The Ramsey Show - App - How to Go to College Debt-Free When You're Broke (Hour 1)

Episode Date: August 29, 2018

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. We're so glad you're here. Open phones at 888-825-5225 that's 888-825-5225 ray is with us in chicago hi ray how are you hi dave thanks for taking my call sure man what's up all right hey i was calling because um my wife and I are on baby steps four, five, and six. And we have two high school seniors. They just graduated.

Our two kids, high school seniors, they just graduated. We have another one in high school as well. He's a sophomore now. But we homeschool, so we have a 16-year- a 16 year old and 18 year old graduate at the same time. But anyway, we started your program late in life. So we do not have any college savings. Um, and obviously we need to resume, uh, you know, paying, you know, resume retirement savings and that kind of thing. So just calling to get some advice as to maybe how to navigate that. Gotcha. What's your household income?

It's usually, let's see, okay. It's, I would say, I'd say $125,000. My wife works part-time. And you're debt-free except your home and you have your emergency fund in place. Yeah. How much is your house payment? $1,750,000. It actually went up much is your house payment? $1,750. It actually went up briefly. I think it's $1,800. So you're in a position to cash flow and help some, but not just to write the checks and pay for it.

Yeah, yeah, yeah, yeah. Like my 18-year-old, he just started as a server at Cracker Barrel. Good. Yeah, like my 18-year-old, he just started as a server at Cracker Barrel. So we're thinking of talking with him about, hey, you know, using a portion, you know, using half, using 75% or whatever, and then, you know, setting up a budget with him. They are interested. They've been listening to a lot of stuff we talk about, so they are interested in being debt-free.

They don't want to start with a student loan, so they're going to community college here locally. There's four or five things you can do to get through being debt-free. They don't want to start with a student loan, so they're going to community college here locally. There's four or five things you can do to get through school debt-free when you're broke, okay? And that's where you guys are. You're not completely broke, but as far as college goes, you're broke. And so, because as you said, it's a late start on things. Oh, yeah. The biggest variable by far that determines whether or not you can

get through school debt free is the cost of school and so college choice choosing like you said spend some time in the community college do a couple years there uh that's much cheaper it's usually about 25 percent of regular tuition and you can get the basics out of the way there. And, of course, a lot of people live at home when they're doing that, so it saves on housing costs and other things. Then the other thing we're looking at is in-state tuition. So here's what happens. The college you graduate from is where you get your degree.

So no one says, did you go to school there four years? For instance, I graduated from the University of Tennessee. I went to Middle Tennessee State University and also a state school my first year, transferred up to University of Tennessee after three years and went three years there. But no one ever says, Dave, did you go anywhere else? As a matter of fact, very few people even know what I just told you. You know? Sure.

I'm not ashamed of it. M.T. Issues is a fine school. But it was in our area, and I lived at home the first year and drove back and forth because that's all I could afford to do. So that's what you do. You pick a car you can afford to drive. You pick a school you can afford to go to.

And so you pick an inexpensive school to get your degree in. Of course, we're going to study something that actually has application in the marketplace. The second thing you're going to do, and you've already done this, is junior gets a job. And I'm not sure, and I like Cracker Barrel. I ate there. There's one next door to us here. But I'm not sure Cracker Barrel job is going to get you through school. You need to make more than probably he's making there, unless he's getting really good tips.

Because you need to get up $15 an hour, $18 an hour average, and that's going to be walking dogs, cutting grass, delivering pizzas, some stuff like that to get your per hour up. And you're going to work a lot. I worked a lot when I was in college. You probably worked where you were in college. It's not child abuse. Yeah, I did.

It's actually good for them. Okay? the work where you're in college it's not child abuse yeah i do it's actually good for them okay and so um as a matter of fact the studies tell us that you have a higher percentage of people who work while they're in school graduate and we have a higher higher gpa the ones that work while they're in school uh i think it's because they're having to pay for it so they actually freaking go to class i guess that's probably got something to do with it i don't know but we've got all kinds of studies that give us that answer uh the the varsity athletes and people who work while they're in school have a much higher class attendance and a much higher graduation rate and a much higher gpa and i guess it's just because there's so much required you have to to organize your life, you know. So class or school choice.

The next thing I would do is say, let's take the ACT, and then let's take a class on how to take the ACT and then retake it. Most schools are super scoring now, meaning if you take the test three times, they take your highest math score of the three. They take your highest English score of the three. They take your highest science score of the three, and they put the best of them all together to create a super score, of the three. They take your highest English score of the three. They take your highest science score of the three, and they put the best of them all together to create a super score,

and that makes you more eligible for scholarships, which brings me to the idea that we're going to apply for, I don't know, maybe 1,000 scholarships. That's a junior's also new part-time job. You get turned down for probably 950 of them, but if you get 20 or 30 of them at a thousand bucks it'll get you through and so you just it's a high it's a high numbers game so scholarships school choice work while you're in school of course we're choosing a again a field that actually has something where you can get a job when you get out but you can work through when you get in school i looked it up

as a matter of fact i was talking talking about it on the air yesterday. The University of Tennessee is a fairly normal state university school. It's about average as far as cost goes. It's $13,006 a year right now for in-state tuition. So $1,000 a month, and you can make $1,500 a month delivering pizzas. So you might not win the beer pong tournament. Your social life, you might not have the college experience. I didn't have the college experience.

I lived off campus. I worked 40 to 60 hours a week, and I graduated in four years with a 2.97. So, because I needed to get out, I was tired of paying for it. Sure, sure. And so this idea, I'm'm gonna go ahead and stay in five years because this is just fun that crap goes away when you're working and paying for it so that's what these kids are facing and it's not a bad thing it's character building it's not abusive uh it just forces them to make some adult decisions instead of extending their emotional adolescence another four years. And so step in, you know.

You know, they may not win the InterVarsity fraternity trophy. Well, whoop-de-doo. They're going to go through school and get an education. The goal here is be smart people. The goal is not the college experience. If you want the college experience, I ain't got any problem with that at all. Go ahead, but don't tell me you have to finance it

because I don't have any time to work with all of my social obligations. Cry me a river. I'm just old and grouchy, so that's what you do. You work your way through dude you can do it thanks for the call open phones at 888-825-5225 this is the dave ramsey show All right.

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

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

Hey, Charles, welcome to the Dave Ramsey Show. Hi. Hey, what's up? How can I help? I was trying to see if I could get some advice. I only have around $7,000 saved up, and it kind of took me a while to save that up. And I have a $9,000 car lease, and I was wondering what I should do, if I should pay that off with what I have now, or should I move ahead? $9,000 is the buyout on the lease, and you get the title to the car?

Yes. Okay, so you're almost... And it's at a 20% interest rate. Okay. You're sure? Because that sounds like an awfully cheap deal to buy a car out completely. Well, I've been paying on it for around two years. I've paid on it already. What kind of car is this? It's a 2009. What? BMW.

BMW, okay. And $9,000, you write them a check for $9,000, they give you the title? Yeah. And you have $7,000? Yes. Okay. Well, what we teach folks to do is baby step one, you set aside $1,000 as your beginner emergency fund,

which means now you have $6,000. And then you take all the rest of the money and you throw it at your dad until you're debt-free. If this is your only debt, then you've got six to apply to the nine. How's your credit? Well, I think that's why I got a high interest rate on it when I first got it, and I think it's gotten better because I've gotten a lot of credit cards sent to me, but I don't use credit cards.

Good. Okay. Can you go to your bank and borrow $3,000? I could check and see, but I'm not sure. If you did, what's your income? It's around $28,000. Yeah. Okay.

If you can borrow $3,000 and put it with the six and pay the car off, I'd rather you have the $3,000 loan at the bank than have the car loan at 20%. Okay. That gets you down. Then you turn around and start working on that $3,000 debt as your only debt and get it paid off as quickly as you can. Meantime, you've got a $1,000 Baby Step 1 Starter Emergency Fund. JJ is with us in Hattiesburg, Mississippi.

Hi, JJ. How are you? Doing good. How are you? Better than I deserve. What's up? Yes, sir. I've got a mobile home that I'm wondering if I should sell.

We're wanting to move closer to work and our church, which is about an hour and 15-minute drive, and I'm just not sure what to do with the mobile home that I own now. Okay. Well, it's a pretty simple equation for me. Where will that mobile home be value-wise 10 years from now, increased or decreased? It's going to be decreased, but it's on family property. Okay. Is it your on family property. Okay.

Is it your property? No, sir. Okay. So you just have the trailer only. You don't have any dirt. Yes, sir. And one thing that's important is when we remodeled it, we remodeled the trailer, which now I know wasn't very smart, but we put, we butted the sheetrock up so there's no flex joints in between the sheetrock,

so it can't really be moved, so I'm not sure if I should room it out or whatever. But you don't own the dirt under it? No, sir. Okay. So what's it worth if you sold it today? Somebody would have to haul it off, right? Yes, sir. It would be worth about four or 5,000.

Yeah. And, you know, if you want to rent it out and get four or 5,000 out of it and fool with the renter over a period of years, you can do that. But basically this thing's not got an end game at the end of the story. You don't own anything. Right. Because you don't own the dirt, and the trailer's going to be worth less and less and less all the time. And you've got to mess with it. So, you know, any chance that one of your family – whose dirt is it on, Daddy's?

Yes, sir. It's my father's. Why didn't he buy it from you and rent it out himself? Yes, sir. That might be a better plan. You could do that, or you could just sell it and have somebody haul it off, get what you can get for it. I think you're going to turn – it's not a lot of money.

It's not the end of the world. If you turn $4,000 into zero, that probably doesn't bankrupt you, probably doesn't keep you from winning with money, but it's just going the wrong way you know so i'd rather turn four thousand dollars into four thousand dollars well i appreciate it yeah thanks for the call man open phones at 888-825-5225 bob's in raleigh hey bob how are you i'm doing well dave good how can i Well, Dave. Good. How can I help? My wife and I are millionaires. Good. I'm barefoot right now. And we have an insurance policy, an umbrella policy of a million dollars,

but our net worth is greater than a million. Do I bump it up to two? What's your net worth? One-four, one-three. You can price it. I probably wouldn't worry about it. I mean, basically, if it's not too expensive and it makes you feel better, the first million is usually, what are you paying, $300 a year for that? Probably, yeah.

Yeah. I mean, when my net worth got up in the tens of millions, I went ahead and picked up a $10 million umbrella policy, just in case I get sued or something. But basically, that's what the umbrella policy is. It's an inexpensive coverage for liability issues. And so, yeah, you could crank that up to $200 if it's not going to cost you an arm and a leg. But if it's $600 instead of $300, I'd probably do it.

I don't know the rates on a $200 versus a $100. I don't either. I know most $100s you can pick up in the $300 range, and I'm paying more of a multiple to get all the way up to $10, more than 10 times that. In other words, I think mine's more than $3,000 a year, in other words. You're a bigger target than I am. Yeah, but, I mean, it's a $10 million policy.

So that's what I'm saying. And I think it might get more expensive. The sweet spot might be around a million. So you may want to fool with it, may not. Bottom line is you're just buying a lawyer. That's what it comes down to. These insurance companies are going to jump in and fight whatever's going on. You hit somebody, you have a car wreck or something,

they jump out saying they're okay, and then they find out you're a millionaire, so they grab their back. I mean, that's what you're a millionaire, so they grab their back. I mean, that's what you're trying to do, is just deal with that and be prepared for that with a good liability policy. So I probably wouldn't spend the money at this stage, but if you get on up there at $5 million and you want to bump it to $2, that might not be a bad idea. So did you inherit your money? No, sir. I'm a bad idea. So, did you inherit your money? No, sir.

I'm a salesman. Apparently not. Apparently not. How old are you? 61. Good for you. Well done. So, $1.4 million.

And what's that invested in? About $2.15 in a house. Mm-hmm. $8.50 in investments. Mm-hmm. The rest is cash. Mm-hmm. and I'm adding to it every day. So how did you do that? Tell people how they can do it.

We got disciplined. I'm a former U.S. Army infantry officer. I know how to work, so we started spending less than we made. We saved the rest, and I got rich slowly. Yeah, so you've been investing in 401Ks, Roth IRAs? Not Roth, but traditional. It's been that long. But that's where the bulk of this is then? Yes.

And then I sell software and software services, so I got in with a company on the ground level and made some money with that when it went public. And I now help people deliver software better. Good deal. Good deal. So how much of that's there because of the IPO? Maybe $200.

Okay. So you did it without that then, too. All right. Well, I tell you what, when you get that kind of money at one time, it's a really charged system. Every system. Yeah, that's right. Good question, Mayor. Good point, man.

That's fun. Open phones at 888-825-5225. I remember I was on a book tour many years ago in Seattle, and I was sitting in a cafe having lunch, and the guy with me said within an 18-mile radius of right here, there's 25,000 millionaires because of Microsoft stock. Former employees are employees that had stock options, and they've gotten rich on Microsoft stock. That's why I was asking about his IPO. Very interesting stuff. But most millionaires are just like that guy right there. This is the Dave Ramsey Show. Listen up, my friends at Churchill Mortgage. You want to put some cash back into your pocket.

Go to ChurchillMortgage.com today and enter the $3,000 end-of-summer giveaway. Whether you're buying a new home or evaluating your current mortgage, you know I'm going to recommend talking to Churchill first. I trust these folks to save you money. I'm talking thousands. And the team at Churchill will take great care of you. Churchill Mortgage is the only mortgage company I'm aware of that takes what I teach and applies it to your loan or your refinance. They've helped so many of my listeners and team members by making sure they are in a mortgage that doesn't bust their budget. Go to ChurchillMortgage.com today to learn more. And while you're there, don't forget to enter the end-of-summer giveaway.

Call Churchill Mortgage today at 888-LOAN-200 or online at ChurchillMortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard. This is a Dave Ramsey Show. Sean's with us. And Joy in Madison, Wisconsin. I see on my screen you're debt-free.

Way to go. Thank you. Very cool. How much have you guys paid off? $30,000 in 12 months. Wow. Look at you. And what was your range of income during that time?

Around $85,000 up to $95,000. Cool. What do you all do for a living? I'm a property manager. I'm a customer engineer. Very cool. What kind of debt was the $30,000? The typical, we had like $16,200 in credit card, $87,000, $35,000 for the car, and $5,000 for a 401k loan.

You were normal. Yes. How long have you guys been married? for the car and $5,000 for a 401k loan. You were normal? Yes. How long have you guys been married? Six and a half years. Good for you guys. Very fun. So what happened that put you on this journey 12 months ago?

I was actually babysitting at my niece's, and when the kids went to bed, my niece had said, hey, we're doing this total money makeover with Dave Ramsey. And she's like, here, if you want to skim over the book. And I just sat there just kind of skimming over it and reading it. And you kind of just read all the everybody else's debt-free journeys in there. And I was like, hey, I can do this. And went home and ordered the starter bundle and told sean about it and he was on board so we started right up so sean you didn't have to be talked into it huh not really it was pretty simple uh to get me to the goal it just made sense huh yep very cool good so 12 months later are. No payments. Have you ever been debt-free since you got married?

No. Nope. So now you're weird. Yes. Normal's broken in debt. I love it, guys. Very, very good. Very cool.

What do you tell people the key to getting out of debt is? Really just communicating together and definitely the budget i'm the nerd for sure with you know i did a wrote it down i had two apps on my phone to every dollar and stuff and so that was the main key i think okay so you you got the plan and you you just uh put super nerd on it then i did good for you that's good well i knew you were the nerd because you're the one giving me the exact amounts of the debt. Good, good. Okay. Very cool, you guys.

Did you have people cheering you on or people questioning your sanity? It was a combination of both. Who was your best cheerleader? Who was the one that was really encouraging to you? Really, I think my boss and then my mom. Okay, cool. So your boss is into this stuff or what? He is now.

Okay, so you're spreading the word, huh? All right. I love it. Well, very good, you guys. Really, really, really well done. I love it. So we've got a copy of Chris Hogan's retire-inspired book for you. That will be the next chapter in your story as you not only become debt-free

but become millionaires now. You'll be one of our everyday millionaires, just like Hogan talks about all the time. Okay? Okay. Very cool. So what do you tell people the key to getting out of debt is uh definitely the budget okay so the every dollar app you both have you come back to that then right yes i have that too yeah okay good good job you guys okay sean enjoy madison wisconsin Sean and Joy, Madison, Wisconsin, $30,000 paid off in 12 months, making $85,000 to $95,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Great job! Man, it feels good to have no payments. Good to have no payments. Good to have no payments. Lisa is with us in Oklahoma City.

Hi, Lisa, how are you? Good, thanks for taking my call. I'm a first-time caller, but a long-time listener. I've never done your Financial Peace University, or any of the things that I hear lots of people talking about. No problems? I'm definitely going to start. Okay. I just listen to you on the radio all the time and think, man, that guy's pretty smart.

Oh, you're sweet. How can I help today? Well, one of my parents passed away last October and left me a, in my opinion, quite a hefty inheritance. And he was the type of person that saved all the time, took about $150 35 years ago ago and turned it into about $700,000. Wow. Yeah. He didn't even graduate from high school. He was just a math wizard. And he invested in the stock market.

He loved to say he lived off the dividends. So I am now in possession of all of this. And before he passed, you know, he and I talked and he wanted me to build a house. So that's what I'm going to do. And I just want your advice on the way that I go about with the funds that I have been left. I'm not a stock market guru

and I know just stuff to be dangerous. However, in his later years of life, I had to help him take care of all of his financial situation because of his health. And I learned a lot about it, but not enough to really go on without guidance. And his guidance and advice to me was always don't call up and ask, and I'm not going to say the company's name, but the big stock brokerage for their advice. Because he went all his life without their advice, doing it of his own knowledge. And, you know, I just don't want, I'd say 75%, maybe 80% of his investments are in REITs. I don't know if you're familiar with that term. Okay.

And they are, I mean, they pay good dividends. Yeah, they should be doing all right. What's that? They should be doing all right. It's basically a mutual fund that buys real estate. Well, they should be doing all right. And people can't. What's that? They should be doing all right. It's basically a mutual fund that buys real estate. Well, they're not doing good, though, Dave. They're not. They've lost about $16,000 since the beginning of last year.

Well, then you've got good ones, because the good REITs are keeping up with the stock market, and those apparently aren't. And basically, real estate's not going down in value. So if you've got a real estate investment trust that's going down in value, you've got a property that's being mismanaged or a bad property in there or something. So you may want to look at moving some of it if you've got something that's underperforming in this world. So two things. Well, that's what I plan to do.

Two things I hear. Number one, I agree with what he said about calling a big company name and then just walking in and blindly doing what they say. They will sometimes put their interests at commission ahead of your interests. Okay? And I would say that's true about 85% of the time. There are people in the business that have the heart of a teacher not the heart of a salesman and that's what you're looking for you need someone to guide you but

not tell you what to do and you blindly follow them that was against the advice um you know of your dad okay so uh but but the uh but you sit down with them you learn from them and then you invest you do not put money in something you don't understand. You look at these REITs, as an example, and try to figure out why they're underperforming. And then do you think they're going to continue to? If so, we're going to move them to something else. So you don't invest in anything you don't understand. You don't work with someone that doesn't have the heart of a teacher.

And I'm going to give you advice contrary to what he said. I don't think I would make my first home purchase a new build. I would buy an existing home. A lot of details, a lot of problems building a house. It wouldn't be my first home purchase. It might be my second or third, but it wouldn't be my first. And I think you're asking for trouble doing that. So click SmartVestor at DaveRamsey.com.

You can find some folks with the heart of a teacher, and they'll help you through this process. Thanks for calling in. Never wonder how much house you can really afford? You can use our free mortgage calculator to make estimating your monthly mortgage payment easy. Just go to DaveRamsey.com slash mortgage calculator. You put in the home value, your down payment, type of mortgage, the interest rate, and boom. Let's see what fits into your budget. Once you know how much you can afford, you can get in touch with one of our endorsed local providers,

and they'll be one of the top 10% of real estate agents in your area. They're high-octane, high-protein real estate agents. They don't get into our ELP program unless they are, and their level of service is amazing. And you'll be able to get a bid in on a house, even in this weird market. And so it's worth doing. Go to DaveRamsey.com slash mortgage calculator, and on the front page, you can always, at DaveRamsey.com, check out our ELPs for real estate. You click on that, boom, you'll get some help in real estate, just like that. Key's with us in Austin, Texas.

Hey, Key, how are you? I'm okay. A little nervous. That's okay. We've never lost a patient. Key's with us in Austin, Texas. Hey, Key, how are you? I'm okay. A little nervous. That's okay. We've never lost a patient. What's up? I want to know if it's worth it to sell our house to get out of student loan debt. Okay.

How much student loan debt do you have? Combined, $285,000. Don't yell. $285,000? Yes, sir. Who's the doctor? Who's the doctor? Who's the doctor? No one.

No one. Who's the lawyer? No one. What in the world did you get a degree in? Political science, media studies. My husband makes six figures, however, but I'm a stay-at-home mom now, so there was just a lot of deferring,

and that's what amped up the interest. I'm sorry, there was a lot of what? Deferring. Deferring to pay. Oh, so it's been many years. Okay. Yeah. So you're a political science degree.

Yes. And that's where all this debt came from? From both of us. We both have bachelor's and master's degrees. Oh, okay. And what are your master's in? Both of them political science? No, he had adult education, and he uses that, and he makes good money.

And I was media, but I'm not in the right city for it. So, yeah. Because they don't do media in Austin? Well, not to, I mean, honestly, a lot of it is volunteer work, independent work, very small companies, just not a lot of opportunity. And I have two young kids. Oh, there's the secret. Okay. So your husband makes what kind of money?

$110,000. $110,000. $285,000. Yep. So we have about $120,000 equity in the house, so that would wipe out his if we sold it and just rented to work on mine. Well, they're both ours since we are married. Yeah. I think you are going to get into media.

Okay. It might be a side hustle. It might be some stuff you do on your own. You are going to get into media. Okay. It might be a side hustle. It might be some stuff you do on your own. It may be that you're doing it remotely for other cities. I don't know what area of media you specialize in, but I'm very familiar with Austin, Texas, and there is a lot of digital things going on there. There's a lot of broadcast going on there. I mean, this is a major city in America.

You're not living in podunk. Right, but lots of companies are leaving. They don't have the incentives they used to have. Yeah, but there's media to be done there. I mean, it just depends on how you want to cash flow it. The big thing is you just want to be a stay-at-home mom, which I don't blame you for, but you've got $285,000 in debt, so you're going to have to do something to create extra income, $110,000.

Even if you only had $100,000 in student loan debt, it's going to take you years. Right. And so we need to really get our income up to match the fact that we've invested this heavily in education even if it's a temporary basis and i don't care i'm not saying to leave with the kids but but let's at least get some kind of side hustle that where you run the business and you can control your time and because i'll bet you can generate 50 50 60 000 a year put that in this equation it changes everything. I want to address that before I give up my home.

Do you hate your house? No, it's a good area. Okay. I'm probably going to sit on this house for a little while, and let's work this plan, and let's try to get the income up and get you guys on a written budget, and let's see if we can throw $30,000, $40,000, $50,000 at this. If you can, now we're on a four-year plan, and we keep the house. If you can't and you're stuck and the house solves the problem,

it doesn't solve the problem is the issue, though. You've still got $100,000 and something in debt after you sell the house. So let's try the other for a year and see what we can do. Get your income up and really tighten up the screws on your budget, both of you. And what can Hubby do to add to his income as well as a temporary measure? Because here's the thing. You guys have invested very heavily in education. You have got to get a return on that investment because you've made a mess.

You gave up your choices when you did that. And so you've got to create incomes for a short period of time anyway, three to five years or something. You guys are going to have to turn on the midnight oil, so to speak. But you do that, you probably can do it without selling the the midnight oil so to speak but um you do that you probably can do it without selling the house but that because the house doesn't solve the problem i mean if you could just be 100 debt free by selling the house and rent for a few years save up and rebuy yeah i'd probably talk about that but it doesn't do that for you and so i don't like

this idea of we're going to sell the house in four years after renting we might talk about starting to save for our retirement i'm starting to save for a down payment to get back in that that one doesn't doesn't sit well it means we're not really addressing the core issue here hey thank you for the call danielle is with us in boca raton hi danielle how are you i'm good how are you dave better than i deserve what's up i good. I'm your biggest fan. I'm honored. Well, my question is, I was thinking about the 7% inflation rate that I heard you talk about before, colleges. And I have twins that are sophomore and going to be starting college in three years,

so I need to heavily start saving for college. I'm just two months away from finishing Baby Step 3. And I wanted to know if it's wise to start Florida prepaid and lock in the rates for this year, so it's not, even though there's a 7% inflation on that. Yeah, you're making 7% on your money when you do prepaid college. I wouldn't do it. If you want to start investing for college, here's the thing. With three years to go, no matter what rate of return you get on your money, you're not going to get your growth on the account is not how the kids are going to go to school.

The way this account is going to grow that sends them to school is you're going to chunk money in there. So, you know, 7% of $100,000 is $7,000. 7% of $10,000 is $700. 12% of $10,000 is $1,200. $1,200, $700 does not fix this issue. So the growth, the interest, so to speak uh is not going to solve your problem what's going to solve your problem is you guys are going to throw money at this fast and heavy to build up as much as you

can and if you can't make it all the way and pay cash for everything in terms of you guys then junior gets to go to work oh well while he's in school. And, you know, junior's going to pick a school that's very affordable. Oh well, not a bad thing, and so on. So, you know, it depends on how much you guys can pile up. But either way, whether you did prepaid or whether you did mutual funds in a 529, it's not going to make that much difference. I mean, go ahead and do a 529 if you want, but there's going to be a few thousand dollars

depending on what you put in there of growth is all. The biggest issue is going to be how much you guys can cash flow and then juniors selecting a college that is affordable and that makes sense. So, hey, thanks for the call. We appreciate you joining us. Ben is on Instagram. Dave, I want to sell my my car the payments are so high i can't afford it i want to pay off my debt but i need a car for work i drive client to client homes for my work i'm upside down in the car i have

no money to buy a car how do i do it uh well you start saving and you work extra and you pile up enough money to pay cash for a decent little car, and then you can get out of the one that you're stuck in. But, you know, that's what you've got to do. I understand you've got to have transportation, but you also have to get rid of this car. It has to go in order to get cleared. That's what you're saying, Ben.

Hey, thank you for following us on Instagram. This is The Dave Ramsey Show. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.