The Ramsey Show - App - How to Respond to Debt Collectors (Hour 3)

Episode Date: July 5, 2018

The show about you

🎵 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. The phone number, 888-825-5225. That's 888-825-5225. Logan is with us in Salt Lake City, Utah.

Hi, Logan. How are you? Hey, Dave. I'm fantastic. Thanks for taking my call today. Sure. What's up? Hey, I have a couple of retirement accounts, one Roth and then one IRA. I understand your recommendation for how to diversify those across the four different types of mutual funds, but I don't understand four different categories. I don't understand

how diversified I should be within those categories. What's the most percentage of my savings that should go into any one fund? I don't know that there's a percentage. I just, you know, I'm a pretty primitive, simple guy, Logan. I don't try to get too detailed on that, meaning that I don't want to have $100,000 and have 25 mutual funds. It would drive me crazy, right? Sure. That's too much.

And on the other hand, I doubt I would want four mutual funds with a million dollars, meaning only four funds, $250,000 each. That might be lacking in diversification. So, you know, when you get up above $300,000, I start to think about how many funds I've got. I want to be sure I have some more. The interesting thing is that if you have four funds in the traditional and you have four funds over in the Roth, as those grow, that's going to obviously be eight funds over time. And, you know, it is eight funds now, but I mean, over time, that would cover a lot of it.

You just don't want to get in a thing where all you're doing is opening mutual fund statements all day long, even though it's wonderful that you have that kind of wealth, but it drives you crazy. These people, they kill trees like nobody's business in that world. They send stuff to me. I mean, my mailbox is just, I've tried to cut off all the paper and just have it all electronic, not necessarily as a political statement, but just because I don't need all of it. Electronic is fine. I've got all the information I need, and I just keep it pretty simple. My goal of building wealth is to not make my life more complicated.

It is to make it more simple, and I want to go that direction. But you do want to diversify enough, spread out enough that you don't feel risky. You don't want to have, you know, a million dollars each in four funds. That would scare me if you only had a $4 million net worth and you only had four mutual funds. I'd want to be more spread out than that. So that's the way I look at it. But, you know, there's not a super complicated, detailed thing that I use anyway

from my personal funds. And I've definitely got seven figures in, a lot more than seven figures rolling around in those funds. But I'm not that concerned about it until it gets up to be just real heavy in one area or in one fund. And then I'll rebalance or I'll move some to a different fund and spread it out a little bit. And if a certain 401K or certain IRA starts to get up too large, then I'm going to spread out among more funds. Bobby is with me in Charlotte, North Carolina. Hi, Bobby. How are you? Hey, Dave. Thank you. I'm good. spread out among more funds. Bobbi is with me in Charlotte, North Carolina.

Hi, Bobbi. How are you? Hey, Dave. Thank you. I'm good. Well, thank you. How can we help today? My husband and I recently jumped on your plan.

I think it was back in May. We've heard about you for a long time, and some friends of ours just paid off their house and everything, and we were like, oh, my goodness, we've got to do this. Wow, cool. So, yeah. So, anyway, we've got to do this. Wow, cool. So, yeah. So, anyway, we read your book, The Total Money Makeover, and just loved it. The next thing we want to do is do the Financial Peace University just to learn more and kind of get on the right track.

But I have a quick question for you. Right now, we just owe on our home, so we're working on paying the mortgage off on baby steps four, five, and six. We own a lake lot. We don't owe anything on it. We own it outright, but we have to pay HOA fees yearly and taxes, of course, and honestly, we just feel like it is, we just want it to go away. We're just so ready to sell this thing. And we currently have a realtor who has, you know, sent the papers over for me to sign. And I just wanted to talk to you first to see what your opinion was. I bought the lot for $54,000.

Honestly, I don't remember the year, maybe 2006, maybe 2007. The listing price that the realtor has suggested is $30,000. So it's a huge loss. We expected that because, I mean, the lots, most of the people who owned the lots out there in this community went bankrupt. So you can get the lots for a lot less money. But at this point, we're just looking at it like, well, we're paying every year taxes and HOA fees. We would rather have the $30,000 to throw at our mortgage that we're trying to pay down right now.

But what's your opinion? Would you hang on to this lot, or would you try to get rid of it and take the loss? Okay. Well, the first thing I want to do is get the realtor to send me comparable sales have they done that and shown you what the actual sale not list i'd like to know what other stuff's listed for too because that's my competition but what's it going to appraise for the way you do appraisal in residential real estate a lot or a house is it's a comparison with other properties that are similar a comparative market analysis it's called and i want to find some other lots in the neighborhood that have sold have they shown you that actual sales they have um well we talked about it on the phone he

hasn't actually sent them over via email yet but we talked about it on the phone um he lives out there the neighborhood is starting to um to pick up and people are starting to kind of move in over there. It's a lot without a house on it. I need to see the sales. I need to see the sales. I need to see the sales to make the decision. Okay. If the sales indicate that the actual value today is $30,000, then you have a $30,000 light lot.

I don't care if you paid $500,000 for it, it's worth $30,000 today. Right. Okay. Then the next part of the question is, to answer your question, is if you had $30,000 piled up in the middle of your table, would you pay it on your mortgage or would you buy a lake lot next door to the one you have? Oh, goodness, for sure, I'd put it on the mortgage. Then you would sell yours for $30,000 because every day the one you have. Oh, goodness. For sure. Put it on the mortgage.

Then you would sell yours for $30 because every day you keep it for $30, it's like you bought it again for $30, isn't it? Yes. So turn it into money. Put it up for sale and sell it. I think the guy is probably telling you the truth because I've got a lake house, and I often tell people here on the air that resort real estate is one of the most volatile kinds of real estate. Meaning it's going to go beach property, lake property, mountain property. It's going to go up, up, up, or it's going to go down, down, down, and it's likely going to do both. And so it's real volatile. Whenever the real estate market moves, it moves to an extreme in the other way.

And so the lake house I have, the lots and the houses around there went way down in that last dip. And now they're on fire again. People are paying stupid money for them now. So yours may get back to $50,000. But the bottom line is you're not a real estate investor. You didn't buy this for that. You're not going to build on it. It's a leftover bad decision. I'd

sell it and move on if I were you. Based on the way you answered the questions, that's where you guys are. This is the Dave Ramsey Show. For years, I refused to endorse any company that claimed to get people out of timeshares. I told my listeners it's a horrible product and that unfortunately they didn't have a lot of options. Then a few years ago, I sat down with Brandon Reed, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry and I learned that you can't sell them and you can't even give them away. And then we talked about Timeshare Exit Team's

process. Every ownership situation is different, which is why they have more solutions than any other company. And that's when they earned my respect. Don't call any of the imposters out there, and there's a lot. The only timeshare exit company I stand behind is Timeshare Exit Team. They have exited thousands from their timeshare burden this year alone. Yes, you will write them a check, but they stand behind their guarantee their guarantee they will get you out or they'll give you a full refund call 844-999-EXIT online at In the lobby of Ramsey Solutions, Walt and Rebecca drop by from Maryland. Thanks for stopping in to see us. I understand you guys got a question.

Yes, Dave. How do you recommend that we invest our IRAs once we retire? The old rule of thumb was that you take your 100 and subtract your age, and then, like, I'm 60, so I put 60% in bonds and 40% in stocks. But nowadays, that won't near keep up with inflation since bonds pay so low. Right. Well, I never would have done that to start with. Bonds have always been a substandard investment for the consumer versus good mutual funds and stocks. And so my plan is to never buy a bond, ever. And I don't move necessarily based on age.

And so the asset allocation theory has a lot of faults to it. It's universally accepted, but it has a lot of faults to it. Because here's the thing. You guys are how old? I'm 60, and Walt's almost 64. Yeah. And if you're in good health, there's a really good chance you live into your 90s statistically now. And so the average death age of a male is 76, female 78.

But that includes infant mortality, teenage death, all that. So if you're healthy in your 60s, you know, you've got to outpace inflation for another 30 years. Bonds aren't going to do that. Not well. And certainly money markets aren't. So it's ludicrous. I intend to continue to keep all of mine invested in equities, in mutual funds. And so as far as your IRAs go, that's where I'm going to park it.

And then just, you know, whatever income you want to pull to enjoy your life as you go along, just set that up to come off of some of those. And, of course, at 70 and a half, anything that's in an ira you've got some mandatory distributions anyway that are going to be coming but uh i'll be in mutual funds is where i'll be when i'm at that age uh just because if you look at the performance over 25 years of mutual funds in in growth stocks versus the performance of bonds over a 25 year period of time i mean it's a no it's a no-brainer and bonds are almost as dadgum volatile especially in a a low-interest rate environment, as stocks are. So I think you've made good decisions already, it sounds like, and good analysis already.

But that's a heretical view among my friends in the financial planning world, that I don't believe in the asset allocation crap that they all just universally accept as if it's a law of gravity or something it's not a law of gravity that you automatically have to move your money into liquid assets and things as you get older you don't you don't have to uh you can live off of the mutual fund production easily and uh there's no reason that the heirs can't inherit that money that way uh There's no law that says you have to, quote, unquote, go safe. Because if you, quote, unquote, go safe, inflation could tackle you from behind. Right.

And that's the danger of it. And I'm not a believer in that, but I'm pretty heretical to some of that bunch anyway. Thank you so much. Thanks for stopping by, guys. Pleasure to talk to you. Open phones at 888-825-5225 caleb is with us in birmingham hi caleb how are you hi dave i am confused how are you better than i deserve how can i help well um i'm about to start baby step two and have all of

my debts listed um my grandfather um came to me last, and he's not a big proponent of credit cards, but he suggested last night that I get a secured credit card to try to keep my credit score up while I'm paying off the older debts in my debt snowball. And I haven't been listening to you long, and I haven't really heard you talk about a secured credit card, and I just didn't know what your thoughts about those were. And so your purpose of keeping your credit score up is what? Well, you know, eventually when I get out of debt, hopefully I'll be able to buy a home,

and I've heard that you had to have a good credit score to buy a house. Basically. Yeah, that's not true. You can have a zero credit score, and you're as marketable for a home mortgage as you are with a high credit score. The only way to maintain a high credit score is to pay these guys fees is what it amounts to. You have to pay the bank lots of money because a credit score is 100 the algorithm the mathematical algorithm that creates the credit score is 100 about you borrowing and repaying debt it's every bit of it has something to do with that and so you have to pay the bank's money for a credit score

instead what i have done and my credit score by the way zero i don't have one because i haven't borrowed money in so long my credit score doesn the way zero i don't have one uh because i haven't borrowed money in so long my credit score doesn't show up and that'll happen pretty quick from the time that you're a hundred percent debt free unless you keep tinkering around with this so i mean i'll be debt free in about eight months great okay and when all the accounts are 100 closed and you have zero balances um somewhere around the you know six months to a year later, you'll have a zero credit score. And then you go to a mortgage company that does what's called manual underwriting.

Churchill Mortgage knows how to do that. And they can do a mortgage the old-fashioned way, in other words, and a credit score is not required. Because this idea that we worship at the altar of the great FICO as our great provider is one of the things that's kept Americans broke. It's kept us in debt because we're chasing our tails. We go into debt to build our credit score so that we can do what? Go into debt.

It's all about going into debt for the banks. I mean, the evil empire has struck, you know. So, no, I wouldn't fool with a secure credit card at all. I'd use a debit card, and I'd pay off my debts, pay off everything, get the accounts closed as fast as possible, look for a mortgage company like Churchill Mortgage that'll do manual underwriting. Rachel's with us in Salt Lake City. Hi, Rachel.

How are you? Hi, I'm good. Thank you. Thanks for taking my call. Sure. What's up? Well, I have a question about student loan debt. Okay.

My husband and I together have about $155,000. Goodness. Yep. He had a little bit when we got married, and then he went on to get his master's degree. And what? It went up quite a lot. He has a degree in business management. Okay. And so what is his income? He makes $27,000 a year. With a master's degree?

Yeah. He went to get a master's degree to increase his career, and he makes $27,000? Yeah. He's making making 16 an hour right now he missed the memo didn't he that's what we're figuring that sucks yeah we're really we're really just confused about what we're supposed to i'm not confused he took a bad job. Why did he do that? Well, unfortunately, I don't know. He works really hard. I wasn't questioning his work ethic. I think I was questioning his judgment.

There really isn't. Like, nobody's knocking down our door. Well, they don't usually knock down your door. You're supposed to knock down theirs. Yeah, and he does. He's applied probably in the last year for about 300 or 400 jobs. Well, then that process isn't working. Yeah.

How old is he? He is 37. Okay, and what is your income? I'm a stay-at-home mom. We have four small kids, and it doesn't make a whole lot of money sense for me to go work and have to pay for someone to watch our kids. What you have is an income crisis. We are, yeah.

And that has to do with your husband's career process and career choice. I don't know why he's not landing with a master's degree in business, how he's not able to land something better than $27,000 a year at 37 years old. Does he interview poorly? I mean, has he got bad people skills? He has struggled with people skills, definitely. I think, you know, I practice with him for interviews, and I think he does a good job. But, you know, he came from a dad who's a logger, and he spent most of his life up in the mountains.

So that's probably the answer to that. Mm-hmm. Okay. So he's kind of a good old boy. Yeah. That actually can work in his favor if he can learn to speak business in the process, if he'd just be real.

I don't want him to be somebody he's not, but he should have some knowledge that can bring some, add value to a business somewhere. So I think he needs to think about what kind of a business he needs to be in, and then I think he needs to think about what kind of a business he needs to be in, and then I think he needs to start pursuing that kind of company and maybe even start doing some work for them on the side for free to get their attention and show how talented he is.

But he's going to have to be talented. Because really, the answer to your all's equation is income. You're starving to death. $27,000 with four kids. I mean, that's poverty level is what that is on the federal standards. And I'm not picking on you. I'm just agreeing with you that you have a tight situation. And it's solved by his career choices.

That's what's got to be fixed. This is The Dave Ramsey Show. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life. I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and every search you're doing online. It doesn't matter if you're on your cell or your laptop.

They can see you visiting websites, streaming or downloading, uploading photos, files, and more. I'm not telling you this to scare you, but I want you to be aware and take action. You need to download an app called Hotspot Shield. Hotspot Shield helps keep your connection on your own Wi-Fi and any public Wi-Fi secure. 600 million people worldwide have downloaded Anchor Free's Hotspot Shield. Download it right now. Just search Hotspot Shield on iTunes or Google Play or go to hotspotshield.com.

You can be secure in seconds. Download Hotspot Shield by Anchor Free today. In the lobby of Ramsey Solutions, Kim is with us. Welcome, Kim. How are you? I'm great, Dave. How are you? Better than I deserve. Where do you live? I live in Tucson, Arizona. Oh, fun. Welcome to Nashville.

Thank you. Good to have you. And you're here to do your debt-free screen. I am. Everything but the house. I love it. How much have you paid off? $32,936.64. Phenomenal. How long did this take? Right at 12 months.

Wow. You kicked it. And your range of income during that time? Well, I normally have a base gross salary of $65,000, but last year I made $85,000. Wow. What was the difference? Overtime. Ah. A reason to work called getting out of debt. That's right. All right. What kind of debt was the $85,000. Wow. What was the difference? Overtime. Ah, a reason to work called getting out of debt.

That's right. All right. What kind of debt was the $33,000? I had three credit cards and a loan on the only car that I've ever heard you say you didn't like, a Prius. That's funny. I love it. Oh, my gosh. Oh, fun.

And so what happened 12 months ago? So you're just kind of diddy-bopping along being normal. I was. I mean, you got credit cards and car loans and whatever, and then something happened. What was it? This guy. Perfect timing. Okay.

Yeah. So about the fall before last February, I became a single mom. And so last February, I was looking at getting my income tax refund check, and I just Googled, what should I do with my income tax refund? And in the realm of finances, your name kept coming up. And I had had friends and family that I knew had done your program, but for some reason, I, without even knowing what it really entailed, didn't think it applied to me. So I started looking into it.

So you told me that I should do this. And around the same time, Tim Tebow told me that I should do this. Who knew? Tim is so multi-talented. He's in everything. There was a radio interview I had heard. Somebody was asking him about waiting on God to bring him the right person. And he said, well, not only is it waiting on God to bring you the right person, but it's using that

time to become the right person. Whoa. So yeah, just like that. That's a, that's pretty strong. Yeah. Well, good for Tim. Yeah. Very cool. Good for you. So you said, okay, this part of my life, it's time for me to be a grownup. Right. And boom, game on. Game on. Now, are you that kind of person that when you just go to game on, it's's like do it yeah i kind of jump in with both feet on a lot of things okay so once the switch flips there's no looking back you just went straight in right cool very cool so what happened then once you made that decision you had that interaction i called my mom to help me come do my first written budget okay Okay. So we sat down and mapped it all out, and we had it mapped out for about 24 months.

And she said, you know, I'd really like to see you add one more thing into this budget. And I pretty much finished her sentence for her. I said, I know, a tithe. And so she said, I don't know where it's going to come from. Off the top. Yeah. So the first month I did a written budget i wound up

with 790 extra to pay towards my smallest debt but you can do the math and about 33 000 over 12 months god provided and i i never put only 790 a month towards my debt absolutely you killed it lots of extra work and watching what you're doing. And so were you like reading Total Money Makeover? Listen to the show? You're in Tucson or what? I mean, or you just sat down and did the budget on a yellow pad or how'd this work? Well, I texted my sister-in-law because I knew that they used your cash envelopes and

things like that. And I said, you know, do I really need to go to the class or can I just read a book or what? And she said, well, just start listening to the show. So I started listening on iHeartRadio and just watching the debt-free screams on the YouTube channel was very motivational. That'll do it. Okay. Very cool.

And then you just get the budget out and get going. I did. I started using EveryDollarPlus pretty quickly after I started. That was a really helpful tool. So I appreciate that. Okay. Yeah. Very cool. Very cool. So you called your mom why'd you call

your mom i think she's good with money i had seen them you know sit down with their yellow pad and do the written budget and so i just wanted another set of eyes to help me look in your family dna to be smart yeah they they're uh from the old school larry burkett yeah good i love it well larry be proud of this larry and i like to tag team, even though he's in heaven. We like to high five on this stuff. So very cool. I love it. Well, I'm so proud of you.

I know she is. I know they are. Is that mom and dad both with you? It is. They made the trip. The posse is with you for the debt-free scream. They are. We've gone over 4,000 miles so far on a 6,000-mile month-long road trip.

Whoa. In a Prius. That's celebrating. And how old is your little guy? He's three. He's three. That's fun on 6,000 miles. Not.

He's a great traveler. Yeah, that's great. Well, he must be. That's great. And his name is? Jake. All right. Has Jake been practicing his debt-free scream?

Several times in this lobby alone. Oh, okay. Good, good, cool. I'm sure it's popular in this lobby. It might not be in the grocery store, but it is here. Yeah, on the car lot, people don't like it. Yeah, very cool. And what are you holding?

You've got this pie chart thing going. This is one of my motivational aids that I made. This is a pie chart, and each slice represents $1,000 in debt. So this kept us on track. We got to color it in. And every time we reached those little milestones. What's the yellow one? Is that the Prius? That's the Prius. What's the yellow one? Is that the Prius?

That's the Prius. That's the big one. The big one, yeah. And the light blue was the smallest, I guess. This is my American Express, Home Depot, and Chase. And I have this. It says, my debt is dumb snowball. You're incredible.

Very well done, Kim. How's it feel? It feels so great. I know this guy's never going to have to know what that is. Amen. And I'm so blessed to have my parents. They were willing to watch him so I could work overtime. And they even took him on a month-long trip last fall.

And I'm a firefighter. Let me just tell you, they're grandparents. That was not a problem. They liked it. Yeah. They wanted that opportunity. That's awesome. Very cool.

Yeah, so I'm a firefighter paramedic, and so our shifts are 24 hours, and I did, while they were gone, I worked 80 and 84-hour shifts and several 72 hours while they were here. Wow. Yeah, I'm very blessed to have them nearby. Well, that's what kicked it from 65 to 85 then on the end. Absolutely. Right. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired.

That's the next chapter for you to become a millionaire. And, of course, outrageously generous along the way. You started that with your tithe right off the bat. So very, very well done. All right. It's Kim and Jake from Tucson, Arizona. $33,000 paid off in 12 months, making $65,000 to $85,000. Count it down. Let's hear a debt-free scream.

All right, you're going to do it super loud. Three, two, one. We're debt-free. Woo-hoo! Way to go, Jake. Way to go, man. Way to go, man. That is awesome stuff. Well done.

Well done. Oh, man, that's fun. You know, we put these headsets on the folks in the lobby out here for them to do the debt-free stream. I'm looking through the window talking to them across the lobby. You know, there's invariably a kid kid one of their kids is running around the circle somewhere that's part of the program you know they're unpredictable so jake she's got the visualize this everybody you know and look into your radio you can see this picture they got the headset on with the microphone down around in front of her mouth and jake's trying to

bite off of it like it's an apple while she's holding him. He's trying to get a bite of it. But he did a great job on his debt-free scream. Way to go, Jayco. Good job, man. Very good. Fun stuff. Fun stuff. Hey, that's how you start it right there. That changes a family tree.

And you see what happened there? Encouragement came in from family, not discouragement. Maybe some of you need to encourage your family. Did you hear brother and sister-in-law were doing the envelope system? I heard that. Mom helped her do the budget and suggested the tithe. Mom and dad watched the baby, so we got overtime. You hear all these people coming together to change lives.

That's what's going on here. And this is the way it is supposed to be when families are functional. So well done, you guys. Very well done. All of you. That's just excellent stuff. Excellent. Reed is on Facebook.

A debt collector called today saying they're coming to my job. Can they do that? I don't even know who they are. Just, hey, Reed, let me just tell you what that is. That's psychological warfare. Okay? They're not coming to your job okay they're not coming to your job they're not coming to your job one time out of 10 000 one will show up at a job they're trying to intimidate you they're trying to make you mad they're trying to make you scared that's what the psychological warfare is so the next time he says that say just come on you know

i've been wanting to meet one of you idiots so So come on out here. I'd like to meet you. I got something for you and it ain't money. Well, they'll just hang up on you. They won't try that one again. You got to, you got to play fair. You got, you can't play fair when people aren't playing fair. So you just got to hit them back, dude. It's just, and let's get you on a budget and get the debt paid off. Get those idiots out of your life. This is the Dave Ramsey Show. Did you catch the news story about hackers targeting schools and stealing students' personal information. Cyber thieves are preying on our school's outdated systems to get students' names, birthdates, and social security numbers,

which is everything needed to steal their identities. Kids are the perfect victims, since typically no one finds out about the theft for years. It's happening all over the country and shows that no one is safe, not even our children. This is what makes Zander's ID theft plan such a great value. They monitor your personal info to help you reduce your risk and take over all the work if you become a victim. Best of all, your kids are covered for free on their family plan. Nobody else does this.

Call 800-356-4282 or visit zander.com protecting your entire family has just become a necessity and zander's plan is just the smarter more affordable way to do it call 800-356-4282 or zander.com Matthew 23, 26 says, As blind Pharisee, first clean the inside of the cup and dish, and then the outside will also be cleaned. Gandhi said, An ounce of practice is worth more than a ton of preaching very true well we want to help you imagine what you could do with your money when you finally take control of it one user jesse says that the every dollar budget app changed everything for her family for the longest longest time, Jesse and Chris were making small payments on their student loan debt.

They felt like they were barely making a dent. Then with the help of EveryDollar, they paid off the entire debt of $10,000 in under a year. We hear stories like this all the time from people using EveryDollar. If you don't know what EveryDollar is, it's a free, completely free app for your iPhone or for your Android, and you can use it on your desktop if you prefer. And you set up a budget in about 10 minutes. It is the world's best budgeting app. It's ours.

We're very proud of it, but you won't find one that's better anywhere. They're absolutely incredible. So, again, for your iPhone, your Android, your desktop, every dollar. Check it out at everydollar.com. Brian's with us in Canada. Hi, Brian. How are you? Good afternoon.

How are you today? Better than I deserve. What's up? Well, I saw your show on YouTube, and I found it very useful. And actually, you mentioned that every dollar app. I've been using that quite often because I basically have gone through bankruptcy myself. And my question is, how do I stay out of this situation? And I never want to be a part of this problem of slavery ever again, ever.

Because I need to see a signified future in retirement and all this other stuff as well cool well it sounds almost smart i like to answer it but the truth is how do you stay how do you stay out of the situation never borrow money again that's what happened to sharon and i when we went broke we made a decision we said never again and you have to have that never again moment never again never again will american express call my my house and ask my wife why she would stay with a man that wouldn't pay his bills. And that really happened. And she called me crying because she was wondering the same thing. But, you know, we just said never again. The borrower is slave to the lender.

We're not going back. And so you don't have something I want badly enough. You can't scare me or make me mad you can't make me dream big enough you can't do anything big enough to put me back in debt i will not sign up for that trip again i've made that trip and it was not a fun trip it was a trip through hell and back and like you've been through brian you don't want to go back and so you have that moment and you say that means that means if i don't have the money no matter what the situation no matter how bad or ugly or bleak or wonderful the situation is if i don't have the money i simply don't buy it i pay cash for it if i can't pay cash i can't buy it because borrowing money

is not an option in the Ramsey's life anymore. And once we did that, then we, you know, we either had to save up and pay for it. We didn't buy some things. But the more we stayed out of debt, the wealthier we got because we weren't giving our money all to the bank. And the more wealth we got, of course, now we want to buy something these days. We just buy it. We don't think consumer items in particular. You know, we don't think anything about that anymore. And I'm not bragging.

I'm just saying that what we teach works. And if you live like no one else, later you'll be able to live and give like no one else. And so you're on track. You're starting to smell around the edges of it. You've been through your version of hell going through this. And now you get to decide, are you going to go back to the ways of living that got you there in the first place which is kind of dumb um or are you going to change your life and that's the position that you're in brian congratulations i'm honored to have you watching us on youtube erica is with us

in sacramento hi erica how are you hi dave i'm. How are you? Hi, Dave. I'm good. How are you? Better than I deserve. What's up? I'm calling because I've been listening to your show the last couple weeks. Fairly new. I've checked out the Total Money Makeover book from the library. Good. And I've started on the baby steps.

I'm trying to get my $1,000 baby emergency fund. Good. I've actually had a garage sale last Saturday. I've started selling things on Craigslist, and I'm really excited about this. Good for you. I have $77,000 in student loans, and I have a car that I actually just got a few months ago. It's all about $25,000 on it, and it's only worth $18,000 now.

And I have no idea how to get out of this loan. And what do you make a year, household income? Household income is about $61,000. Okay. Yeah, this car does need to leave. And who told you it's worth $18,000. Okay. Yeah, this car does need to leave. And who told you it's worth 18? I actually went on Craigslist after I heard, I mean, the Better Business Bureau after I heard you. Kelly Blue Book? Yeah, yeah, I'm sorry. That's okay.

I'm just making sure I understand what you're saying. All right. So Kelly Blue Book says that the car is worth, is that on trade-in or on private sale? On private sale. Okay. And the payoff is 25, is that on trade-in or on private sale? On private sale. Okay, and the payoff is $25,000. $25,000, yes. Well, I would rather be $7,000 in debt than $25,000 in debt. Do you have anywhere you can borrow the $7,000?

I don't think so. Who do you have the loan with now? It's with Capital One. Okay, maybe Capital One will let you sign a note for the difference. You know what? I heard you talk to someone about that, and I called them. And I talked to them, and they told me to try going back to the dealer to see about getting into something cheaper. Well, that won't work.

That doesn't solve our problem. Yeah. Unless you roll the seven into a cheap car of some kind at the dealer. But that's a, you know, you're going to have to be something really cheap to do that. So, hey, is your credit clean? No, I'm actually almost 30 days behind on my car notes. And I have a repo actually on there. Well, I surrendered the car a couple years ago, so that's still on there.

And they've been calling. They offered settlement. I'm like, I'll pay you when I have the money. Yeah, so that means that the interest rate you have on this $25,000 is very high then. Yeah, 14%. Oh, my Lord. Mm-hmm. Yeah, we've25,000 is very high then. Yeah, 14%. Oh, my Lord. Mm-hmm. Yeah, we've got to get rid of this car.

I don't know what we'd do. I mean, if you can find a $3,000 or $4,000 car and trade down and roll the $7,000 onto it, that's fine. But I don't want you just rolling down to a $15,000 car. That doesn't do anything. Exactly. You need to move. You may make dramatic moves. And so talk to your local credit union, local bank,

and see if you can get somebody to do that. If not, quickly working as much as you can work and selling as much as you can sell and coming up with the $7,000 cash to get the car sold is going to be your next move because not only did you get ripped off on the interest rate, you paid too much for the car because three months it doesn't drop seven thousand unless you overpaid for it which means you overpaid for it they got you coming in going kiddo so what a dadgum mess you got so i want you to go through financial peace university our um nine week class uh i'm going to come around you and help you with this because you you've got a mess on your hands and you're ready to change and you're willing

to do what it takes. I can hear that by what you're describing there. So you hold on. Kelly will pick up and we'll get you signed up for Financial Peace University. Gina asks on Facebook, when you say a person should have 10 to 12 times their income in term life insurance, does that mean their yearly gross income or their net income? Gross, because I'm trying to replace your income. That's what I'm trying to do. If you make $50,000 a year and you die,

somebody needs $50,000 a year where you used to have 50. Now, how are we going to create 50? Well, we need to invest $500,000 or $600,000, and we can create a $50,000 income. And then you've got to pay taxes on it. Investment income has taxes just like wage income has taxes. And so you've got to get the taxes on it either way. So it's gross to gross is what we're trying to figure out. And, yeah, you need 10 to 12 times your income.

And we recommend Zander Insurance. It's who I personally use for my insurance, and I've recommended them for 15 years. You will not find better term life insurance prices anywhere. Get a 15- or a 20-year level term, 10 to 12 times your income on you. And that way it replaces your income. And it's not that expensive. Term insurance compared to whole life rip-off insurance is just, it's really, really inexpensive.

That puts this hour of the Dave Ramsey Show in the books. We will be back with you before you know it. In the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year.

Keep listening for more inspiration. 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 to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry, a Better Business Bureau-accredited organization CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and Thank you. visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events.

chministries.org.