The Ramsey Show - App - Getting Your Spouse Onboard With the Plan (Hour 1)

Episode Date: March 4, 2019

The show about you

Live from the headquarters of Ramsey Solutions Broadcasting from the Dollar Car Rental Studio, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call. The phone number is 888-825-5225. Well, I discovered a couple of things over our last week of snow skiing. One is that your spirit does not get old as fast as your body.

Your spirit thinks it can do crap in your old body that it just can't do anymore. I didn't fall. I did slow down very intentionally. I used to ski at least my age, which is 58 miles an hour down the thing, and I backed off. I'm down in the 40s, just kind of cruising, just kind of taking it easy, 40 miles an hour is fast enough for a guy with no hair. So it's good.

And we had fun. We had fun. So thanks for letting us have a little time off. As I understand it, Rachel Cruz filled in for an hour solo. And according to social media, anyway, she was a big hit. So apparently this is in. Some of y'all were like wishing my early retirement. That was a little insulting.

I'm glad you were complimenting Rachel, but I don't want her to be too good too fast. I'll become less important faster than I wanted to. But you never know around here. Open phones here. If we're going to talk about you, the phone number is 888-825-5225. Cynthia is with us in Sioux Falls, South Dakota. Hi, Cynthia. Welcome to the Dave Ramsey Show.

Hi, Dave. I'm so honored to talk to you. You too. What's up in your world well i have made some stupid mistakes in life and as i was approaching 50 which i turned 50 this year i started to get really scared about retirement so i got very serious i did the your book and every dollar budget and i have 110000 in my 403B, which I saved while working before I knew about you. I have $100,000, and I started with $136,000 in debt, my own student loans, parent plus loans, and consumer debt. I have $42,000 left, so that will be gone this year.

Yay, you're killing it! Thank you. I'm hoping. I'm really looking for some encouragement here. So my salary is $135,000 a year, and I want some reinsurance from you that if you think I can still have a dignified retirement. I don't own a home, so I'll have to start at that square one. What do you think about that? You can have a dignified retirement. I think we'll have to qualify and discuss what dignified means. Okay. So let's run a couple of figures.

How long would you work making $135,000? Probably for another 20 years. Okay. At least making at least that much. Yeah, you probably get raises over the 20 years. But just to be conservative for a second here, if we said $135,000 and you save 15% of that, that would be $20,000 a year. Let's see here. Did something wrong. I've got to do it again because i messed it up in my calculator i won't put it in here give you real numbers because that's what i'm thinking out okay

135 000 15 is 20 000 and that is 1687 a month and we'll put that in and wait, wait. We're starting with $110,000 as our present value, and we're talking 20 years. And let's see what this is. I did it wrong. Dadgummit. All right, let me do it in my head because the stupid calculator is giving me a fit. You can use big numbers. Well, okay, 20 times 20. $20,000 a year for 20 years is $400,000, right?

Right. And you've already got $ 400,000, right? Right. And you've already got 100, right? Right. So that's a half a million, right? And in 20 years, it's going to double three times. Yeah, you're going to be dignified. You have over a million dollars. Okay.

You have over a million dollars. Assuming you're investing in good growth stock mutual funds inside Roth IRAs and 403Bs. Well, right now, I just have a 403B, and it's returning about 8%. It's poorly invested then. It should be returning better than 10% overall. Hopefully more like 12 if it's got good growth stock mutual funds. Okay, so here's my next question. So my whole entire career has been in higher education,

so all of my retirement funds are in TIAA. That's fun. CREF is fun. They've got good mutual funds in there. Just look for the good mutual. You need good growth stock mutual funds that fit the four that we're talking about. Depending on how robust your particular CREF offering is, but TIAA CREF's got some solid funds. They've got some that suck, but most every family does.

They've got some that are good and some that are bad. You just look for long-term track records in the four categories, growth, growth and income, aggressive growth, and international. If you average between 10 and 12 percent, if you had a million dollars, or you had a half a million dollars at zero percent, you'd have a million easy. You'd probably have a million and a half, not counting the purchase of your home. And that's a 20-year schedule.

And that's with no raises, and that's saving only 15% of your income. Which I think I could save more because this whole process in the last two. That's true. That's right. We've got to get a house paid for in this 20 years, too. And so that's our Baby Steps 6. So you're really working Baby Steps four and six, no kid college involved. Right. Through that earlier.

Yeah, that's behind you. And so for this 20-year period of time, you're putting 15% away and you're getting a house paid off, counting no raises. Now, bottom line is you'll get the house paid off in 15 years or less because you're listening to me. You're not taking out more than that. And you're going to get raises. So those two things change the curve on this a little bit. But the answer to your question, can you retire dignified, if you follow our baby steps precisely, you will retire with dignity.

Okay. I feel much better because I've been beating myself up for wasting so much time. So I'm just glad to be able to hear. Yeah. You know why the rearview mirror is smaller than the windshield? Because you're not supposed to spend as much time looking back as you do looking forward. Right. That's personal grace.

That's personal grace. If you're the only one that made mistakes with money, I wouldn't have much of a radio show. Well, I appreciate you very much. You really changed my life. Okay, now you go do the numbers that I just did on your own so that you do this not because Dave Ramsey said, but because you understand the numbers, okay? Right, yes. Good for you.

You're a good one. You're going to be all right. Open phones at 888-825-5225. Thanks for jumping in. We're glad you're here. Always an honor to talk to you folks. Dave, how do I figure out how much I'll need for the kids' college? Well, the college inflation rate's around 7% for the last 50 years, average annual.

Some years it goes up 20%. Some years it doesn't go up at all for three years, and then it goes up. But average annual is about 7%. And so you can look at your in-state college tuition and housing costs today and if you've got 10 years then you would add seven percent in per year and put that in a financial calculator like i was just attempting to do and i'll do it the commercial break because i'm dying to know what the real answer is to her numbers i just doing them in my head but anyway you do that and you can figure out, okay, a college that costs $12,000 a year tuition this year, 10 years from now at 7%, it's going to be whenever that comes out.

And that's going to tell you what your target is then. And so you have to save at a greater rate than 7% to even keep up with the increasing costs. And so that's why we recommend good growth stock mutual funds in your 529 or in your ESA, either one, that you control the options to. And you always pick good ones that are doing great, long track records. And get with a SmartVestor Pro and they'll help you do that. Click SmartVestor at DaveRamsey.com. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month.

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Hey, Dave, how are you? Better than I deserve. What's up? Amen. So I bought your book, The Total Money Makeover, in December of 2017. I read it in about a week, And then, you know, starting January of 2018, I was like, Hey babe, let's do this. And she was in line with me and we did. So for the last, I don't know, 14 months, we've been on it. Following your order, your principles verbatim,

the only thing I can't convince her to do, and I don't want to get into an argument with her. It was cut up the one credit card we have, which doesn't have a balance. I think she's just holding on to it for, like, security's sake. Okay. All right. Well, I think you're right, and I think you need to not think. Let's ask her. Why is it that you want to hold the card?

And that's not an intimidating, sarcastic question, okay? It's an honest question. We're just sitting here quietly going, help me understand, And that's not an intimidating, sarcastic question. Okay? It's an honest question. We're just sitting here quietly going, help me understand, because we're winning more than we've ever won with money. We've had a great year. And why is it you want to keep this particular card? Okay? Okay.

And if she says something like, well, I've had it since college. Well, it's not an old boyfriend. It's a card. Why do you want to keep the card? Okay, because I've had it since college is not a real reason, right? Although sometimes people give me that reason. I think you'll find it is one of two things. It almost always boils down to this. And I think you've already hit on it.

I think number one thing is it's a security blanket. If something goes wrong wrong i've got this okay and i think you'll find that okay and if you find that then i'll talk we'll talk about that a second the second thing that comes up is if her vote in the budget committee meeting her voice is not being heard because in your enthusiasm you're being overbearing she may be holding it as a power play because i've always got this option if big george turns the screws down too tight because he's a wee bit enthused about this dave crap okay so sometimes sometimes that one comes up and that's a valid thing too which you know, you know, the answer to that is obvious,

that her voice needs to be heard more. And if you find that out, that's a really healthy thing to find out, that you can adjust your approach to the budget committee meeting where her vote has an equal voice in the budget committee meeting. I don't think it's what it is. I think it's security. I think you already know your wife, and you've already guessed which one it is. So I think it's number one.

The way to solve that, is, okay, what amount of money in the emergency fund or what amount of years of us managing the money perfectly like we've been doing for a year would it take for you to feel comfortable cutting that up? Because at some point, you know, let's say you had a million dollars cash in your checking account. To hold a credit card for security would be absolutely asinine. Yeah. Okay, so then you can go backward from there and just go, is it $10,000? You know, I mean, you know, at what point? And she may just go, okay, well, once we've been managing money well for two years because we've got 20 years of sucking at it, then I'll just be comfortable and I'll cut it up and we got one year in and you go okay we have an agreement then at the end of

the year if we're still on track you're going to cut it up or she may say when we get the emergency fund to 20 000 i'll be willing to cut it up okay let me tell you what will happen if she says that and you get an agreement on that you say okay we're going to cut it up at 20 000 when we get the emergency fund there when you get to about 10 thousand she'll probably chop it because she's seeing things going the right way but you've got however many years of your marriage doing it wrong versus one year of doing it right and so you're rebuilding trust in yourself as well as in her as you guys are handling this money does that make sense that makes perfect sense thank you dave yeah so i i agree with you agree with you. It would not be a hill I would die on today, but I do want clarification on it. And I want an end date

based on a number. Some kind. Some objective measure. Not when I feel like it. That's just being childish. What is it you want from this, and what is it we can do to replace what you want so that you can do away with this thing. Okay. And I think it's going to be size of emergency fund. I think that's what it's going to be.

And, of course, we're in complete agreement. You're not using the stupid thing. You're getting out of debt, not in, and you said you're carrying a zero balance, but I wouldn't even have it out of the wallet. I'd just put it in the drawer, and you do all your transactions with debit cards, cash, and the occasional check and online transfer, but zero use of the credit card.

Now, that's non-negotiable. I will have a fight about that. We've got to stop using the stupid thing. It's a crutch, and so you've got to break that. Once you break that, then you say, okay, what do we replace it with? And is it security? Is it power? And let's replace it.

It almost always falls in one of those two categories. Mike is with us. Mike's in Boise, Idaho. Hi, Mike. How are you? I'm good. Thank you for taking my call. Sure.

What's up? So my wife and I were seven weeks into your FPU class, and we're doing the EveryDollar app, so we're really trying to get our finances in order. Great. We have a rental property that we're trying to decide if it makes sense to sell. So to give a little background, the rental property, we've rented it for 12 years. It's in Northern California. Up until about six months ago, we were in Southern California.

So now we're trying to figure out if we should sell this. Where did it come from? Did you used to live there? We did. Okay, so it's a rental property by default rather than by design, and it's in a different city. All of the rental property I own, I want within driving distance that I can get there within an hour, and currently all the rental property that I own is that because I want to go by and look at it ever so often and make sure that somebody hadn't torn it down or changed their Harley oil in my living room or something like that.

And so, you know, I don't do long-distance landlording at all. It's not been profitable. It's caused all kinds of problems. I know some people do resort stuff with a beach on the condo or the ski house or whatever, and that's fine if you want to do that. I might do that someday, but I haven't done that so far. And I still would have this weird desire to put cameras all over it to make sure that everything was not being torn down.

So anyway, I would sell it because of that, regardless of your financial situation. Even though we've had a property manager who's managed it and had pretty good luck? Yeah, you've had pretty good luck. I think that's the thing. It's long distance. I just, I wouldn't, if you didn't own it, you wouldn't go buy a rental property in Northern California when you live in Idaho. Correct. It would just be unnatural.

And so, unless you had some other agenda of some kind, it's just by default. So, I'm probably selling it. And if you don't need the money to get out of debt and other stuff, then I'm probably going to move the money into another rental property over in your area. If you like rentals. And obviously, you've not disliked them to an extreme level. That didn't come up in the conversation. So good question. Thank you for joining us.

Danielle's in Portland, Maine. Hi, Danielle. How are you? Hi, Dave. How are you? Better than I deserve. What's up? Oh, I'm in a mess. So my monthly expenses exceed my income by like almost a thousand dollars. Most of it is credit card debt and a personal loan. And I just don't

know where to start. Do I stop paying the credit cards to get caught up on everything else. What do you make? $47,000 annually. How much is your car payment? $365,000. How much do you owe on the car? $16,000. And you make $47,000 a year? Yes.

Ouch. $49,000 for the bonus. Yeah. Ouch. Well, that's a big chunk of it right there, isn't it? Yes. How much is your rent? My rent is only $400 because I have a roommate. Net of the roommate, yeah, okay.

I own the home myself. But net of the roommate? $800. Yeah, so, yeah, okay. All right, so you have a $400 and a $265, and you're making $4,000 a month take-home pay of $3,000, so that's used up $1,000. You got a bunch of credit card debt. Yes, I have $16,937 of credit card debt. What do you do for a living? I'm a financial consultant for an insurance company. Okay.

And I have a personal loan that the payment... To start with, on the short term, here's what we do. You look at selling the car, and you look at extra jobs to get your income up. And if you don't pay someone, it's a credit card company. But you take care of food, shelter, clothing, transportation, and utilities before you do anything. So your payment on your house, your payment on your car, food, shelter, clothing, transportation, and utilities before you do anything else. Then you start working to get your income up and get the way through the rest of this. Hold on.

I'm going to send you a copy of the Total Money Makeover. In the lobby of Ramsey Solutions, Dakota and Antoinette are with us. Hey, guys, how are you? Hey, Dave. How are you, Dave? Better than I deserve. Where do you all live? Dayton, Ohio. Oh, cool.

Welcome to Nashville. Thank you. All the way here to do a debt-free screen. Yes, sir. Good for you. And how much have you paid off? We paid off $45,000 in about 10 months. Good for you.

Way to go. And your range of income during that time? We started about $110,000 and up to $125,000. You got it. Good. What do you all do for a living? So I'm an electrical engineer in the Air Force. And I'm a chemical engineer.

I do water treatment sales. A couple of engineers. There we go. Great careers. Very cool. And you're in the Air Force currently. Yes, sir. Thank you for your service.

Thank you. What kind of debt was this $45,000? So $5,000 was my student loan. And then $15,000 was our Jeep, which was our first big purchase of being married. And then a $25,000 was our Jeep, which was our first big purchase of being married, and then a $25,000 career starter loan. So when we moved out here, we thought we needed more debt, so we took out a loan for $25,000. Oh, that's the military starter loan. Oh, yuck-o.

Yeah, they got us on that one. Yeah, that's no good. That was the big dog of the bunch, really, huh? Yep. Okay. So what happened 10 months ago? Well, it probably started at the beginning of our marriage. I was working and Dakota was still in school and I was making a decent income.

I was an engineer, but it felt like we were broke and we were making more money than it really felt like. Yeah. But we convinced ourselves that once Dakota graduated, we'd have another income and life would be good. But we just took on more debt. And so we felt the same so i drive a lot for my job and i was looking for a podcast to listen to and i made a post on facebook i think about five different people said oh we need to listen to dave ramsey and i was like whatever so i finally i i didn't have anything else to do. Well, you asked Facebook. That's what they told you.

So I was listening and about hour two, I was convinced. I was ready to go home and tell Dakota how we were going to sell his Jeep. And I was, yeah, I was all in. About hour three, you actually told a spouse how to discuss this with their spouse and not to tell them to sell their Jeep that they love. But I went home and I told Dakota, hey, I found this new thing. I think it's going to be great for us and this is what we need to do. He was hesitant. He didn't really believe me. That was not my type. I was very much the spender previously. And about a month later, we went on a long road trip and I slyly turned Dave Ramsey on and we listened to it all the way and about we came

home and pretty much started the plan and said the beginning of the year we were going to get rid of our debt full podcast immersion yeah there you go that's what does it all right i like it we went to fpu right after that and that's what started it so that gave you the tools but you had the motivation from listening to other people do their debt-free screams. Exactly, yeah. Starting to believe it could happen to you. Yes, sir. Yeah, very cool. How old are you two?

I'm going to turn 25 next month. And I'll be 25 in October. And you're debt-free. You guys are rock stars. Way to go, millennials. I love you. You're awesome. Proud of you.

Very, very cool. And you kicked it. I mean, you did forty five hundred dollars a month yeah ding ding did you sell the jeep no we still have the jeep busted through it okay no it was uh it's a good looking jeep my guys they showed pictures of it on youtube a second ago yeah yeah well it's being sold next week oh no a car seat doesn't really fit in the back oh okay so they were a lot. Time to move up for the family, huh?

Yeah, exactly. Well, congratulations. Thank you. Very cool. I love it. I love it. Good for y'all. Well, it's a good-looking car.

You'll get another one. You've got plenty of time and lots of things you can do now that you've learned how to control money. Okay, so you're in Financial Peace University. You're listening on the podcast, and you're actually doing it so when someone says how did you do that what do you tell them the key that you learned from financial peace to get out of debt is um well i think my biggest my biggest key was the accountability part so being accountability for each other and for ourselves of course is like a big thing making sure that we were living this way where we were just spending money and telling ourselves, no, we're going to change that way.

And actually now at our church, in Fair Creek Church, we are now helping out with the FPU class right now. Oh, thanks. Even now that we're debt-free, we're still staying accountable. We're going to these classes, and we're keeping ourselves accountable in that way. So that's good. That's good. Very strong. ourselves accountable in that way so that's good very strong i would say uh like dreaming in hd i the whole reason i really got interested was dakota told me i couldn't go on the

several vacations i wanted to in the next that following year and continually having short-term and long-term discussions um really on a weekly and daily basis of, hey, we want a retirement at this age, or we want to go to this destination in five years. That made it really easy to say no to the pedicures and massages that I was very much missing. Well, I understand. That's good. Well, you say no so you can say yes. Yeah, and then exactly. So after we were debt-free, we went to Disney World,

and we did the vacation that we always wanted. That's fun. Yeah. Cool, and then take the kids back someday, huh? Exactly. Very good. Well, congratulations, you guys. You've lived like no one else.

Now you're ready to live and give like no one else. You've got a bright future ahead of you, $125,000 income with no debt, and more importantly, you know how to control money, and you know how to work together to achieve a big goal. These are huge things. If you can learn that at 25 instead of 55, it's pretty much an insurance policy of building wealth. So well done, you two. Thank you.

Excellent, excellent job. We've got a copy of Chris Hogan's book for you, Everyday Millionaires, which will outline what you're going to be next very soon. You're going to be an everyday millionaire. You're on your way. So well done. Probably by 32 or 33. Yeah, our goal is, that was what we were thinking. There you go.

You dialed it up. Good, I like it. We're engineers. You're ahead of me. Well, we'll give you a copy of the book to make sure it happens just for you. Dakota and Antoinette, Dayton, Ohio, $45,000 paid off in 10 months, making $110,000 to $125,000. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! I love it. I love it, I love it, I love it. I love hearing your all stories. My team here loves hearing your stories. We are huge fans of our fans here. We love it when you're 62 years old and you got out of debt and you're now an everyday millionaire.

We love it when you're a single mom and you've scratched and fought your way through this. We love it when tragedy has hit your home and you have persevered through that and have still gotten control of the money in spite of that. And we don't love the tragedy, but we love your persevering spirit. We love, love, love millennials coming on here and doing their debt-free scream, because it absolutely screams literally in the face of the culture that the millennials are not a deadbeat generation. There are many, many, many of them that are very goal-oriented and that can accomplish anything. And this is what I believe about you if you're a millennial. I may believe more about you than you do about yourself because I've got the evidence.

And some of you are just living in the poop right now. You're scratching your way through this student loan debt mess you made or you're scratching your way through whatever mess you made. And, you know, you're thinking you can't win, and yet every single day here on this show, we talk to someone in their 20s, early 30s, who has completely turned it around. Completely turned it around. I mean, did you hear him? They have calculated out, this is not a pipe dream, they have calculated out that as an engineer, and as an engineer in the Air Force,

they should be millionaires before they're 35 years old. They're 25 now. They calculated it out. They figured it out. They thought through it. You don't win by accident. No one accidentally wins the Super Bowl. What happened?

It's not an accident. No one accidentally has a world-class marriage. No one accidentally gets in good physical condition. No one accidentally builds wealth. It's always a series of intentional actions that are proven processes that get you the result you want. The Bible says, as you sow, so shall you reap. What you plant is what's going to grow in your life. And reality TV is probably not on the list of things you want to plant.

Maybe you need to sit down and talk like adults about adult things instead of entertaining your brain into mush and actually intentionally taking the steps to win. You can do this. I know it for you more than some of you know it for yourselves. I believe in you. This is the Dave Ramsey Show. We'll be right back. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure or pick the wrong color, they will remake your blinds for free.

You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSEY to get the best possible deal. Rules and restrictions apply. Today's question is from Alicia in Kentucky. Is it okay to have your three to six months emergency fund in a Roth IRA? No. Your emergency fund is not an investment. Your investments are not emergency funds.

You do not want to use your retirement funds as your emergency fund. I understand that technically you can pull the money out. It's not a technical issue. The problem is your habit patterns and the way you view the money. You need a rainy day fund that is earmarked to be used for nothing except rainy days. It does not make you any money. But insurance doesn't make you money. Insurance costs you money to protect the things that go up in value.

And so quit trying to find a way to shortcut everything and lay out basic foundational financial planning principles. You need a rainy day fund of three to six months of expenses, not invested, parked in a simple money market account, earning almost nothing. It absolutely sucks. It is not there to make you rich. It's there to protect the It is not there to make you rich. It's there to protect the things that are going to make you rich. Like Roth IRAs that you're getting ready to cash out to fix the transmission in your stupid car.

And now you don't have a retirement. That's dumb. No, we're not going to do that. We're going to leave the things alone that make us wealth, and we're going to put up fences around them to protect them, and that's called insurance. One type of insurance is your emergency fund. Not an investment.

Insurance. Investments make you money. Insurance costs you money to protect assets. Defense and offense are how you win games. You don't win games only on offense. If I could win games only on offense, I could have out-earned my stupidity, and I tried it for years. I can make money like nobody's business.

I've always been able to make money. It was the keeping it part that was killing me, and that's how I went broke. Most of you listening to this make a ton of money but you're broke and that's just because all you think you think i'm going to keep making more if i just get another raise and we get a 500 a month raise we go get a 600 car payment to celebrate dumber than a rock and people do it every day every day and you're making 85 000 or 185 000 a year and you're freaking broke no you have to play defense and you have to play offense you put the proper kinds of basic insurance in place homeowners car auto auto insurance those kinds of things you put an umbrella policy in place if you're

starting to build a little wealth and you're getting up close to your millionaire status, your everyday millionaire status. You put basic life insurance in place, eight to ten times your income on you to protect your family from the loss of your income until you have so much money that they don't care if they lost your income. That's called self-insured at that point. You put the basic insurances in place, and one of the basic insurances is not technically insurance, but it's grandma's rainy day fund. You know why grandma said you needed a rainy day fund? Because grandma was old.

Grandma seen stuff come at her she didn't think was going to come, called life. She had seen it rain and she knew you needed an umbrella i'm getting old i've seen every possible stupid human trick i think that people can do to get themselves in a in a pinch and i gotta tell you it changes everything when your heat and air goes out and you've got some money set aside. It turns a crisis into an inconvenience. But if you've got to freaking cash out your 401K to put a heat and air unit on your house, I mean, you're off IRA? That's just suicide.

You just shot yourself in the foot. You're going to walk with a financial limp now. Don't do that. Scott's with us in Atlanta, Georgia. Hey, Scott, welcome to the Dave Ramsey Show. Hello, Dave. It's a pleasure to speak with you. You too.

What's up? So my credit union is running a mortgage sale, which I've never heard of before, but it's for real. I called to check. And they're giving 0.85% off the top of whatever their rates are right now. We were not necessarily in the market to refinance, but I'm thinking that it might be a good idea. I just don't know if the numbers really add up the way I think they do. Okay, let's work it through. So 0.85% off of what?

Off of whatever their published rates are. Are their published rates 0.85 off of what uh off of whatever their uh published rates are so are their published rates 0.85 above market but they're not so uh what i'm being offered is that i could uh i could get myself into a three percent conventional uh for on a 15 year fixed fixed ding. That's legit. Right. Okay, I'll bite. How about the closing costs? Five grand. Okay. What's your loan balance? Right now, it's $326,000 and change.

Okay, that's not bad at all. And what's your value? It's worth about $390,000 as of today. All right, good. and your current your current interest rate is what i was just getting there oh 3.875 and we're on a 30-year fix but it's an fha and we're paying pmi on it oh okay so you're gonna say pmi and 875 right okay so you're probably gonna save about a point and a half probably about about.75 on the PMI, roughly. Well, I'm not quite at 20% equity, but if I move into a conventional, I know I can get rid of the PMI not too far down the line.

Okay, so they're going to charge you PMI on the new one. Right. So the future of getting rid of it plus about a.875. So 1% savings is $3,200, right? $3,260 a year. That's about what I came up with, yeah. And so your break-even point on a $5,000 refinance cost is a little under two years. Agreed?

Yes, I agree. Yeah, I'm doing this. If you're staying in the house, are you staying in the house? Oh, we're staying in the house. We're not going anywhere. I'm never moving again. Famous last words, but yeah. But anyway, yeah, I mean, if you think you're going to be there five years or longer, it's a no-brainer to do this, yes.

Yeah, for sure, and I do intend to pay it off within about six or seven years. Okay. So I'm just going to... Well, you're saving... If you paid it off in six years and it takes you two years to break even, your savings is four years of three grand. So we're talking about a $12,000 discussion here. Mm-hmm. So it's not life-changing, but it is helpful.

It's helpful, and I just needed your blessing on it because my wife knows that everything that you say goes in the house. Well, I'm honored, but it's not about me we did the numbers together here brother it's a numbers transaction so if you're going to pay it off in three years i wouldn't bother there's not a chance i know but if you're going to pay it off in six plus years you're going to save twelve thousand dollars seven years fifteen thousand dollars eight years at eighteen thousand dollars this is what your savings looks like right plus or minus the dropping of the pmi when You're going to save $12,000, seven years $15,000, eight years at $18,000. This is what your savings looks like. Right. Plus or minus the dropping of the PMI whenever you got to do that. Which should be within the next year or so.

Okay. Then that adds to the calculation even faster or adds to the savings. So you're going to save between $10,000 and $20,000 roughly in this transaction. It's probably not going to completely change your life, but the fact that you're looking at it, you're asking the question, you're thinking, how do I do the math here? You were doing it properly before you got to me. All of that is life-changing.

That's what says you're going to be on track to win. So I'm proud of you, definitely. I would refinance that if I were you. Yeah, just for the fun of it. Just to get out of the land of PMI, because I just hate it. It's so stinky, but I'm not going to lose money to get out of it. I'm just going to have to push my emotions to the side. But yeah, I'd definitely refinance that.

For those of you who don't know, PMI stands for Private Mortgage Insurance, which is required on a loan that you don't have at least a 20% equity position in, meaning your loan was more than an 80% loan. And in that case, they charge you about $75 a month per $100,000 borrowed. So about $225 a month for him is going out the door in PMI, and he's talking about getting rid of that. See, that's another, what, almost $3,000 a year in this discussion. So it's lovely to get rid of PMI.

And it gives you nothing except insurance for them. This is the Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.