The Ramsey Show - App - Getting Out of Debt Is About Momentum, Not Math (Hour 1)

Episode Date: September 18, 2019

Chris Hogan, Rachel Cruze, Debt, Budgeting, Savings   Tools to get you started:  Take TDRS listener survey to win a $100 Amazon gift card, click here: http://bit.ly/2krRePv Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is the Dave Ramsey Show, where America hangs out to have a conversation about your life and your money. And I'm Chris Hogan, filling in for Dave Ramsey today, but I'm also joined in studio by a very special, special guest. I've got Rachel Cruz, national bestselling author and host of The Rachel Cruz Show. How are you? Hey, Chris Hogan.

Thanks for letting me join you this hour. I am looking forward to this. Yeah, so fun. Because we have fun. We enjoy this, right? We really do. Talking to America about their money. And we did.

And so we've taken over the show. It's going to be us for this hour. And listen, we want to hear from you. So if you've got a question about money, if you've got a question about life or lifestyle, whatever it is you want to talk about, we're here for you. Here's the deal. You've got

to call us. The number to call is 1-888-825-5225. Again, that's 888-825-5225. And you can also send us messages via all the social medias at Ramsey Show. But, Rachel, you also have some social media handles. What is yours? Oh, yes.

At Rachel Cruz. Absolutely. So, Twitter, Facebook, Instagram. All of them. And, Hogan, you're doing great on Instagram. Well, thank you. I'm learning. We just did a story on Chris Hogan 360, so you can check out his Instagram.

That's right. And I was so proud of you. You were just doing a story like a pro. Well, you gave me a little guidance, and I appreciate you. But America, we're here for you, so we're going to get to the phones. We've got Jared on the line. Jared, how can we help you? Hey, Chris.

Thanks for taking my call. Sure. What's on your mind, my friend? Hey, so me and the wife, we're building a home. It's about $428,000. My income is about $100,000 a year. And we have a small debt snowball of two cars, which is about $20,000 for both of them. Would you suggest taking the 20% that we have in cash for the home and put it towards the cars first?

The home's not going to be finished for about six or seven more months. I'm just wondering what would be wiser. Okay. Tell me about these car payments. So how much is the payment on car one? They're both about $300 wiser. Okay. Tell me about these car payments. So how much is the payment on car one? They're both about $300 a month. Okay. $300 a month.

How much do you have left on them? My commuter cars, it's about $4,500, $5,000, and then her car is about $14,000 to $15,000. Okay. So essentially, Rachel, this would be the hold down payment that they're looking to use toward attack and debt. What do you think? On it. Well, yeah, because what?

You said you had 20% of what? $400,000? $428,000. So it's about $75,000 is what we have. Okay. So the car payments are two. So, yeah, I would today take $20,000 is what we have. Okay. So the car payments are two. So, yeah, I would today take $20,000 of that and put it down. Go ahead and just pay off your debt.

And then do you guys have an emergency fund at all? That's not really. We just have that. And then we're saving right now. We're saving an additional $15,000 as a month emergency fund because we're living with in-laws right now. Okay, gotcha, gotcha. Yeah, I would pay down the car payments today or even sell the wife's car. I mean, you have the money to pay it off, so you could just pay it off.

But if you wanted to be real crazy, you could sell it. But go ahead and pay it off. I'd have that buffer emergency fund there and then put extra cash that you have going forward till the house is complete to continue because you won't close on the house until it's complete so you have time to save up back up that 20 so that's what that's what i would do because if you move into this home especially and you're building which adds a level of risk versus just by an existing home because building always takes longer and usually more expensive so So it's fun and it's exciting. But yeah, I would have no debt in that emergency fund in place for sure using the 20% that you have.

Yeah, I agree. And here's the deal, Jared. In all honesty, you went about this backwards. Yeah. Okay. First and foremost, what you want to do is you get yourself out of debt. Then you want to build up an emergency fund of three to six months of expenses. Then we call it baby step three B. This is where you start to save for the down payment on the house. And why do we say that? People try to get riled up.

It's because you don't want to go into a new home without any kind of cushion and emergency fund because Rachel's stuff does break. Yes. I mean, homes are expensive. And just having, you know, the solid financial foundation under you guys versus trying to do like 14 different

things save for the emergency fund and pay off the car payments and try to get this you know house this 20 all the things stay focused do one step at a time and you're gonna just feel better i think even just emotionally to say okay good we're moving into this home we have no debt and emergency funds and we're able to enjoy it your home becomes a blessing versus a curse that's right and you don't have the added pressure or the stress yes and so it's very important so jared debt and emergency funds and we're able to enjoy it. Your home becomes a blessing versus a curse. That's right. And you don't have the added pressure or the stress. Yes. And so it's very important.

So, Jared, listen, as Rachel told you, write the check, overnight them, you know, pay off those cars. You guys need to drive these cars till the wheels fall off. Then you go get some new wheels and put them on the same car and keep driving it. Don't repeat this. All right. Going back to the lines, I've got Kimberly in Alabama. Kimberly, how are you?

I'm doing fine. How are you? Oh, we are doing fantastic. How can we help you today? Okay, so I calculated my debt, and it comes out to be like $23,000. Mm-hmm. And I do have higher credit cards

that have a really high minimum payment, and I was wondering would it be best to just try to pay off the larger one first, like with my savings, because in my savings now, I have like roughly $9,000. Okay. And I was thinking if I go ahead and pay off the larger one that has the largest minimum payment and start saving that minimum payment, would that be the best idea, I guess? Okay. Well, listen, Kimberly.

First and foremost, I like your mindset that you want to get out of debt. So break it down for me. Of this $23,000, how many debts are we talking about here? Well, there are credit cards and like two loans. Okay. So the credit cards, tell me the largest credit card first. It has a balance of like $6,485. All right.

And that payment. Okay, the next one? Yep. Like $5,000. Okay, and then what are the other two loans? Now, the other two loans is like from like a credit union. Like one is like a long time credit union like one is like a a long time ago i did like a consolidation loan and it was for like it's like 10 000 okay and then the other one is like

a extra line of credit which is like 4 900 all right so you did a consolidation so you've been down this path before haven't't you? Yes, unfortunately. Yeah. Now, here's the deal. This can be the last time you have to deal with this, right? Because it's not fun, is it? It's not. It's just not.

No. And so what Rachel and I travel the country teaching people is that I don't care about the interest rate. I don't care about the payment. I want you to attack the debt using the debt snowball. So you're going to attack it smallest to biggest. So you've got that $5,000, you've got the $4,000 line of credit, you've got the $5,000 credit card, then it goes to the $6,400 credit card to the $10,000. And so Rachel, that's what I tell. Yeah, absolutely. How much do you make a year, Kimberly? So I just started this job in March, so I should be making like $50,000 a year.

Okay. $50,000. Okay. So right now I'm bringing home $33,000, $71,000 a month. Okay. Awesome. Yep. Smalls to large.

It's just like Chris said. Again, it's about your behavior. Get those quick wins and live on nothing. Nothing, nothing, nothing, Kimberly. Throw it all out that debt. Listen to me, people. Quit trying to do fuzzy math. I don't care about your interest

rate. It's about the size. Getting out of debt is not about math, people. It's about momentum. Attack the little one first. Get yourself fired up. And then, guess what? You move forward. You can do this, and we're here to help. This is The Dave Ramsey Show. Do you know who is a prime target for identity theft? Your children.

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And I'm joined in studio by a special guest. I'm joined by the one and only Rachel Cruz. Best-selling author, Ramsey personality, all around just good at everything. Just the one and only. I'll just take that. Do you like that? I'll take that. Put it in front of my name always.

It's great. Now listen, for all of you out there, America, if you don't know Rachel, if you're looking for practical, fun ways about saving money, you need to check out the Rachel Cruze Show. Now, I've had a chance to be on there a few times with you. Yes. And I'm absolutely blown away by just how fun, but how real you are with the show. Oh, thank you.

You are very direct and very creative in how you're helping people kind of begin to look at the decisions they're making with their money. Yeah, absolutely. Well, money's fun, right? So we want to enjoy it and create a life that we love. So how do you do that? So we talk about everything on the show,

from as tactical as grocery shopping to debt to budgets, all the above. So we're having fun. Well, now listen. Now, a most recent episode, you talked about why a car loan is the worst type of debt. Mathematically speaking, yes.

That's right. And so you dig into the real cost of buying a new car, ways to save money on repairs, but you also give some inspiring stories about people that are attacking and paying them off yeah i mean this is an area of people's lives i mean we say it's the status symbol of choice right that's how dave even intros the show and so your car it's a big it's a big deal and a lot of people go into debt for their cars and when you look at the math of the debt it's like okay you're going into debt for something that. And when you look at the math of the debt, it's like, okay, you're going into debt for something that's going down in value.

You're paying interest on it. I mean, all of that combined. And so your car, it's a big part of your life. So not only getting rid of that car payment's important, but what does it look like to go buy a safe, reliable used car? So we talk about that. And I go to an auto repair shop in this episode.

Do you really? I do. Are you undercover? And I talk to a mechanic. Are you undercover? a mechanic are you undercover cody was his name and he was fantastic and so we talk about things that you need to do you're laughing at me are you undercover or you just switched my heels out for a pair of flats and i went to the mechanic and it was great because learning okay what can you do at home

with your car to save money uh-huh yourself things that you can do yourself what should you take it to a mechanic for what should you take it to the dealership which is the most expensive option um i learned all about um oh no i'm gonna forget the name of it all the like auto zone like those type of stores right auto auto parts auto parts stores that's it yes and you can go buy the supplies there and they will sometimes help you work on your car so we talk about that every option when it comes to your car i learned a lot because winston does all the car stuff okay well here's the deal we're gonna have a follow-up video rachel cruz is coming to my house and she's going to do repairs on my car your windshield wipers i learned how to do that by myself i've got to watch this episode. Listen, America, new videos and episodes air on Facebook and YouTube every other week.

She also has a podcast that airs anywhere you listen to podcasts. You need to go to RachelCruz.com. Check it out. I can't wait to see this car repair video. I'm intrigued right now. I'm probably going to watch it at the break. Here, I'll give one more tip that Cody told me, the mechanic. Because I've heard a lot of people change their oil themselves, right?

But by the time you discard the oil, buy everything, it usually adds up to be pretty much the same price as if you just went and got your oil changed at a mechanic. And so he debunks a few of the myths, too, that we start to think about. Okay, I'll think about that next time I'm changing my oil. All right, listen, America, if you've got questions about money, we want to hear from you. The number to call is 888-825-5225. Again, that's 888-825-5225. Or you can submit your question on social via at Ramsey Show. Rachel and I are here for you.

We'd love to talk with you. And we're going back to the phones right now. I've got Brian on the phone out in Arizona. Brian, how are you? Good morning. I'm well, thank you. Well, thank you for calling in. What's your question for Rachel?

My question today is we have $31,759 in credit card debt. We tried to start a business last year and did not work, which is where the debt came from. We currently owe $156,000 on our home, and our income is $61,000 a year. We are trying to wonder whether we should sell our home to pay off the debt. We have about $70,000 in equity in our home right now, so we could sell it and pay off all the credit card debt and have some other money. Or if we should rent it and have a residual income cash flow coming in. My grandmother has a property that we're being allowed to stay on rent-free for the next six months or a year.

So that's why kind of a unique opportunity, but we didn't know whether to sell the home as we moved out or to rent it. Rachel, what's your thought? Yeah, at this point, Ryan, I would just go ahead and sell and get the equity, pay off the debt, get an emergency fund going and start your life. And then if you want to go back and do some rental properties, I would do that later on in the baby steps, around baby step six and seven. But I would not keep it as a rental property right now just because of your current financial situation. If you guys were in a different place, my answer may change. But as you said today, I would go ahead and do it because having a rental property, it sounds great, but there's risk involved. You're dealing with tenants. Things still break. You still own the home and there's still going to be an element there of that home ownership that you're not going to get away from. So I'd rather you guys get the equity if you're planning on

moving out anyways, putting it towards the debt and an emergency fund. Yeah. Ryan, let me ask you this. So you get to live there for six months rent-free. How much will rent be after that? Well, it's indefinitely rent-free until we have to leave. And at this point, there's no leave. So it could be six months, could be a year, could be two years. We don't know. Okay.

My grandmother just doesn't want the property vacant, so we're kind of house-sitting for her. Yeah. Well, and I agree with Rachel. I think, you know, that opportunity to be able to sell the home, pay off the debt, and then be able to have a fully funded emergency fund of three to six months of expenses. But here's the deal. You guys don't go on a shopping spree or a shopping rama with the other equity that you have, all right, after selling the house. You guys have to get your mind set right and your budget prepared to be paying for housing expenses, Rachel. And so go ahead and start allocating a dollar amount each month or leave a good chunk of that emergency fund sitting there.

It's the habits. And Rachel, I've heard you talk about this before. It's the habits that end up causing us to get into these money situations. Yeah. To insult the everyday stuff that you want to be aware of and be intentional. And then for you guys to look forward to your future and say, okay, what is the next plan? Are you going to buy that current home from your grandmother? Are you guys wanting to buy something else? And so looking long-term, too, because I would say, like, if you guys have the home now, yes, the idea of being rent-free and selling it is great.

But if you aren't making a decision on just a year basis on real estate is difficult. So make sure that it is some, that's a decision you guys want to do is completely sell and move to this place, which is a blessing for your grandmother for sure and that you're rent-free. But just think about the long-term effects too because, again, making a decision with real estate within just a year scope is very short. It is. And also go ahead and have a conversation with your grandmother. You guys may be responsible for property taxes and homeowners insurance. So there may be some expenses around it. I would say this, sit down, have a conversation with your wife, make sure you guys are on the same page. And again, take some time and think about this.

This doesn't need to be something you rush into. Whenever you're making larger monetary decisions, you need to spend the appropriate amount of time really thinking about it and also praying about it to make sure that you're clear and if you have other questions. As you get ready to do this, I would encourage you, and Rachel would as well, to reach out to a real estate ELP. We have people that are licensed and that we approve of all around the country that can walk through this process and help you. You can go to ChrisHogan360.com and find one. You can go to RachelCruz.com and find someone that can kind of guide you and help you to

understand what the values are and how long it's going to take for you to get this home sold. That's right. Yeah. Yeah. Your house, it's a big deal. It is a big deal. It's a big part of your life and your family and so

people obviously there's millions of homes around the country like you're there will be there will always be another home but it is one of the more emotional parts of our lives and ownership that we have and we would be remissed you pay off thirty one thousand seven hundred and twenty nine dollars worth of credit card debt i want you to start calling and closing them out. You're breaking up with these people, right? Close them out. Cut them up. I'm serious.

You're sacrificing your home to clean up this mess. Well, clean it all the way up and keep them out of your life. This is The Dave Ramsey Show. Thank you. Hey, guys. At The Dave Ramsey Show, we really value your input. It helps us to know what's important to you so we can deliver relevant content to help you crush your money goals. We just launched a brand new survey, and we'd love your feedback. It only takes a few minutes, and you'll be entered to win a $100 Amazon gift card. No purchase necessary.

Take the survey at DaveRamsey.com slash survey or text survey to 33789. Hello, America. You are listening to The Dave Ramsey Show. I'm Chris Hogan filling in for Dave, but I'm also joined in studio by my security guard and resident just tough lady, Rachel Cruz. Here I am. I know. I feel safe.

I'll beat someone up for you, Hogan. Well, let's hope they're small. Let's hope they're small. All right. Listen, been telling you all to send us questions via social media. Guess what? You did it. And I appreciate you.

You can find Rachel at Rachel Cruz on social media. You can find me at Chris Hogan 360 and you can find this show at Ramsey show. So I've got a social media question for Rachel. This comes in from Melanie. She says, Rachel, how do you know when you're financially ready to add or have another baby? Oh, extending the family. How do you know, Rachel? Yes.

Well, carrying my third right now. It's a big responsibility, obviously. Babies cost some money. But I never tell, I never recommend not getting married or having a baby or making life choices based on where you are financially. The money's going to take care of itself. And so, well, it's not going to take care of itself. You've got to take care of it. But you can figure it out from there. So I would say if you guys are ready to have a baby just within your family and you feel like it's time, then have the baby. And then you can work on the debt and pause on the debt snowball and saving up for an emergency fund, all of that later. But I would say for sure, yeah, when you want to have a baby, or I'd say the same thing for marriage.

If you want to get married, get married. Well, okay, that does make sense. It really does because you do, however, need to make sure you have a commitment to a plan, right? Yes. And you need to talk about it. Sure, absolutely, yes. And be aware, right? Yes, absolutely, absolutely, especially if you're getting married, right, making sure you guys are on the same page. I page i mean there's steps to take but if you wait for the right time to do those

kind of things it's never going to come right i mean like you know okay well we just want we we want to be and some people do they want to be at a certain place financially before they have a baby or add to the family which is great and if that's what you choose to do totally fine um but i would say i wouldn't i would not not have a baby because you have debt or something like that because you can always get out and listen rachel you got to be careful you're about to find out for a third time there are costs that aren't monetary costs associated with having a baby yeah right like a friend of mine that i work with he's walking around cross-eyed right now because he just had a baby and he's getting like a half hour

sleep right so he's feeling it he's feeling it but no they're tiring that's a good question all right we're getting back to the phones i've got stephanie on the line stephanie is calling us from virginia how can we help you hi how you doing today oh i'm focused and not finished young lady what's on your mind so um my husband has um a traditional ir IRA, basically a holding account. Years ago, he left a job, had a 401k, and he had to take the 401k out at his job. And it's just sitting at his bank account, not getting any money, really. I mean, if it is, it's a very, very small percent.

We're nowhere near close to adding tricks. We're still on Baby Step 1. But I know that we're always trying to figure out what do we need to do with it because it's a traditional 401K, and I always hear you talk about loss, lost 401K. So I don't know where we should move it without getting taxed like crazy and getting penalized. No, yes, ma'am. And, Stephanie, I'm proud of you guys for getting started as like crazy and getting penalized. No. Yes, ma'am.

And Stephanie, I'm proud of you guys for getting started as your own baby step one. So you're working hard to try to get that $1,000 in place. That traditional needs to sit still. And I know, you know, typically people start to think like that as you're looking around trying to figure out where can we get this $1,000, where do we attack this debt? We don't even want to touch it. We don't even want to touch that. No. No. this thousand dollars where do we attack this debt um we don't even want to touch it we don't want to touch that no no he did that long long long long long time ago before we even thought about doing Dave Ramsey okay we've been on baby step one got a thousand dollars emergency

murphy law happened and we've backed down so okay what happened Stephanie what was what did murphy do uh well it's basically um medical problems and um car issue my my jeep um it's basically medical problems and car issue. My Jeep is paid off, luckily, but something happened. We had to get into it. And he's also a mechanic, so I remember you guys talked about that. So he's based on commission. Okay. So his pay goes up and down.

Okay, very good. Have you guys ever gone through Financial Peace University? We actually have through our church. Good. Okay, very good. Have you guys ever gone through Financial Peace University? We actually have through our church. Good. Okay, very good. And so you know it's just a matter of making that decision. What I would do with that traditional IRA is leave it alone, but I would get connected with a SmartVestor Pro so you can look at what it's invested in. If you're not seeing any growth, then it might mean that it's not invested in the right things for you all.

And so I would take that statement. Go connect with a SmartVestor Pro. You can go to DaveRamsey.com and locate a SmartVestor. You click on there. You put in your zip code. You'll find several people that are in your area. You call in your interview until you find the one that you feel most comfortable with, and then you get an opportunity to really get connected and get guidance.

And Rachel, I am just shocked at the number of people that haven't reached out to talk to someone about their investments. Yeah, absolutely. Well, these people eat and breathe this stuff every single day and they love it. So when you go talk to an expert of someone that's really good at what they do, and we say it here all the time, but it's true, finding someone that's willing to teach you yes and not just sell you something but walk you through the process show you your options and it is it's amazing it's it's learning that knowledge and i would say i mean you're the retirement investing expert hogan around this whole matter but it's an intimidating part of personal finance when you get into all the investing stuff and Roth IRAs, traditional IRAs, 401ks, I mean, all of it. It can be really intimidating and it can be scary to ask questions.

But I tell people all the time on my show, I'm like, go in, ask questions. Don't be a bobblehead. Like, go in. I mean, I remember even Winston and I, after we got married almost 10 years ago, like we sat down with someone. And even as Dave Ramsey's daughter, which everyone thinks I have like every single answer to in the book, and I'm like, no. And 10 years ago, I mean, I had tons of questions when it came, and I was like, I am not going to allow myself to feel stupid or have some kind of shame talk in my head of like, oh, you know, okay, I should know all this.

No. Go in and ask the questions. Get the information, because you're going to learn, and when you learn, then you have peace because you have control over your life and your money and you know what you're doing. I like that. She's absolutely right. So if you're out there, America, and you've not reached out and connected to a smart investor pro, get that done. Just have them look over your 401k, look over where you are. And I'm telling you, it just gives you more confidence to know that you're on track and you can make changes if need be. And so it's just a great opportunity for you. You can feel more confident where you are all the way around. All right, we're back to the phones. We've got,

let's see here. I think Brad is on the line. Brad, how are you? I'm good. How are you doing? Oh, I'm focusing on finished. What's on your mind, buddy? So I'm young. I'm 23 years old. I got in a little bit of debt when I was like 18, 19. I had to buy a $30,000 vehicle because the vehicle I bought blew up. I went upside down on it for about $6,000. I was a little bit dumber back then, got myself into some credit card debt. I'm getting worried because I don't want to be 40 years old before I finally, you know, get ahold of my finances and then trying to figure out ways

I can do to save money and things I can do, uh, you know, just eliminate these things. I'm getting married next year. Um, you know, I had to put money up for that wedding. So that's all just coming on really fast. I'm a little bit overwhelmed. Just looking to get some advice. Wow. Brad, how much money do you make a year what's your job what are you doing i'm a heavy equipment diesel mechanic i make uh twenty one dollars an hour okay so what roughly what did you make last year last year i made about with overtime almost fifty thousand dollars okay fifty thousand and you bought a thirty thousand dollar car i actually bought the car before I was even a diesel mechanic.

I was making less money when I bought the car. Okay. And I think you said earlier, I had to buy a $30,000. Okay, so we're going to change the verbiage a little bit. You did not have to. You chose to. And so part of starting out this process,

though, really, Brad, I mean, this is a good lesson. And I had to learn this myself in my 20s. You have got to take ownership over, okay, this is what's happening. I've chosen to do X, Y, and Z. These are the results I've gotten. And so being able to take that ownership is one of the first steps. And so if I had a $30,000 car payment and I was making 50 grand, I'd sell that thing in a heartbeat.

Get rid of that car because that's going to keep you. If I had a $30,000 car payment and I was making 50 grand, I'd sell that thing in a heartbeat. Yeah. Get rid of that car because that's going to keep you. Since I've bought my car, I'm paid it halfway through. I only have $15,000. Okay. Good for you. You don't have to. Okay.

Good for you. And listen, the best thing to do when you feel overwhelmed is stop, take a deep breath, and understand where's this pressure coming from, right? If it's the debt, then deck on it. You stay focused and you attack it. But the other things, the stuff like the marriage and all this other stuff, just slow down, my friend. Brad, you do one step at a time. You take it one day at a time.

And you control the things that you can control. Everything else you just put to the side. We'll continue on with Brad next segment. I have other thoughts. Yes. You're listening to The Dave Ramsey Show I'm Chris Hogan, filling in for Dave. And I'm joined in studio by Rachel Cruz.

And before we went to the break, we were talking to Brad, who was 23 years old. He made around $50,000 a year. And prior to that, he had bought a vehicle that, well, he went into around $30,000 in debt for. And he also got an upcoming marriage. So he's feeling some pressure and some strain all the way around. And so, Rachel, you had some thoughts for Brad. Yeah, well, I just want to wrap back around because we ended the last segment with him saying, well, I've paid off half of it, and he has credit card debt and a marriage coming up,

cash flow in the wedding, all of that. So just to kind of clarify, Brad, for all the dynamics of life. So I would get a $1,000 emergency fund and have that be your starter emergency fund and then start paying off this debt. Because you can pay off $15,000 in 12 to 18 months. That's always kind of our rule of thumb when it comes to cars. If you can't pay it off within 18 months, you need to sell it. But you're done $15,000, which is great.

I think he said around $30,000 that he has in other debt. And so whatever that is, break it out and do the debt snowball, paying it off smallest to largest, including all your credit cards, your car loan, all of that. And then you're going to be looking ahead for the wedding. And so the wedding, you could pause the debt snowball for a month or two for a little bit to pay the wedding to save up just go down to the justice of the peace go get a certificate yeah well i'm okay with you pausing it for a short period of time

to save up for the wedding but you can't go crazy with the wedding to your point don't go nuts brad like people make so many mistakes when they're planning their wedding because they get all emotional they get all excited i'm talking more to the woman because the bride's usually one driving a lot of these decisions i'll own it it's fine i'll own it but you you guys need to be on the same page and the wedding preparation you guys working this together doing a mock budget doing a budget for the wedding preparation, you guys working this together, doing a mock budget, doing a budget for the wedding for you guys working this is a great start to say, okay, here's what life is going to look like financially together. So kind of use it as a test board too as you're beginning this. So don't get overwhelmed.

One step at a time, $1,000, pay off the debt, and then you can pause it for a few months. The debt snowballed to be saving for the wedding and then get back to attacking the debt. Yeah, that's a good point. And typically, Rachel, you know, you can feel overwhelmed when you're trying to rush something, when you're trying to hurry up and get it done. And I understand that desire to get out of debt, but you've got to stay focused and don't try to take on too much, but be clear in your steps. And, you know, the reality is, is you can. You've paid off almost half of this vehicle already.

So it tells me you're very, very focused, my friend. And so I just want you to continue that focus. And also, you've got to keep your guard up. Well, and he's 23. So if you could go back and talk to your 23-year-old self, like many of you listeners out there, I mean, you could go back and you would say, I would live so much more inexpensively

to get myself in a better place financially so you can actually enjoy life in your 30s, 40s, 50s, and so on versus living like, oh. Because once you get out of college and you start making your first income, you kind of think, oh, this is fun. Like, gosh, you can go crazy and end up in debt, which he did, credit card debt too. So realize short-term sacrifices for long-term gain. The fact that you're starting this at 23, Brad. Again, listeners out there are hearing this like, I wish I started this at 23.

Well, he made the statement. He didn't want to be in his 40s still trying to get his act together. And it sounds like to me, Brad, you are on your way right now, my friend. So thank you very much for your call. We're going back to the phones. I've got Chris on the line. Chris, how are you? I'm good, thanks.

Thanks for taking my call. You're very welcome, sir. What's on your mind? Well, my wife and I, we are debt-free other than our home. And we put this home back in November, and we inherited a little bit of money due to someone in the family passing away. And we put a big chunk down on the house. We still have about $126,000. So my question is, do we take more money out of the investments that we have left that would still leave some, go ahead and pay off the rest of the house to where we are completely

debt free or do we continue to slay that money in investments? Okay. How much did you inherit, Chris? It's about $340,000. Okay. And so some of that was cash, the rest was in investments? Yes. Okay.

And so how much is left right now? Well, that's what's left after. We had sold a house and took a little bit of that and a little bit of the investments. So there's $340,000 approximately left and then $126,000 left on the home. Okay. All right. And so you're asking what to do with that inheritance. Well, I mean, without a shadow of a doubt, I'm going to pay off that house.

Okay. Yeah. I mean, because, and what's your mortgage payment right now, Chris? It's $1,280,000 and my income's right around $65,000. Okay. And I'm a one-income family. My income is right around $65,000. Okay. And I'm a one-income family. My wife doesn't work. Yes, sir.

Do you have kids? Yes. Okay, so she works inside the house. Yes. Yeah. I'm trying to help you out there, buddy. Yeah, I appreciate that. No, you're good.

You're good. But no, I mean, seriously, you take some of that inheritance, pay off the home, and now you've got $1,280 that's not leaving you every month. And so that gives you an opportunity. Have you guys started saving for college or anything for the kids yet? We have. We've got a 529 for our oldest and working on one for our youngest. Let me ask you, what's your reservation with this, Chris?

I hear some hesitation in your voice. Not much hesitation, just looking for the direction to go. It would be nice to have that money freed up monthly, but then the question is just pour more money into retirement then out of what's left or what to do with that extra income. How much do you guys have saved for retirement as of now? I've got approximately, in my own deferred compensation plan,

is about $60,000. Okay. And not counting the other investments that we have that we inherited. And then I'll have a pension when I retire. Okay. All right. And so looking at this, I mean, yeah, absolutely. If I'm you, I'm definitely going to continue to save up for retirement. And looking at this, because as I told people, Rachel, back in 2016 when I released my first book, Retire Inspired, retirement's not an age.

It's a number. And so when we have money put away, we have options. Yeah, that's right. And getting this house completely paid off is going to free you up, not just financially, but even, my gosh, the options you have when you don't even have a house payments are pretty remarkable. And being able to use some of that other inheritance if you want to use for investments or if you want to buy rental properties, wherever you guys are, because you're clearly going to be at baby step seven, considering kids college is funded. So looking ahead and making a plan and say okay here's what we want our future future look like yeah now hold on rachel you said rental properties and i just want to clarify for people

out there that when we talk about doing rental properties we're talking about 100 cash down that's right right so you're you're paying 100 cash for it okay we did the only the only debt we're okay with you taking on is a 15 year fixed rate mortgage on your primary home on your primary thing oh look at you sorry no no that's a good point good clarification it's the baby talk i'm like go get real estate yeah clarification yes but that's where a lot of people do enjoy after invest after you you know max out 401 or max out your retirement uh that's the place people look. But yes, for sure.

And that's also, there's not an issue also. As you start to, you get 100% debt free paying off the mortgage. You can go take some trips. You can go do some stuff. That's right. And you can pick a room in the home to redecorate. And you've got options. Yeah.

Yeah, it's really important. Okay, we're going to go to the phone lines here. I've got Eric on the line. Eric, how are you? Pretty good. Yeah. Yeah, it's really important. Okay, we're going to go to the phone lines here. I've got Eric on the line. Eric, how are you? Pretty good. How about you? Oh, we're focused and not finished. How can we help you, buddy?

It's kind of overwhelmed right now. Me and my wife are finishing Baby Step 3 this month, and we found out two days ago that we are expecting our first child. Oh, congratulations. Thank you. So I guess our question is, I know if you're in debt, you pause everything and put money back until everybody comes home. But do you do that if you're already out of debt?

I really don't know where to go. Okay. All right. Rachel, what do you think? No, I would say continue to fund retirement baby step forward congratulations you hit a big milestone of getting to baby step three now you're getting a baby and all the things are it's great it's great i know you're overwhelmed i can hear it in your voice um yeah but yeah i would say um continue to fund retirement

keep that going and then save up money on the side because the beautiful thing is once you have your emergency fund and no debt you you actually have money to save. The reason we say to pause baby step two is to free up some cash to save up. But you guys have that cash free because you don't have debt. You sure do. Eric, congratulations, my friend. I mean, I know it's a big step. Just take a deep breath.

Go find some other friends that have had kids. Talk with them and get the real truth. Start taking naps. You need a lot of naps. You need to store up sleep and start drinking coffee. I'm going to tell you that right now. But listen, I want to thank all the callers for calling in. Thank you so much for your questions.

Thank you for sending in social questions. I want to thank our entire production team, James Childs. And thank you, Rachel Cruz, for taking the time to join us. Yes, thanks for having me on. Thank you, America. This has taking the time to join us. Yes, thanks for having me on. Thank you, America. This has been The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register.

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