The Ramsey Show - App - How Fast Should We Pay Off the House? (Hour 3)
Episode Date: December 31, 2019Home Selling, Budgeting, Home Buying 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
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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 the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.
I'm Dave Ramsey, your host.
It's a free call.
The phone number is 888-825-5225. That's 888-825-5225.
Stephanie is with us to start off this hour in Springfield, Missouri. Hi, Stephanie. How are you?
Hi, good, Dave. And yourself?
Better than I deserve. What's up? Hey, so we're a military family, so we move a lot.
And within our journey, we purchased a home in the PNW in Washington State, which we love.
We bought that house, and a little bit before we hit the year, we had to move again to Missouri.
And I'm kind of debating if we should keep the house
because I don't know if we'll ever go back.
I just, you know, I have a lot of conflicts.
Like, I want to keep it for my kids.
The only debt we have right now is the mortgage on that house
and then my husband's truck, which is $32,000.
And I'm just like, I don't know where I stand.
And it's hard because, you don't know where I stand.
And it's hard because, you know, the market in Washington State is very high right now.
What's your household income?
Right now, I just quit my job because I just gave birth to my third baby.
So it is around $40,000, $45,000.
So my husband is working only now.
Right.
And will you be going back to work? I'm not sure. Okay. So my husband is working only now. Right. And will you be going back to work?
I'm not sure.
Okay.
Yeah, because we move so much around.
What do you make when you're working?
I make $15 an hour plus commission.
Okay.
All right.
Well, I think you ought to sell your truck and your house.
You think so?
I'm positive.
A $32,000 truck on a $40,000 income is known as insanity.
Yeah.
That's nuts.
Yeah.
You're not going to want to tell Mr. Military that when he gets home, are you?
No.
Let me just tell you, kiddo, that is really nuts.
It's way nuts.
Crazy, crazy.
I wasn't even thinking of the truck being so expensive in my eyes because what happened we recently doesn't matter what
happened you have 32 000 owed on a truck you make 40 there's no story makes this okay yeah you're
right there's not a story that's going to make this okay there's no system no process no backstory
the only way you even got qualified for the loan was you were working he wouldn't have even
qualified for that loan on his own so you need to sell the house loan was you were working he wouldn't have even qualified for
that loan on his own so you need to sell the house in washington because you don't need long distance
landlording while you're running around all over the world taking care of us thank you for your
service by the way thank you but uh do not yeah do not keep a home in every situation if you want
to go move back to washington someday after military service is over and that's where you all decide to settle go over there and buy your house then
in the meantime we want yeah in the meantime let's keep lingering on the home well i wouldn't linger
on the home i would linger on someday i'm going to go back over there but in the meantime this
house is a boat anchor around your neck it's a hassle you You're dealing with long-distance tenants. It's just, and the market's good right now.
I would get out while the getting's good.
So I'm telling you, what will put your family in the best possible financial condition five years from today?
Sell the house and the truck.
I don't think you're going to do it, not talking to you,
because I think I just knocked you off your stool.
I think you were sitting there just balanced, and I just knocked you in the floor.
And it's going to take you a little while to get up and decide what you're going to do.
But I'm telling you, a $32,000 truck payment on a $40,000 income,
if you look up crazy in the dictionary, you'll see your picture.
I mean, that's nuts.
It doesn't work, okay?
You cannot prosper with those numbers.
Not possible, period, under any circumstances.
No way you can make this smart.
No way you can make this okay.
Hope I'm not being unclear unclear because i really want your
family to be able to prosper over the next five years so you got to cut this thing loose and i'm
sure mr military gets home tonight he ain't gonna like dave ramsey and i'm perfectly okay with that
i'm still gonna tell you the truth because i care about you guys winning and i want you to win long
term and the same goes for that house hanging out over there. I think Washington State's beautiful. I think if you want to move over there and live after you serve your after you guys
retire from military or whatever you serve your your time, whatever it is you're going to do and
then move over there and buy a house fine. But I would not hold a rental property long distance.
It's a good way to lose your butt. It's a good way to have a tenant change their Harley oil in your living room.
You called and asked,
and so I am obligated to tell you
what I think is best for you, knowing what
I know, and that's, I think,
I strongly think you ought
to sell both by
the end of next week.
Tina is with us in Louisville,
Kentucky. Hi, Tina. How are you?
Hi, Dave. I'm great. How are you? Hi, Dave.
I'm great.
How are you?
Better than I deserve.
What's up?
I have a question in regards to child support as a source of income.
We are currently in the snowball phase.
We're a few months in, and we've never had to rely on child support from my oldest son as a source of income, thank goodness. But now that we are going through the snowball phase, part of me feels like maybe we should
inject that as a source of income to get out of this debt faster.
Definitely.
Absolutely.
Or would, I guess my thought was, would you consider that we should continue to save that
and just put that towards the college savings?
No.
No, you put that towards the household.
You spend more on this kid than that money is.
You're correct. So you're that towards the household. You spend more on this kid than that money is. You're correct.
So you're already supporting the child.
Correct.
It's not like you're stealing his money.
You're losing money on this transaction, you know, and that's okay.
It's your kid.
That's what you're supposed to do, right?
It's not a bad thing.
But I'm trying to morally say, let you know that if you spend more than the child support on the kid,
that means the money was spent on the kid.
Right.
If you mix it in with your other income.
Effectively, that's what it does mathematically.
So now it's just a stream of income.
It's one of the things you put at the top with your part-time jobs
or with your full-time jobs or whatever else.
All the income coming into the household goes at the top of the list,
and then we give every dollar an assignment, every dollar a name,
as you're doing to work your debt snowball.
And I wouldn't sweat it a bit.
Here's the thing.
You're going to take care of this kid.
You're going to send him to college.
You're going to get out of debt.
You're going to build your emergency fund.
You're going to build your retirement.
You're going to start saving for this kid's college.
And having set that money aside, it's a false premise in the mathematics that somehow you've done something wrong to use that money in the household,
given that the household spends more than that amount on this particular kid.
By the time you buy his food, shelter, clothing, transportation, utilities,
homeowners, insurance, electricity, all that stuff that people use when they live with you.
And you put all that together, that's what you get.
So you're fine.
I think you're doing great.
And I would just unleash it in that way.
Thanks for calling in.
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Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Russell and LJ are with us.
Hey, guys, how are you?
Great, how are you?
How are you?
Better than I deserve.
I hear you guys drop by with a question.
We do.
We have a son who's 21.
He's graduating from UTK in May,
and he has grown up hearing Dave Ramsey, and we wanted to give him Financial Peace University as
part of his college graduation present, but he's not having it. He's pretty frugal, but we really
would like to see him go through the program. He'll be entering the Air Force in May, and we
just want him to get started on the
right track. Do you have any suggestions? Because at this point, he just really doesn't want to hear
about Dave Ramsey. Well, he just graduated from college. He's a genius. He got that from me.
So I guess he's going into officer training. He already is in the ROTC.
So he'll go in as an officer.
Go in as an officer.
OK, I'll tell him thanks for serving his country.
I appreciate that.
Well, it is one of the most painful things we do as parents.
I'm convinced having grown kids is probably the toughest time because you can no longer tell them what to do.
Great.
Worse than that, they have grandkids and you can't even tell them what to do.
Yeah.
So unless they're my house and then I will.
But short of that, I mean, you just have to convince them like you would a friend.
And the problem is that you guys, him having grown up around our stuff,
he probably hears your mom voice or your dad voice rather than your
friendly advice wiser older person voice right when you start talking with using my name and i
don't know that that can be fixed probably i mean there's a possibility it can't um you know uh uh
what what i might do is uh whoever uh it sounds sounds like, LJ, you're the one that's talked to him about this.
I have, and he's very frugal with his money.
That wasn't what I said.
I was just talking about how to get him convinced.
I get that he's not irresponsible.
Yes, I've talked to him.
It might be, Russell, that you do instead.
He's probably about hurt all his mommy once.
All right.
I'm guessing
nothing wrong with ulj but it's just i'm just guessing it you know that didn't work so let's
try the other run you know and just a cup of coffee dad and son you know this is not me here's
your dad this is just man to man you're going into the military and all the data says that a whole
bunch of folk in the military struggle with money right because they're around a whole lot of stupid when you leave the gates of any installation base anywhere in the world down each side of the
road for two miles of stupid right i mean every dumb human trick you can do because there's a
bunch of 19 to 21 year olds who've got their first paycheck and they're about to go to the carnival
i mean it's it's bad and just say son you know you're, you're set up to lose here. You're naturally frugal and already smart.
And just as your friend, I'd pay you $200 to go through it because I'm your friend.
And just dad to dad to son.
And it might be just a time you all begin to build that kind of a man-to-man relationship a little different than father-son.
My son's 26, so not that far off.
He and I have breakfast once a week.
And, you know, it's been a real pleasure to get to know him as a man, you know,
and kind of build that different kind of a connectivity, you know, that way.
If that doesn't work, it's just treat it like it was one of your friends you're having breakfast with.
You offered them $200.
They should do it, but they're not going to do it.
And, you know, dude, I love you anyway, and you're having breakfast with. You offered them $200. They should do it, but they're not going to do it.
And, you know, dude, I love you anyway, and you're still my friend and all that.
But this is smart, and smart people do this kind of stuff.
But, you know, if you're not going to be that, I get it.
I got friends of mine today.
I'm 57 that, you know, don't do any of the stuff I teach.
Yeah, I understand.
So I can't, you know, I can't, you know, you borrow money on what? That's what runs through my head looking at one of my buddies, you know i can't you know you borrow money on what that's what runs through
my head looking at one of my buddies you know right so that's all you can do is you just you
know put the goods in front of them uh in a winsome way let them know you care about their heart
and sometimes and i you know i in a situation like that i paid kids for a book report grown kids
or i paid employees team members here look i'll give you a hundred bucks if you read that book that kind of thing just to kind of get somebody what you know because this is
going to mean 10 000 to him it's not it's not 200 bucks and and the good news is he's already
probably got a lot of the messages in his head it probably won't be as difficult for him as all that
but the problem is the military is a wonderful environment filled with a lot of wonderful people.
But they're also a bunch of young kids.
And crazy is on the list.
It's out there, man.
And he's just in that environment.
And even his best common sense upbringing may escape him for a little while.
And it could take him a decade to get over some of those mistakes.
And just tell him that.
Just say, you know, this is the environment you're walking into.
I know you're a grown man. I know you're a good man i got faith in you i do not have faith in some of the stupid people you're getting ready to be around okay and
um you know just that's the truth because you go up there and you look down the side you guys are
from jackson i'm from nashville you know examples right outside of you know base up here clarksville
right 101st you go right outside the base you drive down that road they're stupid on both sides
for two miles.
I mean, and every time I go to one of these military things to speak to these guys, that's what it is.
It's just like temptation and every human dumb thing that can be done, money or otherwise, is right there in front of you.
That's all I know to do.
And if that doesn't work, just let him go.
He'll be fine.
He'll be fine.
He's going to be all right.
Good question.
It's an interesting time of life, though.
Is that your oldest?
It's our only.
Your only.
There you go.
There you go.
Okay.
He'll be all right.
He's got good foundation.
And sometimes they circle back and come back to that if they need to.
He hadn't even strayed away from it yet.
We're just trying to keep him from it.
Hey, thanks for the call.
Thanks for coming by.
Good to meet you all.
Thank you.
Open phones at 888-825-5225.
Chris is in Allentown, Pennsylvania.
Hi, Chris.
How are you?
I'm good, Mr. Ramsey.
Thank you for taking my call.
Certainly.
How can I help?
All right.
So my wife and I are currently on baby step two.
We owe $96,000.
We're both 30 years old.
And my wife has the opportunity to possibly go back to school.
What do you owe $96,000 on?
The majority of it is student loans, about $80,000, and then credit cards, medical bills.
You've got a lot of school already.
Yes, sir.
What are your degrees in?
Well, she has a double major in sociology and criminal justice.
And she went to a pretty expensive school.
Sociology and criminal justice with the goal of doing what?
She had planned on going to law school afterwards.
And what is she wanting to do now? Go to law school afterwards and what was what is she wanting
to do now go to law school okay so right with the plan i'm going to keep going yes sir all right
there was about an eight year gap here now that she's been she started she's been a paralegal
for 10 years at the same company and um if she goes back to school and does go to law school, you know, she's been told she has a spot there as an attorney.
So with my calculations, this is how I have it planned in my head, and I wasn't sure what your thoughts would be.
Well, I figure we could pay off the $96,000 in about five years.
Right now we take home about $70,000.
So my math told me about five years to pay off $96,000, and that would be pretty much
the exact same time she would be graduating law school. That's if you pay for law school? How are
you paying for law school? No, that was my question. I don't know that we'd be able to
cash flow law school, so I didn't know if I should pay off the current debt while going to law school.
Then when she graduates, she takes on the new debt, but we're debt-free
because we just paid off all our old debt.
You know what I mean?
Yeah, there's no sense just switching the P between shells.
That doesn't serve any purpose.
So, you know, probably what I would do is I would guess the student loan
that you currently have could go on hard.
How much of the 96 is student loans now?
About 80.
What's the other 16?
Credit cards and medical bills.
No car debt?
No.
Good.
And you make $70,000 household income?
Yes, sir.
What do you do?
I work for a family company.
Okay.
I do pest control.
Okay.
Not making a ton.
Not right now.
We're still pretty small growing.
Okay.
Well, what I would do is put her student loans on deferral while she's in school and cash flow law school. If you can reduce debt and cash
flow law school, I would reduce a little bit of debt. But my primary goal is to cash flow law
school first. Add no more debt. Add no more debt. That's your first goal. Then the second goal,
if you can get past that, is to reduce some of the debt. That would be okay And, of course, when she comes out, hopefully passes the bar and her income goes up.
But I'm not adding new debt while I'm paying off old debt.
That's just swapping the pea between shells.
That doesn't do anything for you.
Cashflow Law School, that's your first goal. We'll be right back. In the lobby of Ramsey Solutions, Jonathan is with us.
Hey, Jonathan, how are you?
How are you doing, Dave?
Better than I deserve.
Where do you live, sir?
I live in Fort Gordon, Georgia, Augusta.
Oh, cool.
And all the way up here to do a debt-free screen.
Yes, sir.
Love it.
How much have you paid off?
Paid off $51,000, sir.
$51,000.
How long did that take?
It took 28 months. Good for you.,000. How long did that take?
Took 28 months.
Good for you.
And your range of income during that time?
$48,000 to $50,000, sir.
Cool.
And what do you do for a living?
I'm in the U.S. Army.
Very cool.
Thank you for your service.
Thank you, sir.
What kind of debt was the $51,000, Jonathan?
Wow. Personal loans, payday loans, A300, TSB loan, $4,000, iPhone, braces, credit cards, $8,000, and the car loan.
How long have you been in the military?
I've been in 22 years, sir.
Okay, cool.
Were you in here when that guy just asked me about his son going into the Air Force?
Yes, sir.
Yeah, you need to do a video for them. You're in the military. You can tell that young guy what not to do? Yes, sir. Yeah. You need to do a video for them.
You're in the military.
You can tell that young guy what not to do.
Yes, sir.
You could get their camera out if they're still in here.
Actually, I talked to them like five minutes ago, sir.
Okay, good.
Yes, sir.
Very cool.
So what happened to you 28 months ago that made you turn this around?
Well, sir, back in 2010, I was stationed in Fort Riley, Kansas,
and our chain of command showed your military portion of the financial piece before we deployed.
And I was kind of bored, you know, I didn't really get into it. So that day, I bought your book,
your financial, which, Total Money Makeover. And so I didn't really think about it. You know,
I stuffed your book on a coffee table, used it as a, yeah, put drinks on it. so i didn't really think about it you know i stuffed your book on a coffee table
used as a yeah but put drinks on it so i didn't really think about your book so let's fast forward
2015 i was about um i was doing stupid stuff my money i was making big mistakes i was i was like
almost saving eight hundred dollars in the hole in my checking account. And I was really scared. And I didn't know what to do.
So I had a Les Brown moment.
I had it.
So I was like, you know what?
I'm going to Jurassic Search.
So what I did was I sold my bedroom set.
I sold my couch, my TV.
I went full on.
And I got about $800 out of it,
and I bought a mattress, like an air mattress from Walmart.
I slept on it the whole time.
Yes, sir.
And I sold it, and I got that up to even, sir.
And I also, as I was doing that, I took Financial Peace University.
I got into that, and I want to give a shout out to Julie Cooper, who is my financial peace coordinator.
Once I got that done, what really pushed me over is when I got the every dollar budget.
I got that.
It squared away.
And from there, I went to the races there.
And I attended a smart money conference, attended a smart conference, and retired and inspired, sir.
Wow.
You've been to everything.
Yes, sir.
Man.
So when you went in, you went all in.
All in, sir.
I had it, sir.
And there's a picture of you with Chris Hogan up there a minute ago.
Yeah.
Very good.
Yes, sir.
Fun.
Fun.
Fun. Fun. So in 28 months, just a touch over two years, you knock off all, you clean up the whole mess.
Yes, I cleaned it.
You were intense.
Yes, because I saw my family members, you know, going in dead, and I just got sick and tired of it.
And once I saw the light, I just couldn't believe it, that you can actually do this.
You know, once you put your focus on it, you can actually do it, sir.
You just applied military discipline to it.
Yes, I did.
And really, the budget helped me.
And I did everything by the book, sir.
Did your babysit, babysit one, two, three, and so forth.
You know, it's not always true, but it's often true when we're working with someone in the military.
You're used to following orders.
Yes, sir.
And, you know, we give you a series of orders.
Do this, do this, then do this, and then do this.
And if you'll follow those orders, they work.
Yes, sir.
And I gained that discipline also from my dad.
You know, he taught me, you know, just no excuses, son, just push forward.
And that's what I applied, sir.
No excuse.
A lot of times when you try to make excuses to get out of debt, people make excuses.
Instead of looking in that mirror and say, it's your fault.
Nobody else's fault but yours.
No excuse.
Very cool.
Good for you, man.
Good for you.
How does it feel now that you don't have any debt and you've got control of your life?
Yes, sir. It just feels so good because all my life patterns changed.
My decision-making process has changed.
It went from a decision-making, went from basically a mindset where it's a poor mindset to a millionaire mindset, sir.
I'm focused on being a millionaire 20 years in the future.
You will be.
Yes, sir.
You will be, or quicker than that, probably, actually.
Wow.
Way to go, man.
Yes, sir.
I'm so proud of you.
Thank you, sir.
And I give a lot of soldiers advice now.
And a lot of people that made fun of me, they turn around and ask my advice now.
Yeah, I guess so.
Now that you're free.
Yes, sir. Hey, you're free yes sir hey you
can talk about me wherever you want but i ain't that that changes everything way to go so what
is the number one number two keys to getting out of that so the number one key i put is the every
dollar app sir the every dollar app is something that i think is number one important because it just makes you focus on everything.
Every dollar app and doing everything by the book, sir.
No excuse.
And stop blaming others.
You've got to stop blaming others.
And don't make no excuses.
And look in that mirror and say, no, it's your fault.
Nobody else's.
It's your fault.
Very cool.
So when did you pay off the last debt?
It was September of last year, sir.
Okay, good.
So you got a new bed then.
Actually, no, sir.
Actually, I'm saving up, sir.
I'm still sleeping on that air mattress.
I'm doing a second one, sir.
You need to get off that air mattress.
I'm ready for that.
Yes, sir.
You've lived like no one else.
Yes.
Now you're ready to live and give like
no one else. I'm happy, sir. So have you
already got a copy of Chris Hogan's book?
Actually, I do, sir. He signed it already. All right. Good.
Have you got a copy of The Legacy Journey?
Yes, I do, sir. You got them all.
Okay. Well, you pick out something out of
the bookstore and it's yours, okay? Oh, my goodness.
I appreciate that. Ms. Melissa will take good care of
you because I don't want to give you something you've already
got. You've earned the right, man.
Thank you, sir.
Well done.
Very well done.
And thanks again for serving your country.
I'm honored to have men like you out here protecting us.
Thank you, sir.
I appreciate that.
Good for you.
Very well done.
All right.
It's Jonathan Augusta, Georgia.
$51,000 paid off in 28 months, making $48,000 to $50,000.
Count it down.
Let's hear a debt-free scream.
Three, two, one.
I'm debt-free!
There you go.
Woo-hoo!
Boom!
That's how it's done right there.
Oh, man.
You know, it is, we live in a culture where we're taught to be individualistic we're taught
to think on our own and of course one of the things to be successful in the military is you're
you're not allowed to do that you you take orders so that a unit can you know cohesively take care of a certain mission and uh and in order to do that
people give up their individual rights for the good of the unit for the good of the group for
the good of the country and for the good of your family what if you gave up your individual rights and submitted yourself to a series of orders?
If you're not military, you're not used to submitting yourself to orders.
I've never served in the military, so I've never had to submit to orders.
As a matter of fact, I resist when someone tells me I have to do something.
And for my first reaction is, no, I don't.
But you know what?
If you want to lose weight, you should submit to what a guy who's built like a Greek god says you should do, right?
I mean, he's got an eight-pack, you've got a keg.
If you want to lose weight, you ought to do what he says, what he does.
It'll get you there, right?
It's a great word, submit yourself to a series of habits, a series of processes,
a decision-making paradigm that's different than the one that got you to where you are.
Maybe you need a new plan. Maybe you need a new path. Maybe you need a new path.
Maybe you need some new steps.
That's what Jonathan did.
And look at his results.
$51,000 paid off in 28 months.
Way to go, Jonathan.
Way to go.
Good stuff.
This is the Dave Ramsey Show. our scripture of the day john 13 33 i have said these things to you that in me you may have peace. In the world you'll have tribulation, but take heart, I have overcome the world.
Jesus' words.
Albert Einstein said,
Great spirits have always encountered violent opposition from mediocre minds.
Yes.
Well, if you're sick and tired of getting to the end of the month
and having too much month left at the end of the money,
then the way to fix that is have a plan.
You know, people who win at anything plan it.
No one accidentally wins, and that includes your money.
It's amazing what you can do with your money when you get control of it.
For the longest time, Jesse and Chris were making little bitty tiny payments
on their student loan debt.
It'll never go away, so I'm going to pay the least I can pay on it.
You know how people do that stuff, right?
It felt like they were barely making a dent in it.
So they started every dollar, and they pay off their entire student loan debt in a year.
Every dollar is the world's best budgeting software app.
It's an app for your phone, your iPhone or your Android.
It's easy to use.
It's elegant.
It's robust.
Those are Internet words that people told me to say.
App words.
App words.
Yeah, you got to have app words.
You got to have cool app words.
Four million people are using every dollar.
Four million people are using every dollar four million people it's free go get it for your phone and start your budget have a plan you cannot beat this
micah is with us in saginaw michigan hey mic, Michael, what's up? I'm doing pretty good, Dave.
How about you?
Better than I deserve.
How can I help?
Well, so I have an RN degree.
I have a bachelor's, and I got accepted into CRNA school in the fall.
And my question kind of stems from this.
I have all my student loan debt paid off as of now.
Good.
During CRNA school, you're not allowed to work just because, number one, the program is so intense.
And then, obviously, the program is two years long.
So I plan on obviously taking student loans out again, which I've already done once. I have a house now, and my question is,
should I rent my house out for extra cash coming in while I'm in school,
or should I just bank, sell my house, and walk out there with liquid cash?
What's your house worth?
Right now I'm estimating about $115,000, $120,000, and I owe $60,000.
Okay.
And what does CNRA still cost?
I'm hoping it's less than $120,000, but that's about what I've been figuring.
Okay.
$120,000.
That seems a little steep.
What's that?
That's high.
Oh, okay.
For CNRA.
Real high. Like almost okay. For CNRI. Real high.
Like almost double what it should be.
Where in the crap are you going to school?
I'm going to Scranton, Pennsylvania.
I mean, that's what I figured in living and cost.
Oh!
That's included living.
Okay, that's not paying for school.
Okay.
Yeah.
I can relax a little now.
I thought you were getting ripped off.
So you're paying, what, $60?
Yeah, probably $60.
I want $60 maybe, yeah.
Okay, so my double was not far off.
Okay, good.
That's more like it.
And you think you're going to need $60 to live, and you're going to get $60 out of this house?
Yes.
Okay.
And you're single? Yes. Okay. And you're single?
Yes.
No kids.
And it starts in the fall?
It starts in August. So right now I have
roughly six months to
somewhere around that much to plan for.
And you're currently a nurse?
Yes.
Okay. I have a challenge for you.
I want you to go do this debt-free.
I want you to...
You have surrendered to this culture of debt,
and I want you to not surrender to this culture of debt.
And here's what I would do if I woke up in your shoes.
The great news is you're a nurse.
You're single.
And I want you to work 90 hours a week between now and August,
and I want you to sell your house, and I want you to have enough money a week between now and August, and I want you to sell your house,
and I want you to have enough money to go do this dream.
Okay.
You're not going to do it, are you?
90 hours a week gets rough.
Oh, whining me a river.
Cry me a river.
Call the wambulance, nurse.
I mean, seriously.
You're going to go in debt because you don't want to work.
Now I can't help you at all. Okay? Look, you're going to go in debt because you don't want to work. Now I can't help you at all.
Okay.
Look, you're going to pay this one way or the other.
You might as well pay for it up front.
It's not freaking free money.
And don't be normal.
Listen, if you want to do it, you do whatever you want to do.
But you call me.
What would I do if I woke up in your shoes?
I think you have the ideal degree field nurse you can work er until you collapse oh go do it you're young believe me
nobody died from hard work right before you die you pass out you know that it's a medical term
so really you're gonna be all right man that's what you do that's it but see yeah but you're
not gonna do it so I can't help you.
All right, anyway, Elizabeth's in San Francisco.
Hey, Elizabeth, how are you?
Hi, Dave.
Thank you for taking my call.
Sure.
So my husband and I, we make about $100,000 a year in salary,
but he was also granted a lot of RSUs this year,
so our W-2 income will probably be closer to $200.
He was granted a lot of what?
RSUs, the restricted stock units.
Oh, okay.
A lot of these take them to the top, yeah.
Yeah, but can he cash them out if they're restricted?
So they rest like once every year, and so like 25% rest next year, and then another 25 next year.
But you get W-2'd on the whole thing?
Yeah, no, we get W-2'd on the part that rested.
Oh, okay, good, all right.
Yeah.
So in the last two months, we paid off our car, which was our final debt, and then we finished a three-month emergency fund.
Good.
And started our 15% retirement.
Good. We don't have kids yet, so I'm now looking at our house.
Yeah.
Our mortgage payment is pretty high.
It's a 30-year loan, and of course, we got it before we started listening to you.
We do love it here, though, and we're thinking about adding enough to the payment to make
it a 15-year loan.
What's your loan balance?
So we have about $570,000.
$578,000?
Mm-hmm.
Okay, cool.
And so your household income is $200,000, or that's just his income?
Household income is $200,000.
Okay, and that includes the RSUs?
Yes.
Okay.
You're saying $100,000 is vesting a year uh no so about
25 000 is vesting a year it was a hundred thousand you're in so is his income his his income he can
get his hands on is a hundred and a quarter then um so no no so okay he makes like $170,000 salary. $170,000.
Okay, I missed that.
Okay, I'm with you.
So $200,000.
All right, so 15% going into retirement.
And then, yeah, a minimum is raised the payment to where you pay it off in 15 years.
But basically, the way the baby steps work is anything you can find in your budget beyond 15% of your income going into retirement goes at this house.
And so I think you can do more than a 15-year payment.
Okay.
Well, okay, so he wants to have a larger emergency fund.
Why?
And add more to retirement.
Why?
Yeah.
Okay, well, he can do whatever he wants,
but my plan is that I teach people on how to get wealth is to get your house paid off as soon as you can. And that's why I limit your retirement to 15%.
And I put your emergency fund at three to six months of expenses.
And that's what I teach people.
And there's a reason I teach people that.
Because it works.
Now, you can do Dave-ish, or you can do what I teach,
and it's what has gotten all these people
out of debt and into wealth it doesn't matter to me i'm gonna be fine you do whatever you want to
do but if you'll follow through on what i'm talking about you're gonna have this house paid
off in no time you guys will make great money thomas you make 200 000 bucks you save 30 you
know you live on a budget you don't have kids kids. You enjoy your life. You go travel.
You buy a nice car, pay cash for it, and you throw the rest of it at this house.
How fast is that $578,000 going to be paid off?
I'll just tell you.
Five years.
That's what's going to happen because his income is going to keep coming up too.
Five years, you'll be debt-free if you do what I'm talking about, house and everything.
And then you are on your road to serious wealth.
If I'm wrong, and it's seven years, you're still on your road to serious wealth.
But if you want to do ish, go do your plan.
I don't care.
It's your plan.
But if you want my plan, that's what I teach.
And that's why we teach it.
Because it freaking works.
That puts us out of the Dave Ramsey Show and the books.
We'll be back with you before you know it.
In the meantime, remember, there's ultimately only one way to financial peace,
and that's to walk daily with the Prince of Peace, Christ Jesus.
Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show.
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