The Ramsey Show - App - Having a "Why" Helps Remove Stress From Your Life (Hour 2)

Episode Date: December 9, 2019

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and a paid-off home mortgage has taken the place of the BMW as the status symbol of choice.

I'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-825-5225. That's 888-825-5225. Lauren is with us in Kansas. Hey, Lauren, welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call and for your ministry. Well, thank you. How can I help? Well, my husband and I, we are in baby step number four. We have no debt except for a mortgage on our house in the city, and we have a loan on 62 acres just outside the city.

We have been saving like crazy to build a house on these 62 acres without taking out a loan. My question to you is how much would you recommend us spending on this house? Would you recommend us spending all that we have saved except for our emergency fund or leaving some money to be able to invest in stocks or cattle or another avenue. What's your household income? Our household income is about $150,000 per year. And how much are you talking about saving to build with? I'm sorry. So if we were to build kind of closer to our dream house, we would be thinking about $300,000 to $350,000.

And how much do you have saved so far we have 430 000 saved so far so why haven't you broken ground um trying to put plans together and trying to decide on how much money could put towards it Oh, okay. Way to go. Wow. How old are you guys? My husband is 31, and I am 27. You're amazing. Well done. And is the land paid for? No, we have a loan on the land. We have a loan for $190,000 left in the land, and then we have a house loan with $160,000 left. On your home that you're living in today.

Yes, that we would sell and hopefully then pay off the farm as well. And it would bring enough, you think it would bring you $190,000 into your pocket? Close to that. So we are hoping to spend a little bit less on building the house so that we would be completely debt free at the end of this process. Yeah. Okay. So you're talking about a budget of, well, you've got one more time. You've got 400 and what saved? We have about 430,000 saved. And your dream house is 350? Yes. Why wouldn't you build your dream house? 80,000?

What's the equity in your current home? What's your home worth? So our home is worth about $300,000, and we have left on the home loan $160,000. And we're still trying to leave that three to six month, which for my husband and I is about $50,000, we would like to keep in savings and not spend that. Well, you got that. $430,000 minus $350,000 is $80,000. So our question is whether or not we should spend everything to get to that? Yes.

Build your dream house. Okay. Because here's the thing. By the time you get it finished, it will no longer be your dream house. No one keeps the same dreams unless you're dead. So this idea that you're going to build a forever house is mythology. You will never live, very, very few people live their entire lives in one house. It's highly statistically unlikely. Your life will change, and you will change. The kids will grow up, the grandkids

will come along, The dogs will die. The kitties will run off. All this kind of stuff. It happens, right? And, you know, what you call a dream house will change. Suddenly it will be a two-bedroom bungalow on the beach somewhere or in the mountains or something, right? And you'll be 70.

It will happen in an eye blink. So enjoy this. You've done a wonderful job. You're not only going to pay cash for the build you're going to pay off the land when you move into the build and your house sells i love this okay and there's nothing to say that with no house payments anywhere that you two wild animal savers you save like maniacs are not going to be able to save enough to build up and do some work on the farm and put some cattle on the farm and do all that.

You'll be able to do all of that with no house payments. Okay. Won't you? Got it, Dave. I think so. You cash flowed all this. This was not an inheritance, right? No, this was cash flowed all of this.

Okay. Yes. And so how long does it take you to do it again with no house payment? Not any time at all. You're not even 30. Right? Correct. Okay.

Here's the problem. Sometimes, I think I am hearing that both of you are excellent savers. Both of you. Yes, that is correct. Sometimes savers have trouble enjoying their money. And sometimes you need someone like me to say, we're living like no one else, so later we can live and give like no one else. You have paid the price.

You paid for the ticket. Go to the show. You have paid the price. You paid for the ticket. Go to the show. Okay? Will do. Thank you, Dave. You've done great. I'm proud of you. Absolutely amazing.

Wow. Wow. Crazy good stuff. Open phones at 888-825-5225. Adam is with us. Adam's in Michigan. Hi, Adam. How are you? Doing well, Dave. How are you? Better than I deserve. What's your question, sir? My wife's brother is getting a new car and wants to gift his existing car to my wife and I,

and I don't know which car to replace, mine or my wife's. Mine is newer, and I owe about $12,000 on it. My wife's is older and has about 200,000 miles on it. So I don't know if we'll replace the old car that's got a bunch of miles or replace the newer car. About $80,000. How much other debt do you have, not counting your house? Including this car, about $40,000. So $12,000 of it is the car. And the old $200,000 car would sell for what, a couple grand?

Maybe, yeah. And you throw that into your debt snowball, right? Yeah. And what's the car worth that Brother's giving you guys? I don't know exactly. I haven't looked it up. I'd tag it between five and ten. Okay.

And the $12,000 debt car, what is it? It's a Mercedes C-Class. Who drives that? I do. Do you like it? I'm still kind of guilty about it. I love it. I wouldn't feel guilty about it.

It's a great car. That little C-Class is a fabulous vehicle. I wouldn't feel a bit guilty about it, other than you need to get it freaking paid off like the rest of that debt, right? But it's not like you owe $42,000 on it and you make $80,000. You owe $12,000 on it. Yeah. And you've got $40,000 minus the $2,000 junker that sells. I'm selling the junker and keeping the C-Class.

Okay. But you've got to knock all this debt out now in less than two years, okay? Okay. If you'll cut your lifestyle, quit going out to eat and traveling and get your stinking mess cleaned up, then you keep the car. But if you're going to screw around and take three years and kind of try to wander out of this or something, then, no, you need to sell everything because you ain't got the ticket yet. You you need to sell everything. Because you ain't got the ticket yet.

You ain't got the message yet. You ain't got the memo yet. But if you got the memo, it sounds like you do because you're asking which car to sell. So I think you're on track. You can do this, man. You can do it. Call me back when you're debt-free. We'll do your debt-free scream.

This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated.

And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282. Merry Christmas, America. We're so glad you're here. Our question of the day comes from Blinds.com.

They have a 100% satisfaction guarantee that means even if you mismeasure or you pick the wrong color, they will remake your window blinds for free. You get free samples, free shipping while you're working with them, and they have new promos all the time, so check out and use the promo code RAMSEY and you get a good deal. Today's question is from Maria in Connecticut. I have an $86,000 parent plus student loan and have decided to refinance.

The loan is currently broken down to three sums, each with a 7.9% interest rate. Since it's in my father's name, should I have him consolidate and refinance it or do I follow my instinct and refinance through a private lender putting everything under my name? Well, Maria, you don't have a Parent PLUS loan. Your father does. If you are wanting to assume the obligation or the agreement has been between you and your dad from day one

that you're going to take on the obligation, then you might as well put it under your name. Doesn't hurt a thing, especially if you're getting a cheaper interest rate than the 7.9. I think you may struggle to refinance a loan that is not in your name. That's not a refinance. That's a finance. You're financing a new $86,000 loan because this loan doesn't have your name on it, kiddo. It's got your dad's name on it. That's why it's called Parent Plus.

And so I'm not sure this is going to go down the way you think it is. I hope it does. But if you want to simply move it to your name and it's at a cheaper interest rate and it's a loan that you have morally obligated yourself to and financially can take on and intend to take on, then sure. There's no reason not to put it into your name. And that gets it, of course, off your dad's back, which was probably, based on reading between the lines,

that's probably your all's intent from day one. Folks, if you're starting to panic about getting some of your shopping done by Christmas, it's sneaking up on it, you know. Did you miss out on Black Friday or Cyber Week Monday, Cyber Monday week? Cyber Monday lasts the whole week. I've still not figured this out. Well, you're in luck. We have another one coming up. Green Monday is here. Good God. Why don't we just say it's the Christmas season and everything's freaking on sale forever instead of coming up with different colored days? This is like rainbow season or something.

All right, so Green Monday is one of the biggest online shopping days in December. It's also known as Cyber Monday, too. And right now in the online store at DaveRamsey.com, you can continue to get the great deals on our new stuff, our exclusive bundles. We put up a new bundle this week. It's pretty cool. And $10 books. People buy these books like by the case makes great stocking stuffers you can buy number one best-selling books for 10 bucks each

all over our site right now including the total money makeover including the average the everyday millionaires including all this stuff financial peace universities at a deal check it all out at DaveRamsey.com or call the Ramsey concierge team at 888-22-PEACE, 888-227-3223. Brad's with us in Tennessee. Merry Christmas, Brad. How can we help? Hi, Dave. Merry Christmas to you, too.

Thank you so much for taking my call. Sure. What's up? Okay. My wife and I are currently in the middle of baby step two and earlier this year um i was medically retired from the military so i'm receiving a pretty good amount of my retirement and we signed up for the survivor benefit program for military spouse and children and my question is did i make a big mistake signing up for this and can that kind of replace the term life insurance policy. It doesn't matter if you made a mistake, you did it.

Well, they said after two years we can opt out of it. We have exactly two years we have the option, so we're kind of trying to find out. What is the nature of your medical problem? It's a mental health problem. Okay. How are you doing? I'm good. The wife, you know, has to deal with it, but she's very wonderful and loving.

I'm doing great. She's now struggling with my mental health problem. That's funny, dude. So, what, PTSD, or what are you dealing with? PTSD, yeah, from Afghanistan. Yeah. Thank you for your service, man. Thank you.

I'm sorry what you had to come home with. All right, so all joking around and stuff aside, are you seeing someone either through the VA or otherwise to continue to get better? Oh, yes, absolutely. The VA is what brought me to realize it wasn't depression and being a jerk. It was an actual issue. Yeah, okay. But, I mean, and you're continuing to, you're seeing improvement.

Yes, sir. But you will get the medical discharge the rest of your life regardless, right? It should be, yes. They say 99.999%. It changes from temporary because they can't separate you with a mental illness and just let you go. They've got to send you to some appointments to make sure you're okay. Yeah, yeah, okay.

Well, and what I want to do is I want to make sure you're okay. That's a big thing for your sake more than what their program is, and then I don't want them to drop this at some point. But it sounds like, as I understand it, it's permanent once you're permanently discharged for whatever reason under that they don't come back and revisit and go oh you're feeling much better now they don't do that so given that and given that this is not a a medical health issue that's going to cause you to die early

um i would not take the survivor benefit. Instead, I would take the higher income. Okay. It's about $150 per payment per month. It goes up over the years. Yeah, $1,800 a year more that you would take in. And then I would just go about my life and say that's my income. In addition to that, I have the income of my new career that you should be embarking upon. I assume you have, right?

Oh, yeah. I'm in the IT field. Wonderful. Wonderful. Okay. And so you and your wife, and, you know, then I would just get life insurance on you. I get life insurance on her, which I would have done anyway, even if this wasn't the issue, right? But all it amounts to is we just increased your income.

That's all we did. Because you're very likely, this is not, now, here's the formula, okay? The formula is if you had some kind of illness that you had contracted that was going to be terminal and you might only live three years, you would be better off to take the survivor mathematically. Okay. Because she's going to get money because you're not going to to take the survivor mathematically. Okay. Because she's going to get money because you're not going to make it, you know. But in this case, you're going to make it mathematically,

so you're going to be around a long time. And so I want you to get that $150 extra plus cost of living adjustments extra for the rest of your life. And in return, you guys go on and build wealth and have an emergency fund and have your term life insurance in place in case something else happens to you, like a car wreck or something like that your family's taking care of, right? But you need that life insurance anyway. And mathematically, you're going to come out a whole lot better off if you go that route.

So if you still are in the window where you have the ability to undo it, I would sit down and make sure I get the proper amount of term life insurance in place across the board. I'm assuming you are in a pretty good place mentally, and that physically you're in a very good place. And so you're going to be around a while. That's the mathematical assumption I'm making in order to make this suggestion. Then I would undo that and I would not take the survivor benefit. I would instead do my normal wealth building by term insurance

and go about the normal process that we use in the baby steps. So, hey, good question. Again, thank you. Thank you very much for your service. And do get better, please, sir. Please continue to do the work. Emotional work's very hard work, and especially when you've been through what some of you guys and gals have been through, that do the work of keeping this world safe, and we appreciate you. Open phones at 888-825-5225. Thank you for joining us.

I have never experienced something like that. I've never been in combat. I can't even imagine what it does to your spirit. I've been in a lot of fights, so to speak, but nothing like that. And just the trauma just dealing with stress in general in a perfectly safe corporate environment can bring on someone. It doesn't even compare. And so those of us out here that have not served in combat, we owe a huge debt of gratitude to men and women like that. And you don't do anything

but respect them. This is the Dave Ramsey Show. Thank you. In the lobby of Ramsey Solutions, RC and Amanda are with us. Hey, guys. How are you? Hi, Dave. How are you? Merry Christmas. Where do you guys live? St. Louis, Missouri.

Awesome. Good to have you. And here to do a debt-free scream. We are. How much have you paid off? We paid off $354,600. I love it. And how long did this take you?

32 months. Wow. And your range of income during that time? Hovered around the $200,000 to $210,000 range. Okay. And what do you guys do for a living? I'm a manager of a communications team. And I work in pediatric oncology clinical trials.

Oh, wow. Okay. Cool. Good for you guys. So what kind of debt was this clinical trials. Oh, wow. Okay, cool. Good for you guys. So what kind of debt was this $355,000? All sorts of things. We had a personal loan. We had iPhones and iPads financed.

We had cars, student loans. But our houses were part of that as well. You paid off your house? We did. All right. Looking at weird people. Proudly, those are officially weird yes a paid four house how old are you two i just turned 38 40 i love it and a paid four house what's this house

worth a little over 200 000 wow and how much of the 355 was your mortgage well the how our primary residence about 135 we also had a condo from when we got married. We both had our separate residences. And so we sold that one. That was about $135,000. I think we got $117,000 for the house. Okay. All right. And so that got rid of $355,000 of it was by selling $130,000 of it.

Okay. All right. Cool. Good for you guys. And how much was your student loans? I don't remember. I think it was around about $40,000. But you did all of this in two and a half years, basically. And how much was your student loans? I don't remember. I think it was around about $40,000.

But you did all of this in two and a half years, basically. Yes. Yeah. Wow. Wow. How long have you all been married? Three years. Oh, there we go. That time period.

Yeah. So we got married and said game on. Right away. So tell me the story. What happened? Well, it actually started a little bit before we even met, in my case. There was a little bit of turnover at my job, and it looked like I took a closer look at my finances and realized that if something really happened, I really wasn't in good financial footing.

So I had been familiar with financial peace for some time, fully bought in, got all the way to step six, met the most amazing woman, convinced her to marry me, and realized that what I'd done before was training to lead us through it. Ah, very good. Okay. So, amazing woman, how did he convince you to do this? Well, while we were dating, he was going to be leading the class at a local church. Oh, that's bad.

Marrying a coordinator. Oh, man. Yeah, so he asked me if I would do this with him. It was really important to him, and I definitely wanted to do it, but I also was a little worried that he was going to be like, um, never mind, I think I'll just move on. Oh, you thought it might be a disqualifier. I was sort of worried, like in a joking way. But yeah, that lesson where you have to write down all of your debt and share it with your group. I was like, okay, well, thank you for everything.

But he didn't bat an eye, and we just basically came up with a plan on how we were going to tackle it together once we got married. And you did fast, really fast. Yes. That's amazing. Okay, so you kind of had this dialed in as a coordinator. You've been, had, you know, a little bit of history. As you said, you'd been training for this next round. And you looked up, and who had the condo that we sold it was your condo so you sold the condo and applied to your house or did you buy the house after you got married we both i own the house

and she owned the condo before we got married right um we sold the condo we retired most of the mortgage but we're actually upside down on it so we had to make up a gap there as well oh you sold that house we sold the condo we still have the house right it, so we had to make up a gap there as well. Oh, you sold that house? We sold the condo. We still have the house. Right, I got you. But you had to pay off everything. So that house was paid off, too? Yes.

That's what I thought. Okay. 100% of everything. Everything. I thought I understood it. I'm just making sure that I've got the process right. Good. Good for you guys.

So the coordinator knows these answers. He's been telling everybody for years, Amanda. So what do you tell people, Amanda, that the key to getting out of debt is? You did it as a newly married couple. Very impressive. Yes. I would say the budget is key and communication is key. Just I think the class was so helpful for us to be on the same page before we got married

so that we didn't have any of those issues once we did get married. And I think just those lessons and those fundamentals that you learn were so helpful as we walked this road. It wasn't always easy, but I think just knowing each month we were going to set a budget, work through it together. I'm definitely the free spirit. So he would make the budget. I would then finalize it and approve it. And then just communicating when things didn't feel right or something needed to happen. We just, we knew how to talk through it. So I think just really approaching it as a team is key. Yeah.

If you ask Sharon Ramsey what the key is, she says, always says communication. Yes. That's her number one thing. She always says that because that's what happened to us. Our experience was that once we started working on money together, it drew us closer on everything together. And you guys did that as the first order of business when you got married. It's huge. So, Amanda, when you're going into this class, I mean, you're kind of half joking.

This guy's going to, he's a little nerdy about all this stuff. This may freak him out. He may exit. He may hit the eject button or something here. All joking aside, though, once you got down into the class and you got that part behind you, what was it that kind of caught you off guard and you said, wow, I never thought of that? I think in one of the lessons you have your budget and you basically say it's usually upside down is your problem. And I was doing a lot of the things I wanted to do before I did the things I needed to do, and that's how I kept getting further into the messes I was in.

And I think that was helpful in just knowing I always wanted to get out of that, and I would try, but I didn't have the tools. And so I think the classes are just so clear and so organized that it made sense. And I think just working through it with RC, it just clicked. So, and knowing it wasn't just my finances anymore in my life, it was going to be our life. I didn't want to continue those patterns. That's really insightful. I like that phrase. I was doing things I wanted to do before I was doing things I needed to do. And that was causing the mess. That is a really good line. That's really insightful. That says you got this nailed.

Very, very good. Outside of the class, who were your biggest, and outside the two of you, who were your biggest cheerleaders? Our families. Okay, very good. Very good. And you pointed, they came with you. They did. You got your posse with you. Yes, we do. Yes. Your own cheering section. Yes. As you should. That'll be proud'll be proud of you very very good what was the hardest part for you guys i think saying no a lot of the time um that was hard for me and just knowing we had some limits but i did find the budget was freeing but it was just knowing that we really did have to stick to that yeah i think just that was hard at times. R.C., you kind of had this stuff all dialed in,

and you kind of got the nerd thing going like me anyway on top of that, and that makes you like a super nerd when you got it dialed in, right? Yep, probably. How many times did you mess up and, like, overstep? Like, you already knew all this stuff, and she's just learning it, and you've given her no grace to come along and catch up to where you were. Certainly frequent in the early going. Because I've been, one of it, I was just so used to doing it my own way.

And you know what to do. Exactly. I know what to do. Why don't you know what to do? I mean, that's where I would always step in. And Sharon would be going, shut up. You know, it's like we get in a big fight. Oh, exactly.

There were tears sometimes. But we always come back like Amanda said we come back and we would talk about it we would um see what one side or the other had missed there were plenty of times where I would have the budget and I would have it wound incredibly tight so we can just move as forward as fast as we could and realizing we needed to pause a little bit to make sure that we were having a livable budget. That's why God sent her to you. Absolutely. Absolutely.

Make sure you have a life. Yes. In the middle of all these numbers. Yeah. Yeah. That's very good. Very good, you guys. It's very insightful because what happens is everybody always says, oh, communication

and doing the budget, and that's how we get out of debt. That's the key. But what we don't talk about enough is that that does involve some arguments. It does involve some people being on one page, other ones on the other page. But the beauty of this is it forces you to work through it. And it forces a thing to happen in your marriage that's really positive. Yeah. And one of the big things I think was helpful for us, too, is having a why behind doing that.

It wasn't just seeing numbers go down in our accounts or on a page. This was something that started to take stress away. And we can really start to notice that, that we were doing this stuff to get ourselves on good financial footing. And then later on, it was, okay, it's not just saving for retirement. It's trying to push forward and make sure that we're going to be secure in our financial future. All right. Let's count it down. R.C. and Amanda from St. Louis, $355,000 paid off in 32 months, debt-free, house and everything. Count it down. Let's hear your debt-free scream. Three, two, one.

We're debt-free! Woo! Yeah! This is how it's done, baby. Yeah. If you're listening today, there's a reason you're listening. It's because you're next. This is how it's done, baby Yeah If you're listening today There's a reason you're listening It's because you're next

Come on, baby You can do it thanks for joining us america every single day at ramsey solutions our team gets to do work that leads to real people really changing their lives by dealing with real problems and real solutions. This team is really sharp, and they care deeply about our mission. We're looking for people like that, that are really sharp and care deeply about our mission, our crusade, and to do work that matters. And we know relocation can be tough, but our team needs your help. We've got key roles that we're hiring for, including experienced web designers, creative directors, UX designers, and lots and lots of positions of all kinds.

Check it out at DaveRamsey.com. Click the Dave's Hiring tab on the right-hand side of the homepage, and you can find out what we've got going on here. We have won Best Place to Work in Nashville 11 times. Why? Because we're the best place to work. That's why. So check it out. Go to DaveRamsey.com.

Click Dave's Hiring on the right-hand side. We hired about 250 folks this year. And we only, we do not, if you're just looking for a J-O-B, figuring out how you can work as little as you can work and get as much money as you can get for doing nothing and not caring and just barely showing up and being a jerk, don't even call. Because we just don't hire people like that. And if we do accidentally hire them, we fire them pretty quick. So we want to work with people that

are fun, that are smart, and that care deeply about getting this work done, which helps people change their lives. This is real. If you think I'm corny, don't apply because I'm like this all the time. My butt is always burning to help somebody, and you need to be part of that or stay out of my way. That's a good idea. Open phones at 888-825-5225. Carla is with us. Hey, in Louisiana. Hey, Carla, how are you? Hey, I'm doing great. Thanks for answering my call. Sure. How can I help? My husband is getting ready to start his senior year of mechanical engineering. He has an internship.

He's doing great, and he works part-time. My question is, we have about a year left. I saw your post about Sally Mae having record profits, and it made me really angry. Good. sally may having record profits and it made me really angry good so my yes so my question is do we consolidate while he is in school because i from what i heard you can only consolidate alone one yes and that is that repayment and interest rate is it better to do it while he's on part-time? I'm a stay-at-home mom with the babies, and he's working two jobs interning full-time student.

Do I consolidate now with the $20,000 income that we have, or do I wait until I graduate? Is he through taking out loans? We will find out on the first he is applying for merit-based scholarships because this is his second bachelor's he couldn't get any but we're getting hit two hundred dollars a month in interest from sally may so do we consolidate now based off his income or do we wait until after he graduates and starts making engineer money so what do you got like 30 40 000 in debt it's already accruing interest 33 000 yeah okay all right uh i would not consolidate if you're going to add more debt because it's only one more year, though.

I know, but as you said, you get one shot at this. And so it's not going to matter much. When you get a lower interest rate, it's not going to change anything that much. $200 a month is $2,400 a year. $2,400 a year is not your problem. $33,000 is your problem. Even if you cut your interest rate in half, it's only a $1,200 difference, and you're not going to cut it in half.

Yeah, because our interest rate right now is 10.5%, and his credit score is 790. I don't understand why it's that. And then the consolidation loan, they said they could offer a four to six, no more than six. Okay. Well, if you did drop it in half, it saves you $1,000. Okay. And my second question is, someone told me that you want to make sure that it says student loan because there's certain protections if the title is student loan instead of like a signature loan. Right. It needs to be a Sallie Mae or Navient loan. It doesn't need to be anything else because the protections are if you die,

the loan is forgiven, or if you become permanently disabled, the loan is forgiven. Are there student loan consolidation loans with the protection? Yes. Yes, tons of them. Yeah, it shouldn't be any trouble at all to do that. But, again, it's not your biggest issue. It's $1,000 out of a $33,000 problem.

So it's okay to do it. It doesn't hurt anything. But the bigger issue is stop borrowing more. That's a much bigger thing to concentrate on than whether or not to refinance. Sterling is in Utah. Hey, Sterling, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? Hey, so my wife and I found you a couple months ago, and we are kind of hit that point of being sick and tired of being

in debt, not making enough. We're feeling like we're not making enough even though we are. The issue is we're trying to figure out what to do because we're trying to figure out how to talk about finances, trying to figure out how to make that conversation as it's been stressful in the past. But I'm in college still, so I've got one more semester left, and we're trying to just figure out are we needing to go through and save up that money and then start on those baby steps, or what would be the best way? Yeah, your first step to your first step to adding or to getting out of debt is don't add more right and so you know going to the next finishing up college

with no additional debt like i was just talking to her about that's the biggest issue on your plate right now and just getting on a budget together and committing to doing that while paying minimum payments would be fine if you don't do anything but break even and get on out of school what are you studying i'm going in international business good okay and you'll graduate when in may of 2020 and i do have an offer already up so i've already got a job lined up great okay okay so your first goal would be to get out without adding any more debt now is she working that is set up yes so she's working two jobs and i am working now part-time good and you figured out you're budgeted to where you can cash flow the rest of college yeah everything else is paid for for college there won't be any more loans

being taken out okay um well that plus some pad to make sure that that really happens and then i would start to work on the debts if you want to. And just working the debt snowball, listing them smallest to largest, paying minimum payments on everything but the little one. Work your way right down with that. That's the game plan. So, yeah, let's do that. But make sure you've got enough pad to where if some part of your plan to go to school, to get out of school,

with adding no more debt slips, that you've got some cash to make sure that happens. Because that has to occur. If you don't make any progress on the debt until next May when you graduate, a year from May, then that's fine. I don't prefer that, but I'd rather you get out with zero debt added for sure. Then worry about the next step, which is start to attack the debts. Big, big, big one-two punch there. Hey, thanks for the call.

Open phones at 888-825-5225. Andrew is on YouTube. Dave, what do you think of rent-to-buy schemes instead of mortgages? I wouldn't do them. I don't know that they're necessarily a scheme. It's just a plan. But let me just tell you what happens. Almost no one ever closes the house.

It just is an illusion. It gives you this idea that you're going to get in there and some of your rent's going to apply and that's going to become part of your down payment. And if all that works out in two years, we'll be able to buy. But it almost never happens because the very reason that you have no money now continues, which is your habits and your processes that you're using for handling money. And if you continue to do that while you think you've got a house bought, you're not ever going to be able to close on the house because you're not ever going to get your act the rest of the way together. So I don't recommend rent to buy. I don't recommend lease with an option to purchase on residential where you're paying extra for the rent.

Now, if you're going to pay rent anyway and you're just paying market rent and they'll give you a right to purchase should you want to that's okay but where you're contracted into a purchase and you're paying extra to close on it later i wouldn't do that i would just wait rent as cheap as you can rent get out of debt build your emergency fund and then have your down payment saved after that that puts us out of the dave ramsey show in the books our thanks to james childs our producer kelly daniels our assistant producer and phone screener. I am Dave Ramsey, your host, and we'll be back. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show.

This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Rants, debt-free streams, and the very popular Everyday Millionaire segment. We'll see you next time.