The Ramsey Show - App - How to Control Spending with a Cash System (Hour 2)

Episode Date: February 1, 2019

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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 choices. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. 888-825-5225 888-825-5225 paul starts off this hour in lexington kentucky hey paul how are you good sir thank you for taking my call sure what's up yeah i've been offered a job in iraq um i didn't seek out the job. It's just a professional acquaintance, and it pays $138,000. And I'm just trying to decide whether I should take it or not.

I got a lot of debt. That's the main reason I'm even thinking about doing it. What will you be doing? Petroleum logistics. Yes. Okay. What will you be doing? Petroleum logistics. Mm-hmm. Yes. Okay. Basically, I'm getting fuel from point A to point B in a timely manner.

Okay. All right. And that's what you do now? No, that's what I used to do. It was about a year and a half ago when my wife begged me to come home because some people got killed on the base I was at, so she wanted me to come home, so I had to switch careers, and I'm a truck driver now. Okay.

All right. So you came home. Yeah. Because she was worried about your safety. Yeah. All right. And how safe is the location you're talking about? From past experience, that's not a place i choose to go

but it pays well now okay all right what do you make now i'm sorry what do you make now um i just got hired on to a new job about two months ago. It looks like I might be able to bring home about $60,000. It's about $40,000 than what I used to make. You in town driving or over the road? Over the road. So you're already gone a lot. Okay. Yeah, I get to come home more now, but, you know, still.

How much debt have you got? Without my house, it's $154,000. On what? Without my house, my total debt is $154,000. On what? Oh, I'm sorry. $24,000 in credit cards, $4,000 on a car payment, $86,000 in student loans, and $38,000 on two signature loans. Does your wife work outside the home?

No, sir. She's always stayed at home. Okay. How many kids you got? Three. Okay. Well, the only way I know how to answer questions is if I was in your shoe. If I woke up in your shoes knowing what little I know about you from us talking for a few minutes, what would I do?

Okay. I don't do very well being away from my family. I'm pretty much a homebody. So it would be very, very difficult for me to do that. You, however, have done this in the past as far as the separation part and you drive over the road already you're already gone all week right yeah it was never like this until about almost you know two and a half years ago then i kind of had to change it so it's been a long road okay so the only way i would want to do it is if everybody is on board and all of this money is going to clear this debt,

and, you know, you get that debt paid off and come home as quick as possible, number one. The other only way I would do it is I've got to feel good about the safety issue. I mean, and I don't like your answer. Your answer sounded like, you know, like this is dangerous. Oh, yes. It's just, you know, the last time I was over there, I cleared off 75,000 in less than a year, you know. Yeah, that's not what I'm talking about.

I'm talking about you said that you wouldn't choose to go to this particular base. It sounds dangerous. Yeah, you know, there's, you know, last time I was over there, you get mortared and stuff. But I don't know. Yeah. Well, I mean, here's the thing, okay? People who are called to serve in the military, who choose to serve in the military, put their lives at risk to protect our nation. This is what they sign up for.

You're doing this for money. So you don't put your life at risk for money. So you've got to make that decision there. And you and your wife prayerfully look at that and think through, you know, is the safety issue something that is reasonable? I'm not going to get desperate. Hey, I want you out of debt more than anybody you'll ever talk to, but I'm not going to put you in get desperate hey i want you out of debt more than anybody you'll ever talk to but i'm not gonna put you in harm's way to get you out of debt

so you just gotta decide if that's the case i can't tell i don't know that much about what you're doing but i know that uh or where you're doing it or whatever but yeah you know and you gotta clear more than 75 grand000 off of this if you're going to do this. You've got to, you know, you've got to really buckle down. And back home, your wife's on, you know, beans and rice, rice and beans, scorched earth over here. If you're going to do all this, you've got to clear it. You've got to clear the debt and get back home as soon as possible and then decide what your career is going to be. Because it puts you in a different position for the rest of your life if you can clear it right fast.

So I'm with you. The math is appealing, but not if it puts you at risk in terms of, I'm going to send you over to die for money. We're not that mercenary. Tim is with us in Ruston, Louisiana. Hi, Tim. How are you? Hey, Dave. I'm doing great, sir. I'm being relocated about three hours away for work,

and I'm curious what to do with the equity we have in our home. We have our home plus two rental properties and a HELOC. I know for sure that we're going to pay off the HELOC, but after that, we should have about $175,000 in equity. Should we use that equity to pay off one of the rentals that we owe about $47,000 on, or should we roll all $175,000 into our new home? I would roll it all into the new home, and I'd sell the rentals. I wouldn't keep rentals that are four hours or three hours away. So roll all $175,000 and sell the rentals. And roll that into the new home too if you want to if you want i mean depending on what you're going if you are you buying a house more expensive than 175

um a little bit yes sir okay yeah then use some of the rental equities to do that here's the thing i love real estate long distance landlording is a good way to have a house torn up lose money not at a minimum not get the efficient return on investment. Because you would never live where you're moving and say, hey, I'm going to buy some rentals over in Ruston. You know, you're ending up with this by default by what has happened here. If I were in your shoes, I'd dump them and move it over to my primary residence first and then secondarily start saving up to pay cash for rentals where I'm actually going to be living and make my money there where I can keep my eyes on them. Even if you have somebody manage them, nobody watches it like you watch it.

I mean, you've got to be able to drive by them. You've got to have a sense of what's going on with your properties. It's just you long-distance landlord, that's how you end up with somebody changing their Harley oil in your living room. Doesn't work out good for you. Hey, thanks for the call. Open phones at 888-825-5225. We are glad you are here. This is common sense for your dollars and cents.

It's called the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend.

It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. Thanks for joining us, America.

Brendan is with us in New Orleans. Hi, Brendan. How are you? Hey, Dave. How are you? Pleasure to speak with you. You too, man. What's up?

So I found you a couple months ago, and I laid out my debt snowball plan of action. And with the coming tax return that I'll be receiving, I'll be knocking out two out of my five steps to my debt snowball. And then in the following 10 to 12 months, I'll be knocking out steps three and four, which include a business loan and a truck loan. Good. So the final step in about a year from now will be the condo that I own. I bought it for $110,000. No, your debt snowball does not include your home. It's baby step six.

Okay. Well, my question is, when I get to that point of freeing out all my debt, I'll have almost $1,100 a month in extra income. Including when you have the condo paid off or before the condo is paid off? Before the condo. Okay, cool. Good. And at what point should I start putting money aside?

Because I don't plan on living in the condo forever, maybe two to five years max. Yeah, I wouldn't worry about that today. What I worry about today is let's just – we teach a thing that – the debt snowball that you're discussing, where you list your debts smallest to largest, is within what we call the baby steps. And it is baby step two. Baby step one is save $1,000 before you do anything. Right. A little starter starter emergency fund.

Baby Step 2 is list all of your debts except your home, smallest to largest, pay them off in that order. And so when you get the truck and the business loan paid off, you will have finished Baby Step 2. And then that moves you to Baby Step 3. The next thing is you need to pour every dollar you can into a rainy day fund, raise that $1,000 account up to a fully funded grandma's rainy day fund, emergency fund, which would be three to six months of household expenses. Three to six times that so that you've got something if something happens. Now you're debt free, but the condo. You got that in place. Then we go to baby step four, and then you start investing 15% of your income into retirement. And you have children? No, sir.

Okay. Then baby step five is kids' college. You don't have to worry about it. We'll skip that. And baby step six is pay off the condo early. So we're going to finish paying off everything but the condo we're going to put in a rainy day fund aside once we've got the rainy day fund aside then we'll start putting 15 of your income into retirement any other money you find in your budget you throw

at the condo and if the condo doesn't get paid off by the time you sell it or if it does get paid off by the time you sell it and move either one one is fine, but at least we're working towards having your home paid for. Correct. Okay. Great. Does that make sense to you? I definitely appreciate the help. Sure.

It sounds like this is fairly new to you. Let me send you a copy of the book that outlines all these baby steps. It's called The Total Money Makeover, and it'll give you the detailed blow-by-blow of what to do first, what to do second, and why. So you understand not just do it because Dave said, but you understand why I laid it out that way and why so many millions of people have had such success with this idea. And that's without hype. I mean, I've sold six and a half million of these books.

We've got 14 million listeners to the show. So it's literally millions of people listening and doing this stuff. So, you know, because it's worked out this way. So hold on. I'll have Kelly pick up. We'll get you a copy of a book, The Total Money Makeover. Dana is in Jacksonville, Florida. Hi, Dana.

How are you? I'm good. How are you? Better than I deserve. What's up? Well, my husband three weeks ago was diagnosed with a very aggressive acute leukemia. Oh, my goodness. And our whole world has turned upside down. Yeah. Oh, I'm so sorry. How old is he?

47. Wow. How long have you guys been married? 23 years. Oh, my goodness, honey. Oh, my goodness. We have three kids. Wow. How long have you guys been married? 23 years. Oh, my goodness, honey. Oh, my goodness. We have three kids. Wow. We started listening to you a long time ago, and we followed some of your plan,

and we've not followed some of your plan, but thank God we got long-term disability. Mm-hmm. And we do have life insurance for him. Good. How much? We have $1.2 million, almost 10 times, but not quite his salary. Thank you, Lord. Okay, good. And we are in Jacksonville, and because his leukemia has got a very poor prognosis, we are seeking treatment in MD Anderson in Houston.

Absolutely. Yeah. But my question is, we have a lot of debt, and we have two houses, which I have one being sold. I have a renter in there, and they're going to buy it through a lease option. No. They're very good renters. I don't care.

They don't need a lease option. They didn't just buy the house. You don't need any renters. You need to get rid of this house. A lease option is just a lease. You need to get rid of the house. Does it have any equity in it? Very little.

With doing it this way, we were going to get about $12,000 out of it by April 1st. April 1st of this year? Yes, because we're doing some kind of closing. They're putting that money down. They've been in there for a year. Oh, they're going to put $12,000 down as option money? Yes. Okay.

All right, let me sidebar just a second, okay, because I've got to stop on that, and then we'll move on past that, okay, because it sounds like this deal's done. Have you got a pencil? Yes. To take notes? I have one in a second. Make very, very, very sure that this lease with an option to April the 1st, or it's going to close April the 1st, and they're going to have a lease.

They're going to put $12,000 option money down that they lose in the event they do not close on the property. How long is the option? One year. My realtor said that's what he's doing. Okay, that's it. So they will not get the money back. Right. And the other thing is make sure the lease language states and the option language states.

They have to both have this in there. In the event they are in default on their lease they also lose their option also lose their option so if they don't pay their rent they don't get to keep the option you throw them out you keep the money so in their lease option and where else did you say in the lease itself because they are leasing the lease and the option are two different documents. Okay. Okay. And they are also taking a hundred percent. In the lease and in the option both, it states that they lose the option.

Okay. The option is voided in the event they are in default on the lease. Okay. You follow me? And if they don't pay their rent, they lose it. Okay. Let's set all that aside because that's a minor thing compared to all this other stuff you're facing. And so how much debt have you guys got?

Do you want the total debt? Not counting your real estate. Not counting houses. Not counting real estate. Okay. All right. So I have $49,000 in unsecured credit card debt plus $3,300 I owe to the IRS. Mm-hmm. credit card debt plus $3,300 I owe to the IRS. I have a truck that I owe $12,000 on and it's worth

about $6,600. He does not need a vehicle. I have a car which is I owe $22,000 on it and it's worth about $13,000. I have a camper but my brother buying that, so we don't even have to discuss that. He's buying it for what I owe. And that's all my debt besides the houses, the two houses. Sell a car. Which car? The $22,000 one. Okay.

If I sell that and have to drive between Florida and Houston, gas is going to cost me a lot. I don't mind selling it. No, it's not. You can sell a truck, too, and get you something that you can drive or fly back and forth. Okay. Cheaper than having a $22,000 car. Okay.

This car is killing you. Okay. And what is... I have his take-home pay before he's losing. How long has he got that coming in? Not anymore. That was the last one. Already done.

Okay. I'll tell you what. Let's do this. I'm going to put you on hold. I'm going to have one of our coaches that's been through our training walk with you guys through this at my expense. It's not going to cost you a dime. A radio answer is not going to help you. You need somebody to walk with you and help you with all these individual decisions, and I'm going to pay for it.

We're going to take care of it. You hold on, okay? Wow. Wow. 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

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Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org Thank you for joining us, America. We're glad you're here. We give you the same financial advice your grandmother would, only we keep our teeth in. It's called The Dave Ramsey Show. It's common sense for your dollars and cents. We're glad you're here.

Ashley's with us in Salt Lake City. Hi, Ashley. How are you? I'm good, Dave. How are you? Better than I deserve. What's up? You know what?

Me and my husband, we've been married for just over a year, and we have a new baby son, and I just can't get him, get my husband on board. I can't get him to read any of your books or listen or anything, and I just know that he needs to be on board in order for us to really dig our heels in and get going on this debt. Okay. So how much debt do you have? We have about $36,000. Okay.

And when you say, honey, we need to sit down and develop a plan to get out of debt so that we can build some wealth, we have a kid now, it's called responsibility, what does he say? He says, I know, um he's kind of open like halfway in halfway out um he knows that we have to do what we have to do but um i feel like he really just needs to learn some more to really get that fire going yeah how old is he he's 24 and i'm 21 okay all right um yeah i i i think that you know this is about him taking responsibility you as a woman him as a man for being adults and saying we're going to get control of our lives um i'm not sure i have a formula for making somebody grow up um and having a baby a lot of times doesn't i'm a little shocked that little wake-up call you're holding right there

didn't didn't shake him into reality going whoa i gotta go i gotta man up get this done i'm a little shocked about that and so i mean i think you just my guess is this when When Sharon and I were first married, it took us about seven years to get to where she understood that I didn't hear subtlety. I still don't hear subtlety. Yeah. Her dropping a hint does not work because I don't see it. I don't get hints. You just have to tell me, and then i can hear it and so it might sound something like this actually it might sound like hey i need you to man up we got a baby i'm scared

this is a lot of debt and i need you to step up beside me be a grown-up and help me figure this out you not doing that is not okay see that's like you being real blunt and not instead of being just kind of sweet and talking about it and thinking how we can handle it and all that kind of thing but that's what you need to do you have to get up in his grill and and you know it may feel that way to you to him he's like oh this is really important to her i mean she talked about it before but like, oh, this is really important to her. I mean, she talked about it before, but I didn't get this big deal. You've got to let him know that it's a big deal. And I think that'll help you.

Hey, thanks for the call. David is with us. David's in Las Vegas. Hi, David. How are you? I'm good, Dave. How are you? Better than I deserve.

How can I help? All right. So this is the situation. Me and my fiancé are getting married in four months. Yay! Thank you. We have two properties. One is paid for and rented at the moment.

The other one we live in, and we owe $130,000. We make $170,000 together, and we are thinking to buy another house when we get married house where we can grow our family in so my question is should i start saving for a down payment before paying off this house and rent this house and obviously will bring our income higher or should I just pay off this house first and then move, you know, buy another house later? You have any other debt? No. Okay.

You have your emergency fund of three to six months of expenses? Yes, we do. Good. Good. Well, you're ahead of the game. Yeah. Well, you're at the point then that, I mean, for that matter, you could just sell this house, take the equity, and go buy another house that you want,

and put that on a 15-year fixed as long as the payment's less than a fourth of your income, then I'm okay with that move, and then just lean into that, pay that house off. Okay. Might as well be living there. What did you say? You might as well be living there. Yeah. Yeah, it's true we were thinking about building um like a rental um business you know so that we can have passive income

throughout the years and the house that we live in right now has a lot of rental potential so that's why we didn't want to sell it. We wanted to hold on to it and turn it into a money-making machine. Yeah. Well, I don't buy rentals with debt. And when you pay that house off and then keep it, but then go get a mortgage on your new residence, that's just like borrowing money to buy a rental. Yeah.

And so I'm going to slow down your rental portfolio goals and say, okay, if you want to do rentals, you might want to live in that house a little longer and just get it paid off, get the rental paid off, then save up and buy some rentals, and then save up and pay cash for your next purchase in order to keep this. If you can't pay cash for the house you move into, then you're not ready to do rentals. I see.

That makes sense. Yeah, because I want you – if you were just – let's say you just had one house and you were living in it, and you said, hey, I want to start buying rentals. I would say pay off your house first and then save up and buy rentals in cash. I've done that. I've done it for you know 20 years i got a bunch of equity and a bunch of real estate that's all paid for it's wonderful i love it i'm a

real estate fiend i'm with you but i'm a paid for real estate fiend i don't do mortgages and i just have i mean i just matter of fact i just went over our year-end closes on our rents and our expenses and our you know all our different llcs that own our real estate uh with my son-in-law, who runs all of it, in a meeting this morning. And man, you talk about cash flow. When you don't have any payments, these things cash flow like a bandit. It's incredible.

So I'm with you, but we've got two goals, and you need to decide which one is primary. Goal number one is I want a bigger house. Goal number two is I want rental real estate, and I want all of it paid for. Which one do you want to do first? If you want to do rental real estate, then get all this paid off. Live in the one you're living in, and get the other rental paid off, and then save up and pay cash for your next house,

move out of it, rent the one you're in. If it's primary to move into a bigger home then let's just sell the one you're in move into the bigger home get it paid off get your rental paid other rental paid off and then save up and pay cash for your rentals going forward that was two different strategies but it's whichever thing one you want whichever thing you want to be primary and you all have got to decide which is your biggest goal my guess is you're going to move into that other house and sell this one that's my guess newly whichever thing you want to be primary, and you all have got to decide which is your biggest goal. My guess is you're going to move into that other house and sell this one. That's my guess.

Newly married, that's probably going to be your first step, and then you're going to work from there. Hey, good question. Thank you for joining us, man. Open phones at 888-825-5225. Justine is on Instagram. I want to use the envelope system, but I'm not sure where to start. Any advice? Well, we have taught and we use the envelope system for just a handful of things.

You don't use the envelopes for stuff you pay on the Internet or stuff you pay through the mail or something like that. You use envelopes for things you buy out and about when you're moving around, like clothing, restaurants. For years I did it in gasoline. I've converted the debit card because I'm too lazy to walk inside now. I'm on my gasoline at the pump, right? Entertainment, groceries. These are things you buy when you're out and about. You're not sitting at your desk paying bills.

If you're sitting at your desk paying bills, you're writing a check or paying a bill on the Internet, and you're recording it into your every-dollar budget. That's not what you use in an envelope system. So groceries is an example. All you do is you figure out, okay, Mike, what I plan to spend on groceries this month is $800, and I get paid twice a month.

So each time I get paid i'm gonna put 400 cash in an envelope and i'll buy all my groceries out of that envelope and i'm not going to buy anything out of that envelope except groceries and that's how you get started and you put the next 400 in there when you get paid next time otherwise you just write a check or use debit card at the grocery store and you'll overspend so when you put actual cash in the envelope you spend less plus you know when you're out of money in that category because the envelope's empty. It's powerful. thank you for joining us america this is the dave ramsey show

justin is in detroit michigan how are you justin i'm doing pretty good dave how about yourself better than i deserve. What's up? I have a question for you. I've paid off half my debt over probably the last eight months and working on the rest for this upcoming year. Good. And my question comes for you. I like your opinion on step four versus investing the 15% into Roth IRAs. I had kind of a different mindset for retirement in which I'd put the money into my plan. I was thinking about was putting money into rental properties and that would be kind of sidestepped me and put me over into retirement eventually versus my current job.

And I was going to find out from you your opinion on investing in the investment properties versus the Roth IRAs. I wouldn't do it versus, but I would definitely do both. What's your household income? Let's see. I think last I checked it was about $105,000. Okay. So $15,000 a year is 15% of your income going into baby step four in Roth IRAs and 401Ks and good growth stock mutual funds.

$15,000 a year will not put you in the real estate business. Yeah, I didn't think so. I figured it would be one or the other. No, you're missing the point. It's not one or the other. Because you're suggesting that $15,000 a year, baby step four, should be done in your real estate, and I'm saying it's not enough to get you into real estate.

You can't buy anything with $15,000. Yeah, to buy properties. The properties I was looking at are between $30,000 and $60,000. They'd bring in some okay rent. I figured that'd be a starting point yeah i would do i would do that in addition to 15 going into your roth iras and 401 case the 15 000 going into those things is not going to keep you out of the real estate business nor is it gonna is it enough to get you into the real estate business and so you know i'm just going to do my real estate over and above baby step four, if I'm in your shoes.

It's what I've done, by the way. And I'll tell you the net result all these years later, Justin. I'm 57 years old. I've got millions and millions and mutual fund investing stuff into real estate. And so it has ended up that probably my mutual funds are a fairly small percentage of my net worth, less than a fourth of my net worth. Most of my net worth would be composed of this company and the real estate that I own.

And so that's where I've ended up making my wealth is in those two areas. Now, the mutual funds have made me, I've got tens of millions of dollars in mutual funds, and in good growth stock mutual funds and 401ks, just like I teach, I do it every month, just like I teach. But what my point is, is that you keep doing 15% of your income into that. And as your income comes up, and as you buy paid for rentals, and as you get more money from those, you buy more paid for rentals, and you buy more paid for rentals and you buy more paid for rentals you're going to end up owning you know 75 of your net worth being in real estate

and it's going to be good that you don't have it all in real estate and it's good that i don't have it all in real estate even though i'm a lover of real estate so calm down take your time do this right be the tortoise, not the hare. Don't try to find a shortcut. There's not one. And do your 15% into good mutual funds, maybe step four. Above that, save and pay cash for your rental real estate. And that's what I've done. That's what I would tell you to do.

Thank you, sir. Open phones at 888-825-5225. Amanda is in Cincinnati. Hi, Amanda. How are you? Hi, Dave. I'm better than I deserve. Thank you so much for taking my call.

Sure. What's up? So my husband and I, thanks to you, were able to pay off $105,000 in 14 months just over a year ago. Good. And since that time, we've been able to save our emergency fund, save our down payment and buy a house. Wow. Now we're starting to look back into our retirement. Wow. Good for you. Well, thank you. So my husband and I, well, my husband has a Roth IRA that he started when he was 18 years old that has $64,000 in it. He has a IRA, a regular IRA from a previous that has $7,400 in it.

And we were just wondering if we should roll that into a regular IRA or into his Roth IRA. It won't go into his Roth. A rollover has to be a separate account, but you can roll it to a Roth as long as you have the cash above your emergency fund to pay the taxes created by that. We do. Currently, we have just over $47,000. Okay.

So, it's not going to be a lot of tax. I mean, $2,000 or something tax on $7,400 when you do that. So, you know, roll it, but when you roll it, you're going to roll it to a Roth in good growth stock mutual funds, just like we all talk about all the time, right? Yeah. And then you're going to have taxes due on that when you file your tax bill next year, not this year, when you file your tax return next year. And then what you'll do there is, of course, just pay the taxes. And effectively, what you've done is, mathematically, it's as if you've invested another two grand.

Because then we wouldn't have to pay the tax on it exactly because you've already paid the taxes on it now and okay and the whole thing the whole account in a roth is tax-free what you've put in because it's after tax now and all the growth is tax-free so and you guys sound like you're young how old are you uh we're 27 and 28 i love it you guys are gonna have so much money you are doing so good keep it up well done vivian is with us in orange county hi vivian how are you hi i'm good you know what i i have a 2017 Ford Fusion, and it's financed at 0%. So I was thinking, should I just return it, a voluntary repo? No. And take that hit on my credit because the goal is to cash flow everything, right?

Right. So what do you owe on the car? $25,300, something like that. All right. And my payments are $478 a month with car insurance at $132. So I figure that's like a total savings if I get rid of it, $600, so that I can start my emergency fund. Yeah, and so you owe $25,300. Have you looked up what the car is worth?

Yes, like $17,000. On what? What do you mean on what? Well, as a trade-in, a retail, a Kelley Blue Book personal private sale? The Kelley Blue Book and also a trade-in. Kelley Blue Book what? Trade-in or private sale? Trade-in. Okay, trade-in. Kelley Blue Book what? Trade-in or private sale? Trade-in.

Okay. Trade-in is wholesale. So you would never sell a car for wholesale unless you were about to be repossessed or something, and you're not. You're talking about a voluntary repossession, which is really dangerous. So that car is probably worth $20,000, $21,000 were you to sell it to an individual on private sale. Look that up on Kelley Blue Book and you'll find I'm right. Who do you have the car loan with?

Ford Credit. Okay. Do you have any credit? Is your credit destroyed or bad or what? It's like in the $600 range. Okay. All right. Do you have any money?

No. No. Okay. So that's why you're calling me. Well, I got it because it was convenient. My other car broke down. You impulsed it. Yeah.

Yeah. And so you do need to get rid of it. But what we need to do is find a way to borrow from the local credit union or the bank about $5,000 or $4,000, which will get you out of this car, and you sell it to an individual. Here's the problem. If it is private sale, $20,000 or $21,000. If it's wholesale, $17,000. If you toss them the keys and hand it over on a voluntary repossession,

they're going to sell the car for $10,000, and they're going to come after you for the difference. Right. And so what you do by selling it yourself is you control the size of the hole you're in. Not to mention not destroy your credit. Not destroying your credit is a secondary issue for me. But you need to control the variables here. When you hand that car off to somebody else and just walk away, not only do you destroy your credit,

but mainly the big problem is you lose control of what the car sells for. And then they're going to come after you for the difference. I'd rather you be $5,000 in the hole than $15,000 in the hole. So you control this. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour is over, but you can find more great content on our YouTube channel. Catch the most watched Dave Rantz, debt-free screams,

and the very popular Everyday Millionaire segment. Go to the Dave Rantz Show YouTube channel and click subscribe.