The Ramsey Show - App - How to Do a Zero-Based Budget (Hour 3)

Episode Date: September 3, 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. Thank you for joining us. Open phones this hour at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Scott starts us off this hour in San Jose, California. Hi, Scott. How are you?

I'm good. How are you? Better than I deserve. What's up? I'm trying to figure out if I should pay off some of my debt today or if I should wait until the end of the month to figure out more if my budget is in line with what I set it up like. Okay. Is this your first month doing a budget? I started last month on every dollar, and then as I was reading in the Total Money Makeover, when I got on my budget,

I realized I had a ton of quote unquote leftover money that I didn't really give a home properly last month, because I know you say that the first month can kind of be wacky for doing the budget. So this is the first month where I am doing it from the beginning of the month. And I feel like it's more in line with what I'm actually going to end up doing throughout the whole month. Okay, good, good. And so how much extra money do you think you're going to have through the scope of the entire month to throw at the debt? About $6,000. Wow.

You've got a great income. Well, I'm just trying to be more on top of knowing where my money is actually going. I mean, it's like you always say. After living expenses, you're going to have $6,000, you think, to throw at your debt. Yeah, that's a combination of some savings that I have that I'm going to wipe it down to only $1,000. Okay, I'm asking out of your budget. Out of your budget, how much money do you have? Okay.

So I guess excluding the savings, I have the leftover money from last month. Now, what in a month? How much leftover money in a month do you think you're going to have in one month? For this month? Yes. I'm not sure because I guess I'm accounting for only last month. I'm not sure for this month how much is actually going to be left over. You did a budget.

Yeah. And the budget is where you give every dollar a name. Yes. So on your budget, what are you projecting to have as leftover money to throw at your debt in this calendar month only? I'm not going to have anything left over. Okay, so you're spending everything you make to live. No. I guess I'm not understanding.

For the month of September only, not for August and not your money in savings. For the month of September, after you pay your living expenses, do you have any money left to throw at your debt based on your budget for September? Yes. How much? That would be the $6,000. No, it would not. You said that included savings and last month's money.

Yes. I don't want that figure. Just in September's income minus September's expenses in your September budget, do you have any money left just from September? Not savings and not August. Oh, okay. I see. Yeah. So that would be, I'm and not August. Oh, okay. I see. Yeah.

So that would be, I'm looking at around $1,800 probably. Perfect. Now we're getting there. So that tells me you've got about $4,200 between August and savings. Does that sound correct? Yes. Yeah, that's probably right. Do you have your $1,000 set aside for Baby Step 1 aside from what we're talking about,

or is that included in these numbers? That is set aside in a separate fund. Perfect. Okay, so we got the entire number to talk about. Good. How much income, what is your household income a year? About $100,000. Good, good.

Okay, and how much debt do you have not counting mortgage? $15,000. Excellent. Okay. uh 15 000 excellent okay all right what i would do is say um i would plan on throwing all of the 4200 at your debt at this moment okay you're not going to be 1800 dollars off in the month right okay and i would plan on you know throwing that 1800 at it as the month goes along as you you know every week you're going to know how accurate you are towards the end of the month so that by the end of the month if your budget was accurate you've also put another 1800 on your debt

right okay but if you got 1800 extra in your pocket today and you don't know about that part between now and the end of the month, I'd let that ride a little bit. Let's see how a few of these weeks go until you get this dialed in a little bit. But the $4,200, boom, it's gone today. Gotcha. Is that logical to you? Yeah.

Yeah. Thank you for clarifying that. Okay. It just took me a minute to get my head around the numbers with you and to know where you're going. So what I'm saying is, is your only risk on your budget inaccuracy is that $1,800. The other part's not risk. We know what that is. That's clear money. Throw that at the debt.

That's the $4,200. But the risk is whether the $1,800 is accurate or not. And every week that goes by, we know it's more accurate because you're further through the month. And by the time you've done this two or three months, you'll just be able to do it. And the good news is you're going to be out of debt pretty quick because we just got you down to about 10,000 now from 15. And then you're going to be able to finish that off in, what, five months or so, give or take. So good job, man. Well done.

You're going to be there. You got this. Bob is with us. Bob's in Kansas City. Hey, Bob, how are you? I'm great. Good. How can I help?

Well, I'm retired. I'm 59 1⁄2. I've got my monthly income is about $4,500 a month. Cool. And when I exited my job, I had an exit bonus that they required me to put into a 403B. And it is $35,000. And I owe $25,000 to pay my house off and I'd be debt free. My amortization shows that if I kept my home loan, I would pay $6,500 in interest. If I were to cash my 403B in, I'd have to pay $8,500 in taxes, but I could pay my house off.

Okay. So you still are making money household income, right? Yeah. It's my pension. Uh-huh. Okay. And that's the $4 my my pension uh-huh okay and so that's the 4500 and that's what puts you in the tax bracket that causes 8500 where the tax is on a 45 000 pull a 35 000 35 000 our

pool which nets you the 25 to pay the house off so have you got any other nest egg uh i have a reserve okay and uh my pension it's a very stable pension, and I'll receive that with increments of inflation for the rest of my life. Yeah. How much of a reserve do you have? I have about $15,000. Okay, and you don't have any other money saved anywhere other than this 403B? That's correct.

So basically you're going to have $15,000 in a pension to your name, and that's it. But your house is paid for. Okay, in a reserve. In a reserve. Yeah, 15. Like on my reserve. Yeah. I mean, you don't have any other money.

Just my pension that comes in. I got that. Okay. It's kind of dangerous, but I like it. I want you to go back to saving money again, because I want you to have a bigger nest egg, even though the pension is there. But you should be able to save money without a house payment with a $4,500 income. And, hey, you're only 60.

I mean, maybe there's some fun you can go have and make some money doing it. Might be something to think about in addition to this. 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 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.

Holly is with us in New York. Hi, Holly, how are you? I'm good. How are you, Dave? Better than I deserve. What's up? It's surreal being able to talk to you, actually. Just want to get that out of there. Well, thank you. How can I help? My husband and I are trying to decide whether or not we should sell our truck um we owe twenty nine thousand

dollars on it we have a total debt of fifty eight thousand which is down um ten thousand since we started your program in april we make ninety thousand dollars a year um but we are planning to start a family in january and we currently rent a two-bedroom apartment above my in-laws which is also kind of a struggle so i've been adamant to sell the truck but my husband has said well you know dave would say if you can sell or pay it off within 24 months then you should keep it and he said and according to our calculations we could pay it off in 23 months. If you can be debt-free other than your home in 24 months.

Right. We don't have a home. I'm saying 100% debt-free, not just truck debt-free. Right. That includes everything. I know. So $54,000 you're going to pay off in 24 months. We actually had intentions of paying it off in 11 months if we were to sell the truck,

but we would be able to pay it off making... And it's less than half your annual income, so yes, that's okay. However, it is a large portion of your debt, more than half of your debt, and you've got some other pretty big goals that are bigger than trucks right babies in a place to live away from the in-laws exactly those are bigger goals than trucks right how old are you two um i'm 28 and he's 33 and how long have you been married pressure how long have you been married we've been married for three years but we've been together for 11 is it your parents or his parents that own the place you're in

um it's his parents doesn't bother him as much being there as it bothers you well he does complain doesn't bother him as much as it bothers you apparently not yeah well that would be normal i mean if one of my daughters moved back in with my son-in-law and with us it'd be pretty normal for her to live there she grew up there she knows our idiosyncrasy she knows all the ramsey weirdness he'd have to tolerate it all as new weirdness right that's just kind of normal you're the outlaw um yeah i i uh either one is fine but i think you have a valid point um and so what would i do if i woke up in your shoes if if we were living my in my in-laws garage apartment and i had a twenty nine thousand dollar truck and it wasn't going so well

relationally hanging out there and we wanted to start having babies after hanging out together for 11 years um yeah i think the truck's in the way i'm dumping the truck probably but it's not because it doesn't meet my guidelines it's because it's in the way of things that are more important to me if it's me right and you two just have to decide that. If his truck is more important than babies are getting out of his mommy's house, then maybe you keep the truck. That's an okay thing to do. Mathematically, it's not a bad thing.

If you guys both said, we love the truck, it's okay, I'm not going to put it in the stupid column. It's just a matter of prioritizing your life. And what you all are disagreeing on is what comes first. You don't even mind even having a nice $30,000 paid for truck. You don't mind that. You just mind that this thing's in the way of these other goals that are more important and more noble to you and really to most of us listening to you. So if I'm him, I'm selling the truck.

I'll get me another truck later after I get babies in the house. Because babies in houses are better than trucks. And I got a couple of really nice trucks. I like trucks. So just to go ahead and put that out there. Hey, thanks for the call. I'm sorry I couldn't just throw the penalty flag one way or the other. You guys got to fight through this.

Open phones at 888-825-5225. Thank you for joining us, America. Rachel is on the line in Philadelphia. Hi, Rachel. How are you? Hi, Dave. It's so great to talk to you. You too.

What's up? So my husband and I are on baby steps four, five, and six. And he has a civilian job but works part-time in the military and just earned full eligibility for the GI Bill. Cool. And neither him or I plan to use that for us to continue schooling. So we have two kids, ages 6 and 4, and since birth we have been doing the full $2,000 a year for each of them. And we are wondering now if we, knowing that we have this GI Bill to possibly use for one of them,

do we need to continue to save fully for their college funds? No, we don't have to pay fully for their college. Right. So you're right. You can lower this. What you need to do is do some calculations and maybe talk to your SmartVestor Pro and say, based on where we are and based on the fact GI Bill is going to pick up X and we're going to need Y,

how much more do we need to put in to hit Y? Okay. You see what I'm doing? You see my formula? Yes. Yeah. The amount you need for college was just reduced by this wonderful benefit from him serving his country. Tell him thank you.

I will. So the amount, you're correct, it was reduced. But what we need to do is just be a little bit mathematical about determining how much our need was reduced. And so you've got to keep in mind, you've got to buy a dorm and food and other stuff while they're in college. It's not just tuition. Right. other stuff while they're in college. It's not just tuition. Right, and the GI Bill does provide a stipend, basic housing, and living allowance based on where you are. For junior or just for you?

No, for whoever is using the benefit. Okay, all right. And both kids don't get the benefit, just one? No, no, no, yeah, just one. And so we would obviously still save for the other one. We were wondering, we've heard you caution people about, not in this particular thing, but when you're relying on the government to follow through. Yeah, I'm not that worried about that here because, A, you're not relying on it 100%.

Okay. And, you know, if the political climate, the winds changed, and in order to balance the budget, they start jerking, you know, benefits from veterans and benefits from service people, which I kind of doubt is political suicide. But if they did, okay, if they did, then you could just bone up and say, we're going to load up that thing a little more. We're going to go back and hit our 529 again, hit our ESAs again.

But for right now, I would just recalculate what your need is and lower your need. And, oh, by the way, why don't you just keep both of them running, both kids running, and don't just assume which kid's going to use the GI Bill, because your 529s or ESAs can be switched to a sibling. And so if the younger one ends up using the GI Bill, we can shift all the money to the older one, and vice versa if that occurred. And so that's where we want to go. Hey, good question.

Thank you for joining us. Open phones at 888-825-5225. Casey's with us in Nashville. Hi, Casey. How are you? Better than I deserve. Thanks, Dave. How are you?

Just the same. How can I help? Yeah, I'm calling because I'm a single mother of two, and I work a straight commission job. And I have some debt. I'm in baby step two. I was just wondering if it would be okay to have a bit more of an emergency fund because if I'm out a couple days sick or if I have a slow month, it could really hurt us financially.

Now, how much do you have in savings now? I have about $5,000 in savings. Okay. And what has been your best month and your worst month on commission? My best month has been probably about $8,000 and my worst month has been about $1,500. Okay. And how long ago was the $1,, and how likely is that to occur again? It was in December of last year because I got sick, and I was out for a week.

Okay. All right. So if you get sick again, you'd have that same situation. Right. You were out for – it hurts you more than a week, though. Yeah. Yeah, well, because then it hurts pipeline and a lot of different things. Yeah, everything else, yeah. Cool.

What do you sell? Cars. Good for you. Very cool. Okay. I think I probably would have it a little bit higher. Okay. Because you're covering income volatility and fluctuation, and you are the sole breadwinner.

I wouldn't keep it a whole lot higher, but I think somewhere in the range where you are is fine. I wouldn't put another dime in it, though. That's more than enough. Maybe $3,000 even. Maybe even $3,000. But just a little bit to get you through a really down month. Because one thing about knowing the number you need to hit to eat,

it kind of motivates you to show up and sell. Yeah, that's definitely for sure. I always tell people that it just depends on your... Yeah, exactly. You just don't want to be completely desperate and hungry, though. It makes you kind of ugly. This is the Dave Ramsey Show. Listen up, my friends at Churchill Mortgage.

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today to learn more. And while you're there, don't forget to enter the end of summer giveaway. Call Churchill Mortgage today at 888-LOAN-200 or online at churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender 761 Old Hickory Boulevard, Redwood, Tennessee 37027. Dominic and Andrea are with us. Hey, guys, how are you? Great. How are you doing? Better than I deserve.

Welcome, welcome. Where are you guys from? Appleton, Wisconsin. And that is near? About half an hour south of Green Bay. Okay, we'll count it that way. All right. Southerners have to have a point of reference there on that stuff.

Good. Welcome, guys. You're here to do your debt-free scream, huh? Yes, sir. Very cool. How much have you paid off? $68,000. And how long did that take? 23 and a half months. Good for you guys. And your range of income during that time? It was $72,000 to $84,000. Very good. What do you guys do for a living?

I am an inventory manager for a vehicle parts supply company. And I work in IT at a credit union. Very good. Good for you guys. Very good. What kind of debt was the $68,000? A little bit of everything. We had two cars, a bunch of student loans, 401k loan, credit cards, cell phones, a little bit of everything.

Okay. Just kind of normal. Normal sucks. And then something happened 23 months Okay. Just kind of normal. Normal sucks. And then something happened 23 months ago. What was that? We got married. Oh, there you go. Just like that.

That'll do it. Yeah, and now it's time to clean up the mess, huh? Exactly. No more goofing off now that we're married. Okay. No, I'm done. So who brought the most debt into the marriage? 50-50, actually.

Really? Yeah, it was right down the middle. Okay. into the marriage? 50-50 actually. Really? Yeah, it was right down the middle. Okay, so where did this discussion come up in the dating slash engagement process? When did you sit down and go we're going to have to work on this?

You can go. So about two months before we got married I had listened to a program on Focus on the Family and there was a lady and I don't remember her name and I feel bad because she kind of started this for us, but she was teaching on similar principles to what you teach on. And so when I was listening to that at work, I decided to cut up all my credit cards based on what she was talking about.

And so after work, I was hanging out with Dominic, and I told him what I did, and he was like, are you kidding me? Do you know what that's going to do to your debt score and everything? Your credit score. You had it right the first time. It's a debt score. Exactly.

He was like yelling at me. We're doing it. And then a couple weeks later. Yeah, I came across, you know, we were going through our wedding budget, and Andrea was crying because we knew that we couldn't have the wedding that we really wanted because of where our finances were at. And then looking at, you know, the debt that we had, bringing that discussion up. Then just a couple weeks later, came across a Financial Peace University kit at my credit union.

And then we decided, hey, let's tackle this. So on a ride home from our honeymoon, we went just on a really small one because we wanted to tackle the debt. And once we crossed the Wisconsin border back in, I put in the first CD. Wow. And that's how she went. Okay in, I put in the first CD. Wow. And that's how she went. Okay, so you took the class at home then? Yeah, we listened to the CDs on any drives that we took and stuff. And I read the Financial Peace book then right away, a couple days.

And then we just took it from there. So when she cut up her credit cards, you're like, you're crazy. But then you get on board, and now we're doing this together. It's all in. And so from day one, you were on it together exactly that's pretty cool because it's unusual how many of your friends who just got married fight all the time about money most of them yeah i don't know how many fights that they have but i mean that was kind of part of our journey is looking at a lot of our friends kind of getting married around the same time as us.

But we were just doing things a little different. Like we weren't moving into houses right away or we weren't having kids right away because we just want to get rid of this before we bring a family into a crazy financial situation. Okay. Very good. Good for you guys. Well done. Well done. Well done. So if someone asks how you did it, because you averaged $1,500 a month average going into this for 23 months. The first 23 months of your marriage, I might add, which is no small step.

And they ask, how did you get out of debt? What are the steps? What are the principles? What are the main things you've got to do if you want to get out of debt? What do you tell them? Right. I would say for me, putting aside the pride and the shame that comes with money, especially with all the debt that we had, I knew that I should have brought it up with Andrea earlier in our premarital counseling and stuff. But I felt ashamed, especially in my 401k loan because of all the bad decisions I knew that wound up getting there and my other debt. And I really had to set that aside and take the lead because when we were going through our wedding budget and stuff,

and then she was crying, I'm like, something needs to change. So we were fortunate that we found something that helped do that. And I think the other thing would be communication with your words because it wasn't Andrea's debt and my debt. It wasn't her income, my income. It was our debt, our income, and we just made sure that we spoke those things and helped solidify that we're on the same page. When you were listening to the CDs, both of you, did either one of you have kind of an aha moment where you went, ah, that

one, that thing right there, if I'd have just known that. Was there anything like that that jumps out at you when you had that, you can go smack yourself in the forehead moment, I could have had a V8, you know, the old V8 commercial, right? For me, it was definitely with my student loans. That was the largest thing that I brought into our marriage was my student loan debt and just looking back and being like, I don't know why I was so convinced I had to go to school right away with absolutely no money to go to school right away, but it was just something that everyone was doing. And so if I could go back and do it differently, I definitely would. And I would say the budget, because obviously zero-based budget is huge.

Some we discuss every month. But I would say I thought I used to budget before, like multiple years before we got married. But I didn't budget. All I did was write down the things that I spent the month prior. So I wasn't planning ahead. So that was like, I wasn't tracking my spending. I was just tracking my stupidity for dumb decisions I made the month prior. Yeah. Yeah, that's funny. I like that tracking my spending. I was just tracking my stupidity for dumb decisions I made the month prior. Yeah.

Yeah, that's funny. I like that. Very good. Was it Michelle Singletary? Does that sound familiar on Focus on the Family? That might have been it. Okay. All right.

She's out there. Sometimes she's on with them. I just recorded a couple of spots with them on Kids and Money the other day here in the studio. That'll be on later in the year. They're good friends. So good stuff. And she does a good job, Michelle does. So fun.

Good for you guys. Very well done. Congratulations. Thanks. We've got a copy of Chris Hogan's retire-inspired book for the next chapter in your story. That you're millionaires and outrageously generous as you go along. Dave, can I just say something else too? So kind of back to the encouragement and advice part.

One of the biggest, I mean, struggles for us doing this was not even necessarily sticking to the budget because once we came up with it, I think we both had really good communication about, okay, this is the budget and this is the plan and we're going to communicate anything we want to modify or change. So that really wasn't a problem, but it was actually more of an internal problem for me.

I realized quickly into doing this budget that I had a lot of discontentment issues and a lot of trying to keep up with this imaginary race around me, like I said before, of just seeing the people around us that were getting married and moving into homes and having children and thinking, you know, why can't we have that right now? Like, I deserve to have that right now. I should have that right now. And just kind of selfish mentality. And so I kind of had to take a step back and look at where my heart was and realize, I mean, I can't do this journey without God. And he really has to just change my heart about this.

And so if there's anyone that maybe have started this journey and have stopped, or there's just struggling to fight through it, there just might be a deeper issue going on in your heart for why money has such a hold on you. And so I would say if there's a struggle to continue with it, that you just might want to look at where God is in this journey with you. Yeah, it's been great. I mean, I've worked with your Smart Dollar team to bring Smart Dollar to our credit union, which has been great, and looking right now to help lead financial peace at our church. Wow. And this journey has not only just changed our marriage and got us off on the right foot for the first two years, but also impacting others, which is what it's all about.

Well, I think you're right. Keeping God at the center of this and at the front of this and at the back of this is the thing. And sometimes that's an effort. It's a conscientious act of the will to do that. Rachel kind of got her arms around that with the book love your life not theirs yeah that contentment issue and um she started seeing a lot of that you know she's your age and so i guess how old are you i'm 26 yeah yeah and so um yeah rachel and winston are similar age and so she was seeing the exact same things with her peer group. And she writes and talks about this every day, but still just the same.

And that's where that book was born out of and why it did so well, I think. Well, congratulations, you guys. I'm very proud of you. Thank you. Do you have more detractors or cheerleaders? I just think there was a lot of people who didn't really fully understand what we were doing. Those are called detractors. They weren't necessarily negative about it. They were more just like, okay.

Curious, yeah. Like, you people are strange. Well, they might have thought that after we walked away. Or they thought they knew what we were doing so then they would try and give us advice and we'd be like, well, that's not really it. Thanks, though, but no thanks. I love it. Alright, Dominic and Andrea,

$68,000 paid off in 23 months, making $72,000 to $84,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Good one. Love it, love it, love it. Man, that's awesome.

Congratulations, you two. Very, very well done. This is... Our Scripture of the Day, Colossians 4-5, Walk in wisdom toward outsiders, making the best use of the time. Herb Brooks said, Great moments are born from great opportunities. This is the Dave Ramsey Show. We're glad you're here, America. The phone number is 888-825-5225. Ryan is with us in Pennsylvania. Hey, Ryan, how are you? I'm great, Dave. Thank

you so much for everything. I appreciate it, sir. Sure. What's up? Well, I drive all night to work, and I just want to say you've been my keep-awake for probably the past 10 years of doing that, and you've kept me and others on the road alive by having your podcast out there. I really do appreciate it. Well, thank you. Thanks for listening. Oh, you're welcome. So we're in baby step four, and I have an opportunity to get a grant from my county for up to $20,000 for any needed home repairs we do on our home.

And I guess the contingency in there is if we receive this money, we need a roof. If we receive this money from the county, they would put a lien on my house for five years, and we'd have to stay in the house for five years, and then in turn the bill for the roof would be paid for in full after that five years. So I just wondered if that is a good idea. Is it forgiven at once after five years or one-fifth every year for five years? One-fifth every year. Okay.

And what are your plans with the home? We don't have any plans to leave our town anytime soon. I've got a good job, good church. Why does a roof cost $20,000? Well, the grand is up to $20,000. Oh. So, you know, the roof and really... Why are they offering free money?

It's the letter in the mail and the conversations I've had with the county office to say it's a Pennsylvania grant, that they're, you know, it's just a way to improve homes in the county. And it's just something they do. I've had a bunch of conversations with, you know, different people and it seems legit, you know, it's the county office. Okay. I don't doubt I've had a bunch of conversations with different people, and it seems legit. It's the county office. Okay. I don't doubt it.

I mean, I've heard of it. Sometimes it's urban improvement or something along those lines that people are doing to try to create revitalization in an area. Sometimes that sort of stuff is there. Some bond money, state bond money usually is what's funding it. Okay. So what do you think your roof will cost? I'm thinking anywhere between $10,000 and $15,000. It's a two-story home, about 1,800 square feet.

Okay. That's a little rich for my blood, but it should be $10,000 and under would be my guess. I'm not sure. So are you going to take more? I mean, is there any other repairs, or is that all you're going to do there is one area of the house that i'd like to update the electrical it still has old uh pipe and tube i guess um electrical in it yeah is that covered under this grant system as well yes okay so you can do that repair as well as long as you don't go over twenty thousand

dollars right yes do you have to put any money in this at all or do they pay the bill direct i would probably end up paying one to two thousand in the beginning because of my income uh depending on what your income is you know they have you pay a percentage right out the gate, and we do have that money in our, you know, in the bank account. Okay. Yeah, I would do it. I mean, it's free money. As long as there's – I don't hear anything in here that's tripping me up. That's, you know, you're going to have real clear guidelines on what you –

how you have to process the work in order to get the money. So make sure that you don't, you know, do the work and then find out you did it wrong or you didn't fill out a piece of paper so you missed the money. Now you've got a problem. So make real sure you've got all of your bureaucratic T's crossed and I's dotted. The red tape, I love it. Yeah, and make sure that you understand the flow of that so that these contractors get paid and they aren't turning around after you

because it takes eight months to get it out of the county or something. And because some piece of paper, or worse than that, you didn't do it just right so they disqualify you after the work was done and you've still got to pay for it. You know, I don't want to get you in all of that. But as long as you can do all of that and comb through the tangles of that, it sounds like some free money. And you're going to stay in the home.

It becomes free money. If you don't, it's going to come out of your proceeds of your house when you sell it. But it's not a payment. It's not a lien they can foreclose on. It's just to ensure that you either keep the house five years or they get repaid pro rata on that 20 a year for five-year process there's nothing wrong with that all right paula is with us in dallas hi paula how are you hi fine thank you it's nice to talk with you you too what's up

well my husband and i have a little bit of difference on this issue is that we are down to our college loans and health. We are scheduled to retire in five years. Good. Both of them are 63K. What's your household income? 84 we bring home. How much have you paid off so far? Paid off in debt?

Mm-hmm. We only had $4,000, and so that's done. Okay. So you just got started. Yeah. We just had credit cards, and that's done. That's out of here as of last month. Okay.

So now we've got these two. I want to do the college loans, and he wants to do the house because at work he's worried about getting laid off and possibly losing the house. Yeah. Well, I'd be worried about both if you're going to get laid off. I mean, so I disagree. You should always pay off your college student loans first. You win the argument. If Dave Ramsey is a tiebreaker, I may not be the tiebreaker, but at least now it's two votes to one anyway.

Yeah, yeah. And here's the thing. You said, what did you say, 80 or 110? Which was it? Well, we make 110, we bring home 84. He will not stop this 401K, this close to retirement. He refuses. I did get him to lower from 16 to 6 percent.

Just the match. It's interesting to me that his plan has not worked and yet he is sticking to it. So, you know, I think you ought to tear into that student loan debt and get rid of it.

And I think it ought to be gone in the next 18 months. And beans and rice, rice and beans, no vacations, on a tight budget. Let's get this thing knocked out. That's what I would do in your shoes. I mean, I would be leaning into this. I'd be excited about this and cleaning it up now. Hang on. I'm going to have Kelly send you a copy of chris hogan's book for your

husband the book is called retire inspired it's a number one national bestseller and uh i think he'll like it uh because that's what you're trying to do that's what's driving him is to retire with dignity and chris can show you that he and i are in agreement about how you process what steps you do to process so he'll show you why to do what but the thing is i think you got a lot of opportunity here but you're going to have to focus and you're going to have to bear down and that means you're going to have to cut back and you're going to have to do all kinds of stuff so um i just think that's very very important that you make this a huge priority. It really is.

So thank you for the call. We appreciate you joining us. The phone number is 888-825-5225. 888-825-5225. Joe follows me on Twitter. You can. About 800,000 of you do. At Dave Ramsey is the place.

And his question is, is the 529 the best savings plan for college? Well, 100% of the time I recommend the ESA, the Educational Savings Account, which allows you to put $2,000 a year per child into good mutual funds to grow it for college tax-free. It's like a Roth IRA for college. The 529 works the same way, only you can put more than $2,000 in. But some 529s are screwed up and do all kinds of weird stuff. You only want the kind of 529 where you control the investments the whole time and they don't move around on you automatically. That simple. Hey, thanks for following us on Twitter, Joe.

That puts this hour of the Dave Ramsey Show in 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 Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year.

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