The Ramsey Show - App - How to Combine Debt and Expenses in Marriage (Hour 3)

Episode Date: July 13, 2018

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🎵 Live from the headquarters of Ramsey Solutions, 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. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Sam starts off this hour in Grand Junction.

Hi, Sam. How are you? Good. How are you? Better than I deserve. What's up? Well, right now, I just recently graduated college about two months ago. Unfortunately, our school here locally did not carry the Dave Ramsey curriculum, so I was not so well thought out about going to college debt-free. And instead of, like, really being able to find sources of being able to pay for it, I basically went with loans. And long story short, I'm buried in loans, student loans.

And now that I'm graduated and moving on, right now I'm looking to be able to start a small business to be able to supplement my income a little bit, doing something that I like while also working full-time elsewhere, and maybe being able to, you know, make life fun until I'm able to get into the military here in the next few months. But what I'm trying to figure out is that is it even smart being buried in student loans to be able, would it be smart to start a small business while being buried in student loans, or should I just go ahead and really just find another part-time job

and just continue to hammer on the loans until I'm able to go to Officer Kennedy School? Mm-hmm. Okay. How much student loan debt do you have? Currently right now, $150,000. Good Lord. And what's your degree in? In professional aviation. Mm-hmm. Okay.

So I assume you got your pilot's license? Yeah, I do have my private and I'm working towards my instrument, but that's with other funding outside of loans. Okay. All right. And so you've landed a job, though. Yes, it's a job, but it's not something within my career field right now. What are you making? Right now I'm making probably $25,000 a year if I count all hours without overtime. Okay. And how quickly will you hear from Officer Candidate School and enter that? Well, my paperwork goes up to board in October, and if I get the all clear, the soonest I

should expect to be at Officer Candidate School should be around December, January. So six months. Yes. All right. Well, the question is, what can you do that makes you the most money during that six months? And that's the answer to your question. You know, if that's a small business and you can prove to yourself you can make more money in a small business setting of some kind on the side, then you can make working part-time

somewhere, then you do the small business idea, as long as you don't make commitments to people that you can't keep after January, right? Yes, sir. But, you know, you follow the money because this is a short-term thing. It's only six months. Now, does the military do anything with your student loan debt if you go into Officer Candidate School? Partially. It will be more or less involved on the federal loan side, with your student loan debt if you go into Officer Candidate School?

Partially. It will be more or less involved on the federal loan side. So the loans that I've taken out, I guess you can say on the government's behalf, they can help me out with that. In terms of the private loans that I've taken out, though, at least currently right now there's not a whole lot that they can do to help me. What kind of help are they giving you on the federally insured student loans? Are they giving you some money to pay off some of this when you join the school or join the military?

Yes, after a certain period of time, as far as I know, you can apply to basically get, I think it's up to $60,000 to help pay off federal student loans. Okay. At least a federal student loan. Do you have 60 in federal? I have less than that in federal. Okay. So you can't get that full benefit then, but you could probably get a third of this paid off.

So, you know, $40,000 or $50,000 or something something and then the rest of it you're just going to have to bust through now uh while you're in officer candidate school are you being paid yes how much uh base pay will be that of a uh enlisted person in the e5 level right which i think is like um i want to say it's $800 a month. Yeah, nothing, but you've got food and board and everything. So, yeah, you're just going to pay as much as you can pay on this as often as you can pay on it and what you can do to create the most money. The second thing you need to do is have a plan B if Officer Candidate School falls through because $25,000 a year doesn't cut it?

You need a new job if Officer Candidate School doesn't fly. You may need a new job anyway. $25,000 doesn't cut it to clean up this mess. And, you know, you need to start thinking about what is going to be your long-term career plan if Officer Candidate School does not go through. What's your plan B? And that's not lacking in faith. That's called wisdom. Always having a plan B.

Always knowing where we're going to go next. Burke is with us in Las Vegas. Hi, Burke. How are you? I'm doing great, Dave. Thanks for taking my call. Sure. What's up?

So my wife and I recently got onto your program. We read Total Money Makeover. We're on every dollar. We're starting our debt snowball. And we're also in the process of refining to a 15-year fix. Great. So with starting the debt snowball, essentially we have $50,000 in debt, $40,000 being a car, and $ and ten thousand being a remodel that we did

about a year ago what's your household income about 150 000 okay that's a lot of car okay yes it is so you're going to pay 50 grand making 150 and your question is what so i have cash up here in 25 000 which i know you're going to tell me to put it right to the debt. Yep. I also have an employee stock purchase plan that I've been participating in for about five years, and the stock has done very, very well. So I want to know, should I cash that out as well and put it toward the debt? Yep.

What's it worth? About $15,000 right now. Great. So we've got $40,000 of your $50,000 gone. Yeah. So it leaves us with $10,000, which we can pay off in about two or three months. Absolutely. You would not borrow money against your car to buy stock.

And effectively, that's what you've done. Right. Yeah, I think that's kind of been our problem. We've been trying to do too many things at once. Exactly. Getting on your baby steps, I think, is really in there. You may have a little bit of taxes, and you need to find out what they are, depending on how much that stock's appreciated since you closed on the deal,

what your basis in it is versus what it sells. And if you've held it more than a year, it'll be a capital gains rate of 15%. But talk to your tax person and get an estimate on your taxes so you know how much of that money to hold back. I don't want you to have a tax problem. So hold it back for the money you pay your taxes, throw the rest of it at the debt. And, yep, I'm cleaning out everything that is not a retirement plan. That's not a retirement plan.

That's open market stock. There's no penalty or taxes due other than capital gains taxes for cashing that out, and I would. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills.

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How are you? I'm great. Thanks. Good. How can I help? Well, my husband and I are on Baby Step 3B, and we want to pay cash for a house, but it seems like a really daunting task. When we were going to college debt-free and paying off debt, we could see the end of another semester or another bill paid,

but this feels like one really big thing. How can we stay motivated through that process? Give me your numbers. How much have you saved? How much are you saving, and what's the goal? Our goal is about $200,000, and we've saved about $30,000. What's your household income? North of $75,000.

Okay. How much are you saving a year? 30 to 40 okay so you've got four or five years left yes yeah okay what can you do to uh increase to increase your income to shorten this time frame or lower your price? I don't know. I'm taking a side job that I work on the evenings when my kids are in bed. What are you all living in now? A rental. Yeah. We have really low expenses.

How much is the rental? $450 a month. What's that house worth if you were to buy it? I'm not saying you're going to. Probably $125 to $150. Okay. I probably would do two things if I were in your shoes, three things. One is I would put a house on the refrigerator drawn out that every time we color in a bar,

we're that much closer to where we figure out some kind of a thing where I've got a visual that we're getting closer and closer and closer every month, right? So that's one thing I would do. The second thing I would do is do anything you can do to get your incomes further up to speed this up. The third thing I'd do is i'd lower my uh uh price range that i'm going to buy in okay i'd rather you you know about two years from now buy a hundred hundred and twenty thousand dollar house and pay cash and then do it again okay take two steps in other words and you know then let's keep saving and move up and saving and move up and saving and move up because the good news is in pocatella idaho 120 000 is not a bad house

right i mean it's not like you're living you know in some kind of super dump or something at that now some areas of the country you couldn't pull that off but that you can buy a decent house for that there can't you it's not what you want to live in for long, but if you had to live there for two or three more years while you saved up to move up to $250,000, that'd be okay. Okay. Because you'd have no house payment at all then, no rent, no nothing, right? Right. Yeah.

I'm going to drop my price and increase my income and put a house on the refrigerator door and get with it to where I can see a two or a three year, two years, three years from now, I'm going to be able to do this. And then two or three years after that, I'm going to be able to do it again and move, sell that house and move up, sell that house and move up. And don't buy a fixer upper at this stage in this way. Buy something you can just live in and save again. Live in and save.

Live in and save. Live in and save. Shante is with us in Atlanta. Hi, Shante. How are you? Shante? Good. Thank you so much for taking my call. Sure.

What's up? Okay. So Hubby and I are on two separate baby steps. I got started listening to you and reading all of your books. I know. But see, what happened was we are newlyweds. We've been married for three months now. Well, once you're married, you're not on separate baby steps.

As a family, you're on one or the other. You combine your finances when you're married. Yeah, and that's what we're trying to do now. It doesn't take but 20 minutes. Yeah, the thing is, we have so many things that's automatically drafted out of our account that we are trying to get to the point that we are having it all in one, but it's just, I don't know. Okay, let's stop a second. Okay, I'm talking about philosophically and relationally making a list of all the debts that we have and all the money that we have. Even if they're in two separate checking accounts for right now, we can still make a list and start calling it we.

Because when you get married, it's French. It's we, we. The preacher does not say, and now you're a joint venture. And so you really, really need to combine your stuff. So how much debt did he bring to the marriage? Well, a lot of it was coming from ours when it comes to the things that we cost, the cost for the wedding and things like that. But him on his own, he has about $9,000 in student loans.

Okay, how much do you have? How much do you have? It's mostly combined when it comes to the credit card debt. So us together, it's about $39,000. Okay. We've paid off about $5,000 so far. Good. And how much did you have that you brought separate from that to the marriage?

It's probably less than about $3,000. Okay. So all we do is just add all of that up and put it on one sheet. You're not on separate baby steps, by the way. Even if you were doing it separately, you both have debt. You're both in baby step two. Okay. Yeah, I think the thing is that he's never really saved up money on his own,

so he was more excited about getting to that $1,000. Oh, okay. So you have a thousand dollars i already have a thousand okay aside i felt like well maybe we're both already on two but no no you have one one thousand dollar savings between the two of you that we have and now you're on baby step two. And then we are going to list all of our debts, smallest to largest, credit cards, student loans that he brought, the $3,000 that you brought. And we're going to list all of these things, smallest to largest. We're going to pay minimum payments on all of them except the smallest one. And we are going to combine our income and attack the smallest one as fast as possible. Moving the automatic withdrawals to one account is a step that if that takes a little while, that's fine. But you can combine your budgets, your goals, and your process tonight. You're right, Dave.

Does that make sense? You really can. Yeah, you really can. It's because it's a mechanical thing. It's not a thing where you have to wait until, you know, State Farm doesn't draft the insurance from your account. He drafts it from, you know, whichever account. It may take a month to move all that stuff around.

That's fine. But you still have an income. He still has an income. We list them together at the top of the page. Then we have rent and food and lights that we are paying. And then we have the debt snowball that we are attacking, and we start walking right down through it. And so what do you make a year?

About $35,000. What does he make a year? About $40,000. Great. Okay. So you've got an $80,000 household income. How old are you two? I'm 34, and he's 36.

Awesome. Very cool. cool well you guys are in good place it's just what's going to happen is this is going to feel like you know mowing the grass in the front yard you're going to make you're going to see progress so quickly that you're going to go wow this is cool i can see it because i've done this for so long that that when you guys combine this stuff tonight and you really get your every dollar budget out and really put it all together you're gonna you're gonna look down you're going oh wait a minute that thousand dollar extra that we got over here let's just throw that on that smallest debt oh wait a minute that one's gone now and you're just gonna start going it's gonna start happening and you're gonna start chopping up credit cards it's

gonna be a party yes that sounds awesome and i want you guys I'm going to give you a wedding gift a little bit late. I want you to go through Financial Peace University. Have you all been through yet? No, we haven't. Oh, you've got to. That would be amazing. The only thing, he's apprehensive about being around other people to share his story and to talk about that and things. Just tell the class you're apprehensive about it and don't share it.

Okay. But go in there and learn and listen to other people's stories. talk about that and things. Just tell the class you're apprehensive about it and don't share it. But go in there and learn and listen to other people's stories and once you get comfortable you'll probably end up sharing it. It's not like we force you to tell people your underwear size or something. Okay. Alright, that sounds good Dave. Let me tell you what's going to happen.

The very first night you're going to find people that are dumber than you. Because there's always somebody in the class that's done something more stupid than you've done. So you start going, ah, my stupid's not even as big as your stupid. I can talk about it. But you don't have to. It's not required. Hold on.

I'll give you the class as my gift. As long as both of you promise to attend, it's my gift to you. And you have to promise to send some young couple when they first get married that need to combine their finances someday in the future when you're rich. You got to pay it forward, okay? Because you're going to be rich if you do what I teach you to do. This is the Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money.

They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance, and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is.

Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Thank you for joining us, America. This is the Dave Ramsey Show. Travis is with us in Chicago, Illinois. Hi, Travis. How are you? Hey, way better than I deserve, Dave. How are you?

Just the same. How can I help? So, long story short, I right out of college, right place, right time. And I was able to be an entrepreneur and start my own business. And it was going really well. I really enjoyed it. But then things changed and I ended up going to the dark side and taking a job with the real company and, you know, being a nine to five kind of guy. Lately this weekend, I was presented by my grandfather with the opportunity and his will, he's setting it up. He wants to know if I would want to run, uh, if I would want

from him, if I would want money, which would be about 400 grand, or if I would want his two, um, rental units, he has no debt, they're paid off, and they're worth about $300,000. And it's so tempting, you know, being in that entrepreneur spirit to go kind of back to that, but it's like, I don't know anything about that industry. So I'm like, well, you know, maybe I'll talk to you and kind of pick your brain for a minute. What kind of rentals are they? They're just condos. Okay, two condos that are worth $ hundred and seven thousand yeah paid off completely so no that's good news it's kind of hard to mess that

up uh you gotta you gotta put a renter in it and the renter has to pay right and yeah how old are you today? 27. 27, okay. All right. Well, I mean, the trick with tenants is, or a piece of real estate like that, is you can look at what it would rent for and see what the rate of return would be. And, you know, you've just got to become good with people, and that involves with tenants being fair when they have a problem with the property that is a legitimate problem. You take care of it. You fix it.

We're excellent landlords around our place. We take care of things very, very quickly if something's broken or is improper. But we're also very firm. We don't tolerate any misbehavior in the properties. And you're tearing up the property. And we certainly don't tolerate you not paying us. We'll move you along pretty quick and we don't have any big long psychological discussions with you about it it's uh you pay you get to stay you don't pay you don't get to stay that's how renting works and we're not mean about it we're not unkind but it's a very firm and very fair and friendly

environment and so our properties are all excellent properties we maintain them we're not but it's a very firm and very fair and friendly environment. And so our properties are all excellent properties. We maintain them. We're not being nickel and diamond. If the thing needs new carpet, we put new carpet in it. If it needs paint, we put paint in it after a tenant moves, that kind of a thing. And you need to plan on doing the same thing. So you've got the repairs and the dealing with the tenant,

putting a tenant in, and then a proper tenant that pays well and that isn't a head case of some kind, and then dealing with them when they're not proper and moving them on. So you have a hassle factor with that that goes with it. But real estate, I'm a big fan of real estate, as you probably know. I own a bunch of it, and it's a great investment. Okay. Yeah, and I mean, you know what?

I'm about four hours north of where he lives, so I know there'd be, you know, I might have to move down there and kind of watch it. I might have to, you know, find a company. I'm pretty sure, you know. Oh, that adds a little twist on it, though. So the properties aren't close to you then right but the good news is my job is uh i only work two weeks out of the month but i just i travel all the time so i'm gone for a week then i'm home for a week gone

for a week home for a week so it's like um you know i have a good trust network down in the city where he's at so you know i think i could do it, it's like, well, I don't know if that's – it seems like a big risk. But it's like, well – Well, the biggest problem you could run into is this. You try it for a year or two and it doesn't work. You either don't want to fool with it anymore, something shifts in your career or whatever. You can always sell them. Yeah.

I mean, if you try it for a year or two and it doesn't work, you can sell them if it's intriguing to you. But he's offering you more money if you take the cash? Well, he's got a little bit in an account. And so that's why. I mean, the house is about $300, but he's got about $50 to $100 in an account. He's like, it's just not enough to go and buy something in that area. But he's saying that would go with them.

So you'd get a $400 either way. It's just whether you take it in cash and condos or cash. Yeah. Okay. All right. There's not a wrong answer to this. It's a matter of which one are you going to handle the best and is going to cause you to have a great life 20 years from now that makes him proud

because you did a good job with the money, and that's what you want to make him proud because you did a good job with the money. But you don't think taking the easy way out is just, you know, taking the money and finding it and getting it invested in? No. No. I mean, you know, taking the money and, you know, finding it and getting it invested well? No. No. I mean, you can invest it. And the good thing about mutual funds is they don't hassle you.

Yeah. They just send you money. There's no hassle. Now, you don't get as good a return. A good rental property will give you a better rate of return than a mutual fund will. But it doesn't have the hassle on the mutual fund. You just go to the mailbox and put, you know and get your check and put it in the bank. It's not hard.

So, no, there's nothing wrong with that at all. And if you're conservative and careful with that at your age, you can turn that into a lot of money over time, just leaving it invested and you keep earning a living. And that money is always laying there if you decide you want to open a business. And opening and running a small business properly, which you've not experienced yet, but there's a lot more profit on that than there is on real estate or on mutual funds. But there's a lot more hassle.

You're running a business. And whew, did you sign up for it then? You know, so, I mean, running a business is exhilarating. One friend of mine said, I heard a guy, read a guy, who was it? The editor of Ebony Magazine said, the entrepreneur is the only person that can go from sheer terror to sheer exhilaration and back every 24 hours. And so that's running a business.

And, you know, but the rate of return, the capital that I invest into this business pays me a lot more than my real estate does, and it pays me a lot more than my mutual funds do. But again, there's a hassle factor spectrum there that we're looking at. Danny is with us in Richmond, Virginia. Hi, Danny. How are you? Hey, good afternoon.

Doing well. Good. How can I help? I got a question about whether I should stop putting money into my 401k, which is about $700 a month, and use that to help pay down about $30,000 worth of credit card

garbage that's just keeping us down. All right. That's good. Here's the rationale behind it, okay? I'm hearing in your voice and the way you asked the question, the words you chose, a level of disgust with your situation. You are sick and tired of being sick and tired. Did I read that correctly?

You hit it on the head. Okay. And if I read that correctly, then you're going to follow through and get the debt paid off very quickly. You're on board. You're going to get, you know, you're a tiger after the meat now, man. You're getting it, okay? This is time to make it happen, and we're going to get rid of this debt really quickly because I don't want you not investing in your 401K for a decade or something,

but for a couple of years, the power of focus, when you are just game on, we're going for the Super Bowl, we're not thinking about anything else, game on, we're getting rid of the debt, and if you're that guy, then you will make better progress by being focused than what little progress your 401K investment would have given you or little bit that you'll give up on the company match or something like that. So we do. We say if you're game on, temporarily stop investing and completely focus all of your financial, emotional, spiritual energy on killing the debt.

Yes. And if you're going to do that... My theory is that once I get that down, I can add actually more to when I pick back up my 401k contributions. Exactly. What we tell folks to do is baby step one, save $1,000 for a mini emergency fund. Baby step two is list all of your debts, not counting your house, smallest to largest. Pay minimum payments on everything but the little one.

Attack the little one. Work your way down those debts. When they're all gone and you're completely debt-free but the house, then raise your emergency fund up to three to six months of expenses. Once you've done that, then you should be putting baby step four, 15% of your income going into retirement. Hold on, Danny. I'm going to give you a copy of our best-selling book,

A Total Money Makeover, which will show you exactly how to walk those baby steps. Guys, let's talk about that timeshare pitch that you fell for. They promised you exclusive access to travel anywhere you want, tropical beaches, mountain getaways, or whatever. Oh my gosh. They claimed it was the affordable way to travel, and then they convinced you it was a good investment. But here's the deal. Search any auction site for your exact timeshare and see what it's selling for. It's listed for a dollar with no bids. That's not a good investment. Now, I know I'm just adding salt to a very old wound, but look, if you tried calling

the resort and they won't take it back, if you tried selling it and no one will buy it, call Timeshare Exit Team. Timeshare Exit Team will get you out. You'll have to be patient. It can be a long process, and it costs money, but it works. They're so confident in their exit service that if they don't get you out you get a 100 refund call 844-999-EXIT it's free to talk 844-999-EXIT timeshareexitteam.com Our scripture of the day, Proverbs 22, 29. Do you see a man skilled in his work?

He will stand before kings. He will not stand before obscure men. Michael J. Fox said, I am careful not to confuse excellence with perfection. Excellence I can reach for. Perfection is God's business. Carrie is in Spokane, Washington. Hi, Carrie.

How are you? Hello. How are you doing? Better than I deserve. What's up? Well, we are selling a piece of property, and we're going to be netting about $120,000 from it. And I'm just trying to find out the best thing to do with that money. We are currently in baby steps four, five, and six.

Okay. And so my options are to put the whole thing towards the remainder of the house, which we have $256,000 left on it. And with what we're currently paying, we'll pay it off in four years. Good. Or increase the kid's college fund. Right now we do $250,000 a month for each kid. And my five-year-old's account, we have $30,000.

And my three-year-old's account, we have $30,000, and my three-year-old's account, we have $10,000. And then the other one is to take my 401K, which is all traditional, and roll it into a Roth, and that account has about $112,000 in it. Good for you, guys. You've done very well. Congratulations. And the rest of our retirement accounts are all Roth already, and there's about $430 total in that. Okay.

All right. I do the Roth after I get your house paid off. Okay. Because especially since you've got all these other wonderful things happening in retirement. And baby step five is kind of vague, as you noticed. It's college funding. That's the step, right? which can mean almost anything, right? It could mean put enough in there and one lump sum that you're done with college.

It could mean I'm going to put a little bit in there and I'll catch up later. You're doing a really solid job based on the age of your kids towards college right now. All right. So let me give you a – so i'm going to throw it at the house the whole house okay so i guess the only other thing i had is my husband is a veteran he's disabled he does work full time but um his orthopedic issues he's having is probably going to limit his working um he's in a pension fund right now um but it's going to be probably only about 40 percent if he has to take

early retirement. What does he make now? He makes about $65,000. Okay. And what do you make? I make $120,000. Okay. It doesn't affect that then?

Okay. I think you're probably going to be house debt free in four years. Yes. Okay. Now, when that happens, let's walk through this. Here's what's going? Yes. Okay. Now, when that happens, let's walk through this. Here's what's going to occur. Okay. You're going to be in a position to finish off the kids' college funds with cash flow

very quickly. When that happens, any other monies you've got laying around, you'll use to do that last Roth roll. And then when the kids get ready to go to college, by the time they get there, you're probably going to be able to just cash flow it anyway if you wanted to because you're going to have a stinking payment in the world. But you will have already taken care of college, so we won't have to worry about it. So, you know, you're going to see this thing.

There's one last gear that you're going to go from fourth to fifth gear when that house drops out. And you're cruising right now. I mean, you know, you're rocking down the highway at a pretty high rate of speed in fourth gear but you're going to shift one more time into fifth gear and you're going to feel this lurch forward that uh that it's kind of going to almost feel like the first time when you got the other debts paid off remember how you kind of went whoa and jumped forward well we kind of did it in one night. I read your book, and about 2 o'clock in the morning, I paid off all my student loans.

But do you remember mathematically how there was kind of a lurch in the following 12 months forward? Mm-hmm. From the time you got those? Yeah, we did so much work on the house after that. It was amazing. Yeah, you had all kinds of room, and there was a shift in your life. That's what I mean. You follow me?

You got one more of those that you're going to feel, and that's four years from now when the house is paid off. And it's going to be the last really big one until you get up over $10 million in net worth, and then you'll feel another one, which you're probably on your way to that, it sounds like. But way to go. Man, you guys are awesome. Absolutely fun.

Benjamin is in Nashville. Hi, Benjamin. How are you? Hi, I'm doing well. How are you? Better than I deserve. What's up? So here's my question.

I have this job offer that it's not set in stone yet, but I'm pretty sure it's going to happen. And I'm trying to decide whether it would be best to sell my house or rent it out because the job offer, the way it works, it's for an air traffic control position, which would require me to move for four months get training but the room and board is covered and you would be living after that four months where and then after the four months it then it it they haven't disclosed that it could still be in nashville but it i have to sign a relocation agreement.

Agreeing to relocate? Exactly. I see. Okay. Well, what I would do is ask them what the probability is that you end up back in Nashville. You understand that they're not committing. I understand I'm not asking you to commit to send me back to Nashville. I'm trying to decide what to do with my house. So what percentage of the time does someone end up back in their hometown, Mr. Supervisor? And Mr. Supervisor will tell you, oh, it almost never happens.

Well, then go ahead and sell your house, right? Or if they say, well, it happens almost all the time, then you probably want to keep that house if you still like the house. And just let it, you know, you're just going to live the other place for four months and get your training done and come back home and you're going to want to have kept the house if that's the case uh if they can't give you any indication or won't give you any indication at all i would keep it until training is done and you get your final location if your final location isn't nashville sell it then if it is nash, then of course you can move back into it without any bumps in the road and without any costs or trouble or anything else. Adam is with us in Phoenix. Hi Adam, how are you? Good, how

about yourself? Better than I deserve. What's up? First of all, I want to say thank you for inspiring me. I really appreciate that. Second of all, my question is about cashing out my 401k i am 26 years old at this point and i've got roughly 16 000 in a 401k i've also recently switched jobs so i do believe i have the ability to take it out without the penalty is that correct no you take it out with penalty well without, without the early cash-out penalty? You'd have the early cash-out penalty. The only thing you can do when you switch jobs is you can roll it to an IRA without taxes or penalty.

Okay. Well, my question is I have currently about $7,000 in debt. What are you making at your new job? I am making about $700 a week. And with my current, I'm making about $150 more than I was in my previous job.

Okay, so you're in about a 20% tax bracket. If you pull the money out of your 401k, you will be taxed at your tax rate plus a 10% penalty. So it'll be about a 30% hit on the money. And so it's kind of like saying, hey, Dave, I want to borrow money at 30% interest to pay off my debt.

And the answer, obviously, to that would be no, don't do that because it's not smart. So instead, what I would tell you to do is to roll it to an IRA and get in touch with your SmartVestor Pro in the area. Just click SmartVestor at DaveRamsey.com and you can find a list of people we recommend in your area for mutual fund investing and IRA rollovers and those kinds of things. They don't work for me, but they do stuff the way I teach. And so then what you can do is fill out the paperwork for a mutual fund or two that you want your IRA to be in. You'll also sign the IRA documentation. It'll be sent to your old company, and they will directly send the money to the mutual fund company for your IRA.

That's called a direct transfer rollover, Adam, and that's what you want to do. You do not want them to give you the check because they're required to withhold 20% on it, and you're required to put in 100% to avoid the penalties or taxes, and you'll only have 80 until next year after you file your taxes. And so don't let them give you the check. You want to do a direct transfer rollover into a couple of mutual funds with at least a 10-year track record. I prefer longer, but I don't buy anything less than a 10-year track record in those situations. Just click SmartVestor, and they'll help you get that done.

So thanks for calling in, sir. Our thanks to Zach Bennett, our filling-in producer for James Childs, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host. 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, Dave's phone screener.

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