The Ramsey Show - App - How to Fix an Income and Outgo Problem (Hour 3)

Episode Date: July 20, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us, America. We're glad you are here. This is a show about you. The phone number here is 888-825-5225. We take more calls here on The Dave Ramsey Show than any talk radio show that you listen to because you are the subject.

Oh, you're calling to ask my opinion, but you're the hero in the story. You are the one that's leaving the cave, killing something, and dragging it home. You're the one that's working the extra job to get out of debt to change your family tree. You're the one that's having to make the decision to amputate the Tahoe. You're the one making the hard choices. I'm just sitting here yakking for three hours a day. Thanks for joining us. Open phones at 888-825-5225. just sitting here yacking for three hours a day. Thanks for joining us.

Open phones at 888-825-5225. Debra is on the line in San Antonio. Hi, Debra. How are you? Hi. Just great, Dave. Thank you so much for taking my call. My pleasure.

How can I help? I've listened to you for years and years, and I just have a question today. I'm 64. I'm a federal employee, and back in 19 and I've been an employee for 28 years. Back in 1997, I quit my job. I had two babies, and I didn't think I'd be going back to work, so I took all my money out of my retirement account. My husband died a few years ago, so I went back to work. So now I'm wishing I hadn't taken that money out, but I put $26,000 back into it. I owe $50,000 in order to retire.

So my question is, what do you think the best way is to put that $50,000 back? I have a home. I own it. I was thinking about home equity loan, but I know you're usually against that. But I don't know if a personal loan would work. How much longer will you work for the government? I'd like to retire at the end of this year. I'll have 28 years in the end of this year and I just want to travel, see my kids,

my two boys and relax. If you don't put the $50,000 back, you will still get a pension at the end of this year, just not as large. Exactly. Way smaller. If I put it back, my pension would be $3,000 a month, $36,000 a year.

If I don't, it would be about $650 a month. Really? And I couldn't live on it. Really? Yes, because my first about 20 years. Are you sure you've got your numbers right? Yes, I had them run them for me. I didn't say I took off 14 years to raise my kids.

You did say that, but $50,000 should not give you a return of $24,000 a year. Somebody's run some numbers wrong on our pension. That would be highly unusual. That's a 50% rate of return. That is. That doesn't make sense. So, because pensions are typically calculated at 7%, and so what is your home worth? About $200,000.

Is it paid for? I have about $140,000 in equity. Okay. I owe $60,000. Is it paid for? I have about $140,000 in equity. Okay. I owe $60,000. And what do you make a year? I make about $80,000. Well, that's good. Okay.

It is. I'm blessed. It's a great job, and I really love it, but I just feel like I need to do more with my life. Yeah. feel like i need to do more for my life yeah and um well i i want you to get with one of our smart vester pros and i want you to go back to your uh your folks at the federal government and get a re-verification on these numbers because they're not i don't think they're right they can be it's possible i mean it would just be a highly unusual scenario and it would have to do with the gap you took off to raise kids that's that could be the

way this happened but it's it's i've never in 30 years heard one that uh that has those these kinds of numbers okay they just typically don't so i'm not i'm not saying it's 100 wrong but it just it it feels squirrely so if it let's pretend that you get with a SmartVestor Pro and you get back with your folks at the federal government and you ascertain that this is correct. The $50,000 gives you an extra $24,000 a year. That's pretty bizarre. Okay, that'd be awesomeness. That's the kind of stuff I would sell my house to pull off. Right?

I would. Because that's a 50 rate of return it changes your life in retirement if that's available to you okay so um the other question i would have then uh because you don't have any other money i assume i have 13 000 i used a lot of my husband's um medical bills but i have 13 000 in my ira that's all i have okay all right um well the other question i start to ask myself is okay how much of that 50 000 can we just make up out of income you earn and would it be worth it even though you want to retire right now and travel would it be worth it to work two more years and just do it out of your income it it but uh the way i was looking at what my resources told me my human resources that even if i work two more years you make 80 000 you could

come up with 50 000 making 80 that's what i was saying back yeah you could you could cash flow the two if you work a little bit longer making $80,000. You just tighten up your budget and pretend like you had $50,000 on a credit card, and you go beans and rice gazelle intensity. And if you're getting a 50% rate of return, hey, I'm Papa Dave. I get it. You want to be with the grandbabies. You want to travel.

I completely understand that. You and I are the same generation. I'm just a couple years younger than you. And so I get what you want to do, but for a 50% rate of return, I'm going to suck it up and work two years. Hmm. So you think I could do that, $50,000 two years? Yeah, $25,000 a year out of $80,000. You can do that.

Yeah. Well, maybe I'll work towards that. I mean, if you put $2,000 a year aside for two years, you get $2,000 a month aside for two years. You get $2,000 a month for the rest of your life. That's what these numbers said. And that's worth doing rather than selling your house just to quit a year early. I'm working to $66,000 if I'm you and doing that. If these numbers are right, but please, before you make that decision, verify them from two different sources. Have the SmartVestor Pro go over what your HR team gives you, and let's re-look at those numbers. But it could be a mathematical anomaly in the pension there. It's not supposed to be that way. Pensions are supposed

to be set up not with a 50% rate of return, but with a 7.5% to 6.5% rate of return. So I don't know how they, but there's all kinds of crap happens. And it is the federal government, so it's one of the great mysteries of life. We're not supposed to understand it. That's how it works. So anyway, go check it out with them and check it out with a smart investor pro, and then you can make your decision. That's a way to do it. You don't have the money otherwise, and no, I'm not going to tell you to borrow the money.

You knew that before you called. This is Dave Ramsey, and I would probably just melt down and go through a hole in the floor with dry ice and saying, What a world! What a world! And there would be stuff if I ever told somebody to borrow money. That would be it. I'd just sink right through, and that would be it. This is the Dave Ramsey Show. Families all over the country are discovering a faith-based and budget-friendly way of meeting health care costs, whether they're anticipated or completely unexpected. For

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visit chministries.org. That's chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. Thank you for joining us, America. This is The Dave Ramsey Show, and as in Seattle, hi, Ann. Welcome to the show. How can I help? Hey, Dave. Thanks for taking my call. I love your books and your show and all the personalities. Thank you. Your podcast even helps me lose weight because I walk and listen all the time. Wow. Honored. Thanks. How can I help?

My question is, my husband and I are, we're debt free except for our mortgage and the mortgage of our rental property. And our question is, which should we tackle first? Right now we're making 15-year payments on both, but we've been going round and round on should we get the rental knocked out and put that rent towards our primary mortgage or... If they're equal or the rental is greater, or close to equal, I'd pay your house off first. If the rental is a tiny little debt,

you might knock it off first. So how much do you owe on your home? Primary home, about $500,000. It's $499,000. What about the rental? $340,000. Okay. That's kind of borderline. And your household income? $550,000 a year. Whoa! What do you guys do for a living very lucky i am an aviation sales manager and my husband is an operations manager for a pharmaceutical company oh wow we spend a lot of time on the road

good job sacrifice there yeah and you're making some bank too okay well um it doesn't matter because with that kind of income versus $840,000, $550,000 versus $840,000, right? Mm-hmm. They're both going to be paid off. You know, what, $200,000 a year, $300,000 a year you're jumping on these things with? So four years, five years, they're both paid off, right? Right. I mean, if we put that much towards them yes yeah i mean well i mean you're a baby step six uh you put 15 of your income away for retirement and uh still have a very very nice life make sure kids college funding is going and then i'm chunking at the

house chunking at the other so anyway five years they're both gone, maybe. Okay? That's only $150,000 a year. Okay? Divided between two? Yeah. If you put $150,000 a year on $840,000 in five years, is that not right? No, that's $650,000. I missed it by a little bit. So 200 times five would be a...

So that is 175, 160, something like that. It's in that range to knock it all out in five years. So let's just say five years, they're both done, so it doesn't matter much which one you do first. I probably would pay down my house first, and it's just simply because there's something that happens when your personal residence has no mortgage that's what we were leaning towards the psychological effect yeah it's also in my world it's also spiritual because the borrower is slave to the lender of course getting rid of all debt is a spiritual thing in that sense too but there's something about your house being paid

paid for that flips the switch inside of you being free because you know in a in a worst case scenario both jobs went kaput right you could just dump the rental and it would cause you a little bit of emotional pain but not much and so then you'd be 100 debt free right and and if you had this horrible situation occur which is not going to happen. OK, but but, you know, so I'm kind of looking at it through a risk management lens, if you will, in a horrible worst case scenario that's not going to occur. What would I want to dump or lose to keep from or dump it to keep from losing it? Well, it'd be the rental over the house. Right. My so i'm probably gonna knock out the house first here let's say this rental was only a hundred and you're like doing it in a year i might go ahead and put the rental in front then you see because it's just going to be over with so fast but it's a pretty good sized both these pretty good size mortgages so hey lay out a game

plan do the math on it, and set yourself a goal. Instead of just randomly throwing checks at it, lay it out and go, okay, there's $840,000 here. When do we want to have that done making $550,000? And you don't have to go into super sacrifice mode or anything. I just want you to be intentional and set a very detailed goal because you make a lot of money and you sacrifice a lot to make a lot of money. So you want to make sure you get something for all of that money good job you guys are awesome evan is in charleston west virginia hi evan how are you i'm good how are you better than i deserve what's up okay so i just wrapped up my third year of college and i'm currently studying business management things are going well and i'm on track to graduate after one more year. So I'll be graduating on time. The problem is after being in

college this long, I now realize I would rather get a finance degree instead. But the problem with that is the school I go to is kind of a smaller school, doesn't have a finance program. And there is another school about 30 minutes away that has a program for finance that I could transfer to, but I would be behind and I would have to spend more than one more year in school, and it would cost me thousands of extra dollars because of the extra time in school. So my question pretty much is, should I keep doing what I'm doing and finish out what I've been going after? Yes, I would finish the degree you've had and anything you want to learn about finance you can learn okay you're the only thing you're after is you want to go be in the financial world right yeah you don't have to have a finance degree you don't

have to have a finance degree to do that you do need an understanding of finance and you are taking some undergrad finance classes one or two at least, aren't you, for business management? Yeah. It's in the curriculum. Yeah. So you've got basic present value, future value stuff in front of you or amortization charts in front of you, compound interest. You know, you've got the basics of finance and, you know, how to do weighted cash flow analysis. All that stuff will be in those first two semesters.

You'll have some really strong undergirding. And then if you wanted to go into a certain industry, there would be industry-specific things you could go do. For instance, if you wanted to be a financial planner, you could go get a CFP. But those are all aftermarket, aftergraduation things you would do. If there's something lacking in your actual knowledge base, you could pick it up with one or two classes just as an audit from that other place and still have your management business management degree okay so i wouldn't just be like locked into the management field and no i go no no i got a degree in finance with specialization in real estate because i was a real estate geek i thought i

was going to be some kind of a big real estate guy. I actually ended up owning a bunch of real estate just because I love it. But the point is the way you're going to use the basic statistics, the basic accounting, the basic marketing, the basic finance classes you've got in the curriculum you're in now, the way you're going to utilize those things, you can go into anything. It's a wonderful, well-rounded degree that you've got. I would just complete it, and then as you move into a particular field,

if you want to pick up some classes at the local university and just pay by semester hour or whatever, you can do that. Or you may choose to study a specific industry certification process in one of the areas of finance that you would want to do. Okay. I think that saved me a lot of time and a lot of money because I was really thinking about just scrapping this degree. No, no, no.

You're too close to the finish line. And it's got the stuff you need to go live what you're wanting to do. Okay. It's not like you wanted to go okay i want to i think i want to go to med school well crap yeah you do have start over okay if you're doing that you're not changing fields you're still in the same field it's just a matter of some specialization on the classes um i mean if you're really really concerned about it while you're doing your senior year go ahead and sign up at the other place and take three finance classes over there

and just pay for them rather than change your whole major. The major will not keep you from getting a job in the finance world. It just won't. That's not a problem for you. Hey, good question. Thank you for joining us. Open phones at 888-825-5225. You join in. We'll talk about your life and your money

kyle is on facebook on the ramsey baby steps community what point in net worth do i need to consider having additional umbrella insurance you can buy an additional 1 million dollars of liability insurance for about 200 250250 to cover car and homeowners. If someone got hurt in either case and would sue you, you'd want an extra million dollars for $250 a year in coverage. Why would you want that? If you were a target, why would you be a target? Well, if you had a sizable net worth, half a million to a million dollars or greater, and or if you just make a lot of money, you just have a really good income, you might be a target.

In either case, you'd want to pick up the liability umbrella policies. Good question. This is the Dave Ramsey Show. Most people's money problems come from not paying attention. That's why before I spend a dime of my money on something, I do the research and I make sure it's going to live up to what it claims. Recently, I got a great pair of sunglasses from a company called Shady Rays. When you're looking for sunglasses, it feels like your options are limited. Name brand sunglasses cost too much, and the cheap knockoffs are ugly, and they don't

really protect your eyes. Discovering Shady Rays is a game changer. With Shady Rays, you can count on premium sunglasses that protect your eyes, and get this, they're affordable. They give people the best overall value in sunglasses. They also replace your shades with a brand new pair if you lose or break them from day one of your purchase plus they offer an exclusive for ramsey show listeners right now you can grab most polarized pairs for just 28 at shadyrays.com with the promo code dave to get20 off your first pair of Shady Rays. In the lobby of Ramsey Solutions, Ross and Natalie are with us. Hey, guys, how are you?

Hey, Dave, good. How are you? Good. Better than I deserve. Welcome. Where do you live? Lancaster, Pennsylvania. Cool. Well, good to have you all the way to Nashville to do a debt-free scream. How much have you paid off? Paid off $68,000 in 21 months. Look at you. Good for you. And your range of income during that time? It started at $90,000 and went to about $68,000 in 21 months. Look at you. Good for you.

And your range of income during that time? It started at $90,000 and went to about $100,000. Very good. What do you all do for a living? I'm a mechanical designer. I'm a veterinary technician. Excellent. Very cool.

What kind of debt was this $68,000? It was two cars and two student loans. Oh, you were fairly normal. Very normal, yeah. Just normal people going along, and 21 months ago, something happened. What lit the fuse? Well, we were married about for a year, and I just remember we got our taxes done, and Natalie looked at me and was like, we made how much, and where did it all go?

I don't know. Love it. And I was just like, taxes? A mortgage? I don't know. And I was just like, uh, taxes, uh, a mortgage. I don't know. Like I had no idea. And at that time, uh, it just made me put like a mock budget together. And, uh, it came out to like a hundred dollars extra or $200 a month. And I'm like, man, is this what it's going to be like for the rest of my life? Like, it's gotta be something better than this. And, uh, at that time, Natalie said, oh, we're going to take this financial class at church. And I'm like, okay, sounds good to me.

Financial peace, that sounds great. All right. Two words that don't go together. Let's try it. Yeah. So you kind of felt like a rat in a wheel when you had that moment, that aha moment, when you're doing the taxes where you go wait this is this is this is and then about that time the class appears at your church huh yeah the church you attend already yes

all right very cool which church is this this is uh grace community church in willow street excellent excellent very cool you guys fun so you go to the class both of you willingly it sounds like yeah yeah you're like okay let's do this. We're going to figure this out. I'm not going to live like this. Life's too short. I don't want to be a rat in a wheel. Just run, run, run, get nowhere. There's no sense of traction.

Okay, so what did you get from the – when you went into the class, you thought you were going to get one thing, and you got other stuff. You know what I'm saying? Like there were some surprises in the class. What surprised you? I honestly never heard of your name before we took Financial Peace. And it was just like, I don't know, the gates let loose or something. And I just went Dave Ramsey crazy.

And I started watching all the YouTube shows. I started listening every day. Sucked into the rabbit hole. Oh, yeah. Yeah, totally. And Natalie, she was I started listening every day. Sucked into the rabbit hole. Oh, yeah, yeah, totally. And Natalie, she was along with me every day. So, Natalie, you kind of got this thing started. You're like, okay, where did this money go?

And, okay, here's a class. Let's go to the class. So when you went to the class, what did you learn that you didn't see coming? I guess just the whole budget part of it, not really being able to spend what we were spending. So it's pretty tough just keeping with it, but it was definitely worth it in the long run. Yeah. So when people say, how did you do it? How did you pay off $68,000 in 21 months? What do you guys tell them? It's, you, you gotta have a budget. Um, you gotta stick with your budget. Um, I would say, um, make the budget easy on yourself. Um,

I know it's, it's really daunting that first couple of months when you do it, you're just like, man, what am I doing? Like, this is really tough. Uh, I can't follow this budget. Like if I can't even follow this budget, just start, how am I going to do it? But you can do it. You can definitely do it and just make it easy on yourself um those first couple months and and you'll get there yeah we always tell people whatever you think you're spending on food put extra in that category because you're spending more than you thought people used to come into class with a hundred dollars a month in their food budget i'm like i don't think so bubba i don't't think that's going to work. Well, good for you guys. Congratulations.

How does it feel? It feels amazing. Absolutely amazing. Financial peace, there's a peace to it for sure. Well, who were your biggest cheerleaders? I think our biggest cheerleaders were definitely each other. I'd say my parents.

They were pretty big cheerleaders. They were all supporters. And our leaders at church, Steve and Joe. Yeah, I want to give a shout-out to Steve and Joe, our FPU coordinators at church. If it wasn't for them, we wouldn't be here. So thank you guys. Very cool. Very cool.

Well, congratulations, you guys. We're very proud of you. Thank you. Thanks for coming all the way down here to do your debt-free scream. Absolutely. We've got a copy of Chris Hogan's book for you, Everyday Millionaires. That's the next chapter in your story. You are on the way, baby.

You did it. I love it. All right. It's Ross and Natalie from Lancaster, Pennsylvania. $68,000 paid off in 21 months, making $90,000 to $100,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Love it! Love it, love it, love it! Well done, you guys. Very well done. Excellent, excellent job. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings.

You get free samples, free shipping. And with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best possible deal. Today's question is from Rachel in Texas. I'm confused on how to begin Baby Step 2. If we are behind, how do we get ahead, meaning our monthly income will not cover all expenses. With mortgage due at the beginning of the month, it puts us behind and lacking the money we need to get through the remainder of the month. Do I skip credit card payments just to get ahead?

Okay, Rachel, before you start the baby steps at all, your budget has to balance. The baby steps is what you do with extra money you can find in your budget. You not only don't have extra money, you are short each month is what you're saying you're saying your budget has more money going out than you have coming in you're not congress that has to change

how are we going to change it well you have to increase your income and decrease your out go i see a part-time job in your all's future, or two or six. I also see you selling something with payments on it, because it's killing you. Yeah, I see you having a big garage sale and knocking out a few of your smaller credit cards with that money.

I think what you've got to do is you have to get current before you start talking about the baby steps. You're not on baby step two if you're not current because you shouldn't have a thousand dollars in the bank. If you're not current, you have to get current first. Now, are you padding to some of the categories in the budget? I don't know. Your every dollar app will help you with that.

And here's the thing. The EveryDollar app has all kinds of blanks in it to prompt you to not forget something that you're really going to spend. In other words, make a budget that is actually real, that you can really use. But no one but God has enough money to put something in every single blank in the EveryDollar app. And so it's not designed for you to – there's no mandatory thing. You have to put something in every blank. All you have to do is give EveryDollar of your income an assignment,

EveryDollar a name, thus the name EveryDollar for your EveryDollar budgeting app. It takes about 10 minutes to set it up it's completely free to use the app and you can put it on your phone or on your desktop so that's how you do that stuff now then once you've done that if you've base if you cover your payments and your basic necessities of life, food, clothing, transportation, car, gasoline, that kind of thing, and you're still coming up short, then you have to take on an extra job and you have to sell something that's got payments on it. Both. To get the log jam busted through.

Because you've got to get on the upside to where there's more money coming in than going out in order to make progress it's not optional that's the only way you can do this you're not in congress so hope that helps you it's a good question thanks for writing it in to us for our question of the day for blinds.com well folks it is that way isn't it we have to live on less than we make no matter what we make well you make a lot or whether you make a very very little and you have to change some of those variables sometimes this is the dave ramsey show Thank you. Our scripture of the day, Colossians 3.12. Therefore, as God's chosen people, holy and dearly loved,

clothe yourselves with compassion, kindness, humility, gentleness, and patience. C.S. Lewis said, True humility is not thinking less of yourself. It is thinking of yourself less. Noel is with us in Lubbock, Texas. Hi, Noel. How are you? Hi.

How are you doing, Dave? Better than I deserve. How can I help? Hi. I just recently changed jobs, and I was looking for recommendations and advice as to where and what to do with the 401k that I have there. My new employer is offering like a Roth 401. So I was thinking about signing up for that and letting the other money work somewhere else. Yeah, exactly.

You always take your 401k with you when you leave a company. So you take the existing 401k and roll it over to an IRA in good growth stock mutual funds. And then at your new company, you start the Roth 401k there. Now, in order to do that, if you don't have a broker, click on SmartVestor at DaveRamsey.com. It'll drop down a list of the SmartVestor pros that are there in your area. One of them will sit down with you after you choose who you would like, and then they can show you how to do that direct transfer rollover, and they'll teach you what I teach you, that we suggest putting it in four types of mutual funds with long track records.

Growth, growth and income, aggressive growth, and international. And you want to pick mutual funds that have outperformed the S&P. And you can do that with their help. Robert is in Dallas, Texas. Hey, Robert, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me. Sure.

What's up? So, new listener. My wife and I have been listening for a couple months now, and in looking at the baby steps and everything, we've kind of been doing some of those but out of order. So we've got the $1,000 because we actually have about $20,000 in our savings account and then $8,000 in cash that we use for bills and whatnot. And then our biggest debt other than our home is my $20,000 car note. And so my question is, would it be better just to pay that sucker off,

like dip into the $20,000 and just pay that all off and then start to rebuild towards our three, six months, or just hang on to it and just keep making extra car payments. So the only debt you have is a car loan and your house loan? We have a little bit of credit card debt. We have $5,000 in credit card, but your baby says we're saying, you know, tackle the most extreme ones first. No, our baby steps tell us.

Let's walk through it, okay? Sure. What we teach people to do is to stop investing and stop saving until they reach that step. And so there's a reason that these are in the order that they're in, because they take you the fastest with the least risk to wealth, okay? And they actually don't violate common sense. So, baby step one is $1,000, and what we would tell you to do is any money that you have other than $1,000 that is not in a retirement account, any investments you have, any savings you have, $8,000 in your checking, $20,000 in your savings, anything else you got a mutual fund

with $5,000 in it that's not in a retirement account, anything like that, we're going to cash out and pay on all of our debts, listing our debts smallest to largest, and pay them off in that order. That is baby step two. Once that's done, you now have control of your most powerful wealth-building tool, which is your income. A 1% savings account is not your most powerful wealth-building tool. Your most powerful wealth-building tool is your income

that you're giving to a car company right now. And now you're going to take every dollar you can squeeze out of the budget, once you're debt-free, everything but the house, and build your emergency fund at three to six months of expenses. Then once that's done, we will start or restart, and we may have temporarily stopped, 401K and Roth IRA investing to the tune of 15% of your income going into retirement. That's baby step four. Do you have children? Yes, I have a two-year-old and a three-month-old. Great. Then after we're doing 15% in baby step

four, we'll move on to start funding their college in baby step five. Any other monies that we find above four and five, we do those simultaneously. We're going to start throwing at the mortgage and paying off the house. The average family doing this program is paying off their home in between seven and ten years. Okay? So what that means in your situation is you need to write checks tonight to be debt-free, and you have no money. Right.

That is exactly what it would turn out to be. You have $28,000 in cash, is what I heard, and you have an $18,000 car note and a $5,000 credit card. Did I hear you correctly? No, it was a $5,000 credit card and $23,000. Oh, you're exactly broke. Okay. Right. We would have just enough to be completely broke.

Yeah, except you need to keep the $1,000 because that's maybe step one. So you're going to have $1,000 left on your car after tonight. Gotcha. And that scares the crap out of you. Yeah. And don't do this. Don't do this if you're not going to play through and do the whole system. Right.

Because I don't want you to sit there broke i immediately want you to pay off that car what's your household income last year we made about 125 this year we should be at 140 because i'm an independent contractor so you're taking home 10 grand a month so next month you're going to pay off the car and you're going to start rebuilding this emergency fund right and by christmas you're going to pay off the car and you're going to start rebuilding this emergency fund right and by christmas you're going to have twenty thousand dollars in savings and no payments that's where you're going but you're going to be on a written budget that shows you and your wife that you can do that to stop at the point i put you at tonight would be ludicrous right i'm not suggesting that not for failure it's just a moment in time and every moment from this day forward this savings account

will heal rapidly back until christmas and so really the only it's not like we're going to stay this way for 40 years we're going to stay this way for 40 days you know and then you're going to be have already put back five six seven thousand bucks because you guys are making bank right and when you start managing it with a budget and the two of you together are locking arms and saying hey we want to get to building wealth here we want to get to putting money aside for these kids college here hey let's talk about getting this house paid off we could be millionaires that's where you're heading if you follow this through and that's i wouldn't take you there willy-nilly i wouldn't take you there on a

whim but i if you play through and you do exactly what i taught you to do right there you're going to be fine but it scares the crap out of you because you're human and it would scare the crap out of me because what you're afraid of is you're going to stop there and you're going to be fine but it scares the crap out of you because you're human and it would scare the crap out of me because what you're afraid of is you're going to stop there and you're not it's just not who you are you're too smart you don't you don't make 140 grand at your age if you're dumb okay so you're too smart to stop there but you got to do the other parts that will give you comfort is what i'm saying when you go ahead and lay your budget out, jump on every dollar.com, download the thing, work on it this weekend. If you want, I don't care.

You don't have to do it tonight, but the point is that's how you would apply our baby steps to the math you gave me in your situation is you are debt free with a thousand dollars in the bank and a thousand dollar debt on your, on your car is all. And next month you're going to have that paid off and put $4,000 towards your, you know, starting to rebuild. And by Christmas, you're easily going to have $20,000 in savings for your emergency fund. And then you're going to move right up the ladder. Click, click, click, click, click, right along. You're going to do just fine.

You're going to be great. So that's what I would tell you to do. It's what we've told millions of families to do over the last 30 years, and it's made a whole bunch of them into millionaires. Because, again, the typical millionaire pays off their home in 10.2 years, and they fund their 401K and their Roth IRAs. These are the things we found when we studied 10,000 millionaires. That's the data points.

That's how they get there. Now, that's not how you get to $100 million, but that's how you get to $5 million. And then you figure out the other stuff as you go along. So, hey, good question, man. Thank you for joining us. We're honored to have you in the listening audience. 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 is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section. Or head over to DaveRamsey.com and click Dave Recommends. Thanks for listening.