The Ramsey Show - App - How to Pay Down a Big Mess of Student Loans (Hour 1)

Episode Date: July 6, 2018

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🎵 🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones this hour at 888-825-5225. That's 888-825-5225. Michelle is with us in Rochester, New York. Hi, Michelle.

How are you? Good. It's an honor to speak to you. You too. What's up? So, my husband and I are on baby step two, and we're wondering if we should sell our fixer-upper. We're having some trouble cash-flowing some of the necessary repairs and tackling debt at the same time. So on top of that, it's a 15-year loan, but we have a five-year balloon payment in which we need to refi with a bank and reimburse the previous owners.

And when is the balloon up? Four years. Four more years. So you did this deal a year ago? Yes. Okay. What's your household income? $50,000.

And how much debt do you have, not counting the house? We have $7,000 in school loans, and that's it. Okay. And what will it take to do the repairs? Oh, well, we have an addition that's collapsing, windows that need to be replaced. The house isn't insulated at all. We need new electric and our kitchen basically we're living in half the house the upstairs is uninhabitable and we're living in three rooms wow what a dump what'd you pay for it yeah um 86 000 really yeah must be a fine we have a lot of land though oh a lot of land okay yeah

so can you sell it i think so um we think that if we sold it we would have enough to to break even yeah but who's the current uh owner financing would that owner that former owner allow that to be transferred to a new buyer? Yes, he would. Okay, because that's probably going to be necessary, because a new buyer can't get financing on this house. That's why he had to finance it. Yeah. Okay.

So we're wondering, should we stick it out? No. Or try to get rid of it? You have bet off more than you can chew. Okay. I mean, what you're describing to me is a $50,000 to $100,000 rehab. Am I missing something? No, it needs a lot of work.

I mean, you just described a complete mess, and you make $50,000 000 a year this is a project that's going to take a long time if you cash flow it right right and you just don't it's not a timeline you're not going to be done in four years okay the seven thousand dollars isn't the problem you just don't have enough income to do this rehab in four years you follow me right yeah and uh are you guys not emotionally kind of worn down with it in any way um i'm emotionally worn down because my husband works a lot and comes home and fixes the house and i just want to spend time with him yeah yeah it's like it's like it's having its impact it's having all kinds of impact on the family in addition to financial, right?

Yes. Yeah. I'm with you. I think this thing is more trouble than it's worth. I mean, it's just a place to live, for goodness sakes. There's a lot of places to live. And, yeah, it's a good idea that wasn't thought through all the way, which ended up making it a bad idea,

because you're not going to have the money or the time to do this in this period of time. And it's just too tight for you guys. So, yeah, if I'm you, I'm out of there. I just don't get married to houses. I've lived in a bunch of them. I like houses. I like real estate. But, I mean, I'm not – I don't have to live there.

I can live anywhere. Jennifer is with us. Jennifer's in Orlando. Hi, Jennifer. How are you? Hi, I'm good. Thank you for taking my call. Sure.

What's up? So my question would be, should we keep renting or should we buy? Okay. We are looking in 200,000 houses. Right now our income is 70,000, but I'm pregnant and I'm planning to quit, so our income will go down to $50,000. And I'm planning to go to school. I do have saved money for school, so it's like additional $16,000, which will pay off for my school. And we do have in savings $27,000. So why are you going to quit?

Because I'm pregnant and I want to go full-time school and finish faster and get a better paying job. Okay, so you'll go back to work after school? Yes. Okay, all right, that's good. Do you have any debt? We don't have any debt, nothing. Well, that's awesome. All costs are paid off. We just rent an apartment, and right now our rent increased to $1,200, and there's nothing cheaper.

Okay. Well, if you do buy something, you want to buy something that leaves your school money alone and leaves you an emergency fund in addition to your down payment and something that you can afford on your husband's income because you're going to be quitting. And we don't want to strain on the family when you quit. You don't want to be broke, right? Yeah.

And so you want to set this whole thing up based on his income and with the down payment, not touching your emergency fund and not touching your house or your school money. And it sounds like it doesn't sound like $200,000 is the range to me. It sounds like that's high. We are planning to do a VA loan. My husband is a veteran. So zero down payment, just pay closing costs. Yeah, I would not do that.

The VA loan is the most expensive loan between FHA, VA, and conventional. It has the highest fees and the highest interest rates the only advantage to it is nothing down which means that you shouldn't be buying if you can't buy a home with a down payment right now then you probably do need to tap the brakes and rent something you may have to move on your rental because i like that rental is very expensive but i would rent as cheaply as i can until you get some of these other goals hit. But what you want is you want to be able to hit the school goal. You want to put down a good solid down payment, and you want to have an emergency fund of three to six months of expenses.

And then be able to pay the payment on your husband's income because obviously you're going to, as you said, quit and go to school. So it sounds like it may be a good time to delay this maybe a little while, and let's see where things end up. So run that out and make your decision that way. Thanks for calling in. Open phones at 888-825-5225. Eduardo is on Twitter. What are your thoughts on using term life insurance as an interest-earning savings account?

There's no such thing. Term life insurance doesn't have an interest-earning savings account. Term life insurance is life insurance only. There's not a savings element to it. So, Eduardo, I'm not sure exactly what you're referring to, unless you're looking at some kind of cash value type product. But term life insurance is not an interest earning savings account. It doesn't have that element to it.

It's just insurance. It's like saying, what's your thoughts on using car insurance as an interest earning savings account? You can't. It doesn't have a savings element. It doesn't have a savings element. It doesn't have a savings component to it. So I'm not sure how you've gotten twisted up. Sounds like you're talking about cash value insurance of some kind, and what I would do is just avoid that always.

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That's the magic word, Ramsey. Today's question comes from Chelsea in Utah. Just found out that our property management company that we rent from recently reported all of our back rent payments to the credit bureaus. We've been working to get a zero credit score for two years. Apart from moving and starting over, is there anything we can do to stop this in the future? Nope.

Very few report payments to the credit bureau, but that probably did cause you to have a credit score and you can't make someone not report something to the credit bureau it's probably standardized in their computer system and they probably download it automatically you can ask them not to um or ask them ask a landlord if they do and make your decision based on that. But that will affect it. Holly is with us in Louisville, Kentucky. Hi, Holly. How are you?

Hi, Dave. I'm well. How are you? Better than I deserve. What's up? Well, my husband and I are working on our debt snowball. I wiped out everything over $1,000 for our emergency fund to pay off the credit card bills. Good.

So those are cleared now. Good. The next smallest loan on that snowball is a $4,800 car loan. We have another car loan and then two student loans. We have another savings account sitting over to the side that has about $5,200 in it that we've earmarked for our children's savings, seven years old and two years old. Do we use that as part of our snowball to wipe out the next car loan or do we keep that hands off? Earmarked? What do you mean? Where did it come from?

Well, we put it, it's just money that had been given to the kids. We, the house a while back, and we put a little bit of money to save for future expenses, savings account just for them to have as they grow up. So really, we put the account in their name but also have our name on it. So I don't know if we should use that. How much debt do you have total? We have about $55,000 in car and student loans, and then we have $298,000 house. How much does that hold on the car? I used the $4,800 to say that. $4,800 on the smallest one, and then $19,000 on the other car.

And your household income is? Is $162,000. No, I wouldn't mess with it. Okay. You've got a huge income compared to the debt that you have. You're going to have this debt cleaned up in no time. You're already making big progress. If you were about to lose your home or the electricity was being cut off

or there wasn't food in the cabinets, I'd use it in a heartbeat. Okay. Okay? But that's not the case here at all. And on top of that, it doesn't make big progress. The progress it makes is not – you're going to make that much progress almost every month. Okay. And –

Encouraging to hear. Yeah. So, I mean, out of $160,000, you know, you start paying $60,000 a year, that's $5,000 a month. Okay. So, you know, you ought to be able to really knock this out fast without doing that. So I think it'll push your shame and guilt button too hard to mess with it, harder than it helps.

If it helped a bunch or you were in a real pinch, I wouldn't care about your shame or guilt button. But right now it doesn't move the needle. Technically, morally, it's your money. Yes. It's not theirs. You're to take care of them. That is your job as the parent.

And if you needed the money to take care of them, that's fine. But it doesn't really do that, you know. Okay. Or if they had, quote, earned the money, unquote, if they were, you know, a movie star or something, it would be a different discussion maybe. But this is just like most people. You just put the birthday money in there. Most of the money came from the sale of the house. Yeah, it did. And so if you wanted to pull that out, you could, but I just leave it alone

and just move on. And if you ever needed it, it's there, but it's not worth it in this situation. If there was $80,000 in there and you'd put $79,000 of it in there from the sale of a house, I'd probably pull it out and pay off all your debt because it would move the needle. But you see what I'm saying? It doesn't move the needle. You've got a great income. You're doing everything right.

I would just leave it alone. Thanks for the call. Moe is with us in Columbia, South Carolina. Hi, Moe. How are you? I'm good, Dave. How are you? I'm good, Dave. How are you doing? Better than I deserve.

What's up? I'm just calling about my student loans, and I was curious as to how to handle the debt snowball. I got myself into a pretty big mess with my student loans where I owe about $160,000. Wow. Okay. That is a big mess. Yeah. I'm just kind of waking up and realizing how big of a mess I have.

Are you a doctor or a lawyer? Well, I'm actually an electrical engineer. Okay. So what's your income? I make about $61,000. Okay. That's good news. Are you single?

Yes. Okay. Well, it's going to take you a little while. It's not going to be easy. I mean, if you live on beans and rice, it's probably going to take you four years. Okay. I mean, I've kind of realized how long it's going to take, but my question kind of goes towards those income-based payment plans.

So I've been kind of working with them, but the question is I'm trying to get a second job to kind of help put more money towards the loan. We're not trying to pay less. We're trying to pay more. Yeah, and that's why I was thinking about getting a second job. No, the income thing is all trying to get a lesser payment. Okay. Income-based is because you're too broke to pay a payment so they cut the payment

down to below the interest and the loan continues to grow that's the that's the income base we don't want to do that i want you to pay like forty thousand dollars a year and live on nothing okay i guess my concern was they kept raising the interest rate every time i made a little bit more money because it was a variable interest rate. So they just kept raising. What's the balance on that one? What's the balance on that loan? Well, it's actually a couple different loans.

It's 16 different loans. Yeah, and how many of them are doing that? It's about 10 of them. Okay. So, I mean, I'm going to target those in case they're similar in size to one one that's not doing that i'm going to knock them out and get rid of them okay in other words if you got one that's 4 000 and one that's 4 200 and the 4 000 the 4 200 is technically a little bit bigger and it would be second in your debt snowball uh but it's one jacking you around then i'm going to move it up and knock it out since he's jacking me around. You follow me?

Okay, I get that. That makes sense. Where they're almost tied. And here's the thing. You're going to be through these very, very quickly. I mean, because you're going to pay $40,000 a year working an extra job, living on beans and rice, list them smallest to largest, regardless of the interest rate, and then just attack in a vengeance. But when it's close to a tie, one that jacks moves to the front,

and we get rid of the guy who's trying to jack me around. And that's what we're going to do. Cody's with us in Tucson, Arizona. Hi, Cody. How are you? I'm good, Dave. How about yourself? Better than I deserve. What's up? Not too much. I talked to you on Friday, and we determined that we need to sell the wife's car,

and I need to know how to do that. We're completely upside down, and I need to know the best strategy to get rid of this thing. How much do you owe on it? $23,000 exactly. Okay. And have you looked up what it's worth on Kelley Blue Book on private sale? Yeah, it's about $16,000 to $17,000. That's private sale? it's about 16 to 17 that's private sale um i believe so it was right around

17 i know that okay well that if you sell it to a dealer it's going to be two to three thousand dollars less than if you sell a private sale on a car like that okay so that's number one unless there's a panic i'm going to take a little more time and try to get a little more for the car by selling at private sale, which is more of a retail-type sale than selling wholesale to a dealer because a dealer is trying to buy it in a way they can turn around and make money on it. That's their goal. Okay. So that's, you know, the first thing.

But let's pretend 17 is the number and 23 is the number. Okay, that gives us our example, which means you're six in the hole. All right? Who do you owe the money to? Vantage West Credit Union. Okay. Go sit down and talk with Vantage West and say, Hey, you're $6,000 upside down on this loan.

Would you allow me to sign a note for the amount that you're upside down anyway so I can get rid of this debt? And I'll owe you a $6,000 unsecured loan, which, by the way, you have a $6,000 unsecured loan effectively now because a car is not worth that. Help me get out of this mess. Sit down face-to-face with the credit union manager and pull that deal off. folks the real estate market is on fire all over the country if you're looking to buy a home and you need a mortgage don't sell yourself short by going and getting a typical pre-approval that's a false sense of security and it's just not good enough in today's fast-moving market. Instead, call Churchill Mortgage and get their certified homebuyer program.

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This is a paid advertisement. NMLS ID 1591, Equal Housing Lender, 761 Old Hickory Boulevard, Brentwood, Tennessee, 37027. In the lobby of Ramsey Solutions, Trevor and Meredith are with us. Welcome. Thank you for having us. Good to have you guys. Where are you from? We're from just outside Lexington, Kentucky in Wilmore. Oh, yeah. Very fun.

Well, good to have you guys. Thanks for joining us. And you're here to do a debt-free scream. Yes, we are. I love it. How much have you paid off? We paid off $75,000 in 27 months. Way to go.

And your range of income during that time? We started at $60,000 and we are now at $90,000. Wow, nice jump in income. What caused the income to go up? Trevor works on commission. His commissions went up and then I picked up a second part-time job. Work. Yes.

That's how it happens. Good for you. Very cool. Very cool. So what do y'all do for a living? I am a teacher. And I am a route sales representative. Okay. For what? Universe Corporation. Okay. Good. Good for you. So $75,000 was what kind of debt? It was all student loan debt. 100% kicking Sally Mae in the butt. Yes. Give the old lady her eviction notice. I love it. Way to go, you guys. Congratulations.

Thank you. What happened 27 months ago that put you on this journey? Well, we got married, and I was like, Trevor, I come with loan debt. Like, what are we going to do? And so he was like, it's okay. We'll take care of it. So we saved, and we bought a house. I was like, okay, Trevor.

Like, we put 20% on the house, but that's not the point of this. And so we were continuing to save, but it was going to savings. And so that following second year of our marriage, we decided like, we're going to go visit my school in Kenya and do some work. And I was like, you know, we're doing a budget vacation, but this is not how this all works. And friends of ours had moved down to Lexington and they were doing your plan and following just all of your baby steps. So I bought your book and I read it. And just Jesse and Amanda Wilson were just really key in talking to us and encouraging and they were doing your plan and following just all of your baby steps. So I bought your book and I read it.

And just Jesse and Amanda Wilson were just really key in talking to us and encouraging us and talking to Trevor. And I would share with Trevor, but there were days where he was like, well, let's just, you know, let's pay a little bit more on the loans, but not as much as we could have. And so we just never really got any momentum going behind it. And so finally, after we got back from Africa, we're like, you know what? We're done. We're sick of this.

We want to travel more. We've got bigger plans and the money can only go so far. And that's where we kicked it into high gear. And we said, enough is enough. And we, like I said, I got a second job and we just started attacking at full force. And the 27 months was hard work, but I mean, 27 months and we were done. Just like that. Yeah. So Trevor, what happened after Africa in your mind? Well, I got comfortable with just how much money was in our savings and checking account. When it kept on getting lower and lower, I was just like, it took a little while. I'm kind of stubborn with how much money I want in the account. And when I would talk to our friends, he was just kind of, he was like, no, you need to attack this.

And so finally, I was like, all right, let's do this. So, we cut a big check and savings went down to the minimum. We're like, okay, we're doing this for real now it's game on now yeah so how much was that check that was 15 000 okay towards the 75 so there's 60 to go and we're game on lean in and extra jobs and beans and rice and budgets and everything else that's right so uh what do you tell people the key to getting out of debt is? You paid off $75,000 in 27 months. What's the key? The biggest thing for me was just trusting the process. When we first got started those first few months, I'm like, we're going to be intense. I wanted it to pick up faster. Seeing that 15,000 gone was really great, but I wanted it to go faster. And I just

had to sit back and know that we had our plan and we could do it and just letting the plane work itself out. And once we kind of let that happen and it just go in momentum naturally, it's like, okay, we can do this. But just really being patient at first was kind of tricky for me. Letting it grind. Yes. What about you, Trevor? What do you think the key is?

Just staying disciplined in your plan. Just taking it step by step and not trying to rush it, but also not getting discouraged if some emergency comes up, which did happen to us. Sure. Yeah, that slows you down. Yes. Yeah.

So what was the, you did all of this off the book? Mm-hmm. We did. Off the Total Money Makeover books. We did. Way to go. Very cool. Congratulations.

Good, good. How does it feel now? It's amazing. It's so free and peaceful. And the people before, they were like, we love to give. We do too, and we love our school in Africa. And it's just nice to be able to, when there's a need that pops up, we're like, you know what? We can meet this need.

Like, this is something that we can help with. And I love that we can be generous. And before, we were like, oh, we've got savings. And, you know, we could be a little bit generous. But now there's not a question. It's, okay, we'll pray about it. Okay, Lord, like, you're good to us. Let's fill this need.

Very good. Fun. Good for you guys. Congratulations. Thank you. Very, very well done. Got a copy of Chris Hogan's Retire Inspired book for you. That's the next chapter in your story for you to be millionaires

and continue that outrageous generosity like you're talking about. And you're in a position to do it. I mean, you know how to handle money now, and, of course, you don't have anything weighing you down like $75,000 worth of student loan debt. How old are you two? I'm 28. And I'll be 34 in about three weeks. Perfect. Very cool. Good job.

All right, Trevor and Meredith, Lexington, Kentucky, $75,000 paid off in 27 months, making $60 to $90 a year. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! We're debt-free! And the crowd goes wild.

Well done, you guys. Very well done. I love it, I love it, I love it. Thanks for joining us. Abby is in Fort Worth, Texas. Hi, Abby. How are you? I'm doing all right.

How are you doing? Better than I deserve. What's up? So I am a sign language teacher currently. My husband's an engineer, so we make pretty decent money. We're on track to get our debt paid off in the next year and a half or so. But I'm also wanting to try to bump our income up a little bit. As a teacher, there's not a whole lot of extra things that I can do.

I have a lot of outside grading and stuff like that that I try to do, and then on the weekends I'm exhausted and try to hang out. But anyways, what I'm wanting to do is one of two, well, long-term goal. I don't want to teach forever. Eventually I want to take certification test and become a sign language interpreter. My skill level right now as a teacher is not sufficient enough for me to be able to pass that test. There's two ways I can do it. I can either steady my butt off and try to do it completely on my own, interact with deaf people, use, you know, buy textbooks, DVDs, that type of thing, or I can go through an interpreter training program. If I go through the interpreter training program, the likelihood of me being able to pass

the test the first time I take it significantly improves because you have teachers that are, you know, trained in preparing their students to be able to do that. How much is that? In one, sorry? How much does that cost? Interpreter training program in the area is about, it's a nine-month program, so it's like $1,000 a semester, I think. I think it winds up being like $3,000 for the year to finish that up. Okay. So that's one option. The other option is because I'm wanting to get income boosted right away, I had

an idea for a small business, but I've also talked with some friends that have done similar things. They said it takes six months, more likely a year before you actually generate any income. I've never done anything like that. So it would be a learning curve for me to figure out how to make that work. And if I take my time and my energy, I'm 28. What do you want to be doing when you're 38 and 48? Interpreting.

Okay, then you don't do the side business. Okay. You keep moving towards your interpreting goals. Okay. And your household income today is what? On paper, it's about $125, but my husband also works a lot of overtime, so closer to $150,000. Okay. And how much debt do you guys have, not counting your house?

Currently, we have about $50,000. Okay. And what do you make today, just you? $53,000. Okay. And what would you make if you were certified uh that depends on what i do it depends on which area you work in the area you're going to go into when you get certified probably around 25 to 30 000 so i'd be taking a pretty significant pay cut so why are we paying

money to get certified to take my pay cut in half? Because I'm more passionate about interpreting. I'm a teacher because it was easier for me to get into, but it's boring and I don't particularly like it all that much. Okay. I think you need to rethink how you're going to do the interpreting piece that gives you passion in a way that doesn't cause your income to drop in half as a result. There's got to be another way, another angle at this to scratch that itch for you that doesn't turn into such a pay cut. But yeah, I think you go through the interpreting class eventually if that's what you want to do, pay the $3,000. You guys have got the money in this budget

to do this, but I wouldn't do it until I figured out how I was going to make more money as a result of that. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ

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Open phones at 888-825-5225. Andrea is with us in Tampa, Florida. Hi, Andrea. How are you? Hi, Dave. I'm great. Thank you for taking my call. Sure.

What's up? So my husband and I went through FPU about two years ago, and we are on baby step six, and we're having a little disagreement over something he wants to purchase, so we figured you'd be the tiebreaker. I'll get my striped shirt and whistle out. I'll be the referee. Awesome. Thank you.

So our household income is about $120 from our regular jobs that we do. He just started a side business, which is basically doing online marketing. And right now he's making about $4,300 a month with it. Wow. Yeah, it's doing really well. Profit? Yeah, his expenses are very minimal. So it's probably at least $3,500 a month in profit. Wow, excellent. Yeah, it's doing well, but it's still a really new business. He's only been doing it for about two months, and he has right now three clients, and he's hoping to get a few more. But he's very excited about this and wants to purchase a fairly expensive $1,500 piece of exercise equipment

out of the business. And I'm just nervous because it's still a new business and I'd rather we kind of just save up and plan for it the way we do with everything else in our normal household budget. But just wanted to get your thoughts. Okay. Well, he's not really buying it for the business or out of the business. It's out of your household income, which now has an extra $8,000 in it from two months of work. Correct.

Okay. So let's just pretend he was at work and he got a bonus for $8,000. Maybe it was a one-time bonus okay okay just for the fun of it that's like your worst case scenario meaning he's already made eight thousand dollars on the online business two months of four grand right yes okay and so if he never made another dime it would be like he got a nice bonus at work eight thousand dollars and out of that check he wanted to buy a fifteen hundred dollar piece of equipment would that be bad i don't know i guess i would just rather i'm i'm just excited about paying off the house okay now that's a fair argument okay all right because i mean you get a bonus, and we say, do we want to...

We can change how the money came in, but we got some extra money is what it amounts to. And you want to throw it at the house, and he wants to buy this piece of equipment. Yes. Okay. And how much is the balance on your home? Right now we owe about $150. Okay. All right.

And have you guys not done anything else to enjoy some money since you busted through baby step three we have we've taken some nice vacations and we always set money aside for travel so we definitely have yeah good good i'm glad you did that's because because what we teach as you know and it sounds like you're living that properly is to have gazelle intensity which is scorched earth no no life at all, until you get through baby step three. And then when you get through baby step three, you let your foot off the gas a little bit, and you concentrate, but you buy some things and enjoy some things

while continuing to pay extra on the house, which is what you did when you went on the trip, right? Yes. Okay. And that's also what this exercise equipment is. I suppose it is. It is. I mean, if you wanted to move up in car, it'd be the same argument. If you wanted to, you know, you were driving a $5,000 car

and you want to move to an $8,000 car and you wanted to, you know, move up, spend the extra three grand on that or something like that, that'd be the same discussion. That's going to eat up, just like the three grand on that or something like that, that would be the same discussion. That's going to eat up, just like the trip ate up some of the money that could have gone towards the house. But the point is that's the letting off of the accelerator, backing off from full-on gazelle intensity to enjoying and doing some other stuff. You might even increase some giving during that time and all those kinds of things. So the point is to be concentrating on the house, but not to the exclusion of all other things.

So really, the truth is, what this argument comes down to is, this is not a joint purchase that both of you want. It's something he just wants. Basically, yeah. That's the argument. It's not that it's the wrong place in the baby steps or that it's really against the house. It's just he wants it, and you don't care about it one way or the other. Yeah, and I kind of feel like we should maybe just, it feels like an impulse a little bit.

Like maybe we should have saved up for it, you know, $500 a month or something because, I don't know, I just feel like it's a little impulsive and it's so much money. You got an $8,000 bonus and you can say, you know, we want to do some giving or whatever. So, you know, what you could do to, that's a fair argument too. That's a fair part of the equation. Sometimes when Sharon and I are talking about it, she's like, I don't know. It kind of feels like you just got the fever. Let's wait a month and see if you still want it.

After a month, if you still want it, we'll do it. Okay. And see if the fever goes away. That would change it from an impulse to a solid purchase. What kind of exercise equipment is it? It's one of these Peloton spin bikes. Okay. All right.

Yeah. And is he taking spin class now yes how long has he been taking spin class how long has he been taking spin class a couple of years okay so him being on him being on a bike is not an impulse correct okay all right i mean because i've never spin class, so me buying one might be more of a, I'm more of a runner, you know, and that kind of thing. So me being on one might be more of an impulse, because it's not like it's something he's never done, is my point. That's correct, yeah. So in that sense, that's an argument for him.

So, yeah, I might shop around, try to figure out where we can pick one up used at one of the sports consignment stores or Craigslist or something like that. Is there a place to find one, you know, a really nice one but slightly used that somebody's using to hang their clothes on instead of actually ride and that kind of stuff? And, you know, let's take a month and see if he cools off on it. If after a month we find a bargain and or he still wants it, I'd probably do it. He wins. Okay. Well, thanks, Dave. He's going to be really happy to hear that.

But do you see kind of how I got there? I do. It makes sense. Yes. There's nothing in here about you guys being irresponsible. The reason I walked all the way through that is it's a good exercise for our listeners, too, to just think through, properly to think through at that baby step where you're trying to pay on the house, okay, when do we not pay on the house and when do we pay on the house?

Because if all you do is buy stuff, you'll never pay on the house, and that's your point. But I don't think you guys are out of control. The fact that you're having this discussion is proof that you are in control. So that's pretty cool. I think you're going to get the house paid off pretty quick, by the way. And I think it's going to be due to his business exploding. Because I've got a feeling this $40,000 is going to turn into $80,000. And that's probably going to pay the house off.

So I think we're okay. That's the other part that's rattling around in the back of my head here. But that's a cool discussion. It really is. It's a good thing to talk about. You know, PJ on Twitter says, is there a balance between gazelle intensity and what the Bible says, the dangers of gaining wealth hastily? Well, PJ, gazelle intensity doesn't have anything to do with gaining wealth. Gazelle intensity has to do with getting out of debt, which is from the scriptures.

And it's Proverbs 6, 1 through 7. If you've signed surety, my son, do this. Give no sleep to your eyelids, no slumber to your eyes, and deliver yourself like a gazelle from the hand of the hunter, a bird from the hand of the fowler. That's Proverbs 6, 1 through 7. Now, what's that mean? If you've signed surety, it's old English Bible talk,

forgotten yourself into debt. How you get out of debt. You deliver yourself like a gazelle from the hand of the hunter. You run like a cheetah is chasing you, trying to kill you. That's gazelle intensity. You run for your freaking life. And that's to get out of debt. That is not a danger of gaining wealth hastily.

Because we're not trying to gain wealth. We're trying to get away from the dadgum master because we're a slave. The borrower is slave to the lender, which frees us up to build wealth as a steady plotting thing. Because, yeah, there is gaining wealth hastily. There's all kinds of warnings about that in Scripture. And not only your spirit, but also just the general process that you end up building a house of cards, which is what I did. That's how I went broke. I gained wealth hastily in my 20s. And I borrowed too dadgum much money, and it caved in on my head because I was stupid.

And that's what it comes down to. But they're different things. And so the gazelle intensity does run up through baby step three, through the emergency fund. And after that, let your foot off the gas. Now you start your wealth building. Now we start paying off the house and we start upgrading the couch, getting the spin bike and so forth. This is the Dave Ramsey Show. Hey guys, it's Blake Thompson, senior executive producer of the Dave Ramsey Show. This hour of the show is over, but you can also watch on our free mobile app, our website at DaveRamsey.com, or on The Dave Ramsey Show YouTube channel. We are everywhere to serve you.

I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance, since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282.

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