest parts of this, though,

is that we both really were so excited about finding out we were pregnant, and I've spent the last three decades imagining what that moment would be like and getting to nest, and it was a very difficult decision to keep saying no, to say we need to pile this up. No, about baby stuff. About, yeah. Period. All right. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired.

That's the next chapter for you to be millionaires and stability for this beautiful baby. Here we go. Thank you. How crazy. There we go. All right. 71,000 paid off in 20 months. 90 to 130.

Dana and Sarah, count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Well done, you guys. That is awesomeness right there. Well done. This is The Dave Ramsey Show. Our Scripture of the Day, James 4.17

So whoever knows the right thing to do and fails to do it, for him it is sin. Juliet Gordon Lowe said, Right is right, even if no one else does it. Yeah, you don't get to make up the truth. You just get to participate with it. I don't care if you agree with the law of gravity or not. Try jumping off a building and see how it works. You don't get to make it up.

Your little wings won't work. You will find the sidewalk. Splatty, splatty, there we go. There goes a fool who thought they could make up their own rules. No, there are rules. There's life. There's truth. North is always that way.

You can go the other way and call it your truth, and you'll get there eventually, but it's the long way around. North is that way. Right is right, even if no one else does it. Just because normal people who are all broke do something with money doesn't make it the right thing to do with money? As a matter of fact, it probably tells you it's the wrong thing to do with money since they're broke. 70% of Americans live paycheck to paycheck. So what do we care what they think about money? Their plans not working.

It's like hiring a personal trainer and walking in and finding out they're 400 pounds. It's kind of a problem. I mean, if you have a keg and they have a six-pack, listen to what they say. Do what they say to do. This is how it works. There's a truth that's independent of your feelings. I don't feel, I don't care about your feelings. I'm sorry. Your feelings don't affect

me. You're sweet. I'm glad you have feelings. It's good. Call the wambulance. Call somebody else that cares. I'm going to tell you the truth that's going to change your life. The only question is, are you going to align yourself with that? Are you going to do it? And you can do it. You can do it. You can win. I'm telling you, people are winning like I've never seen in my life right now. It is such exciting times. Our question of the day comes from Blinds.com. Brand new custom blinds from Blinds.com are the easiest and most affordable way to give your entire home a facelift. With Blinds.com you get free samples, free shipping, and with affordable way to give your entire home a facelift. With Blinds.com, you get free samples, free shipping,

and with the new promos they run every month, you'll save even more. Use the magic word, the promo code RAMSEY, and you get the best possible deal. Blinds.com. Wendy's in Colorado. Is it better to bank with a local credit union, a state credit union, a local bank, or a national bank? Most banks are national banks.

Technically, they participate in the Federal Reserve, the FDIC insurance supplies. Most credit unions are insured by the NCUA, which is the equivalent for credit unions of the FDIC. And so most financial institutions that you deal with nowadays, 90 some odd percent of them, I don't worry about their financial solvency as a matter of whether you bank with them or not. Now, I don't deal with the large mega banks under any circumstances. And I actually don't understand why anybody does. Why you would get treated the way you get treated at Wells Fargo or Bank of America and then keep doing business there is beyond me.

Because if you want to find incompetence by the bushel basket, you can find it around places like that. It's horrendous. I mean, they're as dumb as those airlines who are dragging people off their airplanes. You know, it's just the customer does not matter. People don't matter to them. You're a number. So I have chosen to do business only with regional banks where I can have solid connectivity with relationships and or smaller local banks and or credit unions.

There are a few credit unions, but very few that are very, very large and kind of lost their soul. The 99% of credit unions out there are very customer-oriented. They're like a very, very small-town bank in most cases. But if you can get a local bank, you're just going to get treated better. And this day and time with the internet and the way they they package their services you're going to get the same level of you know web access web sophistication for dealing with you know your checking account moving money from savings to checking and balancing your

reconciling your checking account we used to call it balancing your checking account online all of that you can do it all just about everybody's got all that now. I mean, if you find somebody that's substandard on that, then don't do business with them. But, you know, it's just really, even the smallest of the small pretty much has a cut and paste thing they put together in there that they bought from somebody. But the bottom line is the service to you is just fine. Just fine. You've got access to multiple ATMs. You've got access to, ATMs. You've got access to everything out there. And what you're looking for is relationship. And

you may get some better fees here or there. Credit unions by and large will have better deals on checking and a few little odds and ends. Maybe a little bit better interest rate on your savings or something like that. But not always. But most of the time. So just check all of that. And that's what you're looking for. But I'm not going to take a quarter of a point on my savings account and then be dealing with freaking Wells Fargo. No, thank you.

There's not enough money on the planet to get me to go in that place again. No, thank you. I mean, they have fired almost 10,000 people now for creating accounts fraudulently for people just to meet sales goals. When you fire 10,000 people for fraud and you're a bank, hello? I mean, really? I mean, you deal with somebody like Wells Fargo. It's just silly.

Bank of America, the way they treat people, Fifth Third, the way they treat people, SunTrust, the way the way they treat people i mean just look at these large banks and look at it no thank you i don't want anything to do with that stuff no i'm not calling for a boycott i'm just calling i'm just telling you look why do you do business with people that give you lousy service and and you know and mistreat you that's just silly don't do do it. Matthew is with us in Providence, Rhode Island. Hi, Matthew. How are you? Hey, doing well, Dave. How's it going? Better than I deserve. What's up? Hey, so my wife and I are in Baby Step 2.

We have $190,000 of debt besides the house. Good Lord. On what? Yeah, mostly private student loan debt of mine. What are you? A doctor or a lawyer? I'm a stupid musician. A stupid musician?

Yes, sir. Actually, I'm not currently working with music right now. I'm making money. I'm actually in insurance. So that just goes to show you the biggest stupid tax I've ever done. Good Lord. What is your degree? Did you get a degree?

No, so even worse. Oh, my Lord. And how much of this $190,000 did you spend on that, not getting a degree thing? Yeah, about $150,000. Yeah, I've been beating myself up the last however many years. So what is your household income now, sir? It is $160,000. That's good news. That's good news.

That's good news. You've got a big hole you got a big hole in a decent shovel good okay and so uh so almost all the 190 is student loan then or 110 of it is uh yeah so it's mostly student loan there's 14 in credit cards and about just under five of a car that we're going to pay off very soon. Yeah, okay. So you're working the debt snowball then? So we're working the debt snowball. We're on baby step two. The question is, so my plan, or our plan, I should say, was to finish this in about three years with the income that we have.

And we're going to upgrade in-house. We have a family of four. After. After. Absolutely after. The question that my wife proposed was, our house, we have about $100,000 worth of equity in the house. So she was proposing, what if we get down to about the $80,000 mark or so in a few years, two years, maybe cut the debt snowball by a year by selling the house at that point, finishing it off,

and renting while we save up for, you know. Yeah, it's still the same period of time to get into a new house, though. Yeah, I mean, that's my original plan was to just work the debt snowball. You're going to get to a, you're going to get, I mean, because here's the thing. If you sell the house and pay off the debt early, you've still got to put the $100,000 back into an account before you buy a house right right right and so it's a you're just swapping pockets with your money here you're not gaining any time on your calendar towards getting a new home so i'm gonna sit right there i'm gonna sit right there in that house moving is expensive

emotionally and financially so um i mean if you had three hundred thousand dollars worth of equity and you still had 200 to buy a house with later that'd be different but you got a hundred and it's gonna be gone i mean when you do this so now you gotta start over saving for a down payment and so you don't really gain anything on your calendar doing that no hey i'm glad you're working your way through it it sounds like you got it lined up and hey, we've all done stupid stuff in the past. It's in the past. Put it behind you. Plow through it.

Clean it up. Learn your lesson. Teach your kids. Don't do this. So you change your family tree now, man. Way to go. Good for you. Congratulations.

That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year. Keep listening for more inspiration.