The Ramsey Show - App - How to Say No to Credit Cards (Hour 1)

Episode Date: November 22, 2018

The show about you

Thank 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. Thank you for joining us. Open phones at 888-825-5225. Brandon starts off this hour in Charlotte, North Carolina. Hi, Brandon.

How are you? Hello, Dave. I'm doing all right. How about you? Better than I deserve. What's up? Yeah, so currently I'm a freshman at Queens University. And for my loans, I've already had to dig myself into about $7,500,000 of debt. And let's see.

I didn't get to start off with a bunch of money. My parents made mistakes financially, and I ended up growing up poor and got stuck with a crap car as my first ride. And I don't want to end up that same cycle as they did. So my question is, what should I do to stop having to spend money that I don't need to spend and stay out of debt while living in college? Okay. So what we have to do is we have to lay the goal out in detail right in front of you and then start asking ourselves, what can we do to hit that goal?

I always ask myself, what has to be true for this to happen? Okay. So what are you driving today? It's a 1988 Nissan Pan pulsar is it paid for yes it was a 800 car bought off of craigslist okay good and currently it is a money pit gotcha most 800 cars are they're kind of throwaway cars okay I've had a couple of them in my life, too. What are you studying in school, sir? Nursing. Good for you.

Very good. And you said you're in your freshman year. Yes. And you're attending which school? Queens University of Charlotte. Okay. And what is the tuition? It was 45k and out of the scholarships and grants that i got from my high school

i needed a seven and a half grand to cover the rest of the tuition cost 45 000 for the entire degree no the year per year year? Just for this year. Yes. For one year? Yes. Okay. And you're taking a four-year curriculum? Yes, sir. Okay. Sounds expensive.

Yes. Okay. Sounds to me like you might be able to go to the University of North Carolina cheaper within state tuition. Right. You have a point there. Okay. So the goal here is to get a degree in nursing so that you can be a nurse. The goal is not necessarily where you graduate from.

You can be a nurse if you graduate from nursing school. Pretty simple. So I would check. The first thing I'm going to do is go shopping because I think you may have bought into an expensive school just because you were offered some scholarships. Right. And you may need to transfer schools after this year is over. You've got this year paid for, right? Yes.

Okay, so we've got a little time. We're not in a panic, but let's go shopping, and let's pretend that you could go for half of that, which is probably about right, to the University of North Carolina or whatever. Now, are your folks in Charlotte, or are you living on your own? No, I'm living on my own right now. Okay. All right.

Are you a resident of North Carolina? Yes. Okay. Good. So you can get in-state tuition. And what I'm going to do is shop and shop and shop and shop and shop and try to find the cheapest possible place to get a degree in the state of North Carolina in nursing and probably going to transfer there next year.

And then I'm going to start working my tail end off at 14 side jobs, try to bump up a little bit in car, double that car, get you about a $1,500, $2,000 car, which is a fine vehicle compared to what you've got, and get you something a tiny bit more reliable, in other words, still in the hoopty land, but still will get you there. And then let's start saving like crazy for college. Here's the interesting thing. Delivering pizzas at night, on average, you can make $1,500 a month.

That'll pay $20,000 a year in tuition. Okay? All right. And get you through. It's not going to pay $45,000, but I'm not sure $45,000 is necessary to get us to your goal. So what I'm trying to do is figure out what have I got to adjust on the income side of the equation, what have I got to adjust on the expense side of the equation to still hit my goal.

I don't know how to tell a freshman in college how to make $45,000 a year, unless you just did something highly unusual or you had some kind of, you know, like you wrote web apps or something and you could make some kind of, you know, $2 million. I met a 19-year-old, made $2 million with web apps one time, but that's not the normal person, right? And so, you know, if you can figure out a way to make enough to go to that school, then stay in that school. But otherwise, you're probably going to have to adjust where you go to school and find a way to make money. And you're going to be working all the time. And you're going to be applying for scholarships all the time.

So the three things, Brandon, that we find that allow people to go to school debt-free, our college choice is the big one. Going to a school that is inexpensive and that you can afford. That is a big one. And as we can tell in this discussion, it's probably you're able to cut this in half. The second thing is what you did, and that's very bright, and that's apply for a bunch of scholarships. And the third thing is you work all the time. And you don't just work flopping whoppers

for minimum wage i mean you're walking dogs you're cutting grass you're running a small business on the side i don't know what you're doing but you're making you know you're babysitting you make 15 20 dollars an hour babysitting i mean it's nuts so you know just really get yourself dialed in on that kind of a thing and there's lots and lots and lots of us that did that and worked our way through school. But you have to keep your costs down. You can't go to school just anywhere. You can't just, you know, pick it based on that. Now, if someone will pay you 100% of your tuition on scholarships, that's fine.

I don't care what it costs then because it's not costing you anything. But in this case, it cost you $7,500 out of pocket, and those scholarships that you had, if you'd have gone somewhere else, you might have had nothing out of pocket if you'd have gone to a different school. I don't know. I don't know how much came from the school and how much came from the other stuff in our discussion, but you see my point, and that's what you do.

You work this through. Hold on. I'm going to send you a copy of the book, The Total Money Makeover, which will show you how to put this all together. Also going to send you a copy of The Complete Guide to Money. You said you wanted to break your family tradition of handling money poorly, and this Complete Guide to Money will show you exactly what to do. Total Money Makeover will show you how to do it i'm

going to give you both of them and you call me back as you're working on this i'll help you any way i can and get you through this it's very very possible to pull this off but you're asking the right questions and you're asking them at the right time before you call me up and go i'm 140 000 in debt and i have a nursing degree don't do that don't call me with and go, I'm $140,000 in debt and I have a nursing degree. Don't do that. Don't call me with that, please. Please don't make that mistake. I hope we caught you in time.

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That's puretalkusa.com, promo code SAVEDAVE. Thanks for joining us, America. We're glad you're here. This is the Dave Ramsey Show. Jake is with us in Dallas. Jake, how are you? I am blessed beyond my wildest imagination. And how are you, Dave? Just the same, how are you? I am blessed beyond my wildest imagination, and how are you doing? Just the same, sir.

How can I help? Man, I really thought you were going to go with the standard better than you deserve, but I'm impressed. Okay, quick question for you. I'm trying to figure out the IRR calculation and how you do that. I want to invest in real estate one day because I've listened about how much you love it, but I don't quite know how to quantify that and justify that I would make more there than I would in, say, the stock market. Okay. Well, the calculation, the actual math

formula is a bit complicated, but basically what it does is you reach out there into the future and you establish, okay, I'm going to hold this piece of real estate X number of years. And let's just make up a number. I'm going to hold this piece of real estate 10 years. And then you have to make an assumption of how much you think it's going to appreciate during that 10-year period of time. So I'm going to make an assumption of a 5% or a 10% or whatever appreciation rate.

So I buy the piece of real estate for $100,000 and at 5% or 10% appreciation rate, it becomes worth $500,000. I'll just make up a number, okay, at the sale point. So that $400,000 gain 10 years from now or eight years from now or whatever your holding period is becomes one of the elements of your rate of return on an internal rate of return does that make sense and then you have to assume a discount rate and you discount the discounted present value of that dollar figure way out there okay and you put it into the formula then on top of that you have to say the same thing about your rents. I'm going to assume my net profit after expenses of operating the property and after vacancy is X. And I'm going to say rents go up during the 10-year period of time that I hold it

by, again, whatever you want to increase your rent. You just have to come up with some kind of a set of assumptions that you're doing. Your business case is what you're doing. So, again, if you said 5%, rents are going to go up 5% a year. So that means I have a stream of income then that I put into a financial calculator that is staggered, that increases each year by 5%, your net profits on the actual cash flow from owning the property. And then the last piece of the equation is, is that some of that cash flow is sheltered by the depreciation of the property. And so you have to actually calculate what the property depreciation is, and then you

assume a tax rate. And what is your actual savings in tax dollars because you don't have to pay taxes on the sheltered amount due to the depreciation. And you take that stream of income through the holding period as well. So as you can see, there's a lot of different variables, a lot of different sets of assumptions. And you can sit down with a commercial real estate person, someone that's got a CCIM or that just knows basic commercial real estate cash flow analysis and so forth. And there are some forms. And you do need a pretty decently sophisticated financial calculator to be able to do those,

the rates of return, staggered rates of return over a long period of time like that, that you can enter all of these assumptions. Probably you could. I'm guessing there's a computer program somewhere. I've never borrowed. I've never borrowed, I've never bothered to find one. But, you know, if you really want to do it technically,

that's how you would do it. But you could also just look and say, you know, I think this property is going to go up to, based on appreciation rates, it's going to go up to X or Y. And you don't have to enter it into all this detailed in-depth formula.

And so, you know, you just say it looks like my rents are going to be, you know, I'm going to make about 8% or 10% on my rents net rate of return on what I have invested, and I get to shelter that, and I'm going to get a, you know, the thing's going to go up in value 8% or 10% a year. And so I can look at that and go, looks like I'm probably making 16 or 17. That's pretty much what I've done. I did more large number math without dropping each one of my properties into a detailed internal rate of return formula.

But I was able to do that because I understand the formula. So I can look at it and do that. But there's three places that you make money on real estate. The cash flow, the increase in value over time. When you sell it, of course, you would capture that gain in actual cash and the sheltering of the income. Those three streams of income or those three streams of return give you your total return, which is called an internal rate of return or an IRR.

And that's, you know, how deep you want to get into it is up to you. All right, Sylvain is with us in Kansas City. Hi, Sylvain, how are you? Pretty good. Good. How can I help? I am currently separated from my wife and we are planning on getting a divorce and um i was just wondering how i should um address all of our debt

i'm sorry how long you been married um about nine years wow what happened um well i'm just most of it came down to financial things, of course, but I had a bit of an anger issue and needed to address that and ultimately split up. Okay. Well, are you guys seeing a marriage counselor? No, it's pretty much said and done. She wants it to be over, and that's it, basically. Okay.

A friend of mine that does divorce recovery said years ago to me, and it stuck with me, that divorce turns a marriage into a business transaction. Yes, sir. And so what we're going to do now is all feelings aside, anger aside, hurt aside, everything else, we'll just look at the actual debts that are there and, you know, agree with what we're going to do with those. Hopefully we can agree and the judge won't have to tell you what you're going to do.

So what kind of debts are involved? Do you own a home? No home ownership. We rent. That's good. I've got $16,500 total, $10,000 of that to van, $2,400 of that to loan, and $4,100 to credit cards. Okay.

And what is your income? About $58,000 to $60,000. Okay. And what is her income? I'm not sure. She's working part-time. $58,000 to $60,000. Okay. And what is her income? I'm not sure. She's working part-time. I'm not sure exactly what she's making because we're separated.

I got you. I mean, but she's not got a full-on career then. Are there children involved? Two. Okay. All right. What ages? Nine and six.

Okay. All right. Well, this Nine and six. Okay. All right. Well, this is not going to be a picnic for either one of you financially. No, sir. You're going to get hammered with child support, and she's going to be really broke unless she gets a career making some serious money, or until she gets a career making some serious money. My guess is that she cannot afford to stay in the rental that she's in. Currently, I'm not sure what kind of program she's in, but it's some kind of assisted housing.

Oh, okay. So she is already separated in that regard. It's not the property that you all were in together. Okay. No, sir. All right. And whose name is on the van? My name's on the van.

Okay. Who's driving it? She's driving it. Okay. And she's not got her name on the debt? There's, her name's on several of the credit cards, but the loan and the van are in my name. Okay.

All right. Well, technically speaking, the stuff that you've got your name on are what you would be concerned about. And if you want to pay the van off and give her the title, that's fine. If you want to sell the van and let her get whatever she wants on her own. That's fine. But I'm not going to allow someone that I am not married to to drive a car from a liability standpoint that I own and I'm making payments on. So this van needs to either be refinanced and she goes and gets a loan and pays you off and puts it in her name, or it needs to be sold. Okay? Then you're going to eat the loan.

The loan that's in your name, you're going to eat. And then the credit cards, you've got to sit down and work your way through them. The good news is those two numbers are not very big. And right now, you've got the larger income. You're probably just going to end up selling, or you're probably just going to end up plowing your way through those little debts and getting them paid off. And make sure those credit cards are cut up and those accounts are closed as soon as possible. I don't want her going to Mexico on one of those credit cards and you end up liable for her vacation, which is the way it is right now.

If she decides to use one of those cards, they need to be chopped up now. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend.

It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282. Thank you for joining us, America. Holly is on the line in Salt Lake City.

Hey, Holly, how are you? I'm good, Dave. How are you? Better than I deserve. What's up? I'm just calling in to do my debt-free scream. I love it. How much have you paid off? I paid off $23,000. How long did that take you? 11 months.

Good for you. And your range of income during that time? $43,000, and now I'm at $58,000. Good for you. What do you do for a living? I'm a special ed teacher. How'd you get the big raise? I got a master's degree. So part of the debt that I paid off was my master's, my student loan, and then I took a new position, and that came with a pay increase. So I worked a lot in the summer as well.

Very cool. Good for you. What kind of debt was the $23,000? A lot of it was my student loan, and then the rest was a car. How old are you? I'm 30. Good for you. So what happened 11 months ago that said, okay, I've got to fix this?

I graduated from the University of Utah with my master's degree, and my parents have been followers of you for a long time. So I've known about your principles for years, and I finally thought, well, I'm done giving all my money to other people. So once I got the raise and started working hard and just putting all my extra money towards my debt, that's kind of what got me started there. Cool. So you're a financial peace baby. You knew what to do.

You just weren't ready to do it until then. Yep. I have been debt-free in the past, but made some poor decisions and got myself back in. But now I'm out again. Good for you. Will you ever go back? Nope. I'm done.

That's your last one, huh? It's my last one. Yeah. Very good. Good for you. What do you tell people the key to getting out of debt is? You pay off $23,000 in 11 months. For me, it was making sure just to stick to that budget and then making sure to pay my

tithing first and foremost. So that and the budget were really key for me, and it was kind of a game to see at the end of doing my budget how much money I had left to put towards my debt. And then another part was saying no and learning to delay gratification and waiting for those things that I wanted to purchase. Which was also kind of part of the game then. Yeah. So turning it into a game helped with the discipline?

Mm-hmm. It did. It was kind of fun for me. The sense that I'm getting traction, the sense that I'm moving the needle on this kept you going, huh? Yes, it did. Yeah, that's powerful.

That's really insightful. Well, that's what we find with all the millions of people we've worked with is that people that measure their progress and get fired up because they're measuring their progress. The old debt snowball idea, right? They're the ones that have the highest probability of success. We see all our data shows that. So way to go.

So I'm guessing mom and dad. I'm sorry, say that again? It feels really good to be done. I'm sorry, say that again? It feels really good to be done. Yeah, I bet. I'm guessing since mom and dad brought you up this way that they're really proud. They are. Yep, they're listening in Minnesota. Love it.

Very cool. Well, congratulations. We've got a copy of Chris Hogan's book for you, Retire Inspired, a number one bestseller. And that's the next chapter in your story. And that's become a millionaire and outrageously generous along the way. And you're well on your way. Yeah, sounds good to me. You learn to control that person in the mirror.

That's always our downfall. Mm-hmm, yep. Well done, well done. All right, it's Holly in Salt Lake City. $23,000 paid off in 11 months by 30 years old, making $43,000 to $58,000. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt-free. Free. Yeah. That's how you do it right there. I love it. Hey, it's interesting that when you just decide to do something, you can do it. There is a tremendous amount of power in I just decided to. I just decided to.

Just like that. And it's a tremendous amount of power in that. That's just amazing. Way to go, Holly. We're proud of you and proud for you. Congratulations. Justin is with us in Washington, D.C. Hi, Justin. How are you? Doing great. How are you, Dave?

Better than I deserve. What's up? So I'm just trying to make sure that I'm doing the best thing with my money between now and when I want to buy a house. I'm currently trying to save to buy a house, but it's a couple years off. So I just want to make sure I'm doing the right things with the money while I try to stack it up. Almost 100% of the five-year periods in the stock market's history have made money. About 65% of the three-year periods have made money. So if you leave it alone only three years, one out of three times you will actually have lost money if you use a mutual fund.

That's the averages throughout the history of the market, okay? Okay. Now, if I have that piece of information and I have less than three years that I'm saving for money, I am not using mutual funds because I don't want to lose money. Agreed? Right. You only use mutual funds for good long-term investments, in other words. And so that only leaves us with really one decent option,

and it's not a great option. It's just park it in the bank, making a money market account, making 1% on your money or something. The income that you make on the money sucks, but you're not going to lose any of it. Right. So I guess my question is, I mean, currently I have a Roth IRA contributing to that and saving it. And so I'm just wondering, should I pretty much forego the more retirement style saving in the Roth that I'll use in the future and just try to stack up money so I can buy a house as quickly as possible, or do I continue to kind of divide up the money that I'm saving?

Gotcha. Well, we teach a thing called the baby steps. Baby step one is you save $1,000. Baby step two, that's a starter emergency fund. Baby step two is debt-free. Are you debt-free? Well, my wife has some school, but her work currently pays that so we i kind of let that take care of itself how much school that does she have that work is currently

paying for so she has about 20 000 and they pay about 500 a month month. $6,000 a year. Right. And so in about three years, that's going to be gone, right? Correct. Okay. That's if she stays there. Right. Since they're paying that, then adding anything to it?

No, I wouldn't add anything to it, but I would save the money on the side in case she wanted to quit. She's not trapped right now. She's trapped. This is golden handcuffs. Do you have an emergency fund then beyond that in savings, not counting your down payment money? Right. Well, currently, I have about four months' worth of living expenses saved up.

Okay, good. Good. All right. That's maybe step three then beyond that what we teach folks to do is if you wanted to save very aggressively for a house before starting your retirement in your case stopping your retirement temporarily in order to do this we call the down payment savings baby step 3b because baby step 4 is 15 of your income going into retirement so in your, I would stop retirement temporarily,

and I would pile up money like crazy until I got enough to cover her student loan and a down payment, and then I'd buy the house, and then I would start my retirement if I were in your case. That's the process I would use. Hey, thank you for the call. We appreciate you joining us. Open phones at 888-825-5225. You jump in.

We'll talk about your life and your money. It is a free call. Jen is on Twitter. You can follow me there, at Dave Ramsey. Can you explain what cash flowing means? Sure. It means you pay for it out of your money that you make. You make some money at work. You use that money to buy something. That's using the cash flow or cash flowing the purchase of the

item. And so if you've, for instance, an example would be someone might use the phrase, and they would say, we're cash flowing our kid's college. That means they make enough to pay for college out of their income without using savings to do it. That means they have a really good income. If they're cash-flowing college. If you're cash-flowing Christmas, it means you just make enough to say, oh, I'm going to set some money aside this month for Christmas. Okay, there we go.

That's cash-flowing Christmas, as opposed to borrowing money for college, or borrowing money for Christmas, or saving up up long term to do one of those items. That would not be cash flowing. They'd be saving for it. Thanks for the call. Thank you for joining us, America. This is the Dave Ramsey Show. Greg is on Facebook. Says, Dave,

what's the difference between a policy I could get from shopping Zander and the policy I now have with my local state farm agent? Well, probably half the cost at Zander of what you're paying at state farm for term insurance. State farm

does not have a good deal on term life insurance. That's it. I mean, it's just shopping. Term life insurance is a very simple product. Does it pay when you die? Yes. That's all you need to know. And after that, it's about price.

And so, you know, there's no such thing as a quality of check that your wife gets. I mean, if it clears the bank, it's a quality check. That's all we're worried about. And the regulations in most states to prove that the financial characteristics of a life insurance company are such that they can pay their term claims are pretty stringent so it's very difficult to be licensed to sell term in a state in any state without it without you having enough you know financial wherewithal to pay your claims because it's just not that difficult a business the it's really you know the concepts are behind it the mathematical concepts aren't rocket science so i mean it's

like you know car insurance you know can they their claim? That's really all you care about. And by the way, you can beat State Farm on their car insurance too. So the best way to buy insurance, folks, is not to buy from what we call a captive agent. Any insurance, long-term care insurance, life insurance, car insurance, homeowners insurance, is if you buy from a captive agent, meaning they sell just for one brand, which is what Nationwide or Allstate or State Farm are, versus a broker that will shop among many different companies to get you the best possible deal, then you almost always overpay with captives. Not always, but 90-some-odd percent of the time you can beat the rates that a captive has. And so you can beat State Farm's pants off all day long.

If you want to check your car and homeowner's insurance, just go to DaveRamsey.com, click on the ELPs, and we will give you a broker in your area that we recommend. And a broker means they shop among several different companies. And that's what Zander does with term life insurance. And they shop a bazillion different companies automatically. It takes about like 14 seconds for the database to churn out the answers and give you the different companies that offer. You know, SelectQuote does the same thing.

Other people do the same thing. Zander's just got the most pure system because a lot of the other quote services sell your name off when you fill out the information and your email off. And then all these different insurance companies start hounding the crap out of you. Like if you do like a select quote thing, that kind of thing. A lot of them do that. Xander doesn't. Xander just keeps your information there, and they follow up with you because they actually do the sale.

Nobody else does it. And so it's a very clean, very streamlined system. That's why we recommend them, and it's the best deal. I mean, I'm just not going to pay more for term life insurance than I should. I'm going to get the best possible price. That's why we recommend them. Cindy's with us in Mobile, Alabama. Hi, Cindy. How are you? Great. How are you, Dave? Better than I deserve. What's up?

Well, just a quick question. I do want to thank you for being so faithful to what God has called you to do. It's helped so many of us. I'm a 66-year-old widow. I live alone. I'm paid for a home and I'm paid for a car, no debt. Good for you. Thank you. It's because of your information and me following it, actually. It's doing the plan. But the question I have, my cottage where I live is small, which is fine with me. It's an older cottage. It's in good repair. But I wonder what is the best thing for me to do in terms of putting any money in to just sort of update it, renovate it a little bit, open it up some, you know, open up some walls to make it a little bit bigger or leave it as it is or eventually maybe just hold

my money and eventually just decide to tear it down and build a new home. Okay. What is the size of your nest egg? I've got about 240,000. Okay. What would the renovation cost? I'm thinking I wouldn't spend any more than $25,000. Okay.

That would be all I'd be willing to spend. Okay. And you're 100% debt-free? Yes. And the value of the cottage as it sits today is what? The property and the cottage is roughly $140,000. Okay. And are you in like a neighborhood?

Yes. What do other properties in your area sell for? What's the price range within a two or three street area there? Mm-hmm. Well, one just sold for $130, and then it was flipped and sold for $280. $280? Yeah.

What'd they do to it? Double it double it no they didn't enlarge it they just knocked out walls opened it up did new flooring windows roof it's a very uh desirable area where i live okay but but other than that property, what does the typical home sell for on the street? You know, I really don't know because our home, the people on my street, they've lived there for years and years. Nobody, we don't sell and leave. Okay, if I were looking for a $160,000 house, would I drive down your street? Sure. Okay, all right, then you're not overbuilding the neighborhood by spending $25,000 on something worth $140,000. Mm-hmm.

That's the point. Okay. That's what I was trying to get at. I mean, if everything on your street's $100,000 and you're $140,000 and you spend another $25,000, you know, you've got to live that money out because you're not increasing your value. But in your case, you have the one flip and renovation down the street that indicates that the work you're going to do is probably going to really increase your value so um yeah i definitely i mean you're going

to stay there you're 66 you could be there 20 30 more years i know and so let's hopefully let's get and you know why have we saved money we like nobody else, so later we can live and give like no one else. So out of $240,000 nest egg, would I spend $20,000 to increase my quality of life for the next 30 years? Dadgum right I would. That's why you worked. Very good. Thank you so much, Dave. Thank you.

I'm honored to have you in the audience. Thank you for calling in. You did a great job with your money. Well done. Open phones at 888-825-5225. Char is with us in Chicago. Hey, Char, how are you? I'm just fine. Thank you for taking the call, Dave. Certainly. How can I help? My husband and I, several years ago, had done the Financial Peace University, and we've been working on the Baby Steps. And we've got about $325,000 in retirement IRAs that we have, and another one that's – it was actually a mix-up.

We didn't even realize we had for $53,000. What I want to do – my husband is 69. I am 65. I'm retired. I retired several years ago to take care of our son who had been diagnosed with ALS. My husband is continuing to work. He wants to work. He does not want to quit.

But we've got about $40,000 in credit card debt that I want to get rid of. Do you think it would be a good idea to take this IRA account for $53,000 and save some of it that we're going to end up having to pay the tax on and pay off all the credit cards in the car or turn it into the, our financial person wants to take it from the Wells Fargo account that it's in and put it into an Equus account. Okay, let's stop just a second. You've been through Financial Peace University many years ago and you've still not paid off all your debt and you're still using credit cards. We are not using them anymore and they are being paid now.

For how long? I'm sorry? How long since you used a credit card? About three months. Okay. Like I said, our son has had ALS. We've had a lot of expense with that, and we've also had a son with many child support problems and jail problems and all kinds of other problems.

You keep supporting him, you're going to go broke. We don't support him anymore. We're done. This is it. Here's the problem. Yes, I would take the money out. Yes, I would be debt-free. But you're going to go back in debt unless you change these habits.

So chop up those credit cards, every one of them, get on a budget, do the stuff we taught you in Financial Peace University, and then, yes, paying off the debt is the wise thing to do. And I would do that today. Thanks for the call. Hey guys, it's Blake Thompson, Senior Executive Producer of The Dave Ramsey Show. This hour of the show is over, but feel free to check out our YouTube channel

where we have over 2 million views each month of debt-free screens, millionaire hour clips, Dave rants, and more. All free, anytime, anywhere.