The Ramsey Show - App - How to Get Rid of Old Debts and Dandelions (Hour 1)

Episode Date: February 6, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Joan is with us in Louisiana. Hi, Joan. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you so much for your time today. I really appreciate it.

Sure. What's up? So, Dave, I am single, never married, no kids. Tomorrow, I celebrate my 50th birthday, and I'm also paying off my house. Touchdown! Way to go, kiddo! Yes, sir. Thank you. Big woohoo. I know you have a millionaire theme hour, but I'm only a half millionaire, so I'm waiting for the half millionaire half hour. Well, you're on it. Here we go. Awesome. So I should be filled with financial peace, but unfortunately there's something that's disrupting that peace.

And I have a plan to fix it, and I would like to get your input on that. So I have three siblings, and throughout our adult lives, I've always been the nerd, so I've always had money, and obviously with no kids, et cetera, extra income and such. I've helped them. I've given them money, obviously not loaned them money. As I approached the goal of paying off my house to find my 50th birthday, I have one sibling that recently got divorced, so he had a lot of struggles. And it fortunately got to a point where knowing I was, you know, very close to meeting that goal,

when I'd get a call that would say, I need to talk to you, my heart would sink because I knew it was about him needing money. How old is he? He is 47. When is he going to grow up? Well, he's currently living in my sister's house, so that's a whole other issue. No, it's really not. They're the same issue.

The issue is the fact that he's never stood on his own and has never taken responsibility and never became a full-grown adult emotionally is causing him to have money issues and beg you for money. Am I wrong? That's true. No, you are absolutely correct. My guess is he's pretty erratic on work, too, isn't he? Yes, sir. Like he doesn't like work much.

Well, I think he's more got the, oh, I got divorced, my wife did me wrong, and now I'm in this situation I'm in. How long ago was the divorce? A year and a half. Okay. That's okay for probably six months. After that, you kind of got to move on. True.

You know, I meet people after 10 years that are still singing that song. It's defined them rather than going, they become a victim rather than a victor so uh issues you've got are your family has got issues and they see you as an atm is that what you're telling me okay yes so i'm going to send you a book by henry cloud called boundaries because here's the thing you are a person, and you love your family deeply, and those are great things. And you've been under the illusion, the improper perception, that you've been helping them. Because I think we can both come to the conclusion real quickly that all the money that you've given them over all the years has not really helped them because they're still in the same place you are right if it had helped them they would have be prospering and wonderful and things would be great instead every time you see any of their names on caller id you think it's a beg coming so here's

how we help here's how we help them in the future and. And this book's going to help you with that, okay? But it's, I love you too much to participate in you continuing to be exactly the way you are now, because it's not working for you. So, because I love you, I want to see you win, and I am no longer going to give you money unless it's tied to a behavior that causes you to win in the future. And so if you need some help paying off a debt, I might pay a fourth of it if you pay three-fourths of it. If you want some money for X, you're going to have to put some money with X for whatever that is.

And you're going to go through Financial Peace University, and you're going to show me your budget. Not because I'm a control freak, but because I want to make sure, because I love you so much, that you're doing things that are going to cause you to win before I give a drunk a drink. That's how it's going to sound. Now, let me tell you what's going to happen when you do that, okay? They're going to get mad. Okay. They're going to get mad. Okay.

They're going to get mad, aren't they? Yes. Yeah, they are. And when they get mad, then you say, I still love you, and I still want to help you, but I have come to the conclusion that just giving you money is actually harming you. I am funding your irresponsible behavior, and you're not winning because of me, and I feel so bad because I have harmed you instead of helped you. And I don't want to harm you.

I love you too much. So when you want to do some of these positive things, I stand here ready to help you and to be your biggest cheerleader. I will not give you any money anymore that doesn't have strings attached to you changing behavior. And they're going to get mad and leave you alone for a while. One of them might come mad the rest of their life. Okay. But if I allow my child to misbehave when they're teenagers, and that leads them to a life of misbehavior, have I helped them?

No, I haven't loved them well. Right. I'm asking you to love your brothers and sisters well. You've loved them. I just want you to love them better. Does that make sense? Yes, sir. You've installed some grit in me. I'm going to.

There you go. That's a word. But, you see, there's no meanness. There's no anger. There's no retaliation. There's no I'm going to bring up the past and hit you with it. There's no shaming. It's just I care about you, and I want you to win.

The 100% of this transaction we're discussing is for them. It's no selfish motive at all. Now, you'll get accused of being greedy and not wanting to be charitable and aren't you a real christian and all you'll get accused of stuff like this when people get mad you better be ready because i get it all time you ought to read my mail it's interesting imagine yeah and it's just you know because uh you know that's the way people think when they have no boundaries. And you've been an enabler.

And enablers are the kindest, sweetest people. They're gentle souls. And that's you. And so you've gotten run over is what's happened. And it's not only harmful to you. It's been harmful to them. Hold on. I'm going to send you a copy of the book Boundaries and help you out.

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We're so confident you'll love Pure Talk USA that we invite you to try our service risk-free. Visit puretalkusa.com or call 844-862-3677. Enter promo code SAVEDAVE and receive 50% off your first month. That's puretalkusa.com. Well, one of the guys I admire most in the money space, Pastor Robert Morris is with us. One of the best teachers on generosity that I've ever met in my life. He wrote the huge best-selling book, Blessed Life. It's been a best-seller in 20, 30 countries, not not only the u.s one of my favorite books on giving and um his new book is beyond blessed god's perfect plan to overcome all

financial stress max lakedo john maxwell lisa bevere craig groschel david green franklin graham all endorsed it and they came up short of anybody good to write the foreword, so I got to write the foreword. So I don't write forewords for books, but for Pastor Robert Morris, I write the foreword. This book is incredible. This man is incredible. We're honored to spend a little time with you.

Thanks for showing up, my friend. Thank you. It is a wonderful, wonderful blessing to get to see you again. You too, sir. So this is good stuff. You and I were just talking about it over lunch. And let's go back. The blessed life, the original, the treatise, the manifest, the big dog is about generosity.

Yeah. It's about giving. But the twist is that I really believe that God spoke to me that we don't give to get, we get to give. That giving is about our heart, that we actually want to help someone. And the same way when we watch our children, and let's say that our children are sharing, we want to reward that. So God wants to reward the right heart. So when he can get giving in our heart, if you think about this, Dave, who created giving?

I mean, God did. I mean, no person did. God did. Why? He actually created it so you could have joy. at giving in our heart if you think about this dave who created giving i mean god did i mean no person did god did why he actually created it so you could have joy i can guarantee you at christmas you are not excited about what you're opening you're excited about what your grandkids are opening absolutely your wife is opening what you're giving so that's what i enjoy is watching the little kids we all do that's exactly's exactly right. More than Papa Dave. Papa Dave doesn't even remember what he got for Christmas. That's right.

So I'm not sure he got anything, actually. But it's okay. So it doesn't really matter because what I got is five grandbabies opening stuff, and it's a blast. That's it. But giving and generosity, as we teach in Financial Peace University, is only one of the subjects. It's only one. It's only one. And I feel like as soon as I wrote the book and it started selling just unbelievably matter of fact we self-published it it sold over 250,000

copies self-published before we even went to a publisher and so but people started writing me saying hey i'm giving but i still have credit card debt and i didn't understand that and being a guy like yourself that understands stewardship i didn't understand that. And being a guy like yourself that understands stewardship, I didn't understand law because there are two different things. It's like I wrote a book on combing your hair and said this is one aspect of grooming. And I didn't write anything about using deodorant. I didn't write about, you know, bathing. And someone would write me and say, hey, I'm combing my hair, but I still stink. Well, sure you do because you're not doing the rest of it.

And so for this has been 17 years since the Blessed Life, I've wanted to write this book. And the Blessed Life is not the Blessed Pocketbook. It's a life. So a life walks on two legs, and one of them is generosity, but the other is good stewardship. And stewardship means just managing. It means managing our finances so you can't give enough that god's going to look down and go with a magic wand and say your credit card debt's just gone little baby he doesn't do that well and why think about this the reason he blesses us is two

reasons one he loves us just like we love to bless our kids but also because he wants us to be a blessing so why would he give someone resources who's not going to manage those resources when he could give him to someone else who will manage those resources in such a way that the widow and the orphan and the undopted kids and all the people the churches need to be built the missionaries need to be sent why wouldn't he bless that person yeah so when you're faithful and some little things says after the parable of talents i might give you more to manage that's exactly what it says and if you're not faithful little things i will not give you more don't expect that's right just because you're generous

right to to yeah that's like the old cartoon character of a guy that's got one shoe nailed to the floor yeah so you're just going in circles so i know people who say well i give but i'm not i know i i still have all these problems well they need what they need to learn to give but they also need to take financial peace university yeah yeah in a sense there's that that is spoken though in some church areas i mean some people say just say if you just give everything be okay and that's really a false message because it's not it doesn't line up with scripture it's not true and when you look at scripture the whole of scripture is about stewardship i mean god started with stewardship here's what he says to adam and eve this garden is mine and i want you to know i'm letting you live here but i'm going to put a tree right in

the middle of it so every time you walk by that tree you know who the owner is and who the stewards are and the very first life satan really was because it said you'll be like God, here's what they were saying. You'll get to be the owner. If you eat from this tree, then you get to be owners and not stewards. Whole new version of original sin. Wow. That's exactly right. And that's where it all started.

I like that. So why do Christians then have financial stress? That's an underhand pitch. You can answer that one in your left hand, right? Behind your back. I can answer that. It is because we do not manage our finances according to Scripture. We don't live below our means.

We don't have a budget, which is I've heard you talk about it when you fail to plan, you plan to fail, you know, all these things. And the problem, I think, is that we just don't have a motivation to really see what the fruit could come about in our lives living with no financial stress. Can you imagine living in a world where you never worry about your bills? And if you see a family you want to bless you have the resources to do it that's exactly the world god would like for you to live in but it requires following the guidelines it does live on lesson you make get out of debt be on a budget diversify

your investments all these things are scripture everyone and in the same way though that we've seen god bless people when they're generous we we see God people at our church, when they go through Financial Peace University, when they get on a budget, when they start implementing biblical principles about their finances, we've actually seen God bless them financially, supernaturally. So it's not just that the numbers add up. It's not just math. I'm a math guy. I love math. But it's not just that the math adds up. It's that there comes a blessing on your life financially well you're a farmer and you planted corn you did

the right thing and you kept the weeds out you did the right thing but you get a bumper crop that's beyond explanation that's right there's the blessing that's what you know i got i expected a harvest but oh my goodness you know that's that's when that's when you say that's supernatural yep because you can't explain it by mere human cause and effect and i'll tell you when you can't explain so when debbie and i decided to get out of debt we said we're not buying anything that's not a necessity until we're out of debt completely out of debt and so uh she comes to me one night and her the hair dryer broke and she says to me this is a necessity making sure that i as a man understood because i can just run my fingers through it and i'm fine no so i said okay i i agree

with you but we've learned to pray about every purchase so i just want to pray about and i said do you need it before in the morning do you need me to go to 24 hour store and get it you know she said no i'm okay so we pray about it the next day happened to me sunday we go to church we come home on our porch is a package we opened up there's a note that says i was at the store yesterday i know this sounds crazy but i felt like god told me to buy this for you that's just it was a hair dryer that's weird it was a hair dryer. That's weird. It was a hair dryer. I love it. It's as weird as the Red Sea parting. The point is that when we set our hearts to do God's will and our finances, God said, I would like to encourage you.

Yeah. I mean, there's no way you can explain that any other way. You can't explain that any other way. A lady asked me the other day, how do you justify your faith? I've had hair dryers on my doorstep i mean my whole i've had all these things that show up that you cannot explain them so the book is beyond blessed written by pastor robert morris of the best-selling book the blessed life you do need to get this it's at amazon barnes and noble anywhere great books or so our soul be sure you check all that out. He's a pastor of Gateway Church, a multi-campus church down in the Dallas-Fort Worth area.

I've spoken there many times. We've been friends a long time. He's been a blessing to us and has spoken at our events. We go down there. We've just been friends a long time, trading stuff back and forth in a way. And this guy is the best. And so you don't want to miss this. The book is called, again, Beyond Blessed.

If you want to be, I suggest you read the principles that he puts forth in this book. Pastor, good to see you again. Good to see you, Dave. Thank you for hanging out with me, my friend. Thank you. This is The Dave Ramsey Show. We'll see you next time. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a

situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do go to zander.com or call 800-356-4282 Tony is with us in Raleigh, North Carolina. Hi, Tony. Welcome to The Dave Ramsey Show. Hey, Dave. Thanks for having me.

Certainly. How can I help? All right. Well, Dave. Thanks for having me. Certainly. How can I help? All right. Well, I'm going to start off by saying thanks to be on the phone. Now, your phone's messing up. Are you speaking directly into it, sir? I am. Can you hear me now?

Yes, sir. Does that look better? Yes, sir. Thank you. I think. Dumb. Okay. I think. But now, I'm gazelle intense, and my question is, I ended up filing Chapter 13 maybe about three or four years ago. And while at the beginning of that, I ended up surrendering a vehicle that wasn't in the bankruptcy. And they haven't bothered me in any way.

They stopped calling after about six months. But what I've noticed is they have started dinging my credit every month. So I'll go up 10 points, go up six points. And sometimes I try to settle with them. I've emailed them, but they don't respond to me. And it's one of those places where they only have like an email. You can only contact them. There's really no phone number.

But they haven't bothered me except they just keep making my credit go down each month. And I'm in the middle of Bay Step 2, and I see the light at the end of the tunnel. I should be debt-free, but, you know, all consumer debt. On repo deficits, you can usually settle those for about a quarter on the dollar, especially one that's this old. And so if they say you owe them $10,000, you probably can settle it for $2,500. But you are going to have to track them down and get this done. Always do whatever settlement you do in writing.

Email is fine, but get it in writing, and do not allow them to have electronic access to your checking account in the process. But you're going to have to hunt this down and cause it to happen because it's not going to go away until you do. Should I do that before continuing Baby Step 2? No, I'd go ahead and knock out Baby Step 2. They're not bothering you. They're just messing up your credit score.

Right. They're not suing you they're not garnishing your wages or not doing anything like that so let's knock out baby step two now the other thing you can do if you want to if you can't get any response from them uh but it's it's not going to work long term it'll give you some short-term relief is if you can't get response from them you can dispute the entry on your credit bureau as being inaccurate your credit bureau report is being inaccurate uh because apparently the contact information at least is inaccurate and so um when you dispute that then the credit

bureau has 30 days to get confirmation from them that the debt is valid. If they don't confirm it within 30 days, the credit bureau is required by federal law to take the entire entry off. However, it will pop back on as soon as they re-report it again. So it's a temporary fix until you dig the dandelion out by the roots. You know what happens when you cut a dandelion in the front yard of your house, right? It's going to grow back with three friends. And that's what happens here. This is going to not go away.

It's going to get worse and worse and worse until you dig it out by the root. And that's how you get rid of old debts and dandelions. Julie is with us in Kansas City. Hi, Julie. How are you? Hi. Thanks for taking my call. Sure.

What's up? Okay. We will have Baby Step 3 completed in June. And at that time, should we put more money toward our home mortgage or our retirement? We suggest Baby Step 4 after Baby Step 3, which is your fully funded emergency fund and you're debt free, is 15% of your income going towards retirement. Have you heard that before? Yes, but we are 52 years old, and we only have $150,000 in retirement at this time. So that's why I wondered if we should put more to tackle.

No, because we also need to get your house paid off before you get to retirement. Right, exactly. So these two things are both, both of these things are urgent. Yes. So if you go build up a million dollars and you don't pay off your house, you've still got a problem. Sure. So 15% is baby step four. Everything above that that you can find, throw it at the house, and you'll be amazed how quickly the house goes away.

You know, when you start really, it's the only thing to work on other than 15% of your income going into retirement, you're going to look up, I mean, it may be seven years, but by the time you're 60, it's my guess, the house mortgage will be gone unless you have an unwieldy bad house mortgage, meaning you've got too much house. That may be something to think about. But I think if you really look at it and just go, okay, this amount divided by eight, whatever the amount is, $160,000 divided by eight, that's $20,000 a year, above 15% going into retirement.

Yeah, you'll be done with that house. And then you've got the rest of the time from whenever that house is paid off to really load up retirement. You can max out everything, but you'll be fine. I mean, if you save 15% of your income for the next 15 to 20 years, if that alone will cause you enough to have retirement, and 20 years is 72. So most people nowadays are working up into that, if they're broke especially. Demetri is with us in Virginia. Hi, Demetri, how are you?

I'm good, Dave, how are you? Better than I deserve. What's up? I've got a question for you. I'm about a month away from completing Baby Step 2, especially approaching Baby Step 3. I should be out of Baby Step three in about about may good and good and after that i'll be in the process of selling a home that's out of state so i'm trying to figure out what the best way would be to allocate the proceeds on the sale of that home you're gonna

do that after baby step three yes okay then i would apply it to wherever you are in the baby steps at that point which would be baby steps four five and six your four is 15 of your income going into retirement you don't need the equity to do that it's 15 of your income five is kids college you got kids yes how old uh multiple kids uh one in college two in high school two in elementary school and and two newborns okay cool all right so i'm going to use some of that equity to start polishing up college for all of those. And the young ones, it doesn't take a lot. You can get started with $5,000 or $10,000 on that.

How much equity are you going to get out of this other property? I'd say about $25,000 to $30,000. Okay. I'm probably spreading that across that handful of kids and college. That's baby step five. If you told me you're getting $250,000, I would do a bunch on the kids' college and then reach over and pay off your house, maybe step six, because four, five, and six you do simultaneously.

Okay. Have you ever heard me say that before? Yes. Okay. And so four is done. You don't have to worry about four because it's just 15% of your income. You just set that up and it's just chink, chink, chink, chink going along. Now you've got a windfall, and five is the next thing.

And I don't think $25,000 is going to fund all of these kids' college, do you? No, no, I don't think so. Okay, so we're going to make a run at whatever's most urgent, probably the older kids, maybe a little bit in the younger kids, and then get the younger kids started on a monthly savings into a 529 or an ESA, the two babies, and then the one that's in school we got a we got a cash flow that puppy and then we got some in high school that are coming real fast and we got to have some money towards that 25 is not going to cover all that so I'm probably spending it on the older kids and setting up the youngers on a payment you know a steady schedule like I do in my retirement and then if you get another windfall

you polish off some more on the colleges, and then you would maybe have enough to start dumping on the house at that point. But you're not in a position to pay extra on your house, maybe step six right now, or in May you're not going to be. But you're really making huge progress. Congratulations. I mean, you've got to feel good because now you've got like a plan because y'all ever notice when you don't have a plan money just like evaporates it's like where'd it go where'd it

go you know i have no idea where it went i remember many many years ago my grandmother passed away she had a bazillion grandkids and they sold the farm and each of the grandkids got five thousand two hundred dollars i got five thousand two hundred dollars we were brand new married five thousand and they sold the farm, and each of the grandkids got $5,200. I got $5,200. We were brand new married. $5,200 might have been a half million dollars as far as we're concerned. We thought we were rich. You know, we thought we hit the lottery. $5,000!

I have no idea where it went. It's gone. I do not know where it went. It just disappeared because I was so stupid. I didn't have an intentional plan that i was following when you have an intentional plan money gets traction when you don't have a plan you have no idea where it went this is the dave ramsey show Thank you for joining us, America. This is the Dave Ramsey Show.

We're glad you're here. Open phones at 888-825-5225. If you've ever felt stupid because you don't understand your taxes, that would make you normal. I don't. I mean, I'm really good with money and math and pretty good at taxes, but there's no way. No possible way. Amy, one of our fans, had a different experience after working with one of our tax-endorsed local providers. Never had someone try to help me understand how taxes worked until I worked with my ELP.

There's an expression, if you can't explain it to a fifth grader, you don't really understand it. And she helped me fully understand it. We found our new CPA, thanks to you for pointing her to us. There you go. Pointing us to her, really. So to find a tax professional that we recommend in your area, go to DaveRamsey.com slash taxadvisor. Or on the front page of DaveRamsey.com, click ELP for taxes. And it's that time of year, I'm afraid.

Brian is with us in Rhode Island. Hi, Brian. How are you? Doing pretty good, Dave. Good. How can I help? Good to be speaking with you. Okay.

My wife and I, we were at the Total Money Makeover, graduated from Financial Peace University. We're in baby step number two. We've been in that step for the past two years. We initially had $82,000 of student loan debt, and we brought it down to $55,000. Now, my question for you is, we have two kids, a three-year-old daughter and a one-year-old son. My wife wants to put them in a private school next year. The tuition is $12,500 per child, and so it's going to be $25,000 for both of them to attend.

For a one-year-old? Yeah, yeah, that's my son, yep. I'm so confused. I'm so confused. What does she think she's going to get for that with a one-year-old? I don't know. I mean, does she have an actual logical explanation for that with a one-year-old? I don't know. That's why, yeah, that's why. I mean, does she have an actual logical explanation for that? No, she can't give me anything.

The only thing she can give me is that they're a sponge. They're a sponge, and it's better to put them in school at this time rather than wait later until out of debt. Okay. All right. And what's your household income? It's about $51,000. And you're going to spend $25,000? Yes. Well, that's absurd, dude. Even if it was absolutely necessary, you don't have that kind of money. Yeah. This is illogogical you can't spend that kind of money on your house yep you can't spend 50 of your income on your home much less a one-year-old's tuition so um this is so far

it's so illogical and apparently so emotional that I'm not sure I'm going to be able to give you an answer that's going to work for her. I suspect you're going to have to get some outside counsel, whether it's your pastor or a marriage counselor, and someone else that she trusts to explain to her that this is plain, straight-up stupid. Because it is. That's what I was thinking we probably would have to do. Yeah. I mean, if she can't, I can't imagine being able to reason with her if she ever thought this was a good idea. That's my problem. Because it's so irrational.

Yep. It's not even close. I mean, if you told me you made $250,000, then we'd have a different discussion. Yep. But you make $50,000, your household income is $50,000 a year, and she wants to spend $25,000 on school for a one-year-old and a three-year-old. Yes. Okay.

Even if it was for a 12-year-old who was a genius, and you could make the sponge argument then, right? The kid's a savant, and I want to make sure he becomes all that God has for him to be. Even if that was the case, you simply can't afford it. And that's not the case, because her premise is ludicrous, by the way. So just as an aside for you people out there, let me help you with this. There are zero data points that indicate private school 1 through 12. There's zero data points tying that to success.

Zero. Zero. Now, there's some safety factors, there's some faith factors, and there can be an increased academic experience. But to say that this is the only way your child is going to succeed, there's just no data points that indicate that. None. None. None.

And it goes all the way into college, by the way, for those of you listening. I mean, we just finished the millionaire study, right? The 10,000 millionaires. 67% of the millionaires that we studied did not go to prestige schools. They went to state schools. Only 8% went to prestige schools, which tells us that it's not necessary to go to prestige school to become a millionaire. That's a causal statistic that's causal. You can tell.

Okay? So the premise that you have to go to a private school in order to be successful in this world is ludicrous. Now, there's advantages to going to a private school, and if you want to do a private school and you have the money to do a private school, that's okay, folks. I don't mind that. I'm okay with that. I didn't do it.

My kids didn't do it. But my son-in-law works for a private school, so I'm not mad about private schools. There's nothing wrong with that. But this idea that somehow your kid is going to be more likely to succeed no really not really there's no doubt of points to say that so um uh i make a bazillion dollars a year and i'm not i would not spend 25 000 on a one-year-old a three-year-old to go to anything there's nothing i love my i got one-year-old grandbabies and three-year-old and a three-year-old to go to anything. There's nothing.

I love my wife. I've got one-year-old grandbabies and three-year-old grandbabies, and there's no possible way Papa Dave's writing that check. And I love those grandbabies more than anything. And they're the smartest kids on the planet, by the way. They're Ramsey's. So they're brilliant. They're absolutely brilliant.

But I'm not doing that. John's with us in Baltimore, Maryland. Hey, John, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call again. Sure. What's up? in Baltimore, Maryland. Hey, John, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call again. Sure. What's up? I reached for my call.

I called you a while back. You were very generous, and you sent me your total money makeover book. I read it that night. Cool. Working on step two, paying off our debt. Now, my question for you is tax season. We rent, and I know come April we are going to get a tax bill for anywhere from $9,000 to $12,000. Do I keep putting money away? What does renting have to do with that?

I have nothing to write off. Oh, well, you wouldn't be writing off your home anyway, because in 2018, you have standard deduction of twelve thousand dollars are you married yes sir twenty four thousand dollars unless your interest in charity adds up to twenty four thousand dollars you would be taking the standard deduction anyway okay so with that being said i know that this bill is coming do i keep trying in you have not been paid you've not had withholding on your taxes? No, I do. I'm a W-2 employee.

Okay. You haven't had enough withheld? You know what? We really need to talk to our accountant to see why. $9,000 in the hole under withheld? Yes. Well, you're going to be penalized as well as being under withheld then. What's your household income?

$300,000. Oh, thousand oh okay well that's a little better then no you may not be penalized on that okay uh well you just scrape up the money put that at the top of your debt snowball because you need to knock out the irs before anything else and adjust your w-2s appropriately but you're not going to have enough interest write-off to make it make sense with the standard deduction even making 300 $300,000 if you bought a home. But let's pretend that you did, okay? If you had a $10,000 interest write-off, you guys are in a 34% tax bracket this year, okay? Okay.

So if you write off $10,000, it saves you $3,400 on your taxes. So what buying a home to create a tax deduction is mathematically is you're going to send $10,000 in interest with your payment to the mortgage company in order to save $3,400 on your taxes. Okay. So you would not do something just for a tax deduction because you're trading a dollar for a quarter. Understood.

So then I'm not right now, in your opinion, tackling any other debt. I'm just putting that money away so when April 15th or whatever date it is, I'm paying that off and then tackling the next. Yeah, I'd put that as your top debt, and hopefully you won't be penalized if you pay it on time, and hopefully you've not underwithheld to the point that you need a penalty or that you get assessed a penalty. Because underwithholding gets penalized if you underwithhold too much. And I don't think you have with your income,

but you need a good tax preparer and get this all adjusted. And you guys need to get on a tight budget because $9,000 really shouldn't be a big stretch when you're making $300. That's $25,000 a month. That puts this hour of The Dave Ramsey Show in the books. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.