The Ramsey Show - App - How Do I Do the Baby Steps on Disability? (Hour 1)

Episode Date: August 17, 2020

Savings, Debt Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. My co-host today here on the air on the Dave Ramsey Show, Rachel Cruz, Ramsey personality, number one best-selling author, also my daughter. We'll be taking your calls about your life and your money. It's a free call, and some say the advice is worth exactly what you pay for it. Open phones at 888-825-5225. That's 888-825-5225.

Chris starts us off in Columbia, South Carolina. Hi, Chris. Welcome to the Dave Ramsey Show. Hi, Dave. Hi, Ray. How are you? Great. How can we help?

Well, I have two kids, age 9 and 7, and I'm interested in starting a custodial brokerage account for them. Would that be something you recommend? Well, anytime an account is opened in a kid's name, it is a custodial account because until you're 18, you cannot legally enter into a contract in the United States. And so a parent or someone does it on behalf of a child, and that is a custodial account. So if you open up a savings account, if you open up a mutual fund, if you open up a 529, if you open up anything in the kid's name, it is a custodial account.

That's the nature of it, okay? Now, having said that, why do you want a brokerage account for a kid? Well, we have savings accounts for them, but every other day they want me to go to the bank and draw money so they can spend it. I figure at a brokerage account they can't get access to it. Well, they can't get access to it anyway unless you let them. Yeah, I guess that's the point. Because they go to the bank to put money in and they always want to go and buy something. And they just bug me.

They just ask about it. And I figure if I me about it. It's not a bugging, but they just asked about it. And I figured if I put it at a brokerage account, that's probably at least having grown interest rates, I guess. Yeah. But I mean, the convenience aspect is what's bothering you because you're having to go to the bank to get the money out, where they're 11 and 9. Is that what you said? They're 9 and 7. 9 and 7. So even younger. So yeah, I mean, at this, this is like basic level teaching kids about money. I mean, all they really need to be doing is giving a little, saving a little, spending a little. I mean, it's not going to be anything insane. And so I mean, not even having, you could put some of their savings in the bank and it's more long-term

for them. Like, hey, in the next month or two, if we want to save up and get something, but I would just keep cash at the house at that young of age, depending on how much it is. I mean, if they're getting, like, big chunks of, like, birthday money or Christmas money, yeah, you can put it in the account, the savings account. But anything else I would have at home, because especially for your, you know, especially your 7-year-old but your 9-year-old as well,

like when they have cash at home, they feel it. They can have their own envelope, right? Yes, or the banks. That's what I was thinking about. So let's do this. Let us give you the Junior's Adventure Pack, which is the Financial Peace Junior for teaching little kids how to handle money. Rachel and I wrote, and we'll also give you a copy of Smart Money, Smart Kids, which is what Rachel and I wrote about parents teaching their kids about money,

because that's really what this question comes down to. Now, what we teach is the kids need to learn four things, and Rachel touched on this. They need to learn to work, which is where money comes from. They need to learn to give, to spend wisely under the parent's direction, and, of course, to save. And so the difference is instead of opening a brokerage account to keep them from bugging you,

I will put them on a system that says, kids, my job is to help you as your dad learn how to handle money so when you're old you're not one of those old broke people. Okay? Like all our freaking friends, right? So, you know, and so then they get – when our kids would earn some money, in quotes, for doing a chore, like feeding the dog or something really difficult like that, which you hardly break a sweat doing, right, but they would earn money for doing a chore, then we would divide the chore money. We called it commissions.

You're not on allowance. You're on commissions. You're not – you work, you get paid. You don't work, you don't get paid. Then we would divide that up into those three envelopes. And the kit I'm going to send you has three envelopes. It has a giving envelope, a saving envelope, and a spending envelope. And so if they get ready to say, I want to spend some money, do you have it in your spending envelope?

Because we put some in there from when you worked. And then you can have the discussion of, oh, there's not enough money. Well, you're going to have to wait and work some more. Or you can have the discussion of, you can buy that cheap one if you want to buy it, but it'll be broken by Friday. Or you can wait a little bit and buy a good one that will last you, and you can pass it down to your grandkids. And we had lots of value discussions about purchases.

Rachel generally just bought it. Daniel was very purposeful and goal-driven about his purchases. Rachel generally just bought it. Daniel was very purposeful and goal-driven about his purchases. And Denise was compliant. I don't know. Didn't even spend money. Yeah, she didn't spend money. She's a saver. But you need to make

kids, coach kids in all four areas. Not working is not an option. Not being generous is not an option not being generous is not an option not saving is not an option not spending money wisely is not an option so you can't be only saving or sometimes sweet little kids they want to give all their money away well no that i don't want to teach you that way that's it's i want to encourage you in your generosity your outlandish generosity but you always should have some saved and you should always have some to spend as well.

Yeah, because, I mean, as an adult, primarily, those are the three things you do with money. I mean, obviously, your saving can be more complicated and investing and all that, but basically, that's what you do with money. You give, save, and spend, and so teaching those boundaries is huge. And then, I mean, and Chris, if they're not doing, like, just work around the house, simple stuff, earning that money, I mean, it's, and again, it's very age-appropriate, I mean, and Chris, if they're not doing like just work around the house, simple stuff, earning that money. I mean, it's, and again, it's very age appropriate. But man, the award is amazing.

Amelia, I didn't even tell you this. Papa Dave, you'll be so proud. Okay, I'm ready. She did some chores. She what? She did some chores. What did she do? She actually swept the kitchen.

I didn't even ask her to. But she was like, Mom, can I sweep to earn a dollar? I was like, sure, let's just do it. Because we have like 10 bucks and ones in our like little junk drawer. So that's what I didn't even ask her to, but she was like, Mom, can I sweep to earn a dollar? I was like, sure. Let's just do it because we have like 10 bucks and ones in our little junk drawer. So that's what I gave it to her. So she did that. Carried plates to the sink. I mean, she just turned five.

So it's like, it's lowball stuff. Well, you don't send the five-year-old to the salt mines. No. So you do. So we did six and we went on Amazon. She bought a Polly Pocket for $6.99. I paid the tax. I was like, you know what? I'm going to be a graceful mother and just your five. And we went on Amazon. She bought a Polly Pocket for $6.99. I paid the tax.

I was like, you know what? I'm going to be a graceful mother and just your five. So I was like, I'll pay the tax because she saw the six on Amazon. She's like, it's six. Mom, it's six. And I have $6. And I was like, yeah, you're great. Yes, that's great.

But then she got very confused that the money was still there, even though the Polly Pocket arrived. But I took her money. And so the whole process of buying online is very complicated for kids they don't they don't quite understand it so it probably would have been a little bit more beneficial to like put on the masks and go to target and buy but i was a little too lazy so i was like we're just gonna amazon it all right and have to walk that's a modern day that's still you did it no okay because what most parents do is nothing well and the story wasn't about me doing it but it but what i was going to say is the effects of what happened. She made me, like, take a video of her to send it to a girl that babysits for us.

She was like, tell Maggie that I bought my own Polly Pocket. I was like, okay, so we did it. The dignity. She was, oh, it was just, it was amazing. She just could not, I mean, talked about it for three days. So anyways, it works. No, it gives, anyone who works and earns gains dignity as well as money. It's true.

Not working does not give you dignity. And so it's good that Amelia is sweeping the kitchen. She actually did pretty good. I bet. I bet. She would. All right. So we've got a copy of smart money smart kids and an

adventure pack to send from junior to junior's teaching age financial peace junior to teach the kids how to do that stuff to work to give to save and to spend wisely this is the dave ramsey show In today's world, technology and innovation are crucial for any company's success. But the primary focus should always be on you and meeting your needs. That's why you get the best of both with Zander Insurance and their term life plans. Zander uses time-saving technology like over-the-phone applications, voice or electronic signature, text message updates, electronic policy delivery, and even plans with no medical exams to speed up the process of getting you the protection your family needs. One of the reasons I've endorsed Zander for 20 years is they never skimp on service. They are committed to serving you, whether you want to do business online or need that personal touch. You pick your path. Go to Zander.com or call 800-356-4282.

Zander will guide you through the whole thing, keep it simple, and find you the best rates. That's Zander.com or 800-356-4282. Ramsey Personality, Rachel Cruz is my co-host this day here on the Dave Ramsey Show. Open phones at 888-825-5225. Her new book is on presale. It comes out January the 5th, but we're on sale today. Know yourself, know your money. Discover why you handle money the way you do and what to do about it. If you pre-order now, you're going to get $50 in bonus items,

including the audio book for Know Yourself, Know Your Money, the e-book for Know Yourself, Know Your Money, and the exclusive video lesson from Rachel Cruz. You can take the new money quiz that's completely free, whether you buy the book or not. Jump on and text the word money quiz, one word, money quiz, to 33789 and learn why you do the things you do with your money. Rachel, we talk about how all the time, and this book's all about why. It's all about the why, understanding who you are and why you handle money the way you do it. So everything from giving, saving, spending, to your money fears, to how you grew up with money, to your money dreams. I mean, so much motivates us on why we do the things we do with money. And so understanding the why, I think,

is going to help people when you're on this process, especially if you're doing the baby steps and you're getting out of debt and you're saving and you're doing all these things. When you know the why, it just helps accelerate this process so much faster. You know, there are times you can kind of white knuckle your way through baby steps one through three specifically. Like you're just like, okay, just do it. And there is a level of sacrifice that will always be there. But when you start to kind of understand your why, why you handle money the way you do your personality, even your spouse's situation, everything, there's so much empathy and there's so much more awareness that I think it just helps the entire process.

It makes you much more successful is what it does at your relationships and at your money. So obviously you wrote the book for individuals. If I know more about myself, I can make better decisions, and I can say, okay, I've got to be careful about that, or, oh, that gives me permission to be that way and not feel guilt or shame. Also, you could recognize this in others, like, for instance, your spouse, if you're married, and say, oh, well, he's a spender, I'm a saver, and there's different ways of looking at it. He comes from a home like this, I come from a home like that. Of the eight money fears that you listed, he's got different money fears or she's got different money fears than your spouse does, that kind of thing.

Have you thought about this? Because, I mean, you've been so deep in this research, putting this manuscript complete, obviously, it's gone to print. When you're looking at your three kids, even as small as they are, five, three, and 10 months old, right? Yes. So are you seeing, like, a difference between Caroline and Amelia on how they're going to process this stuff? Yeah, absolutely. I mean, already, for sure, the tendencies of money, I think you can grow to learn certain tendencies, but a lot of them are just your natural personality.

You know, do you enjoy quality over over quantity do you like experiences or things like that those kinds of uh because you're an experience and winston's of things oh yeah for sure yeah yes yep you've always been i could have told you when you were five you were the experience yeah i mean like you know someone that really appreciates buying money and having a tangible thing cannot grasp paying x amount to go to the spa and have a massage or something. Like, you know what I mean? They're like, what? But then it's over.

You spent that on a cruise and I could have bought a car for that. And it's done. Yeah, exactly. So it's the way you view it and what you, honestly, how your personality has been. So yeah, with my kids, I feel like already that. And when I wrote the whole section about growing up in the four money classrooms that you're in, you know, you really will identify with one in the four money classrooms that you're in um you know you really will identify with one of the four but it's but i always say i said in the manuscript

as well like your siblings could have grown up in the same home but had a totally different experience though because the way they view things and so the what's what's come on them they felt you know maybe they felt a lot of freedom because they didn't pick up on the stress and maybe you said no no it was high stress i was very very aware or another sibling could be like no i didn't ever notice that you know because your your memories and the way you go about things is so different as kids so i bet if you asked denise and daniel what things were like growing up if i told one story they would have three totally different perspectives they probably wouldn't some of daniel probably wouldn't remember it so that's what's interesting too is looking at kind of how they're wired and what they're picking up from us um but yeah but it's it's uh i don't know it's been a

fascinating thing and again the pre-sale i think is huge getting free audiobook and ebook and the video lesson if you do it before january 5th so you can do that yeah so you can get all that at rachelcruz.com or daveremsey.com and if you want to take the money quiz and start to learn about yourself now it's text the word money quiz one word to 33 789 and that'll will get you started eddie's with us in salt lake city hi eddie how can we help hi dave rachel please talk to you today you too what's up uh well i am wondering how my baby step journey actually is going to look. Most of my income is actually from a disability income. And I've somehow managed to make myself to pass Baby Step 3. Good.

And now I'm looking at trying to save for the future and possibly buy a home. I do make a small earned income, so I'm able to contribute, I think, to a Roth IRA. But I'm just kind of wondering, that doesn't quite get me to the 15%. And I'm wondering how to do that and balance 3B at the same time on this kind of income. So what is your income? I make about $48,000 from disability. What is the nature of your disability? Blind. I'm blind.

Okay. And who pays that it's from a workplace insurance policy i was actually injured on the job my goodness i'm sorry are you uh have you lost 100 of your site or just most of it uh yeah good chunk of it i still have what some people would call functional vision i'm able to see some objects just no fine detail at all yeah just generally you can walk around the room but but but the idea of opening up a website looking at it's off the off the off the uh out of the options what are you doing for your extra earned money? I'm actually still teaching. Well, I'm teaching the subject I was trained in,

so I was teaching chemistry. I'm able to do that still. How? That's so cool. I've been doing it for 30 years. So you're just doing it all from memory? I it for 30 so you're just doing it all from memory you're doing it all from memory yeah pretty much okay all right you got the lesson plans in braille or whatever or have you learned braille no i uh have some adaptable software oh okay all right so the screen thing I was wrong. Well, good. And then after 35 years, I don't know a thing or two about it.

Yeah, yeah, that's promising. That's promising. Okay, cool. Well, the reason I ask all these questions is you're right. You're doing good. How long ago was the accident? Seven years ago. Okay. How old are you?

47. You're an overcomer man you've been getting it i'm proud of you you're you're impressive thank you so um i mean because that that's life-altering to say the least and some people just get paralyzed and you just kept rolling man good for you all right so how much do you make teaching eddie uh kind of varies it's been as little as about 9 000 and it's been as much as about 13 it's all dependent you know how much i get per semester okay yeah um well i was gonna say because between that and your disabilities you're are you are you married kids family situation, it's just me. Okay. Well, I was going to say that's a relatively average income.

That's the positive part is how to do the steps on disability is that people are doing it with this amount of income and they're just working their way through it. So if you wanted to pause Baby Step 4 to do Baby Steps 3B and go ahead and save up that down payment, you could for a short period of time just to help kind of accelerate that and actually get that quick win um faster than if you were putting some of your money into that roth ira so you could do that as an option yeah i i agree i think you're getting there let me tell you what i'm hearing um i'm

hearing you got a a big future ahead of you, and you've been through hell. And so it might be harder for you to grasp that future. But I think you could do it. I think you could do tutoring. I think you might double your income if you push around and think about this a little bit. You don't have to, but you're just a survivor, man. I mean, you've gotten after it. I'm so proud of you. So I would be continuing to think about ways you could do the teaching because you know your stuff, like you said. And anything you can do to get your income

up, of course, accelerates all of these issues. This is the Dave Ramsey Solutions on the debt-free stage, Kurt and Julietta are with us from Reno, Nevada. Welcome, guys. How are you? I am not hearing them. Let's try one more time. Better than we deserve. There we go.

Now I got you. Hey, guys. How are you doing? Well, welcome to Nashville and all the way down here to do a debt-free scream, huh? Absolutely. Very cool. How much have you paid off? $80,000.

Cool. And how long did this take you? 22 months. Good. And your range of income during that time? I'd say between $110,000 and $130,000. Okay, cool. Back down to $110,000.

Okay, cool. What do you do for a living? Well, I work at the world's most loved airline. Oh, okay. I think we all know who that is. Well, you can say it. Southwest Airlines. All right, cool.

Yes, we love Southwest. We're big fans of Southwest. We do a lot of business with them. Good stuff. Cool. All right. And so, Kelly, our associate producer said that you guys just got married. We did.

So this is more of a Kurt did this. And now Julietta is here to celebrate with him, right? Absolutely. How long have you been married? Tomorrow will be a month. Oh, wow. Real newlyweds. Newlyweds.

Got married during the quarantine. We did. During the pandemic. Absolutely. All right. Well, you can tell your grandkids that one. We got married back during the pandemic. All right, man. Very cool.

So what kind of debt was the $80,000? $30,000 consisted of a loan to Toyota. $21,000 was Tesla Solar. $15,000 was a retirement repayment. $10,000 was various credit cards. And the last four was a retirement repayment. $10,000 was various credit cards. And the last four was a family loan. Oh, very good. Okay. Feels good to be out of all that. Oh, absolutely.

You had a little bit of everything, man. Yeah. So, what happened 22 months ago that got you moving on this? Well, 22 months ago, I just got out of the Army. Served with the 75th Range Regiment for about six years. Oh, thank you for your service. Thank you.

You know, I first was brought on to you back in 2004, and I tried doing my own thing. As most people find out, doing your own thing doesn't work too well. Okay. So, you know, finally I was like, you know, I need to get things going. I need to work on my goals. And blew the dust off the Total Money mic over and reread that and started the baby steps aggressively. Wow.

And was able to knock out a lot of money in a short time. That's awesome. Julietta, what did you think of the process? Did you think he was crazy, or were you like, oh, yeah, go? Before we get married, you can be debt-free. I'd say a little bit of both. Yeah. Not an easy road, but definitely on board.

Yes. So he was getting after it, wasn't he? Yeah. Yeah, very cool. So what was the difference, Kurt? I mean, you're kind of going along. You knew the stuff from 2004 and didn't do it. But what was the thing?

Just the change of career just made you go, I got to do this now? Well, yeah. You know, I absolutely hated owing someone money. And it just seemed like a dog chasing its tail. Mm-hmm. You know, wanted to become debt-free, wanted to be able to live like no one else and you know when you owe no money you can do whatever you want yeah amen brother amen you got a lot of different people not coming out of your back pocket now absolutely it's a whole different

thing well way to go very proud of you what do you tell people the key to getting out of debt is? I would say discipline and absolutely the budget. You need to be able to tell your money where to go. And we use the EveryDollar app, and that definitely was key to the whole getting out of debt. Very cool. Very good. Good for you. Very fun.

So who were your biggest cheerleaders? I'd say my wife, Julietta here. Really didn't have too many other cheerleaders, but didn't have any detractors either. Oh, that's good. You know, kind of kept it to ourselves. A few people in my workplace knew about it. They were cheering me on. Yeah.

But they didn't want to do it because it wasn't for them. Mm-hmm. You know, so definitely, definitely took the discipline. Yeah. And now that you've done it, though, you're looking over going, well, maybe I should. Absolutely. Okay, so out of all the debts, because you kind of had every range. Right.

What was the one that you were like, I'm so glad to be out of that? Between the family loan and the credit card. Okay. Okay. You know, because it seemed like I'd go up to that limit on the credit card and I'd pay it off or pay a portion and then I would use it again. Pay some off and we're back up to the limit again. Yep. So that was even, and that was one of my first ones that I paid off. How'd you break that cycle? Just come to the terms of our goals. We didn't want to go back there. Yeah.

You just reach a point of disgust and say, I'm done. I'm done. And when you do that, you're ready to change your life. Oh, you can do so much more. Yeah. So much more. So proud of you, man. I appreciate that. And congratulations on the you do that, you're ready to change your life. Oh, you can do so much more. Yeah. So much more. So proud of you, man. Appreciate that. And congratulations on the new marriage.

Wow, this is great. Life is good. Very, very cool. We've got a copy of Chris Hogan's book for you, Everyday Millionaires. Without a doubt, you are on path for that. That's the next chapter in your story for sure. Very, very well done. All right, Kurt and Julietta.

Kurt gets out of debt and gets married. Life is good. $80,000 paid off in 22 months, making $110,000 to $130,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Yeah! Woo! Well done. Very well done. Open phones at 888-825-5225. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Always use the promo code Ramsey. All right, Rachel, our question is from Laura in California. I'm a saver. My husband's a spender. He's currently 55. I'm 37. We have two boys, 12 and 10, $65,000 in debt, net income's $140 a year. I found out he racked up a total of 873 dollars in a month on

our credit card on top of a classic car 2900 that he took out a loan to purchase in one month had financial discussions with my husband he doesn't seem worried tells me he's going to retire in five years um how do we get on the same page with financial goals he tells me he shouldn't live like a pauper with $400 a month of fund money. Well, totally on opposite pages, obviously. Not many united goals. And it's really hard. It's really hard to win with money when you're married and you're both not on the same page. You're not driving down the same road because this is so much of a team effort. And so, um, yeah, I would, I would, I would really Laura, as much as you can talk about your why talk about what all of this is doing to you, see if you can have any of those kinds of conversations. And then honestly, I mean,

at this point, I would say bring in a third party if you can to have someone sit down, listen to you guys, listen to the situation. Cause usually money issues are not just money issues it's usually things going underneath the surface um and i think that there's there's a lot there's a lot there and the fact that he's like i don't want to live like a well that sounds to me yeah and she's laid out every little detail so she's definitely the nerd that's fair yeah definitely the saver and she's been she's been uh throwing around dave ramsey like it's a cuss word and he's like i'm not living like that. And she's been throwing around Dave Ramsey like it's a cuss word. And he's like, I'm not living like that. And so she's been, that's not working, Laura.

You can't go after him like a barking chihuahua. And I think that's what I'm reading here. That's fair. I might be wrong. The details of $873 a month. Yeah, $873 a month. I'd be like around $900. Lots of details.

I'm surprised the pennies weren't there. And so I think instead what you need to do is sit down, because your husband is a natural spender, you're a natural saver, and you need to sit down and say, look, I know you're approaching retirement. I'm 37 and I've got two little boys. Us being out of control is scaring the crud out of me. I can't breathe. got two little boys. Us being out of control is scaring the crud out of me. I can't breathe. I need your help.

And so I need my man to man up here and help me with this money stuff. And, you know, because nobody, once you've had that discussion, it says, I'm going to put my family's, with my two little boys, financial future at risk so I can buy toys. That's a little boy that says that, not a man. And he's not that guy, but that's just his reaction to you because you've been barking at him like a chihuahua. That's what I read. I might be wrong. If I'm wrong, you can just say Dave Ramsey was wrong. That's probably a good gut.

Sometimes Dave Ramsey's wrong. Not as often as he used to be, but sometimes. But he's wrong sometimes. This is the Dave Ramsey personality, is my co-host today here on the air. Open phones at 888-825-5225. If you didn't know, during COVID, real estate has been booming, which is a little weird if you think about it. Because it's hard to go look at a house. We went through a whole period of time people were sheltering and all that kind of stuff.

And so absolutely incredible. Did you know that the difference between houses that sit on the market and houses that actually sell are the actual real estate agent that knows what the flip they're doing? That's a big idea. Yeah. It starts with you knowing the value of a good real estate agent. Don't get some friend of yours that just got a license.

Your Aunt Gertie just got her license and she's going to sell your largest asset. No, no. We endorse top agents, high octane, high protein real estate agents that sell more homes than anybody in your area. They're the top and never again settle for a subpar agent. Just go to DaveRamsey.com slash agent and find the agent that we recommend in our endorsed local provider program. And these are great world-class real estate agents. They don't sell three houses a year. You sell three houses a year, you don't get to be one of our endorsed local providers.

I'm not going to endorse you. So you need to actually be in the real estate business and be moving some volume, proving that you know how to sell houses. So that's a big deal. If you're thinking about buying or you're thinking about selling, get a good agent. Go to DaveRamsey.com slash agent. Brett is in Columbia, South Carolina.

Hi, Brett. Welcome to the Dave Ramsey Show. Hey, Dave. Hey, Rachel. Hey, what's up? Well, first off, I just wanted to congratulate Kurt and Julietta on getting debt free. That's awesome. I can't wait to be there.

Very cool. I joined in July. I'm on baby step two now. We've already paid $7,300 out of the $5,300 that we owe. Great job. On our debt yeah and uh we're in the process of getting our house refinanced for a 15 year 2.6 interest uh mortgage so we're hoping to have our house paid off by 2030 great yeah um but uh anyway so my question for you today is um me and my wife we've

been working the baby steps like Like I said, we're on baby step two, but we've come to a point now where we've got kind of a fork in the road. It's basically, we're looking at our cell phone bill and we're wondering if we should go ahead and pay off our cell phones to lower our bill from about $260 a month to $195, or if we should take the $680 that it's going to take to pay that off to pay off another debt, which is $682. So we're like right there at it, and I'm just like, you know, I see the financial advantages of lowering our monthly bill, but at the same time,

I'm like, we can go ahead and knock out that debt and be out of it. Well, you've got to pay it off this time or next time, right? We're not going to keep the cell phone debt, right? Right, right. No, no. And actually, it's both for cell phones. The $682 that is the debt that we owe yeah is uh is actually where my wife bought a new cell phone last year okay and she financed it through an outside company the uh the 680 that's

that we're kind of like paying okay i'm confused i'm confused both of them are debts both of them are cell phones and both of them are around 680 dollars why would you just not pay both of them are debts, both of them are cell phones, and both of them are around $680. Why would you just not pay both of them off? Well, that's what I'm asking. The cell phones that we're paying through AT&T, it's part of our service contract, and we're paying it through our service contract. You financed your cell phone with AT&T. Your wife financed her cell phone with one outside of AT&T.

Correct. They're both debts. Okay. So you're saying it doesn't matter which one you pay off because in the end you're going to be paying off one of them anyway. At the rate you're paying down debts, you're probably going to pay them both off this month, aren't you? Oh, yeah.

Yeah, I've been selling anything that's not mail-bound. You've been doing good. Am I missing something? No, so, Brett, does that answer your question? Is that what you were wondering? Yeah, I guess so. I just didn't know. I figured I guess we should probably.

Yeah, this is the evil part of AT&T and Verizon and so forth, okay? When they finance your cell phone into your phone bill, you don't think of it as debt. Right, yeah. And that's the great mystery of how they pulled that wool over our eyes. It's still that. You still borrowed money as opposed to when I get a cell phone, they're either giving me one because of the contract we're on or I'm paying for it right then when I pick it up, one of the two.

It's going on, you know, we're paying for it immediately. So we don't finance cell phones over on payments, whether it is with the cell phone company or with an outside party. And since you have, then we're just going to get rid of that. Yeah, but they did. They've changed that over the past couple of years where it's like kind of this like finagled thing within your bill. It is. And it can be very, very confusing.

And so it's intentionally confusing. A hundred percent. Because they totally want you to finance it. Yeah. And they totally don't want you looking at the interest rate. They totally don't want. They just want to make finance it, and they totally don't want you looking at the interest rate. They totally don't want you. They just want to make it easy for you, easy for you. That's what they want.

Yeah, beware of these people, man. I'm telling you. It's just like anybody's going to make it easy. Yeah, that's a problem. It's a problem. It's not easy for, you know. All right. Open phones at 888-825-5225.

Mike's in Minneapolis. Hey, Mike, what's up? Hey, how's it going, Dave? How's it going, Rachel? It's an honor to be on your show. Thank you. How can we help? Well, I got kind of a weird situation that I'm in.

I'm a little nervous and scared. I'm 26 years old. I'm on baby step number two. I got into a car accident two years ago, uh, a little fender bender. And, um, so, um, I didn't have insurance at the time. I didn't, I didn't know better. I was, uh, not, I'm a new, kind of a new listener to you guys, but I didn't know better. And I, I was driving around with no insurance, got into a car accident, long story short, two years later, they're suing me. I've been paying, I've been making payments from the two years,

for two years for the damages to the vehicle. And so now they're suing me as a trial case, and they're taking me to court, and they're trying to get payments up. And they're not asking a dollar amount, though. I've talked to several attorneys and all of the attorneys that I take the case to. The first thing that they tell me is they say that I need to file bankruptcy. I make about $30,000 a year. I'm in college right now that is all getting paid for through scholarships, two-year university. How much is owed on the car? How much is the damage on the car?

Okay, so the damage, I believe I've already paid the damage but it's damage and medical bills that i'm paying for right now uh the total amounts uh that i feel oh is nine thousand dollars but it's been going up uh in the since the two years it started at like two thousand just for the damages and then it keeps increasing and every time that i talk to the insurance company they tell me that they can't they don't know when it's going to stop. And right now, since they're suing me, it's not a chance. It could go up more is what the attorneys and what the insurance companies are saying. If they win the case, then they could potentially get, who knows, it could be a quarter million dollar settlement.

No, honey, they're not going to get a quarter million dollar settlement on you for a $9,000 fender bender. Okay. Not a chance. It's the medical bills. I was just thinking. Wait a minute. If this is a medical bill. Wait a minute.

The medical bills. Yeah, I mean, did somebody almost die? No, and that's the thing. The police arrived. Nobody used ambulance. Okay, there's no quarter million dollar claim here, honey. You're okay. You're okay. You're okay.

Breathe. And you don't file bankruptcy on $9,000. Not at all. You may need to get an attorney to get the negotiation straightened out. But if the only thing your attorney told you is to file bankruptcy, you didn't get the right attorney. Okay. Or if the only thing the attorney told you was you're up to a quarter million dollars, then you didn't get the right attorney. Okay. Or if the only thing the attorney told you was you're up to a quarter million dollars, then you didn't get the right attorney.

These are ambulance chase bull crap people. You need to get away from them. Okay? You need to get a real attorney, and it's probably going to cost you a couple grand, and then you're probably going to be delivering pizzas every night for the next little while because you probably do owe these people around $10,000. Uh-huh. And that's the thing.

I'm totally fine with paying. Who's the insurance company that's suing you? State Farm. Of course. They're a complete pain in the butt. I hate that company. They don't pay their claims, but, boy, they come after you on yours. You think I should just wait it out?

No, you can't wait it out. It's not going away. You hadn't noticed that? So, no, you need to get a lawyer, honey, immediately. But you've got to let them get this locked down. You're not bankrupt over $10,000, though. You do need to earn some money and get this paid off. I'm sorry you're facing this.

This is the Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener from the Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes or head to DaveRamsey.com. Thanks for listening.