The Ramsey Show - App - How to Face Your Financial Fears (Hour 2)

Episode Date: July 18, 2019

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225.

That's 888-825-5225. Brian is with us in Charlotte, North Carolina. Hi, Brian. Welcome to the Dave Ramsey Show. Hi, Dave. How are the Dave Ramsey Show. Hi, Dave. How are you doing today? Better than I deserve. What's up? All right. So I recently come to a divorce, and I am self-employed of a fairly successful business. But with the divorce and the way it left, I made some bad decisions in the past year,

racked up quite a bit of business in credit card debt. Of course, since I'm self-employed, it's all my debt. But long story short, I now have two homes, my primary and a rental, that I'm thinking about selling them both to move them into an apartment to use the equity to cancel out my debt so I don't feel like I have a cobblestone around my neck every day. Generally speaking, I like the idea. Fresh start all the way around. How much debt do you have on the business? Okay, so business and personal, well, counting them both is about $163,000.

Okay. And how is that fine? Credit cards and what else? That is all credit card. So about $120 was business debt, and it is on a business loan, which is basically treated like a credit card, and then the rest is on personal credit cards. But, of course, I'm personally guaranteed on the business end of it.

Sure. There's technically no business debt in a small business. You're on all of it. So it's all personal debt. You just labeled it business. The homes will bring equity of how much? $150,000. So it won't quite clean up the debt then? Well, it'll leave me about $16,000 in debt.

I have about $11,000 in savings, which I didn't let go because with the divorce, I wanted to make sure I could make my mortgage payments because I wasn't sure what was going to happen. Literally, if I sell the houses, the market is extremely hot right now. And with what I have in savings, and if I keep $1,000, I will be left with probably $5,000 worth of debt, which I'll be able to cancel that out in another just few months with my income. So what is your income? Clear $4,200 a month. That's net.

Okay. What kind of business? I do custom aquariums. Okay. I like orthod? I do custom aquariums. Okay. I like orthodontists, pediatricians. As you've gone through this horrible time in your life, your business has not suffered? It has a little bit. Most of my clients I've had for 10 to 15 years, I've actually picked up new clients.

So it's one of those things that it's not affected it negatively. I did pull my advertising, which is called the slowdown, but that was really just to kind of regroup with my company to refocus. So, no, my income really for the past 10 years for the most part has been fairly consistent. You got any children? I have two kids. Okay. Do they live at the house with you?

One, I have 50-50. The other, I do not yet because he has some medical issues. But within about a six-month period, I should have both boys 50-50. So there's a child support payment as of now. As of now, I'm getting ready to move into an apartment. The lowest cost is I can cut everything and kind of the beans and rice deal. I'll be left with about $1,500 a month left over after all expenses, child support, everything.

But the apartment will be okay for them to stay in when they're with you? Yeah, it's a three-bedroom apartment. It meets our needs. No issues. It's actually, I'm like five miles away from the kids' school. And my three-year-old, of course, he's out at three-year-old and a five-year-old. Five-year-olds get ready to start kindergarten. So it accommodates the kids. And, you know, about five years ago we moved into, or maybe eight years ago, moved into an apartment.

Me and the ex-misses, you know, we paid off about $80,000 in debt, saved up enough to buy our house with, you know, 20% down, 15-year mortgage. We still had 30 grand left in the bank. All I was trying to figure out is how the kids are going to be affected by this idea. But it sounds like they're okay. It sounds like they're fine. They're totally going to be fine with it.

So, yeah, our divorce will be complete in October. Okay. Yes, at that point, when the divorce is complete and the properties are in your name, I would sell them. Yeah, I've done the quick claim deed. They're in mine, and like I said, I'm ready to sell out, fresh start. I was going to hold them as a rental, but they still have that debt holding over me. You're not in a position to be a landlord right now.

You're broke. Exactly. I think you're making a good move. It's a clean slate. You've gone through a hard time emotionally and heartbreak and everything else, and you're starting over, but you're going to start over with almost no debt and soon to be no debt. And, yes, I think that's a great move. If you're going to liquidate these properties before the divorce is final,

make sure your attorney is in the loop on that and goes along with that, because I don't want that to come back and bite you and change the settlement. Understand. But other than that, you know, if the divorce was final, I'd do it today. I understand. dialed in but good question i'm sorry you're going through this open phones at 888-825-5225 elena is with us in orlando hi elena how are you good how are you there better than i deserve what's up so i am um almost 250 000 in student loan debt. Good Lord. I'm not even planning on being a doctor. You're not? Are you going to be a lawyer?

No. What kind of a degree did you go get for $250,000? I got my bachelor's in psychology. For $250,000? Yeah. I think it was $100,000 a few years ago, and I didn't even think about it, and then it just sprang up even higher. But I am planning on going back to school to be a social worker.

Yeah, because everybody knows they make six figures. True, they don't. You're broke. You can't go be a social worker what is your what's your household income um right now i'm actually not making anything i am a caregiver for my grandma at the moment are you single yes okay how old are you? I am 27. Okay. This is mean old Uncle Dave on the line. Are you ready?

Yeah, I'm ready. You have to go make some money, kiddo. You have to go make some money. A lot of money. And social workers don't make a lot of money. So you gave up the right to be a social worker when you spent $250,000 on a psych degree. So now we have to retool your career and reset your career because you need to go make some money. You have a mess on your hands.

You're going to spend the rest of your life as a slave to this student loan if you don't. I don't want that for you. Hold on. I'm going to get you signed up for Financial Peace University, and I'm going to send you a book called Start. But it's not going to be Start Being a Social Worker. 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. Thanks for joining us, America. We're glad you're here.

Arnita is with us in Jacksonville, Florida. Hey, Arnita, how are you? Good, Dave. Thanks for taking my call. Sure. What's up? I just learned about you over the last two weeks, and I'm motivated to pay off debt. Good for you.

So here's where I stand. I got about $35,000 in retirement, $74,000 in the money market account. The income is $50,000. So do I take the money from the money market account and pay off the debt that I have, or can I just work my behind off? No, I just pay it off. How much debt do you have, not counting your house? Not counting the house.

I have 15 for a car loan and 82 for a student loan. Oh, okay. And you make 50 a year. Right. Okay. All right. Yeah, I pay off the car, and I put the rest on the student loan down to $1,000. That's going to feel really scary.

How'd you get the $74,000? Just saved it up over a period of time, which leads me to one other question. Should I take that? Do I leave that there, or do I move it maybe to – because I have the IRA account, which has the $35,000. Yeah, I'm going to leave the $35,000 loan. I'm going to clean out the $74,000 and put it on the debt. Okay. Down to $1,000.

$1,000 is baby step one. And then that will leave you about $20,000 in debt. And you've got to knock that out like you used to knock out savings. You're going to lean into that debt as hard as you can lean. And you're going to knock that debt out in about a year, year and a half. Okay. And then once that debt's gone, then I want you to take that $1,000 account and raise it back up to three to six months of expenses.

Okay. So that way you've got your rainy day fund. And then, only then, start your long-term investing with your IRAs and your Roth 401Ks or whatever's available to you on that. So have you read the book, The Total Money Makeover, yet? No, I have not. Like I said, I just learned about you two weeks ago. Okay, I'm going to give you a copy of it.

It's the baby steps that we talk about. You hear me talking about those all the time on steroids. It's every detail about the baby steps, why we do them, when we do them, why the order is there, and the reason, even though it feels very uncomfortable through parts of the baby steps like when i tell you take that 74 000 and take it down to 73 000 put on your debt you can't hardly breathe when i say that because you're a saver and that pile of money right there gives you a tremendous amount of safety feelings, emotional feelings, and all that kind of stuff.

It gives you much more peace than the debt gives you nightmares. Right, absolutely. And I know that. Otherwise, you would have already put it on the debt. Right. If the debt nightmares were bigger than the peace, you would have already moved it, right? Correct. And so what I'm asking you to do, I know, is emotionally strenuous.

But the fastest method between you and wealth is to get control of your most powerful wealth-building tool, not be giving all your money to a bank and be debt-free. When you don't have any payments, building wealth is fairly easy. Okay. Hold the money from the money market building wealth is fairly easy. Okay. Hold the money from the money market and pay off the debt. Yep. Pay off the car today and then throw the rest of the student loan. It's going to leave about $20,000 on the student loan if I did my math right.

That's only $8,200 on the student loan. $8,200? I thought it was $1,000. No. Oh, you're breathing better than I thought you were breathing. Okay. I thought you were down to nothing. Oh, my gosh. Yes, you're debt-free by the end of breathing. Okay. I thought you were down to nothing. Oh, my gosh.

Yes, you're debt-free by the end of the day. That's a no-brainer. That should be easy for you. Okay. Yeah, you're done today. Boom. You're debt-free. Okay.

You just got to write two checks. Right. Okay, so it's $23,000 out of your $74,000. We got you down to $51,000. That's still too much because your emergency fund should be 3-6 months of expenses and so your emergency fund should only be about $20,000

and it's $51,000 after we paid off all your debt so the rest, how old are you? I am 47 do you own a home? I do, my balance on that is $66,000 I'm going to throw about about 20 000 bucks at your home i'm gonna pay off the other two debts for 20 000 bucks i'm gonna leave 20 000 in your rainy day

fund and then i'm gonna make sure you're putting because you got no payments now but a house payment how's that feel right pretty good we're gonna take your we're gonna take your your income now and make sure you're putting 15 for you that. That's about $7,600 a year into good growth stock mutual funds in your 401K. Do you have a 401K at work, 403B? I don't. I don't. I'm a substitute teacher. My husband, he's retired military.

Okay. All right. So he's got the good 20-year plan on the retirement? No. No. Oh, he's not retired. He's not retired from 20 years. Okay.

All right. But is he working out other than that? No. How old are you two? He's 57, and I'm 47, like I said. Why doesn't he work? Yeah. He?

Why doesn't he work? Well, he's a disabled veteran. Oh, oh, okay. Yeah. Okay. That's the reason for his retirement. So he's got that income coming in. Good.

Well, so tell him thanks for his retirement. So he's got that income coming in. Good. Tell him thanks for his service. Okay, good. And so you're working, and you're going to take 15% of your income and throw it into retirement in your 50s, and you're going to have no payments, and we're going to get the house paid off next over the next 5 or 10 years so that by the time you reach retirement, you're going to have a half million dollars and no house payments.

Does that feel pretty good? Yeah, it does. And do you have any survivor benefits on his disability if he passes before you? Yeah, we both have $100,000 in policy, so term policy. Yeah, that's life insurance. But do you have survivor on his income? No, no. Okay.

All right, cool. All right, you're doing good. Yeah, you got, oh, man, I feel so much better. $8,200 instead of $82,000. That's just a lot better. Okay, good. All right, so, yeah, hold on. I'm going to have Kelly give you a copy of the total money makeover.

It'll shop you. It'll walk you right through this and reiterate what I just told you to do. After you've read it, you'll understand. And you can go over it with him, too, and the two of you line this out. You're going to be okay. You're going to be okay. You're going to be okay. But, yeah, you need to clean up the – all we're doing here is dusting out the corners. I mean, it's not near as bad as I thought it was.

Good, good, good, good, good, good. All right, Kevin is in Seattle. Hi, Kevin. How are you? I'm good, Dave. How are you? Better than I deserve. What's up?

So I am working through Baby Step 2 and just started working through Baby Step 2. And I currently am in school, about halfway done, and I have about $22,000 in student loan debt. I'm wondering a couple things. One, do I stop school until I can pay for it? So that way I'm not continuing with the student loan debt? Or do I drop school altogether? What are you studying? It's IT management.

Okay. What do you do for a living? IT management. Why won't they pay for it? The organization I'm at is a non non-profit and so there's lots of uh there's lots of experience but they don't have uh the resources for that um i have been going towards project management uh i make total i make 67 in total about 75 with my wife okay how much do you have 22 $22,000 in student loan debt.

What other debt do you have? Grand total, it's about $100,000 with my wife's student loan debt and medical bills and car payments. How much do you owe on your cars? One car, I owe about $3,000, and then the other car I owe about $15,000. Okay. There it is. Okay.

I'm going to tighten up my budget and say I really can't make much progress on my baby step two, but I'm going to finish my degree. What's it going to cost to finish the degree it would cost um probably between another 10 to 15 it's an online school and i can and you make 75 000 a year yeah so if you pay minimum payments on everything and get on a beans and rice budget and stay out of restaurants you can cash flow the balance of your education you're not going to make any progress on your debt while you're doing that, but you can finish your education, in which case your income ought to go up $20,000, $30,000 when you finish it.

You're going to have to leave that job. You know that. Yeah, I know. Okay. At some point. I mean, you've got to decide. But if you're going to finish this degree in order to further your career, it's not going to be at that place. They can't afford you once you to finish this degree in order to further your career, it's not going to be at that place.

They can't afford you once you've gotten this degree. But, yeah, $15,000, finish it. Cash flow it out, man. Just stop paying extra on everything. Cash flow it out. You don't have to borrow more. You can do it. But if you're borrowing more in order to keep doing Baby Step 2 and debt snowballing, then you're just borrowing money to debt snowball.

That's dog chasing its tail. There's no need to do that. So just let it sit there and tread water until you get out of school and then hammer it. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members.

I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait. One hire can change the direction of your company. Post a job today at linkedin.com slash Ramsey and get $50 off your first job post. That's linkedin.com slash Ramsey. Terms and conditions apply.

In the lobby of Ramsey Solutions, Robbie and Julia are with us. Hey, guys, how are you? Hi, we're good. How are you? Better than I deserve. Where do you guys live? Georgetown, Kentucky. Georgetown, Kentucky, home of the famous Chris Hogan. Yes.

Yes. That's where he went to college. Yes. Very cool. And they had a national championship while he was there. Yes. Yeah, very cool. So the Lexington area, beautiful area of the country.

Very pretty. Welcome to Nashville and all the way down here to do a debt-free scream yes sir all right how much have you paid off 260 000 in eight years wow very cool and your range of income during that time well we started our journey at 125 and interestingly enough our income went down over the eight years. We have had a couple of children along the way, and I felt a calling to stay at home. So about two years ago, I actually went part-time, and I worked twice a week. So we ended our income last year at $99,000. Cool.

Very cool. What do you do for a living, Robbie? I'm a physical therapist at the University of Kentucky. Cool. And before you were a full-time mom, Julia, what were you doing? An insurance underwriter. Okay. Very cool. And you're full-time with the kids? Actually you were a full-time mom, Julia, what were you doing? An insurance underwriter. Okay. Very cool.

And you're full-time with the kids? Actually, I work part-time, so I work two days a week, and then the rest of the time I'm home with the kids. Gotcha. Okay. How many kids y'all got? Two. Ah. So 260,008 years.

I'm looking at this. You must have paid off your house. We did. I love it! I'm looking at weird people. Only weird people pay off their house. Normal people have a mortgage their whole life. Not you guys.

No. Wow. Very, very cool. Well, here's what's interesting. Our team obviously knew you were coming. And Zach Bennett, one of our top production guys, combed back through the archives of the Dave Ramsey show. And there's actually a phone call from you five years ago to this month.

Was it really this month? Exactly five years ago. You called. That's crazy. We're going to play a short clip from that right now. Let's hear it, James. This is our first home that we've had. We have not tried to sell it, but I just hear horror stories about people trying to sell their house and taking a loss. Whether the market's good, whether the market's bad, whether the real

estate is white hot on fire and going up, whether the real estate's in the tank and not doing well and people are taking losses on their home, it doesn't change the discussion. You still pay off your home because in either case, you're better better off when you get to baby step six and you're ready to pour on and pay off the house you know pay the thing off as fast as you can because sitting there with a paid for house in the next five or ten years is going to put you in such a place to win long term i mean it is such a wonderful place to be hey thanks for the call so you called in and asked if you should pay off your house. I did. And I said it's going to take you five to ten years.

Eight years later, here you stand. Here we are. Yep. Or five years later. Five years. Five years from that call. And you did it. Oh, that's so crazy. I remembered calling, but I thought there's no way that they would remember that.

Well, actually, we thought there's no way, but we have a magic weapon named Zach. That's great. And Zach combed through all that stuff and found that. That's great. Absolutely cool. So, I mean, that's inspiring to me to sit here and go, I just take a call and a lady says, should you pay off her house? And I'm like, yeah, you can do it. You can do it.

And here you stand. Yeah. I love it. Yeah. Here we are. Yeah, baby. So tell people, how old are you two? I'm 34.

I'm 35. And you have a paid for house. Yes, sir. How old are you two? I'm 34. I'm 35. And you have a paid-for house? Yes, sir. What's this house worth? Probably around $225, something like that. I love it. This is cool. So tell people.

They think this is impossible. How do you do that? I mean, it took you eight years from the time you started. Five years into it, you called, or three years into it, you called me, which means you were kind of finishing up the other debt, probably. Okay, and so out of the $260,000, how much was the house itself? $165,000. Okay, all right. So what's the trick to getting out of debt?

You did it. You're rock stars. There's really no trick, honestly. We followed your program. Our debt really consisted of a car loan at $20,000, student loans at $75,000, and then the rest of it was our mortgage. And around the time of the call, we had paid off all of the car loan, and we had paid off all of the student loan. And I was pregnant with our first daughter and was just kind of wondering, you know, when you have children, for me anyway, the tolerance for risk goes down.

And it felt risky to still have that mortgage, but it's so normal, too. And so we, you know, honestly, after the call, I thought, I still don't know. I still don't know if we should, because we weren't sure if it was going to be our forever home. You hear that term thrown around a lot, but it what it matters is is are you living there now yes do you want to have debt on this no yeah um so life happened we had another child about two and a half years later um and then about a year ago we looked at each other and we were like you know what we're very close we really could do this. So we actually last summer, actually about this month, we really dug in and took on a lot of extra jobs, a lot of extra hours. And here we are.

We actually paid it off in February. I'm so proud of you. Well done. Thank you. Very, very well done. Absolutely fabulous. I mean, you're sitting here with $100,000 household income, not a payment in the world, 34 years old. You're going to be so wealthy, it's going to be unbelievable.

That's what we're looking forward to. If you just invest a house payment from now to 65, that's $5 to $10 million. I mean, you really are going to be in an unbelievable place, and you have changed your family tree. Just by being intentional, watching what you're doing, focusing, working a plan that works. And well done, you guys. Thank you.

How does it feel? It feels fantastic. I mean, obviously, with being intentional, we knew this day would come. But to now, like we said, we've spent the whole summer saying yes to a lot of things. We've taken kids. We've done vacations, amusement parks on the weekends. We went to Destin, Florida for a week, and we've done amusement parks and just said yes to a lot of things.

And it's been enjoyable for the whole family because for so long, we were just saying, no, it's not in the budget. It's not in the budget this month. But it wasn't that long. You're 34. Right. It's true. You lived like no one else, though, and so now you can live and give like no one else.

You can say yes to a lot of things. Generosity. You can say yes to your kids. You can say yes to investing and continue to build wealth and change your family tree, like I was saying. You're going to be one of those everyday millionaires before we know it. So well done, you guys. Thank you. Very, very well done.

We've actually been quite, not shocked, but before we paid our house off, we didn't really have a lot of discretionary income to give. And so over the last year, actually two years, we started tithing. And that has really just opened up a joy in my heart that I didn't know really was missing. And we've been able to give to community members, strangers, you know, everyone that,

that we come into contact with that has a need. And it's just so nice to be able to meet that need. And it may seem big to them, but you know, for us, it's just such a small sacrifice to make, to make such a big difference. When you don't have a house payment,

you can put tires on a single mom's car and not blink. You know, that's not even a house payment. Right. And that's just one month. I mean, you can do anything. It's amazing the position it puts you in. People don't grasp it. And it's worth fighting to get there.

It is. It's worth the sacrifice to get there, the scratching and the clawing and all of that. What was the hardest part for y'all? Well, honestly, a couple things for me. One, just the perseverance to do it. Eight years is a long time, and having two children, and you kind of get stuck in the grind. So we actually would listen to a lot of debt-free screams to stay motivated.

And another portion is when you're in that grind with two kids, you're tired, and you don't always feel like cooking. So it would have been a lot easier to go out every night. But staying on budget with food in particular, that was hard, but it was well worth it because we've been able, I've been able to do it like a meal plan for the month. And it just helps with planning and grocery shopping. And it kind of has a ripple effect that I didn't anticipate. But that for me was kind of developing that system was difficult at first. Yeah, it's interesting that when you get discipline in one of these nuanced areas,

it opens the discipline up in the others. And when you get generous in one of these nuanced areas, it opens up the generosity in other areas. It's very contagious, this stuff, as it works its way through your life. Well, very well done, you guys. Excellent. Did you have people cheering you on or saying you're crazy? Well, if they thought we were crazy, they didn't tell us. Talked about you behind your back, didn't they?

You wanted to speak on that. But no, we had a lot of supporters, family, friends. We've had a lot of people along the way that have really also inspired us to continue, you know, during those times when it was difficult. Yeah. Shout out to our neighbors, Eric and Amy Sidebottom. They started us on the journey. 260,000 paid off house and everything at 34 in eight years. Make it 125 down to 99. Robbie and Julia, count it down.

Let's hear a debt-free scream. Well, first we need to give a shout-out to Gwyneth and Owen. Yep. Ready? Ready. Three, two, one. We're debt-free! Suzanne is in Columbus, Ohio. Hey, Suzanne, how are you?

Hi, I'm good. Thank you so much for taking my call. Sure, what's up? Well, I'm a new listener, and I just finished the Total Money Makeover today, and yesterday we completed Baby Step 1. But about eight months ago, we did some really stupid things when we bought the house that we're in now, the biggest of which was buying it before I got my paycheck, my first paycheck from a new job that I had just started. And when we got the paycheck, we discovered that my pay was about 40% less than what we had figured it was going to be due to mandatory retirement that was taken out.

Taxes were a lot higher, and our insurances were higher than we thought they were going to be. So fast forward to today. Last week, we put the house on the market because we just decided that we can't afford it. We've been trying to increase our income by selling some stuff, and I'm looking for a part-time job. But my question is, until our income increases, do we default on our other payments and keep paying the mortgage, or do we allow the house to go into foreclosure

while we're still trying to continue with the baby steps? What other debt do you have other than your home? We have $20,000 on a camper, which we're trying to sell. We have $3,000 on a credit card and $2,000 in medical okay and what does your husband make a year he makes he makes about 38 and i make about 22 okay is that take-home pay yes sir okay so you have a sixty thousand dollar income how much is your house payment 1925 okay all right um are you doing your written every dollar budget yet? Yes. I just started. I just got that all entered last week.

Okay. So you've been doing it a whole week. Okay. Yeah. Well, yeah, the camper's up for sale. The house is up for sale. We're changing as many directions as we can here. A garage sale is in order.

Craigslist stuff is for sale. All that kind of stuff is going on. Both of you are looking for part-time jobs. That's a good thing to get this to balance. I think, though, how much is the payment on the camper? It's $220. Okay. I was making payments of $250 to try to pay it down faster but then

you know we stopped doing that to start doing the baby steps yeah i think you can make all these payments you're gonna have no life but i think you can make these payments okay let's prioritize though to help you with that. Okay. But, I mean, you got $2,300 and you got $5,000 take-home pay on those two payments is $2,300. And that leaves you $1,700 to buy food and lights. You know, you ought to be making this. I don't think you're in default. We have four kids yeah but we're not gonna be

paying for piano lessons and our house goes into foreclosure okay so right you know if you're choosing between house foreclosure and that the kids get to uh you know we're gonna everyone's limiting lifestyle right now because we're in a crisis mode now i'm not saying i'm not saying don't feed them but short of that um you you can make this um you just got to tighten down so anyway here's your priorities the first thing you buy is food okay groceries not eating out you don't need to see no we don't need out you don't need to see the inside of a restaurant unless you're working there um then the second thing you do is you pay lights and water okay the second thing you do is you pay lights and water okay the third thing you do is you pay a house payment okay um the fourth thing you do you don't have any

car payments you keep gas correct you keep gas in the car so what i just yeah what i just did and tithe what i just did was the um what we call the four walls but it's old it's old seventh grade civics lesson. The necessities of life are food, shelter, clothing, transportation, and utilities. We do those first. That keeps the four walls of your house standing. You have a place to live. It's heated.

The kids are eating. Everybody's eating. We're driving the cars and going to work. And that's where we start is getting these real basic necessities of life taken care of you've got enough to cover all of that that wasn't the camper and that wasn't the master card or the credit card okay they're they're the last thing on the list is the camper okay um well actually i paid the camper before i paid the credit card but the last two things on the list are the uh the the uh before I paid the credit card. But the last two things on the list are the camper and then the credit card.

Because the credit card can't do anything short-term except damage your credit. Short-term, the camper could repo you if you just quit paying it altogether. But you got it up for sale. So we're going to get rid of it. That's going to be helpful. So I think you're going to get through this. But what you've got to do is just prioritize from most important thing to least important thing.

The least important thing I heard in this list so far is the credit card. Next to that's the camper. The most important thing is your family being taken care of, food, shelter, clothing, transportation, and utilities. Where would the medical bills come in on that? You didn't mention you had medical bills. Yeah, I had 2,000 in medical. Okay.

Then they would be down there by the credit card because there's nothing they can do. Secured debts come before unsecured debts, and both are at the bottom once we get past necessities. Okay. Because secured debts, they can take stuff. Unsecured debts, they just bother you. Right. Eventually, they'll sue you, and eventually, they'll garnish you. But you're going to get to this long before that happens.

Because the house is going to sell, the camper is going to sell, and you're going to be in a better place. I mean, this is a matter of months. It's not a matter of years. Okay. So you survive three months doing this. You're going to be, you know, everything is going to turn. The house is going to sell. The camper is going to sell.

You're going to be the other side of this, and you're going to be going, whew, man, we almost screwed that up, right? But we got out of it by the skin of our teeth, right? That's what you're going to be saying. Thank God you're turning the corner here. But here's the thing. If you eat and have lights and water and have a place to live and you have transportation, emotionally, the rest of it is just a monopoly game and you're behind but when you get inside your house inside those four walls and you start having the lights turned off or getting foreclosed on in your homeless or that kind of stuff now emotionally your relationship everything's been invaded then and your stress level goes through the roof

but if you separate necessities from the rest of it's just a game I'm losing right now, I can lose a game, but I don't want to lose my house. Right. Does that make sense? Yeah. Yeah. That lowers your stress level. It's not going to go away until you get rid of the house and the camper,

but it lowers your stress level. And if these collectors call, say you know you're too far down the list i can't get to you right now i'd like to i'd like to but i can't get to you you know you're on the list and the more you call the further on the list you drop you know let's just have some fun with it right and we're not setting out to destroy your credit we're not setting out to not pay bills that wasn wasn't your plan. It's not my plan. But I'm going to take care of your family first because that's the best way for your bills to actually get paid later. Okay.

Because if you get this out of order, you're going to get all stressed out, and it's going to mess up your marriage, and you're going to end up in bankruptcy court and divorce court and all this other stuff. We don't want any of that stuff going on. No. Yeah, we're just going to lock arms here and fight our way through this little bit of stupidity, and it'll be in your rearview mirror within a year. Oh, I hope so. Oh, I know it will be.

I know it will be. Put the house on the market competitively. Put the camper on the market competitively. Get them sold. Priced competitively. Good question. Thank you for joining us. Sometimes when you're scared, And I've been scared.

You ever been scared? Scared? You ever been scared? I've been scared, man. I've been terrified. Sometimes when you're doing that, it's hard to think clearly. One good rule of thumb when you're facing something like that where the fear is coming at you is just stop and break the problem down into bite-sized pieces

and go, okay, what can I do? What variables can I control? Okay, our family can eat. That's good. So we're not hungry. One less thing to worry about. Lights and water are on. Okay, we're bathing and we are drinking water and um we have electricity

so we have heating and cooling ah one less thing to worry about we're gonna pay the rent or the mortgage now i have a place to live and do all that we're gonna put gas in the car so we can go to work yep we'll pay that car payment if you got one right now and you start working your way down these necessities first and you really start understanding the rest of this stuff is just a really ugly game and you work your way through it and that's all we did there you can do this too if you need help you call here we're here to help people it's a pretty simple thing this is the the Dave Ramsey Show. Hey guys, this is Blake Thompson, Senior Executive Producer of the Dave Ramsey Show.

Did you know over 15 million people listen to the Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country. To find a station near you, head to DaveRamsey.com.