The Ramsey Show - App - Get Traction With Your Money (Hour 2)

Episode Date: July 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 am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Thanks for being here, America. Dan is with us to start off this hour in Kansas City. Hi, Dan. How are you? Good. I was wanting to call in today. I've had a question between saving or spending debt down, where I fortunately paid off my outstanding credit cards and small interest loans, and so I just have my first and second mortgage.

All right. And I'm trying to pay the second mortgage off as quick as possible, but I know in a year I've got a lot of expenses for home repairs and potentially replacing wife's car. I'm trying to figure out. I'm trying to save about $500 a month, and I'm paying about $600 a month to pay the second mortgage down. I'm wondering if I should be more aggressive with paying the debt down

or more aggressive with the savings. What is the balance on your second mortgage? $17,000. And what's your household income? The gross is about $150,000 a year. Okay. When we have a second mortgage that is less than half your annual income, which yours is, we count it in baby step two, we call it,

which is where we have everyone pay off all your debts except your home. Now, if you had an $80,000 second mortgage, we wouldn't do that. We would leave it at what we call baby step six, and you would just pay on it only as you got ready to pay on your home. But this is like a credit card debt or a car payment. It's a small debt. And so what I would do is I would stop all investing, and I would stop all saving of any kind,

and I would pay this off in an instant. Do you have any money saved or invested that is not in a retirement account? At this point, no. I've tried to save up for emergency. How much is in that? About $3,000. All right. Then we take that baby step one, No, I've tried to save up for emergency. How much is in that? About $3,000. All right.

Then we take that baby step one. What we teach people is a process called the baby steps to the fastest path to building wealth. Okay? And baby step one is $1,000 saved as a starter beginner emergency fund. Anything above that, we throw it at debt, and we stop all investing and saving and baby step two and that's become debt-free everything but your home and that would include a small home equity loan like you have so that's where you are you're at that step so i'm taking two thousand dollars i'm throwing out of your three i'm throwing it at this the car and the home repairs are on hold for right now

they're they're a thing you need to do but they're not an emergency today and you need to clear this debt as quickly as possible once that's gone then it should be gone in no time i mean if you stop everything and completely point all of your guns at this one debt that's only fifteen thousand dollars after this discussion and you make $150,000, you should be done with it in just a matter of months, right? A couple of months. Just knock it out fast. Well, yeah, I still look at it about $1,200 a month, so it could still take nine to 15 months.

You make $150,000 a year. It shouldn't. Okay. And I don't know how that is with taxes and insurance, but when I calculated what we actually bring home, I think it's closer to $92,000. You don't pay $60,000 a year in taxes. True, but I looked at what my take-home was. I understand.

Did you get a huge tax refund? No, actually. How much is going into 401K? Right now, I'm putting 6% in. Stop that. That's what I'm saying. Stop all investing temporarily and completely focus. Because your take-home pay, I'm talking about after taxes, your actual tax bill on $150,000, I mean, you should be bringing home $120,000.

Your tax bill is about $30,000. And so about $10,000 a month minus your health insurance. I don't know how expensive your health insurance is, but $120,000 minus health insurance, and then just crunch your budget down to nothing. And when you start doing that, $15,000 goes away in a matter of about three months, four months. You should be done with this before Christmas for sure. And then I want you to build your emergency fund of three to six months of expenses. Raise that $1,000 up to about $20,000.

And then pay cash for a car and then pay cash for the home repairs. And only then do you restart your 401K. And that's baby step four. And you put 15% of your income, not 6%, into your 401K. See, what's happening right now dan is you're falling into the classic trap that causes people to not get traction is you're trying to do six things at once and none of them are getting done you feel that you're putting money in your 401k you're trying to pay extra on this on this loan and you're trying to save money for a car

and none of them are really going very fast. And you make $150,000 a year and you've got no traction. So the difference is what I tell people to do is what you focus on is what wins. And that's caused people to be able to win. Now, you can do whatever you want to do, Dan. But you called me. And this is our plan. And it has worked for millions of people.

So it's what we tell folks to do. Hang on. I'm going to send you a copy of the book, The Total Money Makeover is My Gift. Read through that and then make your decision. It's very persuasive because it's correct. You know, the things that we focus on are the things we win at. And when you try to do six things at once, nothing, you know,

it's jack of all trades, master of none. Nothing gets done. Nothing gets done. When you try to do six things at once, there's no power focus. And so it makes you very nervous to not have but $1,000 saved. It makes you very nervous to turn off your 401K. But it ought to make you very nervous that you don't have but $3,000 to your name and you make $150,000. That ought to make you nervous.

And that ought to tell you that you're not getting the traction that you should be getting here. If you do what I'm talking about in one year, your life will be dramatically changed in the financial area. Dramatically. Because you make really good money. You're just not winning with it. So, hope that's helpful to you, brother. Hold on. I'll have Kelly pick up.

We'll give you a copy of the book. Spencer's on Facebook says, Dave, I've got $1,000 saved beyond baby step one. Problem is I need a car badly, but my only debt I have left is also $1,000. What should I do? You should pay off your debt, and then you should save up and pay cash for a car. Badly is the only time you need a car badly is if you don't have a car. Other than that, you've got a car. The car you have may suck.

You may be driving a hoopty. I got that. And you probably do need to move up in car. But if the car you've got is driving, if it's not sitting in the driveway broken and you can get to work, drive it and shut up. This is a temporary thing. We're not driving this car for five years. We're driving it for a month or two months. You pay off your debt, you build up your emergency fund,

and then you save for a car. And just do this in the right order, man. You have to. When Sharon and I went broke, a guy loaned me a car. The predominant color on the car was Bondo. I drove a 478,000 mile used Cadillac, very used Cadillac, and the color was Bondo. That's who you're asking this question of. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options?

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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. Tori is with us in Columbia, Tennessee. Hi, Tori. Welcome to the Dave Ramsey Show. Hi, Dave. Dave, my question at the end of my information is going to be, should I pay cash for a house now or wait another year when I qualify to finance?

I'm in baby step four. I paid off $30,000 in debt. I'm debt-free. I have my six-month emergency fund. Starting in this month, I'm building for my down payment on a house with a 15-year mortgage. I'm 60. I'm single. I have no retirement. How would you pay cash for a house? Inheritance. My dad and my grandma passed last summer, and I have approximately $350,000 to $400,000 coming. Some of it's wrapped up in commercial property in a slow-moving market in Arizona, but right now I have about $230,000. I'm working with the smart investor, and I was going to put half in a variable annuity and half in mutual funds. And also, I quit my job shortly after my father passed, and I turned my side hustle into my primary and only income.

So I now don't qualify today. What are you thinking about spending for a house? $100,000 to $125,000. Why don't you just do that now out of the cash you've got now? The smart investors were just saying it might be better at my age to get it going now, my retirement,

and then as money comes in later, use that to buy a house. So that's why I'm calling you. Neither one of those involve a loan, though. Do you want to invest now and rent for a little while until the property sells, that's the slow-moving commercial, and use that money to buy the house? Yes.

Or do you want to just buy a house now, and then when that other money comes in, then use that to invest? That's the only choice. You qualifying for a loan is not on my list of things for you to do. Because of the inheritance? You've got the money to pay cash for the house. Got it. I'm not going to put you in debt.

You're going to buy a $100,000 house that's 60 years old, and you're not working except for your side hustle that's turned into a full-time gig. And you can live on that, apparently, right? And the money, I guess. Okay. So what's the other? When the smoke clears, it sounds like you are getting about $600,000 or $700,000 total out of all this inheritance. No, I'm sorry.

I misrepresented. $350,000 to $400,000 is what I'll be getting when it's total. Yes, that's the total. In total. But you already have $200,000? I have $240,000 that's available to me right now it came from my father's mutual funds and then 100 000 so you're only getting another 100 in property 100 to 160 yes okay and that property's on the market it's on the market yes okay um well i i

personally if i woke up in your shoes, I'd buy a $100,000 house today, pay cash for it. And then when that property sells, I would invest that money into mutual funds. What are you making on your side hustle? Sir, I'm only making $24,000 right now. I just got back from caring for a family member as he passed. My goal is to build my business. I can double it easily by the end of the year, so to $48,000. And so you can live on that without touching any money, especially if you don't have a house payment. Oh, absolutely, absolutely.

And I look at retiring at age 70 to 72. I mean, retiring where I'm not working full-time. Yeah, yeah. Well, you should have, what, $250,000 invested in a paid $400,000 house when all the smoke clears on this. It sounds like plus that will go up in value while you work another few years. And while you're making $50,000 a year, you can invest additionally into that, especially since you don't have a house payment, right?

Certainly, yes. Yeah, you're going to be fine for retirement, especially if you continue making some money and, you know, don't use this money to eat on is the point. Yeah, I would go ahead and buy a house now. I'd get out of the rental business as far as being a renter goes and pay cash for it today. That's what I would do. Hey, thanks for the call.

I appreciate you calling in. Open phone's at 888-825-5225. John is with us in Houston, Texas. Hey, John, how are you? I'm doing well. How are you, Dave? Better than I deserve. What's up?

Well, I want to kind of kick things off right financially for my family because generationally we haven't done well. But I'm a recent graduate of college, 22. I have about 3,000, a 401k, 6,000 stocks. I'm starting a teaching job in September, but I'm living at home with my parents, so I'm looking at some guidance, like should I buy a house or continue living at home, save up, and then go buy a house?

Where should I go from here? Do you have any debt? I have about 40,000 student loans, and that's my only debt right now. Okay. All right. Well, what we found, John, as we've studied millionaires at length for the last 30 years and have walked with people that are building wealth for the last 30 years, the shortest path to building wealth is to become debt-free.

Your most powerful wealth-building tool is going to be you, your income. And if you don't send all your income to someone else in the form of payments, that's your fastest way to build wealth. And that's the financial goal that I've got for you on this show. You've got a lot of goals and a lot of good things you need to work on. But as far as the money part of it, that's what i want you to head towards and do as do as good a job of managing as you can to that end what we've learned to do is use basic financial planning techniques and a very clear path of exactly what to do first what to do second. The first thing I would do is I would build an emergency fund of $1,000.

Do you have any money saved other than the stocks in the 401K? I have, like, $500. Okay. I would liquidate the $6,000 in stock today, and I would put $1,000 cash in a starter baby beginner emergency fund and I would pay the rest of it on your student loans except for I would hold out enough to get your deposit for your first apartment and your utilities and so forth and get your roommates lined up and all that

so when you get your job in the fall, you're out on your own. Do you know what you're going to be making in the fall yet? I think on paper it's like 53. Good, good. Very good. And when does yours start? When did you get your first check? The end of September.

The end of September? Yeah, because the way the system's set up, it's a little wonky. Because we hold the first one, and it's just a little weird how it's set up. Okay. So you've got to make it. Are you working now, doing something in between? Yeah, I was teaching summer school for a while, and that just ended. So I'll be getting money in through July.

And it's, I want to say, like $1,500 a month. Yeah, what are you teaching? I'm teaching band and English. Okay, good. What I would do is poke around some of the high schools in the area and middle schools in the area, particularly the school you're going to be working for, and see if there's any parents that need somebody tutored in either,

and pick up some tutoring at $20, $25 an hour all through the summer here. Any money we can make through the summer here. Any money we can make through the summer is going to help this equation. Okay, so now that we're making money, whenever we're making money, doing patchwork stuff here in the summer or when the big job kicks in in September, we're going to walk up the baby steps. Baby step one is $1,000 saved. Two is to become debt-free except your home. You don't own a home yet, so no, I would not buy a home.

I would rent right now something as inexpensive as you possibly can, pile some roommates in there where you don't have hardly any cost at all. It would be a great idea. That's what my kids did. And then I would pay down that $40,000 as soon as I possibly can to nothing. And I'm going to work extra, too. Continue doing tutoring in addition to your regular teaching gig. I want you to work a lot.

And let's clear that $40,000 as fast as you can. Like 12, 18 months, I want it gone. You're used to living like a broke college student now, so let's just keep living that way. Don't go spending a bunch of money on something. Just get this debt cleared up. Because if you had zero debt and you're making all this money, you could save some money, couldn't you?

Mm-hmm. Absolutely. And that's where I want you to be about a year from now, 18 months from now. And then we're going to build up that emergency fund to three to six months of expenses. Take that $1,000 account that I was talking about and add to it until we get it up to three to six months of expenses. And then's when the magic happens. That's when you start investing or saving for your first home you need to start your 401k up again at the new place and start putting 15 away or if you wanted to lay that a little bit and save up and pay cash for uh or pay your big down payment on your home you can do that at the time but um

that's about two years out from now. Maybe two and a half years from right now. That's okay. You're young. You've got plenty of time. Plenty of time. And you're not going to be renting for long. By the time you're 30, you're going to own a house.

And you may own it, paid for it, if you keep following what I'm telling you to do. So, good job, man. Well done. I hate to see people waste money, and that's exactly what happens when you spend hundreds of dollars a year on ID theft protection plans like Trusted ID, LifeLock, ID Watchdog, and any of them. Well, let's face it. Identity theft is a nightmare, and it's not going away. But there's no need to freak out and buy the most expensive plans out there because you think you're getting the best protection.

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It really is the smartest way to protect yourself and your family. Go to Zander.com or call 800-356-4282. In the lobby of Ramsey Solutions, Marty is with us. Hi, Marty. How are you? I'm fantastic. How are you, Dave? Better than I deserve. Where do you live? I live in Morris, Minnesota. It's a small town about three hours northwest of Minneapolis-St. Paul. Cool. Good to have you. All the way to Nashville.

Yes, sir. To do a debt-free screen. Absolutely. How much you paid off? $49,000. Cool. How long did this take? 32 months. Good. And your range of income? I started right after college, right around $35,000 up to right around $55,000. Okay. So you get out of college and you're paying off student loans. Absolutely. However, it was a private student loan to my parents. Oh. Yes. So we had a verbal agreement that they would pay for my schooling.

And the ticket was that it was going to be interest-free. And got out of college and just didn't have a plan. Okay. So you owed them $49,000. Yes. They didn't borrow the money. They loaned it to you. Correct.

Okay. But interest-free. But you had to clear $49,000 straight out of school. Right. Okay, cool. What do you do for a living? I'm a farmer in the dairy and beef industry. Okay, cool, cool.

So you own a farm or what? I work with a partnership. Okay, very good. Good. All right. And so your degree is in what? Agricultural Economics from South Dakota State. Of course it is.

Yes, of course it is. You're actually using your degree. So you came out of school with no plan, but we got to do something. So what happened 32 months ago? Yeah. So I had been working for just a couple months, and I'm fortunate enough to work with a couple of my older brothers on the farm. And they sat me down one March Saturday in 2015.

I thought it was for a normal farm meeting. Turns out it was not. And they sat me down and they asked me a series of questions. And they asked me how much I had made since I had started my career. It had only been about three months. How much I had paid off to my parents. And I think it was right on like a measly $700 in three months. And it was really sporadic. And then they asked me a question and I was so ashamed, Dave, because I had no answer. They asked me where the rest of the money went because I'm a spender and I had sporadic. And then they asked me a question, and I was so ashamed, Dave, because I had no answer. They asked me where the rest of the money went, because I'm a spender. And I had no answer.

And so that very day, we made my first budget. They gave me the total money makeover. And it took me a couple months to really get on board. But then I got wired up and fired up. And it wasn't long before I was all in. Wow. So it was a brother intervention. Yes, yes.

The brothers ganged up on the little sister. They did. I know. Nothing new about that. Nope, not at all. Well, the good news is you're not afraid of hard work, and you do know how to implement a plan with the hard work that you do and with the career field that you've chosen.

It's anything but. It's always hard work. So you knew what to do then. You just had to roll up your sleeves and get after it, right? Yeah, absolutely. But it took a few months to kind of get moving, huh? It did because it wasn't my plan. So my ego definitely got in there.

But I realized they were right after a few months. Okay. So they held you accountable then, huh? They did. If I was ever wearing something new or had anything new, I was held accountable by not only my brothers, a lot of coworkers and family of, where'd that come from?

Was that in your budget? And that was the ticket for me was, my plan was to tell people around me, and that was my accountability team since I'm single. And I got a lot of coworkers listening today for that reason. Very cool. So you had lots of encouragement. Yes. Some of it a little over the top yes lots of encouragement very good very good well it's neat that you've got a good enough relationship with them that uh you could accept

that from them at least a little bit grudgingly but get it get it going and that they felt like they could speak into your life that's very very cool. That's a testament to your parents, too. Yes, absolutely. Very well done. So what advice do you have to a young, single lady just graduated from college with $50,000 in debt? Well, the first thing, of course, the technical piece is to make the budget. I used every dollar, and I love it. Budgeting has become somewhat of an extracurricular for me now.

I really enjoy doing it. But like I mentioned before, the accountability piece, but then also contentment and really enjoying the journey and what it taught me because, you know, I was right at college, so I've really grown. I know I've got a long ways to go, but I really grew in the last three years because of that. I bet. Yeah, you do, because you have to deal with the person in your mirror every day to hit this goal. And that's a long 32 months right there. Yes. And there's a long 32 months right there. Yes. And there's a lot of people your age would be out doing other things right now with that money.

So, but you completely cleared it up. How's it feel? I underestimated the feeling. Really? I was worried it would maybe be a little anticlimactic. I paid off my debt on Christmas Eve of last year. I gave my dad the last check for three grand. And because I love Christmas and I loved getting out of debt.

So it was just the perfect time to do it. And I underestimated how good it would really feel. Yeah, I bet. Well, way to go. I'm proud of you. I know your brothers and your parents are. Well done. And your coworkers.

Well done. Good job. Very good job. Very fun. So what was the hardest part for you? The hardest part was saying no. I'm a very social person. I really like to go out and do things. And I haven't really done anything for the past 32 months. I said no to a lot of things. And I had to make it really dramatic for myself. And so what I ended up doing is, let's say I got invited to go

out for pizza, right? And so that was really hard to say no to, but then I would always come back to the question, do I want pizza or do I want to be debt-free? Do I want to go shopping or do I want to be debt-free? And the answer was so obvious then, and I needed to make it that dramatic in order for me to stay on the plan. Yeah, yeah, you do. So what are you going to do to celebrate?

Well, I'm here in Nashville with a couple of my coworkers. We're here for an extended weekend. Oh, cool. Good. Yep. That's a good celebration. Yes. A bit of a trip there. Yep. A bit of a serious road trip. Yeah, good. Very cool. That's a good celebration. Yes. A bit of a trip there.

Yep. A serious road trip. Yeah, good. Very cool. Way to go, Marty. We got a copy of Chris Hogan's book, Retire Inspired, for you. And that is the next chapter in your story for you to be a millionaire now. And you're on your way. You got control of one of life's most difficult subjects, and that's money.

Well done. Very, very well done. All right. It's Marty from St. Cloud, Minnesota. $49,000 paid off in 32 months, making $35,000 to $55,000. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt-free! Yeah! That's how they do it in Minnesotanesota ladies and gentlemen well done well done well played oh man good stuff very good stuff you know you hear over and over and over and again when i ask the question what's the key to getting out of debt, she said it. Get your budget done. She said, I use every dollar. Budget, I love the line. Budget has become an extracurricular activity. And listen, about 5 million people are using every dollar now.

So I don't know what you are waiting on. But if you're really going to get serious about this and really learn how to handle money and really get out of debt and really build wealth and really be outrageously generous. It's an act of intentionality. And today, you know, it's the first of the month, right? Here we are at the beginning of the month. You get paid. Do you know where the money is going to go this month?

If you don't, then you don't have a budget. A budget is your roadmap. It shows you how to get there. It's your GPS that says, turn here, don't turn here, turn here, turn around. You've gone too far. That's what the budget says. It talks to you in one of those voices, right?

Every dollar doesn't talk to you, but the numbers do. So if you've never budgeted before or you've gotten a little off track or you've fallen off the wagon and this time you're ready to really do it, go to EveryDollar.com. Sign up for a free account. You can download the mobile app for your iPhone or your Android and put it on your desktop. You enter your income, your expenses.

It's a customizable template. It takes about 10 minutes. If you have the free version, you just enter your expenses as you go so you can track your spend. If you get the premium version, then your expenses show up in every dollar because they're attached to your bank account. And that premium version is really cool. And having a plan helps you get rid of debt and save for the future while making sure you have room for the fun stuff each month.

This is the most robust and elegant budgeting software out there, completely free to get started, only takes 10 minutes. If you want to upgrade and do the premium, we'd love to have you do that too. So check it out every dollar. You've got to do a plan, folks. No one accidentally wins the Super Bowl. No one accidentally becomes a millionaire. No one accidentally gets out of debt.

You can wander into debt, darling. You can't wander out. It takes an intentional act to change your life. And the budgeting is a key part of that. When you get sick and tired of being sick and tired, darling, that's when you're going to do a plan, and you're going to stick to your plan. But until then, you're going to live in the land of ish. Ish.

I'm doing it ish. Doesn't work, baby. Doesn't work. Check it out. Everydollar.com. This is the Dave Ramsey Show. Folks, the real estate market is on fire all over the country. If you're looking to buy a home and you need a mortgage, don't sell yourself short by going and getting a typical pre-approval.

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and get ahead of the game. I trust Churchill Mortgage. Call 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLSID 1591, Equal Housing Lender, 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Thank you for joining us, America. We're glad you're here. Open phones at 888-825-5225. Joy is with us in Grand Junction. Hi, Joy. How are you? Hi. I'm so well, Dave. Thanks so much for taking my call. Sure. What's up?

My baby is on my back, and she's sick of waiting, so you'll hear her a little bit. Sorry about that. I read the first half of Total Money Makeover about six years ago, paid off all of our debt, my husband and I, and our now four kids. And apparently you should have read the second half because we failed to save for an emergency. And the emergency hit about six months ago, and we quickly accumulated about $35,000 in debt. And so what I'm wondering right now is whether or not we should sell our home. We have quite a bit of equity. What is your household income? It's about $60,000 to $70,000.

My husband's a teacher with a lot of side hustles. How much debt did you pay off the first time? $23,000. How long did that take? It took us about two years. This is going to take three. Do you like your house? We love it.

Then keep it and pay off the debt. What kind of emergency $35,000? All medical? Medical. of emergency $35,000 on medical? Medical, our car died, and our lost work due to a medical situation. How much do you owe on your car? $15,000. Oh, sell it. Okay.

I thought you would say that. Yeah. Well, you knew what to do. You just didn't want to do it. Yeah. It's up to you, kiddo. You can do what you want to do. You're a grown-up. But this is what we teach people to do. Basically, like you said, you did the plan-ish, and you didn't follow through, and you didn't have an emergency fund in place,

and then you got freaked out and went and bought a car in the middle of having a medical problem and a job layoff. And so you don't get to make decisions based on emotions if you're going to win with money. You get to make, you can have, unless they're emotions of joy, those are the only money decisions you can make. But freak out always. Every single time I get desperate, I get stupid right after that. They follow each other around.

That broke desperate and stupid, they're three brothers that hang out together. And none of them are smart. It's like Daryl and his other brother Daryl, right? And I've been right where you are, kiddo. I get scared, and then I get desperate, and then I get stupid. And it just, fear is not a fruit of the spirit and even if I get afraid and everybody does I've just have steeled myself against making decisions based on the fear and that car purchase was not necessary and you know it now you could have

gotten a car you might have getting you may have needed a different car the car crashed I got that or whatever happened here but you didn't need that car, and you guys went overboard. And so sell it. Undo the problem. And, oh, by the way, that's 15,000 of the 35. Ta-da! We're back to 20.

And that's what I would do if I were you. You do what you want to, but you call me. Taryn is with us. Taryn is in Sacramento. Hi, Taryn. How are you? I'm good, Dave. How are you?

Better than I deserve. What's up? Awesome. This is way cool. I'm so thrilled to talk to you. I'm here, too. Okay, so I got real yesterday with a friend that I was actually teaching your steps, too, and I have a PACE loan, which is the energy efficiency loan that's tied to the property taxes. So my total debt is $59,000.

This PACE loan is $37,000, broken into two. One's $12,600 and $24,800. It's at the end of my snowball due to the debt amount. My question is, do I put it in front of the snowball? Do I refi or do I keep put it in front of the snowball? Do I refi, or do I keep it at the end of the snowball? I'm so tired of paying this every single month. The balance on the thing is what?

$37,000. And what's your household income? Yeah, it goes, base is $81,000, and I can do side jobs. I'm a registered nurse. I can bump it up an additional $12,000, so $81,000 to $93,000. Okay. Well, it's basically a second mortgage you got for windows or something, right? Or solar panels? Roof and HVAC.

Oh, okay. All right. Yeah. And so you've got a second mortgage for home improvements is what it comes down to. It's a special program, but that's the nature of what it is and um so we would treat a second mortgage as you know uh if it's more than half your annual income i'd throw it into baby step six and i'd refinance what's the interest rate on your second on your first mortgage uh first mortgage interest rate is 3.75 yeah you're not going to get that right now. No. So if you refinance, that's

going to go up a little, going the wrong way. I'll have to use to refi, too. Yeah, and the fees on this, it's interest-free on Pace, right? No, 8%. 8%? Okay. Yeah. So your

$37,000 is right on the bubble of being about half your annual income. So it's kind of you could go either way is where I was going with my answer. So what would I do if I woke up in your shoes? I'm listening to the tone of your voice and the words you're using. You are very focused, and you are very game on. And I think you're going to pick up over time, and I think you're going to be done with this very quickly. so i'm going to go ahead and leave it in baby step two because of the lady i'm talking to

okay so i put it in the front uh no i just run it in baby step two where it belongs smallest to largest wherever it lands in the wherever it belongs and just get to it but just you've got the ability to pick it up and you you kind of what i'm hearing you're almost sassing yourself you've got a little attitude like okay girl it's time to do this you're kind of telling yourself that i heard that i heard that in the way you were saying that that i did i read that wrong no not at all i'm kicking myself yeah you're just a little bit disgusted with you and that's that's the perfect formula to get stuff done yeah yeah you're you're a rock star you're gonna be done faster than you think you are i'm proud of you you got this you got it you can do it you can do it i'm gonna leave it

down there and baby step two and be done with it and then it's done forever that's good news and we don't lose that good interest rate on that first mortgage uh by refinancing it just to take care of this because we didn't roll up our you you know, double up our fist and punch it. So punch it instead, and let's just knock it out. Good. You got this. You can do it. Anton is with us, Albany, New York.

Hi, Anton. How are you? Hey, Dave. How's it going? Better than I deserve. What's up? All right. So I am currently thinking of going to grad school.

Cool. Where are you going to study? That's my practice. Nursing anesthesia. Oh, nursing anesthesia? Yeah. Okay, very good. So I'm looking at three schools, and I really want your input into which ones

should I really focus on applying to. The two of them are in the States. The other one's in the U.S. territory where I was born. The two here are much older, more established, and they pretty much get the whole package. But the one where I was born is a lot more affordable. It's a year shorter. They're both credited the same way. But there are certain things that I know I will not be able to get the experience there,

and I would have to get them when I start working. Now, the price of the two of you schools here, adding up the tuition and cost of living, I've put them to about $120,000 for the three and a half years of schooling, while the one back home would be about, it's $20,000 for the tuition and about $5,000 to $7,000 for cost of living, because I will be living with my parents again. Where's back home would be about, it's $20,000 for the tuition and about $5,000 to $7,000 for cost of living because I will be living with my parents again. Where's back home? Puerto Rico. Okay.

All right. School doing okay with all the problems they've had with the hurricane? I was with the, I talked to the directors a little bit ago and they- Okay. And when you graduate, if I understood you, when you graduate, you're going to be a nurse anesthetist. Yes. Okay.

Which makes what, a couple hundred? 300? On average, about 140,000. Yeah, okay. But the issue is that the range is so large, it could be anywhere from 100 to even 190. But it's those extra things that I know I will not be able to get in that school that kind of add on to the bigger part. Do you have the money?

Right now I have $52,000 in savings. And since it's about a year out, I tend to average about $25,000. You think you can pay cash for either one? If you can pay cash for it, I don't care which one you do. It's a wonderful career field. Just whichever one you want to do. The bottom line is you're a nurse anesthetist at the end of it, and you've got the ability to make incredible income.

And so as long as you pay cash, I don't care. If you only can pay cash going one way, then go that way. This is The Dave Ramsey Show. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped Dave Ramsey Show app from the App Store. We're always listening to your feedback and adding new features to make it even better. Check it out. For years, I refused to endorse any company that claimed to get people out of timeshares. I told my listeners it's a horrible product and that unfortunately they didn't have a lot of options. Then a few years ago, I sat down with Brandon

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