The Ramsey Show - App - How to Save $1,000 by Christmas (Hour 3)

Episode Date: October 2, 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 am Dave Ramsey, your host. It's a free call at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Jeff is with us to start off this hour in Dallas, Texas. Hi, Jeff. How are you?

Hi, Dave. How are you? Thank you for taking my call. Sure. What's up? I have a question on budget. Recently read your total money makeover. I had a sister send it to me many years ago and finally picked up and read through it.

So we ended up getting baby step one done. And my question is, when I do my budget, I'm still going in the red, which is driving me nuts. Now, I did talk to my wife, and she's on board with what you say because I've told her that I've listened to you before, and I guess things are just sinking in. You know, I'm at the age that's close to retirement, but there's nothing there because of life happens. So I want to be out of debt, and that's my goal is to pay off the house. What is your household income?

Right now it's about $100,000. Okay. And how much debt do you have, not counting your home? I probably have about $10,000 or $15,000. Part of that is from the health care act that I got screwed over on. You don't owe money on your cars. Yeah, I don't have any credit cards. You don't have any car payments.

Car notes, right. Okay, so I'm a little confused how a hundred grand with no debt virtually is causing you to be in the red where's all you did a budget where did the money go i i see it as it goes to uh you know groceries i pay the rent i do this i do that but i don't see where it's going and maybe it it's the budget, maybe it's... Okay, so what is your take-home pay should be, what, $6,500 a month, right? Yeah, well, it's probably close to about $4,000 or $5,000 a month. No, it's not.

$4,000 or $5,000 a month. No, it's not. Well, I mean... $100,000 is $8,300 a month. You do not have $4,000 coming out of your check. Okay. Something's screwy. Yeah.

Either your income figure's wrong or are you taking out 401K? Yes, I restarted funding my 401k, which is $100 a week. So that's $400 a month. That's $5,000 a year. That's not it. Are you paying a bunch of costs out of something, out of your check? No.

Well, I recently looking at redoing my health care, because my health care was at $700. And I caught looking at redoing my health care because my health care was at 700 and i caught in your show yesterday and i got a guy from medshare to see about what we can do on that okay but i'm just not seeing where the money is and i guess it's just frustrating because okay well number one we need to figure out where's some of your are you getting a huge tax refund no i've had to pay for the last three or four years with okay well let you know let me just stop a second and just do the math with me here okay all right a hundred

thousand dollars a year is eight thousand three hundred and thirty three dollars a month you're talking about gross gross okay okay your taxes should be somewhere around 1500 maybe two thousand dollars you should be taking home around six thousand five hundred dollars um something like that and then if you take out and then if you take out um you know seven hundred dollars for health care and $200 a month, you said $400 a week, so $400 a month, another $1,100 for your health care and your 401K, we're still not down in the $4,000s. So something's off at least $1,000, maybe $1,500 with that figure.

You've got to go find that to start with. Or you just told me your income wrong. Well, I'm basing it from what I made last year. Yeah. And is that all salary every month? What? Is that salary every month? No, I'm not salary.

I'm hourly. Okay. All right. Well, just kind of back into that and you know what you need to do is go discover that that's the first thing you need to do and then let's put five thousand dollars at the top of the page and your rent is how much uh we recently got it redone and now it's 637 okay so 5 000 minus 600 right i'm down to 4 400 4 300 okay right and you're you know food i mean two people 700 bucks yeah 700 bucks right i'm down to 3 000 and you got to pay lights and water. Right. This is doing a budget. You and I are doing a budget right now.

This is your income minus every dollar has an assignment down the page. I'm missing thousands of dollars. Yeah, and that's where I am, too, and I've searched online for a different one. I did found a budget that somebody did from you they come they did it it's an eod debt and i have a budget that i've redone but it's just crazy i can't figure out where all this money is going okay well i mean you need to find it because it's going somewhere you when you do a budget you should not be in the red on paper with the numbers you're giving me.

This is dramatically screwed up. And so, you know, you need to start with your income at the top of the page and find out where every dollar is going and or tell every dollar where it should go. Maybe try the Every Dollar Budget online. Maybe the app will help you. You may want to get in touch with one of our coaches and sit down with them and walk you through it. The budget forms are in the back of the book you've got, the Total Money Makeover book. The EveryDollarBudget app for your iPhone or your money is going.

Something is $2,000 to $3,000 off in the numbers that you and I discussed every month, which is substantial. Your take-home pay is wrong. Something's screwed up about that, and then once you do get it home, you know, after you take out rent and food and lights and water, you don't have a lot of other necessity expenses, and you need to write down before the month begins where this money's going to go and tell it where to go, and don't do anything with it other than that. And when you do that,

your budget is you telling your money what to do before the month begins. And once you put it on paper, you're the boss of the budget until you get the budget done. Then the budget's the boss of you. It's you telling you how this household's going to run, how we're going to live. This is what we're going to do because the way we've been doing it for this last 60 years hasn't been working. And it's time to change some stuff. So every dollar has an assignment. Very, very important.

And then stick to that. This is the Dave Ramsey Show. Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal. Folks are under a lot of pressure to offer more money to get into that house. Don't do that. Get certified instead. The Churchill Mortgage Certified Home Buyer Program is a game changer. You can quickly position yourself as a more reliable buyer, and you get an upper hand during the negotiations. You can close two to three weeks faster than your competition. So call Churchill Mortgage today and get certified. They've helped

thousands of listeners and team members here at my office win the bidding war without having to bust their budget. Call 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Thank you for joining us, America. We're glad you are here. Heather is with us in Lexington, Kentucky.

Hi, Heather. How are you? I'm doing good, thanks. How are you? Better than I deserve. What's up? So about a year ago, I switched positions with a new company, and I had the opportunity to switch over my 401K about six months after my transition.

I still have not done that up until this point. I got a statement from my current investor just the other day with my standings. So now I'm at the point, my husband and I are in baby step two, and I'm not sure whether I should roll over this 401k, which it's about broken up into almost thirds with Roth pre-tax and a pre-tax match. I'm not sure if I should roll it over or cash it out. It's just shy of $9,500. And I don't know if I should put that towards baby step two or just roll it over and leave it until we get in the point of our baby steps to start investing again. I never cash out retirement unless it's to avoid bankruptcy or foreclosure because you're going to get hit

with your tax rate plus a 10 percent penalty so it's probably about a third of it would go to the government and that's borrowing money at 33 interest to pay off debt's a bad idea so that's that that's what i would do uh is i would roll it to an ira and just get with your SmartVestor Pro or whoever you use for your investment advice and do a direct transfer rollover. Anytime you leave a company, I always take my money with me in the form of doing a rollover to an IRA. And that way I've got control of it, what it's invested in. It's convenient for me to get my hands on. And if you don't have somebody to help you with that, you click SmartVestor at DaveRamsey.com.

You fill in your stuff. It'll drop down a list of people in your area that we recommend called SmartVestor Pros, and they'll help you out. Annie's with us in Columbus, Georgia. Hi, Annie. How are you? Hi. Good.

How are you? Better than I deserve. What's up? Okay. I am contemplating going to a new job, and my current, I'm a nursing ethicist, and my current hospital offers a life insurance policy that I think it's about $500,000. My new employer, their life insurance policy that they offer is only $100,000, and I can't get it otherwise. I have some autoimmune disorders, and I get denied,

or I'd have an outrageously expensive policy. And I'm trying to think outside the box that I'm not stuck in a job that I'm unhappy because of this one issue. Yeah. And I don't know how to... Are you going to be making more at the other position it'll be the same okay but hours will be better i only have to drive 10 minutes instead of an hour i wonder if the new place the new hospital or whoever has enough flexibility

that they could add some insurance programs to their group plan to allow you to buy more. I asked about that, and the man I spoke with said that it's a bundle package, and he doesn't believe that that's the case. And I spoke with our investor, and he said, and he goes by your principles as well, and he spoke about a managed bond account. No, that's not my principles. It goes by your principles as well. And he spoke about a managed bond account. No, that's not my principles. I've never heard of it.

I'm not going to start buying bonds to offset the fact that you don't have insurance. That's not, no. That's what he's doing in that. No, thank you. I mean, you need to build up a big pile of money called wealth, and then you don't have to worry about life insurance. That's the general principle that you move towards. We're about to pay our house off in December, so we don't have any debt. And so, you know, and the more wealth you have, the less we need to worry about replacing your income for the good of your family.

Right? If you have enough wealth that your family's fine and you have no debt and your family's fine without your income then we don't worry about this subject anymore because you become self-insured your family's fine because the point is is the family needs your income to live right and to the extent they don't need that is to the extent you don't need life insurance now have you actually shopped or are you making an assumption that you can't get insurance i got denied about seven years ago and i have not tried call zander insurance then the market has changed dramatically well i got another diagnosis back in march that when i looked up life insurance and this diagnosis it um they basically said you get denied but i haven't tried xander yeah try them i mean there's

no it doesn't cost anything to ask let's talk about it and find out that i don't i think you may be right i mean if you know you probably found some valid research and probably not insurable you know so the only question is just you know if your family only got 100 grand instead of getting 500 grand how old are you 38 and and uh the autoimmune that you've got i mean how uh you know you're a health care professional uh do you have a real threat here of losing your life you can't there's different degrees of it and mine's mild but i um once it hits your record it kind of i'm talking about the actual fact you die and your family is left without you. What's the probability of that?

I don't know the probability. I mean, I'm in good health. Okay. So, I mean, it could get worse, but, you know, you never know. How old are you? 38. Okay. So, I mean, in the next 10 years, a typical 38-year-old would have very low probability,

short of an accident, of passing away. And yours is slightly greater is all. It's not like you have a terminal cancer diagnosis, right? Right. Okay. So I'm not going to worry about it. I'm going to take the job I want and then use your fabulous income, which you have to build wealth and to become debt free in the family.

But I mean, if you're sitting there with a million dollars in mutual funds and your 401k and mutual funds and everything's paid for house and everything and you pass away i think your husband can struggle through yeah i think you know and that's what i mean by self-insured by becoming wealthy and we've got about 300 000 in retirement yeah and your house is paid for so and you get 100 000 in insurance so you know, is he going to be okay? Yeah, he's going to be okay. Yeah.

Plus, I'm guessing he works, right? He works, yes. Yeah. So, I mean, he's going to be okay. So, I'm taking the job. Okay. Well, thank you. But call Xander for informational purposes and just double-check your assumptions, okay?

Okay. I will. Thank you. Thank you. Michael's with us in Charlotte. Hey, Michael, how are you? Good. Thanks. Thanks for taking my call. Sure. Michael's with us in Charlotte. Hey, Michael, how are you? Good, thanks. Thanks for taking my call.

Sure, what's up? So overall, I'm trying to figure out whether or not to continue to build up my underfunded emergency fund or to pay off my car. So I can give you a little bit of a back story. We teach people what we call the baby steps. Baby step one is $1,000. All right, I got that. Anything above that goes on baby step two.

Any other money goes on debt. Anything except your home, you list your debts smallest to largest, you attack that with a vengeance. How much do you owe on your car? I owe $18,000 on the car, and I do have a mortgage also. And what's your household income? $64,000, $65,000. So how fast are you going to pay off an $18,000 in the car, and I do have a mortgage also. And what's your household income? $64,000, $65,000. So how fast are you going to pay off an $18,000 car?

Pretty quick. What's pretty quick? Well, right now I'm just making the normal payments. How fast to make it $60,000 or are you going to pay $18,000? Do that math. Nine months. Yeah. You have no life. You get the car paid off or you sell the

car and move down one of the two but you don't need to be in debt much longer how old are you 24 24 and almost like i've done this before okay yeah so you got a really expensive car and it's kicking you in the teeth. I paid off half the car. Good. Oh, my God. It's a really expensive car. What is the car worth? I paid $30.

And you make $60. It was my graduation present to myself. Yeah, well, sometimes a present to yourself is not a present. My present to myself is I'm going to ruin my life. No, that's not a present. My present to myself is I'm going to ruin my life. No, that's not a present. Okay, so let's get this stupid thing paid off or let's get it sold, one of the two.

So you've got nine months to pay it off with $1,000. You got any money saved other than $1,000? Well, I currently, with the company match, I'm putting $15,000. Stop putting money in your 401k until you get this car paid off. Okay, and I'm putting $300 a month into an emergency fund. Stop doing that.

How much is in your emergency fund? Approaching $4,000. Correct. Okay, take three of it out, put it on the 18, you're down to one, stop all savings, and completely lean in and completely focus and completely attack and pay this car off. If you are unwilling to do those things, that means you need to sell this car. This is the Dave Ramsey Show. You've heard me talk about ID theft for years and how it's only a matter of time before you become a victim.

But I ran across some numbers that even surprised me and shows the real nightmare that people go through when they become a victim. Of the 16 million victims of identity theft last year, yes, 16 million. 26% of them had to borrow money from family or friends. 22% of them lost even more money by taking time off work. And 900,000 victims took out payday loans. This stuff is a freaking nightmare. That's why the only plan I have for my family and my entire team is through Zander Insurance. Zander takes over all the work to solve these problems and more, along with the systems to reduce your risk and protect your money if your accounts get hacked.

Visit Zander.com or call 800-356-4282. It's the smartest, most affordable way to protect yourself. Josh and Haley are with us in Asheville, North Carolina. Hey, guys, how are you? Great. How are you doing, Dave? Better than I deserve. I see on my screen you're debt-free. Congratulations. Thank you.

Yeah, thank you. Cool. We are excited. I bet. How much have you guys paid off? $153,000. Awesome. How long did that take?

About 23 months. Well, not about 23 months and 19 days. That's pretty close. All right. And your range of income during that time? Was $147,000 to about $160,000. Cool. What do you guys do for a living?

I'm a pharmacist. And I am in sales and consulting with insurance. Very good. You guys are doing cool. I'm sorry? I'm sorry to cut you off. I also am a supply preacher. Okay.

Excellent. Very good, guys. Well done. Great income. How old are you two? I'm 30. Very good, guys. Well done. Great income. How old are you two? I'm 30. And I'm 34. Good, good.

And the $153,000 was owed on what? About $12,000 was on my truck, and then the rest was all student loans. All of my student loans. Ah, the pharmacy school. Okay. cool resulted in a good job though that's good news it's very cool so how long have you two been married uh about two and a half years now okay so it sounds like you got married and started on this plan so you must have been talking about it even before marriage. Tell me your story. So we have an interesting story. We feel like you're going to like this one a lot.

We met about four and a half years ago in Sunday school, and my brother was him and his wife were the coordinators for FPU class at our church that started like fall time that year. Me and Haley were the only two single people in there. And so when we had to partner up to figure out who the nerd was and the free spender, we just partnered up together, and we started dating later that year. Uh-oh. Yeah, so we were both doing individual budgets before we were married.

And, of course, when we got engaged leading up to our marriage, we sat down and had a conversation about exact numbers and the debt. We made our goals. And so when we came back from the honeymoon, which we cash flowed, and the wedding, which we cash flowed, and the wedding, which we cash flowed. We sat down and had our first official budget meeting and set a goal that we were going to be out of debt completely before our second wedding anniversary. I'll tell you what, this is a place to meet a woman in a financial peace class.

It's a financial peace romance. I love it we always say we're we're poster children for dave ramsey and fpu here so oh my gosh i don't know how you could get any more indoctrinated than that that's pretty amazing that is wonderful we were trying to figure out earlier today, I said, you know, one of the best things about this is we've never had a money fight, ever. And I was saying we're probably in the 1%, and she said it's probably less. Yeah. You know, of married couples that never argued about money.

Well, I don't know how many I've met that actually met in a financial peace class. So there you go. That's right. We're going to have to start a financial peace class for singles. Slash dating service, yeah. There you go. That's a really good idea. That way it keeps the arguing down after the wedding's over there.

Well, I can think of a worse place to find a spouse, I'll tell you that. That is awesome, guys. Well, since you are experts and indoctrinated through and through, what do you tell people when they ask how you get out of debt? You paid off $153,000 in 23 months. No matter where you met, that's not easy. No, it's not. I think the biggest part was having a budget and

and having a plan together and sticking to that plan every month and i'd say for for me i think that you know i just feel that we're we're overwhelmingly blessed in the fact that um while before we met and I can look back at my financial history where I made bad decisions, after we met and we got on the plan separately, we've never gone through those dumb decisions. We've never had to deal with those stupid purchases. We've never had to look at something that we've done as a couple and said, that was dumb. Now we've got to fight back out of it. You got all that out of the way while you were single.

Absolutely. Good for you guys. Very, very well done. I love it. That is awesome. You're right. That's a great story. That's a great story. Gives me a whole new idea for a new product line. There you go. I think, too, one of the biggest things for us is that we found out about eight months ago that we are going to be having our first child. Yay! Now. So we had about two months to go getting out of debt, and we just hammered down to finish this off. And I know my personal story, my father passed away at a – he was 36 years old. Whoa.

And our family in a pretty tight spot. My mom is such a hard worker, a hero of the family, but had many health problems, which made money tough. And so I get overwhelmed to think that our child will not ever know about debt. Yeah. Will not ever know how that life is. Yeah. You know? Yeah, I'm sure you're a fiend about term life insurance, too, with that.

Oh, yeah. Yeah. There you go. We were just listening to that. We were, yeah. And the other thing for me is that when the Holy Spirit nudges you to do something and you don't have any debt, you know what you do? You do it.

Amen. Amen. Yeah, I was talking about that the other day. It's tough to serve two masters. That's right. And when you don't have another master in your life, you only have one. It's a lot easier. That's right.

Jesus talked about that. So well done, you two. Very, very well done. So proud of you. your life you only have one it's a lot easier that's right jesus talked about that so well done you two very very well done so proud of you i'm sure your families are too did you have more cheerleaders or uh i'm guessing you had a lot of cheerleaders oh yeah we had lots and lots of cheerleaders i think everybody was rooting for us and in our fpPU class, you know, I said my brother and his wife were the coordinators. My mom and stepfather went through it with us as well as Haley's mom and stepfather. So we heard mom and dad, excuse me. We were all in there kind of together.

So we've kind of all grown through this and just very goal-oriented. But a goal without a plan is just a dream so that that's what that's what helped us yeah that's a chris hogan saying right there yeah good stuff love it love it well congratulations you too proud of you and you're right that's a great story my favorite in a long time so uh we've got a copy of chris hogan's book for you speaking of him number one best-selling book, retire inspired. We want you to be millionaires and outrageously generous along the way, and I think you're well on your way to doing both.

Thank you, sir. Thank you, too. Josh and Haley, Asheville, North Carolina, $153,000 paid off in 23 months, making $147,000 to $160,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

That's how it's done, baby. Right there. Oh, it doesn't get any better than that. That's awesome. Well, Financial Peace University has become so ubiquitous that it's you know it's just everywhere and it's it's intersected so many people's lives and to the point that you kind of are having to make a decision you know i get a lot of hate mail these days and trolls and stuff on twitter and all that kind of stuff because you kind of have to decide

are you going to play or not because everybody's talking about it everybody's doing it or not doing it one of the two but you don't get to just say i never heard of it anymore i mean there's too many people been through it it's taught in too many places and uh you may be just coming to the party you may be late to the party but it's not too late we'd love to have you join the party we want you to go through the class and have the same experience those two did that That's pretty impressive. 153,000 and met his wife and a new baby on the way now. Oh man, that's good stuff. I love it. This is the Dave Ramsey Show. Thank you. Our scripture of the day, Revelations 3.20 Behold, I stand at the door and knock. If anyone hears my voice and opens the door,

I will come into him and eat with him and he with me. Grandma Moses said, Life is what we make of it. Always has been. Always will be. Jen is with us in Minneapolis. Hi, Jen. Welcome to The Dave Ramsey Show.

Hi, Dave. Hi. What's up? Okay, so I have so many questions, but my husband and I started, or we read your book this week, and so we're starting now on the Total Money Makeover. Okay, good.

And we have about $235,000 in debt, and about $193,000 of that is wrapped up in cars, student loans, and a timeshare that we have. And so my question today is about the cars um we bought them new this year and we don't um we we owe more than we um we'll be able to sell them for so do we wait until we can break even on those or no you sell them now sell them now so take the loss yep oh you've already taken you've already taken the loss you're just going to admit it when you sell them right right um and then same with the time share i assume we would take that loss as well Yep. You've already taken the loss. You're just going to admit it when you sell them. Right, right. And then same with the timeshare. I assume we would take that loss as well.

Yeah. We call them time snares. Yes, yes. We were very, very stupid on that one. Yeah. Just timeshare exit team can help you with that and get rid of those. And then the cars, how much do you owe on your cars? We have a truck right now that's 45 000 and a car that's

32 000 wow and your household income is what um we are set to gross about 130 this year yeah yeah i'll get rid of both of them and just get you two beaters for now while you get this mess cleaned up it's not a forever car it's just for a short period of time but if you can the the huge amount of money you got going out the door on can the the huge amount of money you got going out the door on cars and the huge amount of loss you're taking every day in depreciation how fast they're going down in value it's just destroying you guys so i would just move down to like two five thousand dollar cars and you know even if you got a little debt on those and you got a little debt on where you were upside down finance it over at the credit union or something and cover

the amount that you're in the hole. It's still a lot less debt than you've got now, and you stopped the bleeding. Yeah, and so I guess I'm not exactly sure how to go about doing that either. My husband might know a little better. Well, here, let me walk you through it, okay? Let's take the $32,000 car. That's the debt on the car, correct? Yes.

And let's pretend that when you look that car up on Kelley Blue Book that you can private sell that car for like $28,000, which would be like $4,000 in the hole. Right. Now, where do we get the $4,000? Well, you obviously don't have any money. You're broke, right? Mm-hmm. So you're going to either borrow that from your local credit union or your bank. Then you'll be $4,000 in debt instead

of $32,000 in debt. So that's huge progress right there. And then let's say that I come up to buy the car. I hand you a check for $28,000. You put the $4,000 you borrowed from the credit union with it and pay the car off. That gets you the title to give to me, the buyer. Right. Okay, and that's how you do it. Now, who are, that gets you the title to give to me, the buyer. Right. Okay, and that's how you do it.

Now, who are your loans with on the cars? One is through the credit union, and one is through Ally. Okay. The Ally deal will work just like I talked about just now. The credit union, you may be able to sit down with them and convince them by sitting in person in the manager's office only. This is not a telephone conversation. But you may try to say, hey, look, this is how far we are upside down on this car, which means that you have a partially secured loan. You have a loan that's secured by this much, the value of the car.

The rest of this loan is an unsecured loan, right? You understand what I'm saying? Yes. Okay. Then the, and so, Mr. Manager, all we're asking you to do is to admit that it's unsecured by giving us an unsecured loan for the amount that we're in the hole, and let us sell the car and get out of this debt. Okay.

And then you've got a $5,000 loan at the credit union, whatever the difference is, or, you dollar loan at the credit union whatever the difference is or you know at the credit union instead of a forty five thousand dollar loan whatever the work whatever the numbers work out to be but i would dump both of these cars get into some very very cheap cars for a period of time while you clean this mess up and it's going to take you a couple years to clean this mess up oh yeah but five years from now you'll be driving anything you want to drive and you pay cash for it that's what we're hoping well it's not open i mean you you can do it mathematically if you just take the steps and sacrifice to get there but you've got to amputate you know these cars i mean you got a thousand dollars a month car payments or more probably 1200 and um you know it's, it's choking you to death.

You're going to feel so much more free when you get rid of those stupid vehicles and then later on get you whatever you want. You drive like no one else, so later you can drive like no one else. You live like no one else, so later you can live and give like no one else. Betty Lou is with us in San Antonio. Hi, Betty Lou. How are you? Hi.

Can you hear me, Dave? Yes, ma'am. How can I help? Okay, cool. I was telling your comrade that I feel like I'm the poster child at 62 for having made bad financial decisions and not planned for my retirement. And the reason I'm calling is because I am working full-time. I'm 62. I want to find out how to leverage my situation and my income, my savings, et cetera, and I have some debt, to ensure at least a reasonably comfortable retirement, which I plan to happen in about eight years. Good. So I'm already except two. How much do you make?

I make $66,000 a year. Good. How much debt do you have? I have $20,000 in outstanding student loan debt, and I have $2,800 due on my vehicle, which I will pay off by October. Okay. So $23,000 in debt, making $66 debt making 66 that's good all right and how much money do you have saved not counting retirement okay so i have the government's version of a 401k which

is called thrift savings plan i'm sure you're familiar with it and i have about 11 000 in it and i was you have any money other than that saved? I have a $1,000 emergency fund, and that's it. Okay, good. All right, cool. Well, we stop adding to the TSP temporarily. Yes. Well, I took it down to 1%. Stop temporarily and completely concentrate on this $23,000 worth of debt

with everything you've got. Squeeze every dollar out. Because when you don't have any payments, then you have control of your most powerful wealth-building tool, which is your income. Right now it's all going out in student loans and car payments. So we get rid of the car payment, we get rid of the student loan payment, then we build an emergency fund,

raising the $1,000 up to a three- to six-month of expenses emergency fund, baby step three. And then baby step four is saving 15 of your income into retirement and um you know where will that leave you is the next question so if we take 66 thousand dollars let's just pretend for a second and 15 of that is 9900 a year 12 divided by 800 bucks a month give or take, $900 a month, something like that, going into retirement. And we start with $11,000.

Let me put the $11,000. I'm putting this in the calculator, so I'm mumbling. All right, going in the calculator, and we're going to do this for, say, I'll just put 10 years in there for the fun of it just to see what it does, see what kind of money we end up with here. That would be about a quarter of a million dollars that you would have at retirement, and you would be 72 at that point. And that's not counting any kind of match from the government.

Most of the TSPs don't have a match, and that's not counting any raises you get during the next 10 years while you're working. But if you're debt-free, and by then your house will be paid off too, by the way. And so if you're debt-free 100% and you have $200,000 to $300,000 sitting there, you're going to make it. I'd like to have you have a lot more, but that's a fur piece from social insecurity as your only way to retire. And you certainly don't have to buy that cookbook, 72 Ways to Prepare Alpo and Lovitch.

You'll be able to eat. So you put the income off of $300,000 along with the income from Social Security in your early 70s and everything is paid for. I think you'll be okay. We're past panic mode anyway because we now have a plan. I'm going to send you a copy of Chris Hogan's book, Retire Inspired, which will help you walk through those steps that I just gave you, not only the baby steps and not only to get out of debt, but also walk through the calculations.

Anytime you want to run a calculation, you can do that at his website, ChrisHogan360.com, and that's where you'll find the ability to run your RIQ, your retire-inspired quotient, your retirement IQ. Then it'll help you calculate how you're doing and where you're going. 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. 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.