The Ramsey Show - App - Getting Your Life and Money Back on Track After Job Loss (Hour 2)

Episode Date: February 19, 2019

The show about you

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is done, 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. This is your show, America. We're glad you're here. Open phones at 888-825-5225. That's 888-825-5225. Brandy starts off this hour in Boise, Idaho. Hi, Brandy. How are you? I'm a little stressed, but I think that I'm going to be better after this. How are you doing?

Better than I deserve. How can I help? Well, my husband and I have gone through a pretty rough few years. We've had some illness. We both lost our jobs. And on top of that, unfortunately, went through a very, very rough custody issue with my ex-husband. We've also made some pretty bad credit decisions. And we've recently decided we really want to get on top of things. We've got three kids and we want to be able to get everything paid off and have college funded for them and just really get our lives back on track. And we're just kind of lost. and we'd actually considered filing bankruptcy.

And I started trying to Google budgeting for beginners and like that, and your name popped up several times. And I actually have a coworker that had mentioned she uses your envelope system. And so I found the phone number and thought, who better to ask for some advice on kind of how to get started with everything. Cool. Well, I'm sorry you guys have been through this. I think the epiphany you've had is really healthy, the transition that you had.

You kind of went from, I'm going to be managed and my money is going to be managed by the tyranny of the urgent. I'm not going to be managed by the tyranny of the urgent i'm not going to be putting out little fires anymore to i'm going to have to step back and have a plan or this stuff's going to crush me and that's a really good already has yeah that's a really good place to find yourself now then the only question is how to best turn it around how what do we do now to turn it around and how do we do that so let's talk through your details how much debt do you all have not counting your home we actually don't have a home we rent okay and even with that we've got about 131 000 okay on what break that down for me. So we've got about $58,000 in student loans, $44,000 in cars. We've got about $4,000 in credit cards, $3,000 in medical, got about $1,000 in loans from family, and then $20,000 in attorney's fees alone from the custody battle.

How old are the attorney's fees? About two years now. Are you paying on them monthly? We have not been. Now, we finally just recently, after almost a year of both of us being unemployed and almost homeless. But you're in touch with the attorney, and they're not coming after you, because they generally want their money, and they know how to get it, their attorneys. So, okay, what is your household income now?

What's your household income now? We should be making about between $35,000 and $40,000 a year now that we're both working. Mine is very irregular. I'm a waitress, so it's very up and down. I'm sorry, you're making like $40,000 total or $40,000 apiece? Total. Okay, you make $40,000 a year. So you make how much roughly a year?

Me by myself, I make about 10 and he makes about 30 should make about 30 yeah and you have how many children at home three okay and so your mom and part-time waitress and what does he do he is a service advisor at a car dealership okay all right cool and how long has he been doing that uh well he's done it for several years you've been doing that this time recently this time he's been there about six weeks oh okay so we're just glad to have this job at this point okay gotcha absolutely all right so let me walk you let me walk. So let me walk you through what bankruptcy would do. A Chapter 7 bankruptcy, if you can qualify, is the one that drops an atom bomb on the debt, drops a hydrogen bomb on the debt, just destroys everything,

and, of course, destroys your credit, and you walk away. Okay? That's what most people think of when they think of bankruptcy. A Chapter 13 is a payment plan in bankruptcy. In either case, student loans are not bankruptable. Right. So almost half of your debt is not going to be addressed by bankruptcy. Okay?

Okay. In either case, you're going to continue to pay the car payments and pay the full amount owed on the cars if you keep the cars in either case the only way to get rid of the cars i mean the only way to get rid of the car payments in bankruptcy or out of bankruptcy is get rid of the cars the payments stay if the cars stay whether you're bankrupt or not. You follow me? That's actually the problem, David.

So bankruptcy does not help you. Right. And we don't actually have the cars anymore. They, unfortunately, because we were... Oh, they were repoed. They were both repoed. Oh, good. Okay, well, that solves that problem.

So now we don't have those, but we've got to pay to buy a car. You're confused then. You don't owe $44,000. You did not have a $44,000 deficit. When they take the car and sell it, they come after you for the difference in what you owed and what they sold it for, not for the total. I see. Yeah, the total owed originally was $44,000. Now they took the car and sold it, and that comes off the balance.

And then you can settle that for about a quarter on the dollar with cash. Okay, so what do you think those cars were worth, roughly? Let's see. My husband's car was probably worth about $10,000. My SUV was probably worth around $25,000 to $27,000. Okay. So instead of $35,000 of value on those cars, you might have got, say, $25,000 at repo auction or $20,000,

somewhere in there. So your balance is only going to be more like $20,000, not $44,000. They didn't tell me that. They don't tell you anything. They're just coming after you and barking at you. And then the second thing that's going to happen is you can settle that 20 for about a quarter on the dollar, so about $5,000. Okay. So about $5,000 makes the car issue go away in cash.

The student loans can be put on hardship deferral today and need to be if they haven't been already. And then we've got to work through these little ankle biters other than the attorney's fees which are are there you're not bankrupt you're just in a mess because bankruptcy bankruptcy wouldn't help you much you follow me okay it would clear i am now i i was terrified i know when you're scared you just grab at everything and i've been scared i know how it feels so what we got to do is we've got to get you on a written budget, and we've got to do everything we can to get your household income up. Okay. The faster we get it up, because it's still low,

even though we're thankful for these new jobs, it's still very low. The faster we can get it up, the more we can dump on these debts and start cleaning them off. You know, I need to get you up to $50,000 to $60,000, but that may be three jobs each. I don't know. Y'all are going to be working a lot and selling everything in sight that you haven't already sold. And I'm going to put you through our class.

It's a year-long access to an online, plus you can go to the class in your area for nine weeks. It's called Financial Peace University, and I'm going to pay for it, and it'll keep you from having to file bankruptcy, and I'll help you turn this around. Hold on. I'm going to walk with you. I get asked all the time about what people need to do to improve their family's money situation. Two of the most overlooked things are term life insurance and disability insurance. Both plans make sure that you have income to pay bills and take care of yourself and your family if something were to happen. For term life, you need to carry 10 to 12 times your income,

and I recommend 15 or 20-year plans for most families. Stay away from cash value or return of premium plans. They're just a rip-off. Disability insurance is just as critical. How are you going to pay your bills if you're unable to work? Disability is the leading cause of bankruptcies and foreclosures. That's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years.

Call 800-356-1780 or visit zander.com and compare online. That's 800-356-1780 or zander.com. when i was 28 years old i was a millionaire making 250 000 a year but i had done a lot of stupid stuff ever done something stupid with money yeah i've done a lot of stupid stuff. Ever done something stupid with money? Yeah, I've done a lot of stupid stuff with money. I had borrowed too much money and the bank got sold to another bank and they called our notes. Had a brand new baby.

Toddler. A young marriage. I was so scared I couldn't breathe. I didn't know what to do. Have you ever been there? I remember distinctly, and it's 30 years ago, I still remember distinctly, trying to balance the checkbook.

Now, this is old school. There was no internet. So I had the little checkbook register out with my calculator, and I was trying to balance the checkbook, and I realized I had not entered a check, meaning that I had operated off of a false balance, and I was going into overdraft, and there was going to be overdraft charges,

and the check was going to bounce. You know that feeling? My heart rate changes. A little sweat right on the top of your upper lip, right above your eyebrows, and some right in the palm of your hand. It's called stress. Fear. Anxiety. it's called stress, fear, anxiety,

looking at the mountain of bills piled up on the desk. Can't breathe. Thinking about how I'm going to sit down and talk to my wife and say, that money I thought we had for groceries, it's not there. What are we going to do? They're going to cut the lights off on Tuesday, honey. Electric companies coming on Tuesday. The last notice of the last notice of the last notice has now come. Since it's the third time they're cutting off the electricity,

this time they're going to take the meter out. And it's going to cost us an extra several hundred dollars to get it put back in. Yeah, I know it's cold outside. I know we have babies to keep warm You ever had those kinds of discussions? Those conversations? I hope you never do But most people have

Some degree or another. Maybe you didn't know millions of dollars, and maybe you weren't stupid as I was. Maybe you were slightly stupid as compared to my PhD in DUMB. But if you've ever done something really dumb and been so scared you couldn't breathe, you're listening to the right show. That's why I started doing this radio show.

To take people that were like that, and show them how to get their feet back under them, and actually become wealthy, and live their dreams. Go from stressed out and can't breathe with my heart racing to multimillionaire with my family tree changed to where I'm the last Ramsey in this branch of the tree that will have to worry about money. My kids and my grandkids have really got to screw this up to go through how much money we've piled up now. Because when I hit that bottom, I hit it so hard, I said, never again.

Not only am I going to never again sit here and have this conversation inside my head, not only am I going to have to have this conversation with my wife, this is it. It stops here with the Ramsey family. This branch of the tree, it stops here. As for me and my house, we're going to serve the Lord. It stops here. As for me and my house, we don't borrow money anymore.

Ever. For anything. Because you see, when you don't have any payments, it's fairly easy to build wealth. When you don't have any payments, your stress level goes almost to zero. When you don't have any payments, you're able to give and be generous and not even think about it. You don't have to worry when you're not broke about your generosity.

You're not making a choice between taking care of your own household first or being generous when you're not broke. You can do both. But it's an intentional act to not be broke. You can get broke by no fault of your own, or you can get broke like I did, a fault of your own. Sometimes things happen to you that are out of your control, and it's not your fault. Staying there, however, is your fault. Staying there would have been my fault. Staying there, however, is your fault. Staying there would have been my fault. But I said never again. Never again. Had our fifth grandchild born this week. Never again. He will not have that experience.

The only way he'll have that experience is if he misbehaves and gets cut out of the family fortune. Because he's going to be okay if he behaves. He's covered. And his brother and his sister and his two cousins, they're covered. Because I said never again. You can say never again. You can decide to change your family tree starting right now.

If you're sitting there like that lady who started the show off today from Idaho, she's so scared with $130,000 in debt and a $40,000 income and brand-new jobs, just got those jobs, and they're not even great jobs. And she's scared overwhelmed can't breathe if that's you it'll take you some time it'll be hard no discipline seems pleasant at the time but it yields a harvest of righteousness. But I will make you a promise. If you will live like no one else, I will show you how that by living like no one else, later you can live and give

like no one else. You can not only change your life, you can not only change your destiny, not only change the quality of your retirement personally, but you can change your entire family tree. And if you really want to think big, you can get yourself in a position to change your entire family tree. And if you really want to think big, you can get yourself in a position to change your community with your generosity and never miss a dime of it. What if you could give away millions of dollars a year? Could you do some good with that? There's a prerequisite to that.

You'd have to first have millions of dollars a year. Ta-da. Here's the trick. Anyone can do it. I don't care what your education level is. I don't care what your background is. I don't care where you come from, how your family acted. I don't care what your background is. I don't care where you come from, how your family acted. I don't care what your race is. I don't care. I have met people of every region, background,

race, education level that have turned this financial thing around by a sheer act of their will. Some get a head start based on the family they come from, the education that's provided them. Some get a head start based on their race. Some get a head start based on their sex. But just because you got a head start doesn't mean you can't run the race. Just because somebody else got a head start doesn't mean you can't run the race. Is it harder for some than others?

Yes. Some of us aren't as smart as some of you makes it harder when you're dumb but when you're dumb and you keep doing dumb things that's just stupid that's different than just not having the wrong material that just means i'm making bad choices so i don't know how you got there and I'm not blaming you for being there, but five years from now, if you're still there, that's your fault. Because I can show you how to get out. Step by step, I have shown millions, millions and millions of families

how to turn their financial life around, get out of debt, and be on the road to being millionaires. Meaning that you changed your family tree and you ensured your financial destiny for retirement. I know some of you are scared. Been there, done that. Got the t-shirt. Let's trade it for a different t-shirt. What do you down? Are you confused trying to navigate your options?

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She's here! Right here in Ramsey Solutions Lobby, Sarah's with us. Hi, Sarah. How are you? So much better than I deserve, Dave. Thank you. Well done, well done. Where are you from? College Station, Texas. Good. How much did you pay off? Just under $33,000.

Love it. How long did that take you? Three years and two months. Okay. Range of income during that time? For most of it, I was only making $26,000 a year as a newspaper reporter. Towards the end, $35,000. And then in the last month, I went up to $42,000. Wow. I also had a little side business where I made $11,000 last year.

Okay. Good for you. What was your side gig? YouTube, actually. I'm one of the crazy people on YouTube documenting their debt-free journeys. My channel's Budget Girl. It's all about you. You're famous.

I've seen you, yeah. Oh, wow. Yeah, very cool. I saw the Budget Girl thing pop up a while ago. Yeah, good for you. Well done. Fun, fun. And YouTube's making you a little money then.

It is. I like it. Yeah, it's pretty amazing, fun. And YouTube's making you a little money then. It is. I like it. Yeah, it's pretty amazing, actually. I just talk about getting out of debt and following your plan, and it's the day-to-day where you provide the framework, and I'm following it, and so many people are there. They want encouragement. They want accountability.

And we're on there every single day rooting for each other. Yeah, and you're inspiring people, so I'm glad you're making some money. Good for you. Well done. Good, good, good. What kind of debt was the $33,000? All student loans, though I do have to admit that I took out a little extra to live on during college because I was a special kind of idiot.

No, you were just like the rest of us. We've all done that dumb stuff. Way to go. So what's your degree in in school? Communications and journalism. Okay, cool. So your main gig is newspaper reporter. Well, for most of my debt-free journey, I was just at the very end.

I started working at Texas A&M as a communications specialist. Ah. Is that where you graduated from? No. I am actually a graduate of Mississippi University for Women. Gotcha. Okay. Very cool.

Well, good. So you're officially an Aggie now, though. I am University for Women. Gotcha. Okay. Very cool. Well, good. So you're officially an Aggie now, though. I am. Yeah, big time. Okay. Good for you. Well done. This is quite a journey here.

I mean, three years and two months you've been at this, making $26,000 when you started, and all the way up to now making $42,000. Side gig, side hustle. You've done it all well done yeah i delivered pizzas i a little bit of horse trading i did secret shopping i did dog training even though i wasn't qualified babysitting anything i could i was so mad at that debt. I love it. I did dog training even though I'm not qualified. I'm just thinking I'm not either, but I make the dog behave, so that counts, right? That's what I figured.

That's fabulous. So how did you start this journey? Well, I was working at a newspaper out of college, and I got laid off. And I hadn't been paying all my student loans in a couple of years since I had gotten out because I didn't think that I made enough. The government said I didn't have to pay and I didn't realize that my loans had shot up like five grand since I graduated and I was so scared, Dave. I didn't know how I was going to make rent. I didn't know how I was going to eat and I decided then and there, I'd already heard of you, that once I got a new job that I was never going to make rent. I didn't know how I was going to eat. And I decided then and there, I'd already heard of you, that once I got a new job,

that I was never going to be that scared again. I was going to get out of that debt. Good for you. Good for you. So a young single lady making 26 grand. Yeah, it is scary. It was terrifying. Yeah.

And so you got after it then. Fear will propel you. It'll move you, man. I mean, some of the best work I've ever done is when I was scared out of my mind. So very good job. Fun. So you've been telling people on YouTube, obviously, but I'm going to ask you again, what is the secret? What did you do?

What's the secret sauce? What did you do to get out of that? How do you tell people? What do you tell people when they say, how did you do? What's the secret sauce? What did you do to get out of debt? How do you tell people? What do you tell people when they say, how'd you do that? Three main components. The first is a budget. And it's this magical thing where if you make a plan for your money and then you actually follow that plan, your money does what you want it to do.

Wow. Which is so common sense, but I never thought of it before. And like you say all the time, making the person in the mirror mind you, and all of a sudden, everything's happening. The second is to have some sort of accountability. I started the YouTube channel because I knew that my friends and family would get so sick of me talking about it all the time. And I knew if that was going to be my main focus, that's all I was going to want to talk about. And so there are thousands and hundreds of thousands of people online on Instagram, on YouTube, on Facebook. There are all these communities out there.

Most are dedicated to you of people just rooting each other on in the day to day. And if you need motivation, it is there. There are people there who believe the same thing you do that will prop you up and keep you going. You brought some of your posse with you. Who's with you? I did. These are my friends from college, and they were there with me when I was getting into debt, and they supported me while I was getting out of debt, and they're here to celebrate

with me. So that's part of the cheerleading and the accountability. So that's two of the things. What's the third one? The third is to have kind of little rewards set up along the way. I went scorched earth, Dave. I didn't buy any clothes for three years. I didn't buy any home decor.

I didn't go out to eat. So for every $5,000 I paid off, I gave myself about $50 to do something nice with, to kind of mark the milestones along the way and remind me to keep pushing forward. $50 whole dollar. Yeah. Wow. Well, at the halfway mark, I spent like 200. Whoa.

Okay. All right. Wow. And so if I wanted something, I could say, if I still want it when I pay off another $5,000 of the debt, that'll be my reward. And it spurred me on like crazy. So that was one little secret of mine,

was to mark the milestones and really look forward to those. I bought this little ring when I only had $10,000 yet. It was like a $30 purchase. But every time I wear it, it reminds me that I'm winning and that I'm working towards something. Wow. You are powerful. Very well done. Very well done.

I love it. So what was the most encouraging thing that came from your YouTube audience? What somebody said to you in the comments or something you got back when you went, wow, that lifted me up. People tell me that, one, that they learned about you through my channel. Or two, that they figured out that they knew about you, but they didn't see how they could do it before I was showing my actual budget every month of what I made and where I put it and how much I was putting to debt. Cause people kept telling me I was crazy to do it at $26,000 a year. But I was showing my budget every single month saying, this is how much debt I have. This is

where all my money is going. And this is how much I'm paying off. And so they're encouraging me and celebrating with me. And so many of them, as they were paying off debt, they were saying like, you showed me that I could do it or you gave me inspiration to keep going. And if you can do it at $26,000, then I can do it at $80,000 or whatever they had. So that was- So how much of a breeze is it to live on 42 now with no debt?

Are you kidding? It's insane. It's like you're rich or something. I feel so rich. That's going to sound so weird. But yeah, I'm already 75% funded of BS3. In 20 minutes, yeah. Yeah, it's amazing to have my money my own again.

And I was so used to living on such a small percentage of my income. It was like less than 50%. I was, you know, just doing anything I could to cut an extra corner, you know, aside from like being unethical or anything. But it, I feel so wealthy now. I don't think it's an accident that most people's income goes up while they're doing this. In your case, I think it's particularly interesting. The way that, I mean, your income has doubled, basically, almost. I mean, this is so impressive. So impressive. Very, very, very well done. What was the hardest part for you?

Telling myself no. Every day. Every day for a long time. But every time I told myself no, I said, because you're going after something more important. And I actually... Was it worth it? So worth it.

If I had followed the government's payoff plan, I would be over 40 before I paid off my loans. I turned 30 on Tuesday. I have the rest of my life to do what I want with my money, to be fearless financially. I'm going to retire a millionaire because I started this program. You are. You definitely are. There's no question about that. I'm inspired. You're delightful. You are wonderful. This is fun. Well, we've definitely got the copy of the book to help

you. Chris Hogan's Retire Inspired. That is the next chapter in your story. I'm talking to a future millionaire right here. There's no doubt in anybody's mind watching this or listening to it that that's the case. Very well done. Alright, count it down. Let's hear your debt-free scream. Alright. Thank you so much, Dave. Three, two, one.

I'm debt-free! I'm debt free! Well done, kiddo. Well done. This is the Dave Ramsey Solutions, Tricia and Troy are with us from Pensacola, Florida, dropping by. Hey, guys, how are you? We're great. How are you? How are you doing, Dave?

Better than I deserve. How can we help? Well, I have a question about timeshares. We, I say unfortunately, purchased a small timeshare about three years ago, and then we went back in for a review and upgraded and made a second purchase. And they're both, one is like at a 6% interest, one is at a 12%. I would have a 6,000 and then a 20,000. And we just feel like we made a bad choice in that timeshare purchase and are kind of wondering do we try to sell it can you let it go back do we just pay it we're just kind of lost in that yeah it's your advice on timeshare i have been asked this question for 25 years because very few people

like their timeshares like 97 percent exactly dissatisfaction right and so it's a horrible product you can't and i can't find anybody to sell them. I mean, they've got these listing things. You could list them online, and you pay $200 to whatever or something, and they never do anything. They never sell. Some people give them away on eBay. They sell them for $2 just to get out of the, not the debt, but to get out of the maintenance fees. They'll kill you on top of the debt.

But on top of that, you guys have got substantial debt on these things. Debt and a really high maintenance fee yearly. Yeah. So we finally found a company a few years back that we started endorsing called Timeshare Exit Team. And you will pay them a pretty substantial fee up front. And it's 100% refundable if they don't get you out. But they have managed to work with the industry. And have figured out ways to get the industry to release you.

But it's several thousand dollars. But it's not $20,000. And at least you're out of the maintenance fees and you're out of the thing forever. And if they don't get you out, they do give you your money back, but they'll get you out. They're very good at what they do. And it's kind of a, we hesitated about actually endorsing them. They were buying a bunch of radio and stuff and contacted us. And we got to looking at it because everybody around that whole industry, it's kind of a scummy business you know and i was a little bit afraid that people getting out might be scummy too

you know but these guys aren't they're straight up they've come through entree leadership we've spent time with them they've been in my home the guys that own it uh they do a really really good job it takes a little while you know six months or more that kind of a thing it's going to cost a little money but i would recommend that that's the only way that kind of a thing, and it's going to cost a little money. But I would recommend that. That's the only way I know how to get you out is timeshareexitteam.com. Okay. And they're the only ones we endorse. Okay.

Yeah, we actually spoke with someone this morning at the timeshare, which we did not purchase anything else. And he said, oh, well, you can just let it go back. It doesn't ruin your credit. That's not true. I don't believe that. That doesn't ruin your credit. I don't believe that. That's not true. Okay, I didn't think so. I don't want financial advice from a timeshare salesman.

Exactly. I'm not thinking that's probably going to work. Because basically you've signed a note here. Right. And when you let it, it's a repossession. Yes. It is going to show up on your credit. They may or may not report it.

They may choose not to report it. That would be okay. But just let it go back. Yeah, right. they may choose not to report it that'd be okay but uh just let it go back yeah yeah right no i think we'll i think we'll do it right and make sure there's a bow on this package and everything's closed up real nice and tight here right so thanks for dropping by guys good to see you god bless all right eric is with us in flint michigan hi eric how are you hi there dave pleasure to speak with you you too what. What's up?

All right. Well, my question is here. We are on baby step two. We just started this in mid-December. We will have our last credit card paid off this week. Yay. And about $13,000 worth. So the only things we'll have left is our mortgage and two cars. Good.

My question is about PMI insurance. I still have about $5,000 I need to pay down on my mortgage to drop the PMI. Would I be smart to pay down that mortgage at $5,000 before I attack the cars so I can save that PMI insurance on a monthly basis? How much is your loan balance on your mortgage? Right now, about $52,000. Your PMI is not much. PMI is $56 a month. Yeah, about $52,000. Your PMI is not much. My PMI is $56 a month.

So $600 a year. And what's the balance on the cars? One car, we're at $9,500. The other is about $7,500. And your household income? It is about $90,000. Okay. No, I'll just go ahead and knock the cars out.

And then we'll get the PMI at your baby step six, which is basically you're doing four, five, and six at the same time. Fifteen percent of your income going into retirement is four. Five is kids' college, if that applies. And six is we're just going to – that'd be that extra $5,000 would be the first thing we'd do real quick and get rid of the PMI and then go from there. And just go ahead and continue.

The good news is you don't owe much on your house at all. You get the whole thing paid off fairly quick. But no, I'm going to go ahead and knock the cars out. That's going to change your cash flow much more dramatically, especially given how low a balance you have on your mortgage here. So, hey, good question, though. The good news is you have on your mortgage here. Hey, good question, though. The good news is you're paying attention, man.

You're getting after it. Well done, well done. David's with us in Concord, New Hampshire. Hey, David, how are you? I'm well. This is amazing. Good to talk to you, sir. I'm talking to Dave Ramsey, a legend. That and $5 to get you a cup of coffee, brother.

What can I do to help? So basically, I was really into you and your stuff several years back, and we got on a plan, and then I got away from it and kind of spiraled out of control. We ripped through our $10,000 emergency fund, and we were at $0. So I started to panic and got back on your plan and started doing it your way instead of my stupid way and um so i have a baby on the way yay and yeah and i have um about a little under $3,000 in debt. We're hoping that the tax return will be able to take care of it.

But I need to get a minivan now. Why? I'm trying to figure out, because I have three children. Okay. What kind of car have you got now? We have two Toyota Corollas. Okay. One one's paid off the other we owe eight hundred dollars so we'll probably owe six hundred by the time we get our tax insurance so we'll be able to pay that off so my plan according to your plan was to um to pay off the cars pay pay off all the debts,

and we'd have our $1,000 in our emergency fund. And then start keeping up as much cash as we possibly can to trade in her car, the newer car, and buy the minivan. Would that make sense? What is her car worth? Probably $2,200, the highest. Okay. All right.

And so your household income is what? $40,000. All right. And basically you're telling me with your tax return, you're going to pay off the cars and everything and be 100% debt-free. Is that right? Yes. And, baby, is due when?

In six months. Okay. All right. And so we've got six months to go from $1,000 up and trade cars, right? Yes. Okay. So you're going to be working a lot, like extra jobs and stuff, delivering pizza. Yeah, I already got an extra job.

Good, good. All right. I'm trying to find a third, but you also need time to work. Yeah, yeah, I hear you. Okay, so we're going to pile up cash as high as we can pile it. And, you know, what I would do is get right up until baby comes and let's just see how high we can get this and then try not to spend it all. Try to keep some in the emergency fund.

Yeah. And so that was my goal. Yeah. Let's, let's say you, let's say you save $10,000 and you sold her car for 2000 thousand and we put three thousand with it and bought a five thousand on a minivan and had five thousand in an emergency fund when baby comes home that that would feel pretty good okay yeah but that makes sense that'd be hard to do but if you could do something like that that i mean that would you would have pulled off a good one doing that i mean because you get a little bit better car than she's got now and a car that'll handle three kids, which the Corolla won't, three car seats.

And, you know, a $2,200 van is less than ideal. But I don't want you draining it down to zero with a brand-new baby either and used cars, old used cars like this. So let's make sure we hold some back for an emergency fund in the process as well. So, good question. Congratulations on number three on the way. This is the Dave Ramsey Show. This is James Childs, producer of the Dave Ramsey Show.

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