The Ramsey Show - App - How to Prioritize "No Balance Due" Credit Card Debt (Hour 3)

Episode Date: February 11, 2019

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Music Music 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'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Nate is with us in Olympia, Washington.

Hi, Nate. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? So my wife and I are on baby step number two. And so one of the ways I'm going to try to help pay down the debt is I want to start a small business.

And I'm starting it as a sole proprietorship, like I hear you talk about. And so I read a lot online about the importance of writing a business plan, creating a written business plan. But a lot of what I read is kind of geared toward bigger businesses or businesses with investors or lots of assets and stuff like that. I'm wondering if you have any advice on how do you write a good business plan and what are the important elements of the business plan? Well, I probably would look at a couple of the outlines that you could pick up online without any trouble, just Googling it. Most of the time what you're saying is true, that someone is writing a business plan in order to describe to a potential investor or a bank that's going to loan them money

why they should give them money. And that's generally what a business plan is used for. It's a money sales tool. If you're simply opening a business with some cash to get some cash coming into your place, you know, the business plan, the only reason for the business plan at that point is just to make sure you've touched all the bases for yourself, just to make sure that you haven't left something out. So what kind of a business are you talking about opening?

It's going to be a surfboard repair business. Okay. opening it's going to be a surfboard repair uh business okay and um so really i mean you think about there's three or four or five pieces of business there's not a segments of business there's not a lot going on there okay one is where are we going to get our customers that's marketing okay okay how are we going to produce the good or service? Obviously, you're a surfer, and you know how to repair surfboards, so we know how you're going to do production, right? Right. How you're going to produce the good or the service that you're going to sell.

The third thing, then, is the accounting, and the pricing model goes with that. How are you going to price your service? The fourth thing might be the location. Where are you going to conduct this service? Okay. So are you going to do it in your basement? Well, it will be a home-based business, yeah. Yeah, okay, from home.

So you're not going to have to go rent a location. Customers are going to be probably word of mouth and social media. You're going to let people know on Facebook and around the surfing community that you're willing to do this. And once you get a reputation of having done a repair for one guy, he's going to tell two of his friends and word of mouth, it'll begin to grow. Correct? Right. Yep. Yeah, you don't need to spend a bunch of money on marketing.

I wouldn't. I think most of this is going to come from hustle. You're just letting people know you're doing it all the time, always talking about it, always, you know, go surfing, and everybody on the beach, you tell them, hey, if you know anybody that needs a surfboard repaired, I'm doing it, you know, and here's how you get in touch with me. You can build you a little simple website. They're not hard to build.

WordPress helps you do that, and so they've got a place to find you and connect to you by e-mail and pick up a Twitter handle and a Facebook page and a couple things like that, and just so people can find you. That's your marketing stuff. How are you going to charge? Have you determined? Well, I haven't really decided other than kind of perusing other surfboard repair websites and stuff in California. You know, that's basically what I'm going off of, kind of similar to their pricing model.

Okay. Yeah, that would be a good thing, except, you know, starting out, you're going to go cheaper. And if you found someone that could give you repeat business like a surfboard shop or something um that doesn't do repairs uh you might you might say hey i'll fix two boards for you for free to show i can do it okay give them a little taste of the cookies so they want some more so they order a whole batch of cookies now you wouldn't do that with an individual because once you've repaired their board they don't need you again, right? Right. Unless it was someone that was highly influential in that community,

and then you might repair that board in order for them to post on Instagram that you're the best thing since sliced bread when it comes to repairing a surfboard, right? Right. So that kind of thing. I think we just wrote your business plan. Did you hear it? Yeah, that's awesome. Thank you. That's. Did you hear it? Yeah, that's awesome. Thank you.

That's the way you do it. You're just thinking through the accounting, the pricing, the location and production, where are customers coming from, how are we going to acquire customers, how is our acquisition going to look. That's called marketing. And are you going to hire anybody? No, you're going to be it, right? Right.

And you're going to charge enough to cover your materials, but most of this is not materials. It's time, isn't it? Yep. And you charge enough that you make more than a dollar an hour, right? Yeah, that's the plan. Yeah, because otherwise you'd be better off doing something else. It's not a hobby. It's a business.

Correct. So if it takes 20 hours and you only charge 20 bucks, that's not a plan. That's a good point. How many surfboards have you repaired in your life? Well, I've only done one myself, so I'm not real experienced with it. I do plan to take some classes and get some mentorship on it before I really launch the business. But at this point um just the one yeah i would not spend any money on this um i would do it all from word of mouth

and elbow grease because you're trying to get out of debt right now um and i really wouldn't spend all my time on this right now because it sounds like it's going to be a little while before it actually makes you money you might need a different part-time job that actually makes you money while you're getting out of debt instead of spending your time on something that's got a bit more of a long play to it. So, hey, good question, man. I like having the discussion with you. Hold on. I'm going to send you a copy of my book, Entree Leadership, which is our business book,

our handbook for this business, how we started on a card table in our living room. And here we are today, and it wasn't an accident. It was a series of intentional decisions. So Entrez Leadership will help you with that process too. But I don't think you need a business plan. I think you can sketch out on one page what we just did here on the air, and I think you'll know exactly what you need to do from this point forward. The trick is to take something that you love like that and actually turn it into money.

Because there's a lot of people who hang around a hobby, act like it's a part-time job, and it doesn't make any money, which by definition makes it a hobby. So until you are cashing checks clear of expenses, you are not running a business. Until then, you've got a hobby. And that's how we all need to think about the things that we're kicking off as our side hustle. So good question, man.

Thank you for calling in. This is the Dave Ramsey Show. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged loan.

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NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Thank you for joining us, America. Derek's with us in Houston, Texas. Welcome to the Dave Ramsey Show, Derek. Hi, Dave. Thanks for taking my call.

Certainly. How can I help? Yes, Derek. Hi, Dave. Thanks for taking my call. Certainly. How can I help? Yes, sir. So the question I have here is I owe $24,000 plus on my car right now, paying $480 a month for it. And the question I have, since I'm trying to clean up stupid, is if I should double down on the car payments and just get it paid off quicker, or should I actually surrender the car and go get me something cash? Okay.

No, we never surrender a car because they're going to sell the car at way below wholesale and sue you for the difference. That's called a repossession. Mm-hmm. So we don't want to do that one. But what is your household income? $40,000. $40,000.

You're single? No, sir, I'm married, but stay-at-home wife. Okay. All right. And this one car you owe $24,000 on, do you have a second car? No, no, no. I actually got rid of my second car beforehand um because i had old uh it was basically it cost me like 600 a month it was like the most expensive car that we had so i was like

no we got to get rid of this thing so okay we sold that one and um and gave them the payment for that and i was just double checking to see if i should do the same with this one yeah if you sell it that's fine surrendering it i it, I would not do. Now, what is the car worth? Do you have any idea? I don't have any idea what the car is worth, but I'm pretty sure it might be around like the $10,000 area. And you owe $24,000?

I owe $24,000. How do you owe $14,000 more on it than it's worth? Do you roll negative equity from the other car into it? I roll negative equity from a previous vehicle, not the old car that I sold off. That's what I mean. When you did a trade-in, you had negative on the trade-in. That's correct. And they put it on this, and then they jacked your interest rate and smacked you in the face.

So much fun. That's why I said I'm trying to clean up stupid. Yeah. Wow. Is this your only debt? No, no, no. I still have my student loans that I have, and then I have some outstanding credit card and other collections.

Like, I literally started watching your programming about maybe like a month or so ago. Yeah. How old are you? Gotcha. How old are you? I'm 32. Okay. All right.

Yeah, you've got a mess. What we look at on how quickly someone can turn their mess around is what I call the shovel-to-hole ratio. The hole you're in is the pile of debt. The shovel is your income. And so it sounds like you have a lot of debt compared to your income. Agreed? That is correct. I don't think you want to turn this car in, but I do think we need to get it paid down as rapidly as possible, paid off.

So let's try again. $24,000 on the car. How much is owed on the student loans? $25,000. And how much on the credit card? The total of everything ends up being right at $71,000. Gotcha. Okay.

All right. And so what we've got to do, do you have anything else you can sell? Nothing else that I can actually sell right now because I'm renting. I don't own my home. Right. So I don't have anything else that I can really sell. Okay. How many kids do you have? I have two, a two-year-old and a that I can really sell. Okay. How many kids do you have?

I have two, a two-year-old and a 10-month-old. Okay. All right. Well, if you pay off $10,000 a year, it takes you seven years. You see how I did that? Yes, sir. If you pay off $20,000 a year, $25,000 a year, it takes you three years. $24,000 is $2,000 a year takes you three years. $24,000 is $2,000 a month,

which means you would need to increase your income with an extra job during that three years that paid pretty well, delivering pizzas, mowing grass. I don't care what it is, but you need to get an extra $1,500 a month coming into your house. That and another $500 out of your budget goes towards these debts, and you're debt-free in three years. Selling the car doesn't help if it only brings 10 of the 70 and 10 of the 24. You follow me?

If it would bring a lot more than 10, I'd sell it in a heartbeat. So I want you to look up on Kelley Blue Book, kbb.com, and see what it's worth, number one. Number two, you're going to be working an extra job that pays well, and you're going to be working a lot because you've got to clean this mess up. Number three, you guys are going to get on a written budget that's scorched earth, meaning you have no life. You're not eating out. You're not going on vacation.

You don't see the inside of a restaurant unless you're working there. You have a mess to clean up, sir, and it's going to require a level of intensity, a level of healthy, righteous anger at the mess to get the mess cleaned up. You can wander into this kind of debt. You cannot wander out. You've got to get mad and go to war. You following what I'm saying? I got that message about a month ago when I watched you the first time,

which is why I'm in contact with you right now. Awesome. So I want you to go through Financial Peace University, our nine-week class. I'm going to give it to you for free because I've been where you are, broke and scared and didn't know what to do. But I'm going to show you how to get out. If you'll go to that class, I'll give it to you, okay because I've been where you are, broke and scared and didn't know what to do. But I'm going to show you how to get out. If you'll go to that class, I'll give it to you, okay? Yes, sir.

All right. And that includes the one-year membership to the online everything. So you can do your every dollar plus budget. You and your spouse do not miss a class. And then stay with the online budget. Go back over the lessons during the year. Take the other classes in the online during the year, but go to the class, the Financial Peace University class for the nine weeks,

and then Financial Peace, the membership goes with it. I'm going to throw all of that in together, and I want you to take care of your family and turn this around, and you be the guy that changed your family tree. You're the last broke guy in your family. You change this, Nick. You can do it, and I'll help you. If you get scared or you don't know what to do while you're walking through this,

it's going to be three years you and me are together, brother. And then from then on, we're going to be together because I'm going to help you be an everyday millionaire. But you call me if I can help you. And you hold on. Kelly's going to pick up, and we'll get you started. Open phones at 888-825-5225. You jump in.

We'll talk about your life, your money. It is a free call, 888-825-5225. Nick is in Baltimore. Wait a minute. That was Nick I was talking to. Who was I talking to? Oh, it was Derek. I'm calling him Nick.

I had the wrong guy. There's Nick. Hey, Nick. How are you? I'm talking to. Who was I talking to? Oh, it was Derek. I'm calling him Nick. I had the wrong guy. There's Nick. Hi, Nick. How are you? I'm doing well, Dave. How are you? Better than I deserve. Sorry about that.

How can I help? No worries. No worries. Hey, I just wanted to let you know that I've been following you since last year, and I've paid off at this point probably about $45,000. Woo-hoo! And I have about $10,000 left in student loans. And I wanted to see the best way to pay those off

since they're grouped in miniature different groups. Okay. Smallest to largest, doesn't matter, because you're paying this stuff off so fast, it's all going to be gone so fast, it doesn't matter. Yeah, that's what I was thinking. I was taking a look at it. The different loans are linked as few as like $878,000 and then as much as like $4,000.

Yeah, just list them smallest to largest. Work your debt snowball. Knock them out in that order. Fair enough. Because you're going to be – I mean, think about how fast you paid off $45,000. Yeah. This is only 10. A lot of changes last year. Yeah, this is only 10. A lot of changes last year.

Yeah, this is only 10. So this is walking a park for you, man. You've proven you can do it. You've already ridden the bicycle. You know what balance feels like. Yeah, you're ready to go to town, man. Congratulations. Well done.

Very well done. Lauren is on Facebook. Is it better to get life insurance coverage through work as payroll deduction or have a freestanding policy? I'm changing jobs, and I need to know what to sign up for. You're better off to have a freestanding policy because if you became uninsurable due to a cancer scare, a heart scare, diabetes or something while you're at work. And you leave that job, your life insurance doesn't go with you. And so since it doesn't go with you, you've lost your insurance since you became uninsurable.

So a freestanding policy is much safer for you. And by the way, generally it costs less once you understand the differences in the kinds of insurance that are offered and you're buying the right kind of 15 to 20 year level term insurance, which is seldom offered at work. It's usually an ART at work, an annual renewable term, which goes up every year. Cheaper to buy it when you buy a 15 to 20 year level term. This is the Dave Ramsey Show. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated and they have a sense of fear and intrusion.

It can be overwhelming. It's scary and infuriating at the same time. People question your character. You try to figure out how it happened and you worry it's going to happen again. Then you have to deal with cleaning up the mess. Bill collectors, credit bureaus, even the police just make the nightmare worse. And trust me, ID theft is not going away. That's why I personally work with Zander Insurance to develop an ID theft plan that provides the best protection and value.

Smart strategies to help reduce your risk so you don't feel so helpless along with taking over all the work if you do become a victim and without wasting your money on gimmicks or things you can easily do for yourself go to zander.com or call 800-356-4282 do not wait until it's too late and you have to go through this nightmare on your own. Go to Zander.com. If you're new to our 7 Baby Steps plan, the Baby Steps bundle is a perfect place to start. It's only $29.99. It'll help you understand our 7 Baby Steps with the book, The Total Money Makeover, a long-term financial plan with a retire-inspired audio book.

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I'll be there on February the 20th, and we'll be livestream streaming that for the whole nation. If you want to jump on and watch it from wherever you are, just check it all out at DaveRamsey.com. Sally's with us in Washington, D.C. Hi, Sally. Welcome to the Dave Ramsey Show. Hi, Dave. How are you today? Better than I deserve. What's up? So I have a question about investing plus taxes. So I took a second job with the income I made from that second job, which is waiting tables, plus my salary from my day job left me with a $3,600 tax bill. So is there some way I can invest money to lower that bill? No.

Well, there is, but I wouldn't do it. Because every dollar that you invest only saves you a quarter on taxes. While we're investing, if we can do that tax smart with a Roth IRA, it's growing tax-free with a traditional IRA, it is tax-deductible. So if you put $6,000, $7,000 into a regular IRA, $6,000, that will probably save you $1,500 on taxes. Okay. But you don't have an extra $6,000 laying around.

Nope. I've got the $3,600 that I've got to write a check to Uncle Sam for. Yeah. So what happened? You underwithheld on your regular job, or you paid nothing in on your waiting tables? I didn't pay any in, and I wasn't able to claim my daughter as a dependent this year. Oh, that's what threw it. More than anything else. Okay.

Yes. Why? You were going through a divorce um no she took a she took a job and made more than she's grown okay how old is she she's 26 but she has a disability so had she not made money i would have been able to claim her gotcha okay and in the past you, and that's what threw it off. Correct. Okay. And it's why, because of her income, it was wiser for her to take the deduction than you, is what you're saying. Correct.

Yeah, I think that's probably right. Okay. All right. And so for next year, you've got that fixed, so you'll have the proper amount withheld, and this won't come up again. Yes, my day job is taking out extra. Yeah, well, and you can set up the proper amount to come out of your regular job, given that you don't have the deduction anymore. That's assuming she's going to continue working, right? Yes.

Yeah, that's the way to fix it rather than try to invest your way out of it. To invest $3,600 to save $3,600 would not be a deduction. That would be a tax credit, and there is no such thing to do for investing for the consumer, where you get a one-for-one write-off. Your write-off is, I mean, your deduction creates a savings equal to the percentage your tax bill is. And so if you're in a 20% tax bracket, 20% of what you put in is what you save. So it's trading a dollar for a quarter, in other words. And that doesn't help you in this situation. Ron is with us in Santa Barbara. Hi, Ron. Welcome to the Dave Ramsey Show. Hey, Dave. I really appreciate you taking my call.

Sure. What's up? So I'm a stay-at-home dad and a full-time student, while my wife, she goes to work full-time. And my question is, we've been talking about investing in real estate property. We have about $375,000 in a mutual fund and no debt. So my question is, I guess, do you think it would be a good idea for me to wait and con'm done with school in about two years? Or would it be a good time now to start investing? The $375,000 is not in a retirement account? No, it's a mutual fund she inherited from her grandpa.

Wow, okay. Yeah, very generous. If you were to purchase real estate properly and manage it well, you should make more on the real estate than you would on a mutual fund. But obviously, it has more hassle. A mutual fund, you just open the envelope. That's your only hassle, right? But obviously, with a piece of real estate, you have repairs and tenants and collections and tax bills and things come up, right? So there's a hassle factor, a time drain on owning a rental.

So it should make you more. Now, it won't make you more if you purchase it wrong. And the only way I would purchase it is for cash. And so then what we need to make is, you know, you need to make $40,000 a year on $375,000, right? We're actually planning on just using about half of it, so right around $200,000. Okay. Then if you want to make 10% on your money, then you'd need to make $20,000, right?

Mm-hmm. Yeah, that makes sense. We're actually thinking of doing out-of-state, which I'm not sure if you have any opinions on that. I would not do that you need you need rental property where you can see it touch it and feel it okay out of state is a good way to have someone change their harley oil in your living room out of state if it's resort property is very volatile and it also typically means that someone's going to take half of your rent and to manage a resort-type, VRBO-type situation.

The management fees are very, very high. So, no, I would purchase something in your neighborhood or in your general area where you can look at it, touch it, manage it, take care of it, and if you don't have the time to do that, then I wouldn't do it. I would just let the money sit in the mutual fund. Because at this point in your life, as a stay-at-home dad, full-time student, if there's not enough margin in your day to take care of the rental, then you need to leave the rental business alone. It's going to get you in trouble. It's a wonderful business, but it just requires a certain amount of time and attention paid to it to properly profit from it.

Jay's in Akron, Ohio. Hi, Jay. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call. Sure. What's up? Absolutely.

How can I help? Recently, I've been approached by my brother. He's worked at the same business since he was 16 years old. 28 years later, he buys the business. Business is in good standing. It's never had a red month since 1968 when it started. He wants me to come in as a partner. I currently own my own business. It does well. It's been growing between 30% and 33% every year net. We're doing very well. We're about to start another business to help support our first business in a different market, like a different revenue.

And my question is, my brother's offered me this package to come with him. It is a nice salary, and it accrues ownership over five years. And at the five-year mark, ownership transfers, and I would become minority owner of the company. And I'm not sure if I should let go of what I'm doing, what I've built. We are 100% debt-free. Our business is debt-free. We own three homes debt-free. We have no debt whatsoever.

Why would you do this? My brother's in a bit of a pickle. The business is probably valued at so much more than what ours would be. So? Why would you do it? You're not getting the business. You're getting a minority ownership after five years? Minority ownership of the dollar amount of what it's worth is far beyond what my company is worth today or in five years is what I'm looking at. Okay.

So what is his gross revenue top line? It's well over $8 million. Okay. I don't want a minority ownership in that because you have absolutely no power whatsoever. You don't have any rights. He can borrow. He can run the thing into the ground. He can be wise.

He can be dumb. You have no say. You're just a sitting duck. Plus, you can't liquidate it. You can't ever sell it. It's of no value except for the extent it creates income for you. Because you have no say-so. No, I think I'll pass on that one.

Thanks for the call. Our Scripture of the Day, Philippians 4.8 Finally, brothers and sisters, whatever is true, whatever is noble, whatever is right, whatever is pure, whatever is lovely, whatever is admirable, if anything is excellent or praiseworthy, think about such things. Muhammad Ali said, what you're thinking about is what you're becoming. You become what you think about. Earl Nightingale said in The Strangest Secret, you become what you think about. Brooke is with us in Des Moines, Iowa.

Hi, Brooke. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? So my husband and I are about to start baby step number two. And two of our loans do not have a minimum monthly payment, so we don't pay on a monthly.

So how do we keep our debt snowball rolling and the motivation to keep it going? When do you have to pay them? So our credit card, we don't have to do a monthly payment until August. Why? And then my husband... Why? They said that it's just kind of a trial thing, so we don't have to do a minimum monthly payment. And then don't pay a minimum monthly payment until you get to it on the debt snowball.

Okay. Okay, but that has to be. Let's list your debts smallest to largest. Pay the minimum payment that you're allowed to pay legally under the deal that you're at this month and put all the money that you can squeeze out of your budget on your smallest debt. If it happens to be one of those credit cards that doesn't have a payment due yet at all, then still you're just chunking a huge big pile of money on it. Everything you can squeeze out of your budget, you throw at your smallest debt when you're in baby step two and you've stopped all investing temporarily and you've stopped all saving temporarily list your debts smallest to largest and attack them in that order while paying minimum payments on everything if you have no minimum payment the minimum payment is zero unless that's the debt you're coming to and the debt snowball,

and then it's everything you can squeeze out of your budget. Regardless of if there's not a payment due, you're still going to pay it off as quickly as you can. If it's a zero interest, it doesn't matter. We're still going to pay it off as fast as we can because the interest and the payment amounts are not your problem. The debt is the problem that we're trying to clear. And once we realize that, then we've got to attack all of it.

And we attack it in the order of smallest to largest. Martha is in Chicago. Hey, Martha, welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thank you for taking my call. Sure. What's up in your world? So I'm very young, married, and we only have a very small car debt.

We have our home paid off. But now we're at the stage where we are looking into investing. We've done all the other baby steps. But my job only offers a 457B, so it doesn't have any matching other than the pension. How do I go about knowing what to invest or how to even understand it? I don't want to just risk my money out there. I want to know what I'm getting into. That's very wise on your part.

How old are you? I'm 25. And what's your household income? 45. 45,000. $45,000? Yes. My husband's currently in school. Oh, okay, good.

When does he graduate? Well, he's doing his doctorate, so this is his last year of coursework, and we're paying out of pocket for it. Good, good, okay. Well, the baby steps tell you to be out of debt and build your emergency fund before you start investing. Have you heard that before? Yes. You're not out of debt. You have a car loan.

Right. Okay, so we're going to get out of debt first. Okay. How much do you owe on your car? $4,000. Oh, good, okay. So goal number one, baby step one, is save $1,000. Do you have any money saved at all?

Yes. We already have a six-month saved as well. We just didn't pay the car loan because it's a 1% interest. How much do you have in savings? We have $15,000. Why have you not paid the car loan? Because it was a 1% interest, so we figured we'd leave that there. Okay. So you're really working your plan in a way yes but we have to pay it today today okay pay it today and then build

your emergency fund up three to six months of expenses and then start saving 15 of your income into retirement you can both do a six thousand dollar,000 Roth IRA or less than a $6,000 Roth IRA and you're going to be there. So you only need to save about one Roth IRA in good growth stock mutual funds. You can sit down with your SmartVestor Pro and they'll help you pick some good mutual funds. That'll be better than the 457 because it's tax-free growth and the 457 is tax-deferred growth because it is deferred comp. So sit down with your SmartVestor Pro after you pay off your car today

and after you're out of debt and then you have your emergency fund of three to six months of expenses, then you have your emergency fund of three to six months of expenses, then you start investing. And so that way we're not trying to do things-ish. So here's the rule, Martha. We know you're wrong about your 1% theory. I don't want to pay off the car because it's 1% interest. How do we know you're wrong? Because it's Dave's opinion?

No. We studied and talked to 10,000 millionaires. None of them, not one, said, I built wealth because I took advantage of low-interest borrowing on consumer items like cars, and thereby I was able to get rich. Not one of them said that. The vast majority of them, 70 to 80 percent, depending on what the question was we were asking, said they stayed away from car debt, credit card debt, student loan debt.

They stayed away from debt like it was the plague, regardless of the interest rate on the debt. They were not trying to play some kind of a math game and beat up a car company. The only way you got 1% on a car was you bought a new car, so you lost a lot more than 1% when you drove it off the lot. So this is all an illusion. It's smoke and mirrors. Pay off your car today, then build your emergency

fund, then start your Roth IRA with a SmartVestor Pro, and you'll begin building wealth, even with a $45,000 income. Well done,000 income. Well done, kiddo. You can do this. No ish, though.

We don't do ish. Plan ish, baby steps ish. Well, we're sort of doing your plan. There is no sort of. You're either doing it or you isn't. You've got to decide. Christina's in Los Angeles. Hi, Christina.

I'm short on time. Go straight to your question. Sure. Thanks for taking my call. Sure. I just started Baby Step 1 last month and was able to put aside $350. Good. But then I just did my taxes and found out that we owe $740.

Ouch. Right. So I'm kind of, you know, going backwards in a way, and I'm really wanting to pay off all my credit card debt. What's your household income? $72,000. Okay. You have a nap from now until April

15th to get $1,000 in the bank for your baby emergency fund and another $700 to pay the IRS, and then you'll begin your debt snowball. Right. But you can do that by April 15th. That's $1,700.

You make $72,000 a year. Tighten that budget up and stay out of restaurants. Well, we don't do restaurants at all. You're doing something. Well, what happened was we now owe our student loans because i've ended up exceeding all of my forbearance okay but now we just started paying our student loans of four hundred dollars a month and you make 72 000 a year yeah with my husband and i yes so sit down and do your every dollar budget and tighten it up.

Nothing you've told me yet keeps you from having $1,700 all the way down to April 15th. You'll get there. You're just starting the plan. For the first time ever, you're telling money what to do instead of wondering where it went. It has great power when you do that. You're going to be amazed at how much traction you get. Hold on. I'm going to send you a copy of the book, The Total Money Makeover, if you don't already have one, to make sure you've got all the steps and exactly what to do.

You can do this, kiddo. You call me back if I can help you more. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify?

For all the ways to watch and listen, check out our showcase at DaveRamsey.com slash show.