The Ramsey Show - App - How to Recession-Proof Your Life (Hour 3)

Episode Date: August 21, 2019

Chris Hogan, Debt, Retirement   Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE   Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR   

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is the Dave Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Chris Hogan, sitting in for Dave. And America, I am excited to talk to you. I know you have questions. I know you have things on your mind that you want to talk about, and I want you to call me. The number to call is 888-825-5225. Again, that's 888-825-5225.

I want to know what's on your mind. Because what I have found is that when we get the right answers, we can get on the correct path to get to our destination. And we all have places to go. We all have things we want to achieve, and we have people that we want to achieve them for. So let's get it started. I'm going to the phone. Let's see here. I've got Jake on the line.

Jake, how are you? Focus and not finish. How you doing? Oh, this is somebody that I know. I like you already, buddy. What's going on? Hey, my question is about my parents. We're having a debate on whether they should start investing or paying off their house first. Okay. Tell me what's their situation right now.

So their income is $143,000. Okay. They have $77,000 in retirement. Okay. Plus my dad will receive $1,558 starting at age 62 per month from a pension until death. They are 56 years old, and they owe about $24,000 left on the house. And they think if they keep doing what they're doing now with – and they just finished Baby Step 3, so they're just kind of trying to stay gazelle intense and pay off the house. Okay, good, Jake. All right, I got a feeling, Jake, that you probably introduced them to the Baby Steps, didn't you?

Actually, my sister kind of did. All right, very good. Give your sibling the credit where credit's due. I'm proud of you there. So they owe $24,000 on the home. No other kind of consumer debt at all. No credit cards, no car loans. Correct.

They're completely debt-free besides their house. Okay. And how much is their mortgage payment, Jake? I think it's about $800 or $900, including escrow. Okay. $800 or $900. All right. And they don't have any other debt. They've got a good income. How much are they paying on the house? Are they just doing the minimum? Well, they have, I think, about $9,000 in savings to kind of bridge the baby step three. But I said go after the house, but my sister thinks they should start investing and then whatever's left to pay off the house. Okay. And so that $9,000 is not including baby step three. This is extra, correct?

No, that's what their partial Baby Step 3 to kind of cover to start paying off the house. Okay. To cover anything that happens between then. Okay, gotcha, gotcha. Well, I'm going to tell you this, my friend. I want them to complete Baby Step 3. Three to six months of expenses sitting there. That way it's going to give them cushion in their life. It's going to help them to relax.

But I like the mindset of attacking sitting there. That way it's going to give them cushion in their life. It's going to help them to relax. But I like the mindset of attacking this home. $24,000 left on the balance. Let's get focused. Let's get after this thing. And then they free up $800 to $900 a month for them to start to catch up and invest. Now that's me, Jake, and I know you because I'm allergic to debt and so are you. I don't want it in my life because it just takes. It requires a payment and it takes. So that's the advice that I would give them. And you all, I'm proud of you and your sister for caring enough to engage with them to talk about this. It's so many money questions out there, people getting bad advice or not knowing which way to go. So I love that you guys are open enough to have that conversation and willing to help

them. So yes, that's the direction that I would go. Definitely encourage them to keep pushing because they're not done yet. All right. Next up, I've got Ryan on the line in Tennessee. Ryan, how are you? Hey, Chris. How are you?

Oh, I'm focused and not finished, my friend. What's on your mind today? So I have a couple questions for you. I'll give you my financial background a little bit first. Okay. My wife and I are completely debt-free. Oh, I like that. So we're in steps four, five, and six.

All right. Household income is anywhere between $150,000 to $175,000. Okay. And so we're looking at steps five and six. And for step five particularly, we don't have any plans to have children, at least within the next 10 years. We're still pretty young. And we can unpack that too. But on step six, I want to talk a little bit about maybe refinancing my home

and what your thoughts are on that. Okay. Tell me this, Ryan. How old are you and your wife? Okay. I'm 24 and my wife is 23. Okay. Wow. You guys are young. And you said you're completely debt free. How much debt did you all pay off? So we got married in March of this year and we paid off a combined is around $27,000. $27,000 at age 24 and 23. Why did you guys pay this debt off?

Oh, I've been a listener for a long time, and that was just a lot of my wife's student loans. And I actually did not graduate college, so I didn't have any student loans. Okay. All right. We had minimal amount, and we paid that off. Very good. So you're on Baby Steps 5 and 6. And for the listeners out there that may be new, Baby Step 5 is where you start to save for college. Baby step six is where you attack and pay off the house.

And so you're, you're thinking about refinancing. So tell me the housing situation. So purchased a house. We, we needed a, uh, interim location here in Northeast Tennessee, right? Purchased it in September of last year at 105,000 at 6%. Okay. What kind of mortgage did you get? It's a 30-year fixed rate. Okay, all right. 30-year fixed rate. Did you guys put money down?

No, I did not. So that's where the high interest rate comes from. So 100% financing. So you're asking me if you should look at refinancing? I've looked at it, but I'm not 100% sure what all it entails. Okay, okay. Just kind of guide me a little bit. Yeah, no I'm not 100% sure what all it entails. Okay. Okay. Guide me a little bit. Yeah, no, absolutely. Ryan, thank you for your call. Well, listen, if you have a mortgage and that loan is three years older or more, the likelihood that you could refinance, you could

probably get a lower rate. Rates are around four and a quarter right now. I want you to always go with a 15 year fix. So Ryan, here's what a refinance would look like. I want you to always go with a 15-year fix. So Ryan, here's what a refinance would look like. I want you to call your existing lender, tell them that you're interested in refinancing into a 15-year fixed rate mortgage. They will send you a lending statement of what that refinance would look like. And so on that, it should detail the closing costs and all the fees associated with this. And so this would give you an opportunity to really look this over and understand kind of what this lender could do for you. But I want you to take it a step further.

You're not officially applying. I want you to reach out to another lender. Go by your local bank or credit union, and I want you to talk with them about your scenario. Not officially applying, but just say, hey, I've got a mortgage balance of around $105,000. It's at 6%. I'm looking to refinance from a 30 to a 15. They can run some numbers and give you a lending statement as well on what it could look like for them. Now, keep in mind, until you formally apply, they can't guarantee you any kind of rate on the 15-year, but it gives you an idea, Ryan. So I think where you all are and the position you're in, that's something I would definitely

look at, but I want you to start with your existing lender. Typically, the situation is going to be a lot smoother. They have all of your financial information already, W-2s, tax returns. You'll have to probably provide them some updated pay stubs from you and your wife, and they may need to get also a new appraisal. So the appraisal is something you will have to pay for. So that's the process of refinancing, America. It's not hard, but it is something you're going to have to stay focused and dedicated to and really pay attention to the numbers. This is The Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times.

You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members. I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities, but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait.

One hire can change the direction of your company. Post a job today at LinkedIn.com slash Ramsey and get $50 off your first job post. That's linkedin.com slash Ramsey. Terms and conditions apply. Hello America, you are listening to The Dave Ramsey Show. I am so excited to be with you. As we walk through and we take your questions about money, maybe you've got something you've been wanting to know, and so you can finally get the answer.

All you have to do is give us a call. The number to call is 888-825-5225. Again, that's 888-825-5225. We would love to hear from you. And oh, by the way, you can find us on social. It's at Ramsey Show, or you can send it to me at Chris Hogan 360 as well. So listen, I want to tell you something. Financial Peace University has been changing lives for over 25 years. And that's a whole lot to celebrate. And like we usually do around here,

we don't go small, we go big. And for the month of August, we've challenged folks in baby step number two. That's people that are serious, they've got debt, and they're ready to get their money back. We've encouraged them, if they're on baby step two, to pay an extra one thousand dollars toward their debt this month and so it's part of the one thousand dollar payoff challenge now we're almost to the august finish line uh and we've had over get this one hundred thousand

people commit to the challenge that's massive so if all of them, all 100,000 of them pay an extra $1,000 toward their debt, guess what? That's a total of over $100 million in debt that's been deleted. That's gone. Interest no more. It's out of there. And so I'm telling you, there's a lot of people out there who are on fire to take back their financial lives. And guess what? We're giving away $2,500. Yeah, you heard me right. I'm going to say it one more time. We're giving away $2,500 to four of those people this month. Now, we've had some finalists and we've had some people that have applied to this contest.

Elizabeth, are you on the line? Yes. Hi. How are you today? Good. Good, good. Listen, are you on the line? Yes. Hi. How are you today? Good. Good, good. Listen, we're just randomly... How are you? I'm doing well. We're just randomly calling and checking in on some finalists just to see

how they're doing. How's your day? So far, so good. So far, so good. Okay. Can I make your day just a little bit better? Yes. It's an honor speaking with you because I only watch you online and now I'm actually talking to you. So that's awesome.

Well, let's see. You just buttered me up now. Well, you know what? I'm getting ready to make your day a whole lot better. If you're happy just to be talking to me, okay, and I'm honored to be talking to you. How would you feel if I told you you won $2,500? I'd be super ecstatic. Well, I need you to start getting super ecstatic, Elizabeth, because you are the winner.

Oh, my gosh. Yay. Congratulations, young lady. This is our suit of loans. Yay. Yes, that is fantastic. Oh, you're very welcome. So tell me this.

What are you going to do with this money? We're going to dump it all up to our student loans because we've been really like, I got married early this year. And when we started mixing our finances, we're like, okay, we have this big loan staring right at us and we just have to, you know. Well, I've got to know, Elizabeth, how big is this student loan? So this is actually a student loan plus a car loan so this is the total of it all we started at around 73 000 and now just this monday we paid off six uh we paid off a couple of the loads the monthly thing and so we're down to 62 296 fantastic you guys are actually you are focused you guys are

getting after it well Well, listen. You want to get out of it. I know you do. Because, listen, you get that debt out of your life, you get your money back, don't you? You know? Yes. You give yourself a raise. So I'm proud of you as newlyweds.

You guys are working together, doing this thing the right way. And I'm very proud of you for applying to the $1,000 payoff challenge. And I'm even more excited, young lady, to tell you, congratulations, you are the winner. So, Elizabeth, thank you so much. And listen to me. If you're all in and serious about getting debt out of your life, there's still time for you to join the $1,000 payoff challenge. Again, we'll be giving away $2,500 to two more people who commit to doing this challenge right now. So I don't want you to delay any further.

You shouldn't have to be motivated to get your money back. You should want that. So this is a great opportunity. All you have to do to enter is go to DaveRamsey.com slash payoff. Let me say that again. To enter the $1,000 payoff challenge, to enter, all you have to do is go to DaveRamsey.com slash payoff and get this. There's no purchase necessary for you to be able to enter. So again, that's DaveRamsey.com slash payoff. Well, that's fun. I just gave away $2,500

of Dave's money. I'm good at this. Can I do another one? James is looking at me. He's like, don't even think about it, dude. So listen, I want you all to get out there, get after this, you know, committing to it and getting serious. This is what we have to do. And all this talk out there right now about potential recessions and all this stuff that's going on, I'm going to tell you right now, you want to recession-proof your life, get focused and get on a plan, get plugged into Financial Peace University. And when you have your debt attacked and paid off and you've got an emergency fund, I'm going to tell you right now, you feel a whole lot different when people in the media start stressing out about certain things. And I want more people feeling that same kind of relief. Okay, I got a question in from Rudy on social media.

And this is a question, America, pay attention. You need to hear this one. Rudy says, Chris, if I have basic life insurance through my employer at 10 times my salary, do I still need term life insurance? Okay, Rudy, I appreciate you asking this question because this is a big one. Okay, life insurance, the goal of life insurance is to replace your income. If something were to happen to you, you've got life insurance. You can make sure that money's coming in. But here's the deal. Two things, Rudy. Number one, I want you to have term life insurance. Term life insurance covers you for a set period of time. Sometimes some of these insurances that are offered through jobs, these things can be,

let's call them irregular insurance products, which means they have different nuances and caveats that may not be there and do what you intended to do. So I want you to get term life insurance, but also this is the second reason. I want you to get it outside of your job. If you get it outside of your job, now if you leave or lose that job, you don't lose or leave your insurance behind. And that's what can happen if you have life insurance through your employer, through that payroll deduction. And oftentimes, term life insurance can be cheaper than what they're charging you. So, Rudy, I want you to go to ZanderINS.com, get a quote on term life insurance, get 12 times your income in life insurance coverage to make sure that you got yourself and your family covered.

All right. Thank you for that question, Rudy. A lot of people out there needed to know that so they can make sure they're taking care of things. Okay. So here we go. I'm going to the phones, America. If you've got a question, I want you to call us. The number to call is 888-825-5225. Okay. I'm on the line. I've got Billy out of Kansas. Billy, how are you? Hey, Chris, I'm doing good. How are you? Oh, I'm on the line. I've got Billy out of Kansas. Billy, how are you? Hey, Chris. I'm doing good. How are you? Oh, I'm focused and not finished.

What's on your mind? Hey, I am leading FPU. My husband and I, we're on our third week, and I've got a couple of us really gazelle intense and ready to sell their car. Okay. However, they owe more on it than what it's worth. Mm-hmm. ready to sell their car. Okay. However, they owe more on it than what it's worth. And as I was mentioning to them, you know, go ahead and sell it and then get a loan for the remainder of what you owe.

They had a really good question about the title, and I'm not sure how to answer it. Okay. What do they do with their title? Because they can't release it if they owe money. Okay. Great question, Billy. So you've got lead a Financial Peace University class. Thank you for doing that, by the way,

because that's an opportunity to be able to reach out and help other people. But you've got a couple that owe more on the car than what it's worth, and they're trying to sell it. What they would need to do is to reach out and contact the lender, whoever the automobile lender is, communicate with them what they're trying to do, that they're trying to sell the vehicle, and they're going to get a short-term loan to be able to pay it off. And typically, the lender will work with you as long as they understand and see the short-term loan documents

and the check is going to be made out to that lender. Typically, they'll do that. And as long as the buyer's on the same page, it's just a couple more steps to take and a few more phone calls, but it can still get done. Billy, thank you for that question. And more importantly, thank you for leading Financial Peace University. That's a great opportunity to be able to reach out and help other people that are in need.

Now, listen, if you're out there right now and you're like, what is this financial peace stuff? I'm telling you right now, it's called progress. That's how you get your money back. That's how you get on a plan. When you get sick and tired of being sick and tired, you do something about it.

And financial peace is that thing. It's a game changer. Change my life. They can change yours. This is the Dave Ramsey Show. This is big news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again.

Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands, or better yet, reduce the time until you're debt-free. Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Can you imagine how it would feel to no longer have that payment looming over your head every month?

Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace, knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or ChurchillMortgage.com. Hello, America. You are listening to The Dave Ramsey Show. I'm Chris Hogan filling in for Dave today, and we're having fun. I had an opportunity to have some amazing calls and

I got to give away some money. And we're telling people about the $1,000 payoff challenge. And so again, I'm serious. I want you all to get fired up about this. This is a great opportunity. Here's what you do. You commit to paying off $1,000 in August and you'll be entered to win $2,500. That's all you got to do. So go to DaveRamsey.com slash payoff. Again, that's DaveRamsey.com slash payoff. And I was so excited.

I got an opportunity to give away $2,500. So I want to give away more of that, of Dave's money because I'm pretty good at it. So America, if you've got a question on money, I want you to call us. The number to call is 888-825-5225. Again, that's 888-825-5225. All right, I'm going to the phones. I've got Ryan on the phone from Wisconsin. How are you, sir? Good. How are you doing, Chris? Oh, I'm focused and not finished, my friend. What's on your mind? Well, a little back story here. I started listening to you about four weeks ago. I was sick and tired of listening to the same songs while I'm working. I'm a city employee.

I'm 24 years old, and I typed in financial while I listened to music, and you popped up, started listening to you, and I'm stuck with it. Then, obviously, I heard Dave Lamsey and downloaded his app, and now I'm here on the live show. That is fantastic, Ryan. And, again, 24 years old. That is amazing. Got tired of listening to the same songs, and so decided to listen to a deep-voiced dude and Dave. All right.

That's pretty cool. That is pretty cool. So what question do you have for me? Well, you know, as a city employee, I have a pension. And the city matches 100%, and it is at 6.55%. Okay. And it is projected to go up to 6.75% next year. You know, we just had a baby recently, so I went into HR to add the baby to my

insurance. And I also had some questions for her regarding pension and other investments. Now that I have some knowledge from you guys, because when she first went over it, I had, I was clueless. I mean, I was overwhelmed. Right. Right. But, uh, so I asked, you know, in the future, I'm in baby step two right now. Okay. And I asked, this is asked, you know, I'm in baby step two right now. Okay. And I asked, this is mainly, you know, I'm not trying not to get too far ahead of myself, but I would like some knowledge when it comes time. So I asked if I was able to bump my pension up.

Turns out I can only put in as much as they put in. Right. They do also offer a 457, which I am not very familiar with. They offer it in a traditional and a Roth. Okay. I thought that was great. I was like, okay, cool, Roth, you know, Roth 100%. But then after talking to my director, he said, yes, you know, the 457 plan is great,

but we work with a financial advisor, and they gave me his card to go meet with him because he believes that IRAs are kind of a better option for me. Okay. So I was wondering what your take is. Yeah. Ryan, did he give you a reason why he thought the IRA was going to be better? Not that I remember so much. Okay. So you guys right now, you're on baby step two. You are super focused trying to get additional information. Tell me, how much debt do you have left to attack? remember so much. Okay. So you guys right now, you're on baby step two. You are super focused trying to get additional information. Uh, tell me how much debt do you have left to attack? Well, as you say, I did some stupid, um, I wish I would have started listening to you a few months

earlier. I know it's all, we've all been there. How much do you owe? Roughly $15,000. I bought a version of my dream truck. So that put me in the hole. Before then, I was hardly in debt. Okay. So just the truck is all you owe on? I also have a credit card as well. Okay.

And I'm obviously paying on that right now and moving to the truck next. All right. Good. Good. How much do you owe on the credit card? About $1,000 truck next. All right, good, good. How much do you owe on the credit card? About $1,000. Okay, all right. So yeah, get that thing attacked, Ryan,

and then close it out and shut it down. Right. But here's the deal. Bottom line is, investing is about growing your money, right? You and I both know that each and every year, the cost of things go up. So we've got to grow money. So I need to be able to invest it.

Right now, the way it's structured with your pension, you've got some options. I love anything Roth related just because it means it's after tax dollars. That means the money that's growing is going to be tax free. Now, looking at this there, what you would need to find out is, is the Roth 457, which is essentially a fancy way of talking about a 401k, it's a way for you to put money aside, but because it's Roth, it's going to be after-tax dollars. Here's the question. Are they matching in that 457 like they would into the pension? And if they have the Roth 457, do they have a version of the Roth 401k? So that would be my question going back to your HR benefits person to see if that's available. I'm telling you, anything Roth related is an awesome direction to go. But Ryan, we got to pump the brakes because here's the deal. You got debt. And so we're not investing

right now. I'm fine with you getting additional information, but I want you to get focused on getting the truck of 15,000 out of your life, but first and foremost, the $1,000 credit card. But here's what I'm gonna do for you. I've got an Everyday Millionaire's Investing Guide that's out there that is a step-by-step kind of playbook on how to build wealth.

And it's a 30-page guide, and it's free, Ryan. And you can download it by going to my website, chrishogan360.com slash start now. Now, hear me with that. I'm going to give you that again. It's my step-by-step playbook for building wealth, 30-page guide. It's free. You can download it at chrishogan360.com slash start now. Now, Ryan, going back to it and looking at it, if the IRA option is always a good

one, especially if it's a Roth IRA. So when you get to investing, we tell people to invest 15%. So you can invest up to the match inside of the pension and then outside of that, use the Roth IRA for the additional. So again, I don't know what investment person you were talking to, but we've got SmartVestor Pros. These are the people Dave and I trust. And you can find those by going to DaveRamsey.com, SmartVestor. Again, you click on Find a Pro, you'll put in your zip code, and the next thing you know, you've got a list of several that you want to call and interview. And that's the way to do it, because it's important that you find people that have the heart of a teacher. And that's exactly what we have when we use these smart investor pros.

Okay. I got another social question. This one, somebody, Brandon on the Everyday Millionaire Facebook group asks, is a speeding ticket a good reason to use the emergency fund? Brandon, listen here. Okay. First of all, I need you to slow down. All right. I need you to drive speed limit. to use the emergency fund. Brandon, listen here, okay? First of all, I need you to slow down, all right? I need you to drive speed limit. No, that's not an emergency, okay?

That was bad driving. And so what you got to do is cut out in the budget, right? I mean, you know, slash the food, whatever it is, pay the $137.50. That's what I've read. That's how much I think they are, my last research. But you got an opportunity.

Oh, boy. I told on myself right there. Listen, no, it's not a reason for the emergency fund. You do want to tighten up your budget, though, and get focused and get that thing paid for. Seriously. But the goal of the emergency fund, remember this, America, it's in case life happens, car breaks down, the AC unit in the home goes out, you know, something unexpected happens. That's a major thing. Now, you could say, well, Chris, this ticket falls into that category. I get it.

And you know what? If you got to use $137.50 out of there, then get it, pay it. But guess what? Here's where people forget. If you use the emergency fund, job one is to replace it. See, most people don't end up replacing it. And that's how they find themselves back in a situation. So if you use the emergency fund to replace a battery, a car, a tire, whatever it is,

job one is I need to replace that money ASAP. And so you want to stop doing whatever it is you need to do to get that money back. Because once you have that three to six month emergency fund, you always want to be at that number. Don't let a shoe sale, don't let a sporting goods sale, don't let anything going on cause you to touch that emergency fund. And by the way, if you are married, you want to make sure you and your spouse are in agreement before you use the emergency fund.

And if you're single or newly single, you need an accountability partner. You need somebody you can call. When you're getting that itchy finger to do something crazy financially, you got to talk to somebody to get you to calm down. And so that's what we do. But the emergency fund, keep it replenished and keep it there. This is the Dave Ramsey Show. Hello, America. You are listening to The Dave Ramsey Show.

I'm Chris Hogan filling in for the big man today. And we've had a blast, had some fantastic calls. And if you're out there and you've got a money question, I want to hear from you. The number to call is 888-825-5225. Again, that's 888-825-5225. Again, that's 888-825-5225. Or you can find me on social media at ChrisHogan360. Or you can find The Ramsey Show at RamseyShow. We always love hearing from you and talking with you.

So I'm going back to the phones. I've got Carlos on the line in Arizona. Carlos, how are you? I'm good, Chris. How are you? Oh, I'm focused and not the phones. I've got Carlos on the line in Arizona. Carlos, how are you? I'm good, Chris. How are you? Oh, I'm focused and not finished, my friend. How can I help you today? So, Chris, I need your advice.

Me and my wife are having a little dispute. We're on baby step two. We're down to our last two debts, which is two vehicles. Okay. Our household income is about $90,000. Okay. Our household income is about 90,000. Okay. Now my decision that I want to go with is, so I owe 10,500 on one vehicle, which I will have paid off by February. Okay. Now my second vehicle, I owe 23,700. So I was thinking of selling that vehicle, which it's private sale is $16,000

and borrowing $10,000 from a local credit union to pay off the difference. Now my wife wants to just continue with the baby steps and just pay as much as we can, or I want to cut out $8,000 of paying to the bank. So I just need your advice on which would be the best route to go on knocking these debts out so we can start saving for a house. Okay. All right, Carlos. Now, let me track if I'm getting this right.

You want to take out the loan to pay the difference on the $23,700 vehicle that's worth $16,000. Correct. Correct. Okay. Now, why would you go for a loan for 10 when all you need is about 8,000? Because I would need to purchase another vehicle that I can get to and from work. Okay. So you have a vehicle and your wife has a vehicle. Correct. Correct.

Okay. All right. And so you're looking at it. So your wife says, hey, let's stay focused on the baby steps and pay it off. You say, let's go to the bank, get the loan, and get enough out to bridge the gap with what's owed versus the value and buy a $2,000, $3,000 vehicle, right? Correct. Okay. How much is the payment on this $23,700 vehicle?

$515. Okay. All right. And $10,000 loan, have you priced out what the rates would be on that? No, I haven't. Okay. All right. Now, the reason I'm saying this is I want you to call and find out, you know, at a local

bank or a credit union and find out what that would be and begin to run the numbers. The only reason that I tell people or we advise people to take out a short-term loan to bridge the gap on a vehicle is just to be able to get out from under that payment, but it's a short-term loan, okay? Meaning it's an 18 to 24-month loan at tops, all right? I would be able to pay that $8,000 in five months would be my goal. Okay. That's five months after the February, right? Because you're planning to pay off that $10,500 vehicle by February? Yes, sir. Okay. All right. And so you could, you're saying you can come up with $8,000 in a couple of months? Yes, sir. So in February at my job, we get a yearly bonus and it's around $6,000.

Okay. So I think, you know what it is, Carlos, the reason why your wife is kind of hesitant to that is that you guys have signed on and borrowed your wife is kind of hesitant to that is that you guys have signed on and borrowed your way to this situation. Does that make sense? Exactly. And so for her, what she's saying is, is we need to get out of debt, get out of debt, get out of debt. And what you're proposing is bringing in debt. So what I do is sit down with her, walk through it and, and, and, and begin to kind of run the numbers. And it's less about what you want to do and what she wants to do. It's a matter of what's the best thing for the family to do. And I think if she understands and hears that you're willing to commit that bonus to attacking that,

then it becomes an option. Now, again, this is considering, right, that you can get this car sold for $16,000. So time is kind of of the essence. So run the numbers. Find out what that would look like. Again, I'm all right with a short term. Like I said, 18, 24 months tops. But after that, you guys are driving the vehicles you've got, taking care of them, and really and truly staying focused.

Thank you for your call, my friend. I'm back on the phone. I've got Ashley in Illinois. Ashley, how are you? Hi, Chris. How are you? Oh, I'm focused and not finished, young lady. How are you?

I'm pretty well. Good. I had a couple questions for you. Okay. I guess one specific question. I'm 24 years old. I am a recent college graduate and I'm just starting my professional career. I'm actually still in college as a graduate student now. So with that

being said, I have debt, but it's not active debt. The only active debt that I have is basically my student loans, which is going to be deferred until I'm done with graduate school. Okay. So I currently went through the program. Well, I started the program maybe three weeks ago. I've completed Baby Step 1. I'm on Baby Step 2. So I'm trying to figure out how should I go about, I guess, snowballing the debt if they're, like, inactive. Should I even worry about those now, or should I just focus on them? Very good.

Tell me this, ashley how much in student loan debt do you owe wow um close to 90 oh okay is this undergrad uh undergrad grad because i've completed my bachelor's my master's and right now i'm in the nba joint uh jd program so are you just degrees in there You're getting all the education. Pretty much. Now, with this, how far along are you in the MBA JD, which is the Master of Business

Administration as well as the law program? How far along are you? I just completed my first year, so I have about two and a half more to go. Okay, so how much are you, and so you're going to be signing on for student loans for these next two years? No, actually I just started with the company and they actually pay for my education. So now I'm going to be receiving tuition reimbursement versus student loans. Okay. Gotcha. And are you a full-time student right now?

Actually part-time. Part-time. Okay. All right. So you're saying you're making part-time money. So what's your household income? Right now, I'm like 67. Okay. All right. And so do you have any other debts, Ashley, outside of this student loan? I have credit cards, but I normally pay those off every month. They're like pretty small.

Okay. They're typically like 200 a month that I typically just pay off. Okay. Well, let's, let's the next, have you recently paid them off? Yeah.

Okay. Well, close them things out. Yeah. You don't need them. You have cash, honey. Yeah.

You don't need, yeah. Don't, don't get yourself caught up in that. You have cash. You're making 67,000 a year, uh, right now.

And you know, you're going to work in year uh right now and you know you're going to working toward being a professional get those things out of your life shut those things down uh you know people believe that myth of wanting to build their credit score i want you to build your wealth so i i would say this too with the kind of money you're making even though those loans are in deferment you've got the money to start setting that money aside or going ahead and paying that. So what I would do is reach out, find out what I owe in student loans, right? Get that, find out what that dollar amount and at least find out what the payment is. And you could start putting that aside in a money market account each and every month

or start paying these things. Remember, as they sit there, they're not, they're not going to go away. You follow me sit there, they're not going to go away. You follow me? Oh. Yeah, it's not going to go away. So, again, now, what could happen? If you make the payment into a money market account, let's say the loan payment's going to be $800.

If you go ahead and build your budget to where you're moving $800 each and every month over into that money market account, it's as if you're making the payment. So when the loans become out of deferment or become active, you're already in the habit of setting aside that money. And so that's what I would do if I'm in your shoes. Matter of fact, if I found out the payment was 800 and all you owe on is the student loan and these small credit cards, which actually you're getting out of your life, I'm going to triple up on these payments. I'm going to start putting two, three grand aside and attack it to really hurry up and get those out of your life.

$90,000, that's a lot of student loans. But you've got to think, too, your income is going to go up. So if you've got that habit of paying extra and attacking it, you're going to get those out of your life, and you're going to be a happier young lady. I'm telling you, that's the way to go. Well, listen, I want to thank all of you, America, for calling in and tuning in. I want to thank producer James Childs and associate producer Kelly Daniel. And of course, you, America, for tuning in.

We're so excited to be with you and we want you to tune in. Stay connected. You're not done yet. You've got an opportunity. Stay focused and not finish. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show. Did you know you

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