The Ramsey Show - App - How to Turn a Handshake Into a Legal Contract (Hour 1)

Episode Date: September 13, 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Lindsay starts off this hour in Lynchburg, Virginia.

Hi, Lindsay. How are you? Hey, Dave. I'm great. How are you? Better than I deserve. What's up? Well, my husband and I are just getting started on Baby Step 2. And we have an agreement to pay my mother, who owns the house that we're living in, $70,000. It's not written up. It's an unofficial agreement. But my husband is kind of feeling like the slave to the lender,

and I wanted to see if we should work this into our baby step two. Okay. So let me understand. The house is in your name. It's my mother's house. It's your mother's house. It's in your mother's name. Yes.

Okay. So you don't own the house you're living in, and there's $70,000 that you owe her in order to buy the house? That's correct. We're basically doing a rent-to-own, but she has been accepting a very small amount of money from us each month that we need to increase. Gotcha.

And I don't know if I, do we continue to take advantage of what? So what is the house worth? About $120,000. Okay. And $70,000 makes you the owner of the house? Correct. And your household income is what? $90,000.

Go get a mortgage i don't know if we would be in the position to do that right now why um just bad credit okay and we owe her. Okay. All right. What is the other $100,000 on? About $75,000 is student loans combined, mine and his. We have two car loans. We have... What do you owe on the cars? About $7,000 each.

Okay. All right. And how long have you been on our plan paying everyone on time? I'm sorry, say that again? You said you had bad credit, but I assume at some point you started paying everyone on time on our plan, right? We're just getting started with the plan. Okay. So I do have some things that I was going to think about.

When was your last late payment? Are you still behind with some people? Yes, I'm behind on the student loans. Okay. All right. Yeah, you're not going to get a mortgage. You're right. Okay.

Well, you have two or three options today. Okay? Okay. Well, you have two or three options today. Okay. Number one, you can move and rent somewhere else and just walk away from the deal. Tell her to sell the house. You just can't stand it. Okay. That's probably not the best option, but that is an option. It solves the problem.

Right. Number two, we can, and this is the one I would suggest, we can write up an agreement that you guys both sign, your mom and you and your husband. And it states very clearly what the terms of this agreement are. Okay. We are renting the property for X number of dollars. Put a set amount on there and then always pay that amount every month like you had to like you were going to be evicted if you didn't pay it whatever that amount is and we have the right the option to purchase the property for seventy thousand dollars for five years whatever make it up okay so you're you're

renting with an option to purchase and you draw up. You write it up as a written agreement. And you might even run by a real estate office, pick up a lease, sign a lease for this amount and an option to purchase. Just jump online, go to LegalZoom, you can get you an option to purchase form on there. And your mom signs that, you've got to sign that. Then if something happens to her, you have a document that the estate would be liable to uphold. Okay. You're not stuck.

And so that puts a more of a business, a properly done business transaction, which is how you should have done this in the first place, in place, until you can get some of these debts paid down and get some distance between today and have a year, two years of good payments. You're paying on time or early while you're getting out of debt in the next two years. You should be debt-free in two years. Okay. Not counting the house, okay?

And if you do that, then during that time, your credit is going to heal enough to get a mortgage, and you will have been paying rent. Okay. So when you say we should be able to be debt-free, you mean aside from? Aside from the mortgage. Aside from what you owe your mom. Okay. Okay. But handshake deals are more likely to blow up and cause problems, obviously, than any other deal.

And the paper is written up not because we think you're a crook, not because we think your mom's a crook, but contracts are not for dishonest people. They don't make dishonest people honest. Contracts are for communication between honest people. Okay. And you're going to follow through through and she's going to follow through and then that'll take some of the pressure off your husband because i don't blame him for feeling that way but we can't really get rid of it today other than just to move out and go rent and i

don't really think that's a good answer okay because you got a great buy on this house your mom fully intends to sell it to you at a great buy it's you know everything in this, everything in this sounds smart, except I don't want you to own your mom long term, and your husband doesn't want to owe your mom long term. So you're going to go get a mortgage as soon as you can as you get out of debt, and she's going to get her money. Pretty cool. Hey, thanks for the call. Open phones at 888-825-5225.

You jump in, and we'll talk about your life and your money. It is a free call. Jose is on YouTube and says, I'm 28 years old. I contribute 3% to my 401k. Is that good for me or not? Not. You should be either contributing nothing to your 401k because you're in Baby Step 2 getting out of debt, and you've temporarily stopped all investing. Or you're up at maybe step five or four, and you're putting 15% of your income into retirement.

3% is going to get you minimal results, even if it's got a match to it. It's better than nothing, but we're not trying to end up mediocre here. We're trying to end up rich so that you can go anywhere you want to go in your retirement you can take care of your kids you can help poor people you can be a blessing and serve charities you can do you can do all of that when you have some money and so we're trying to do everything we can to get money in your pocket and three percent doesn't get you there that's the whole thing so we work right up the baby steps jose is how we do it and baby step one is thousand dollars two is you're out of debt

everything but the house three is using the debt snowball three is you finish your emergency fund of three to six months of expenses baby steps four five and six we do simultaneously four starts the line with 15 of your income going into retirement, not 3%. And then you go to kids' college. With any more money you can get above that, more money above that, we throw it at the house, maybe step six and pay off the house early. This is The Dave Ramsey Show. 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 spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events.

chministries.org. Monique is with us in Lexington, Kentucky. Hi, Monique. How are you? Hi, Dave. I can't believe I'm talking to you. How are you? Better than I deserve. Honored to talking to you. How are you? Better than I deserve. Honored to speak with you. How can I help? I am in quite a bind. I am currently $123,000 in debt, $106,000 being student loans, $14,000 being what I owe on a previous car,

and $3,000 in just consumer debt. And I make $39,000. What is your degree for $106,000 in? I have an undergrad in bachelor's of psychology, and my master's is in human resource management, public administration. Why do you not have a better job? Well, currently I work for the state. It sucks.

Yeah, they don't really pay as much. I'm currently in the process of seeking better employment. I've been in my field for about six years, so I have the experience and the education at this point. Yeah, your income should be double what it is. Exactly. Which solves this point. Yeah, your income should be double what it is. Exactly. Which solves this problem. Yes. However, in addition, I am a leader in my local church, and everybody, including my

mom, has been telling me to get a second job. However, the leadership that I am under, you know, they do a lot of traveling and a lot Mm-hmm. and I've just gotten to a place of depression and frustration, really not feeling like I'm choosing between my financial well-being, which I know God has for me, or my spiritual commitment to my church. I spoke to my pastor. Your spiritual commitment to your church should not extend beyond your spiritual commitment to God. So do you think God is worried about you running around all over the place? Or do you think he's worried about you getting your household straightened out? He's worried about me getting my household straightened out.

Yeah. I think that probably the gospel will continue to be spread whether or not you function the way you're functioning at the church. Yeah, that's what my mom and everybody else keeps saying. Well, it is. I mean, I'm not against. I do a lot of i'm speaking in first baptist orlando this saturday i'm going down there and not charging a thing i don't charge anything to speak in churches and um you know that that's that's my ministry is one of the things i do i believe in ministry i believe in serving i want you to serve uh and yet i'm not hearing anything going on here except some kind of toxic rub to hang out with this particular group of people.

This didn't sound real spiritual the way you described it. Okay. Yeah, I think that's what's bringing you down. But also, you need to see some hope on getting rid of this debt, because you don't want to live like this. Exactly. And the extra job is a short-term thing, and that'll help some. But I really want you in a new full-time job making a lot more money in the next six months. Yeah, and the thing is, Dave, I love what I do.

I don't care. It sucks. I know. You're starving. Yeah, yeah. You are too much in a comfort zone to be this uncomfortable. It's time. I'm kicking you out of the nest, little eagle.

You ready? Let's fly. Let's fly. I'm just telling you. Think about your check for a minute. What if you had two of those every month instead of one of those? Exactly. Yeah. It changes everything. your dad's gone in two years yeah gone no question and right now you got a repo don't you is that that 14 on an old car yeah i did a voluntary see i knew that was there

yeah you've been living on a string for a long time and then sitting over at the state smiling like you're enjoying it. Yeah. This is true. You need a new job, baby girl. Okay. I do have one just quick question. With my current financial situation the way it is, do you think I should tithe off my gross or do you think I should tithe off my net? Well, I tithe off the big one.

I do too, right? But God loves you either way. He's not mad at you, okay? And he's not waiting for you to tithe to give you money. He's waiting for you to change jobs to give you money. Amen. And so that's the thing. He's not, you know, he's your heavenly father.

He's crazy about you. He says to give a tenth of your income, and this is the best way to live, my daughter. That's what he says to you. He says it to me and says, my son, right? And so I say, yes, sir. But he's not mad at me if I didn't. But that doesn't solve your problem either, kiddo. You don't have a 10% problem. You don't have a $4,000

a year problem. You've got a $40,000 a year problem. Right. Yeah. So the tithe doesn't fix it. And so if I'm you, I'm not going to tithe out of compulsion. I'm not going to tithe out of Christian performance or because I think God's going to give me money back if I tithe. I don't believe scriptures indicate any of those things. But scripture is very clear for those of us that are Christians that we're supposed to be giving a tenth of our income to our local church. And I can do a full Bible study on gross versus net and all that stuff. But bottom line is I t tied on the big one,

so when I get up there, in case I'm wrong, it was on the right side. Right. I'm a pretty simple guy when it comes to doctrine. But, you know, just a lot of grace around that subject. Okay. You're reaching for the wrong tree to get your problem solved when you ask that question. You follow me? Yes.

The tree you want to reach for is the income tree. And, yeah, you can pick up a part-time job in the interim, and if you have to cut back on the church work during that time, okay, there's nothing wrong with that. I probably would do all that. And let's get this thing in balance, get your life back where you're not as stressed and depressed and you're doing something about it,

and then let's get a new job. Do a master's degree in human resources. If you know anything about the space, you're worth 75 or 80 grand. I mean, really, if you know what to do in the space, you're worth that in the open market. You know, so start looking. and you may have to move cities. I don't know. Look around. Maybe you find something there in Lexington.

I hope you do. It's a wonderful town. Open phones at 888-825-5225. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. If you mess up, if you mismeasure, you pick the wrong color, and I've done that. They'll remake your window blinds free. Their satisfaction has to do even with you messing up.

Wow. You get free samples, shop, shipping, and new promos they run every month. Use the promo code RamseyBlinds.com. Eric is in North Carolina, Dave. We're going to be finishing up Baby Step 3, our emergency fund, coming months. We're trying to plan for Baby Steps 4, 5, 6. We have a rental property. There's $85,000 left on it, a mortgage on our house of $220,000 left to pay.

Which do we pay off first? If your income is north of $100,000, I'd probably go ahead and pay the rental off. If your income is south of $100,000, I'd just keep chucking along on your house and keep going there. And the only reason I'm doing that is you can knock that 85 out pretty quick if your income is north of 100. If it's not, it's going to be a long slog either way. So let's slog on your house rather than on the rental. Rental is the second.

If they were equal, I would always pay off your house first. But these are pretty substantially different amounts. But all real estate, mortgages on on rentals mortgages on home residence all goes in baby step six generally let's say pay off the house first home first and the reason i do that is a simple risk management viewpoint of things meaning if everything fell apart and i was going to lose one of my properties i would rather lose my rental property than lose my house and so i'd rather have it paid off first that's where that comes from nothing more than that so generally speaking you pay off your house

first but you know this is a small mortgage it's a third of your overall of the of your home mortgage so if you got a big income you just punch it out right fast, that's okay. Knock it out. It'll be okay to knock it out. But if it's going to be a slog, let's just peck away on your mortgage on your home. Good question, man. Thank you for joining us. This is the Dave Ramsey Show. Thank you. I get asked all the time, when in the baby steps is the right time to buy life insurance?

My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance, since it's the most affordable way to get the right amount of coverage and not break your budget.

Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term Life Insurance is inexpensive and your family needs this no matter where you are in your baby steps. That's Zander.com or call 800-356-4282. Zander.com. In the lobby of Ramsey Solutions, Tim and Tara are with us. Hey, guys. How are you?

Hey, pretty good. Good. Welcome, welcome. Where do you guys live? West Des Moines, Iowa. Oh, fun. Welcome to Nashville. And all the way down here to do your debt-free scream. Yes, sir.

I love it. How much have you paid off? We paid off $140,000. Cool. How long did this take? Seven months. Wow. And your range of income during that time?

Well, it started about $40,000 and then went up to $230,000. In seven months? Yes. Okay. Explain that. Well, I'm an independent claims consultant. So I work in the insurance world. A lot of hurricanes hit last year, so basically we took the sacrifice, and I just traveled and nonstop worked.

We did whatever it took to get out of debt. Yep. Okay, so you were just gone the whole year. Yeah. Pretty much. You just went and worked and worked and worked. You can't do that forever, but you can do that for seven months. Yes.

And that got you completely clear. So what kind of debt was the 140? It was our house. You paid off your house? Yeah. Looking at weird people. Yes, we are. I love it.

Way to go, you guys. How old are you two? We're 40. All right. Very nice. Our goal was by 40 to be out of debt, and we didn't think we gave up a year ago. Yep, we did. And then we did it.

And then you just said, but I mean, you had, how long have you been doing the claims thing? We've been doing that for eight years. Yeah, so you kind of knew you could just take off and be gone a year and make, but you just never could do it before. Exactly. And we did a lot of other things also. Yeah. What made you pull the trigger?

Well, a couple of years ago, we had some pretty life-changing events happen. I broke my leg and foot. I came down with, I got a PE, DVT, had blood clots in my lungs. So it was basically scared us into reality of, okay, we've got to do something. We've got to get out of debt right now. And Tara had problems with the last two pregnancies. And we almost lost her and the last two kids. So it was a point in our life when we said, you know what?

We can't drag our feet any longer. Yeah. This is real. Yeah. That's a wake-up call. Yeah, definitely. That'll do it. Very cool, you guys.

No payments. What do you tell people the key to getting out of debt is? I'll be gone for a year. Do everything it takes. Yeah, sacrifice anything you can. Be weird. Don't go out and get all the different kind of loans you can. Sacrifice. Don't go out to eat.

Beans and rice. But really, I mean, 90% of this is attributed to just a real change in your income. You're just making this decision to self-deploy, in a sense. And you guys have a couple of kids. Yeah. How many? Eleven. Eleven.

Yes. So you left her with 11 kids. Yes. And that was her sacrifice. That's her sacrifice. Yes. Yeah. And a whip and a chair.

And because, I mean, this is not like she just did Home by Herself with it. No, she's got a dadgum army she's running at home. Oh, yeah. Wow. Very cool. Yep. How does it feel? Oh, it feels amazing.

Was it worth it? Oh, yeah. Yep. Never regret it. We're not going to, it feels amazing. Was it worth it? Oh, yeah. Yep. Never regret it. We would do it over. We're not going to do it over again. No. But we have zero regrets, and it was great.

Well, you're completely free. Yeah. It changes everything when you do that. It does change your mindset. You don't think about anything the same ever again. So now that you settled back in, what would be the rhythm of your income? Was it back to 40? No, it's going to be closer to 100.

Okay. Yeah. So you can kind of do a little bit of running out here and there, but not be gone all the time and get your income up a double where it used to be. Exactly. Okay. Yeah. All right. Very cool.

You'll be able to hit a lot. You've got a lot of college funds to do. Yeah. Next thing to work on. That's right. Wow. Wow. Very cool.

Very cool. Congratulations, you guys. Thank you. Did you have cheerleaders? Yeah, we had some. A couple. A couple here and there. We had some basically people calling us crazy.

It's normal. We've got 11 kids. People call you crazy all the time. Oh, yeah. We're used to it. We're used to it. We are crazy. I love love it that's fun you're used to that yeah of course we are of course we are yeah i love it that's great man that is so great congratulations this is very very cool so uh how did you get connected to us

uh 10 years ago we went through Financial Peace University. Oh, okay. And that prepared our minds, our habits, our spending habits, our savings. Well, her savings, my spending. So it helped me correct my spending. So we went through that, and basically that helped us get to this point. Wow. Very, very cool. All cool all right well let's get

all the kids gathered in they'll take a minute into the shot we want everybody to participate in the debt-free scream we got a copy of chris hogan's retire inspired book for you that is the next chapter in your story to be millionaires now and outrageously generous as you go along so sometimes i get the criticism of, Dave Ramsey stuff doesn't work with large families. Well, take a look at this picture. That's right. It works.

You did it. You did it. You've been living on a budget for a while. You've been smart, but we just want to knock out that last little bit. And so Dad goes crazy for a year, not even a year, but seven months, and knocks this out. And we sold everything that we could in our house to help, too. What was the biggest thing you sold?

Well, we... All of our furniture. No way. Yeah. You're all sitting on the floor? Yeah. Pretty much. Card tables and...

But it's paid for. Yeah. And so now you can rebuild and put whatever else you want in there. That's right. Just took the whole family on a camping trip. Yep. Yep. Pretty much in our house.

Wow. And we went dumpster diving. That was another crazy thing that we did. That is crazy. Yeah. That's over the top. Yeah. Oh, my gosh.

You guys are fun. Well done. Tim and Tara from Des Moines, Iowa area. And the 11 kids of the tribe is with them. $140,000 paid off in seven months, making $40,000 up to $230,000. It's a great story, an unusual story, and a wonderful story. I'm so proud of y'all. Congratulations.

Count it down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free! three two one we're dead free well done well done oh my goodness that's fun you know i've got a couple guys on our team here that have seven eight kids and one of the things you notice about large families like that the kids are well behaved otherwise you would go nuts you know i mean i guess wow i mean but there's you know if somebody's got one kid and that kid is cute you know and they think they're the center of the world or something that that kid's a jerk you know

it's interesting very interesting i love it way to go you guys very proud of you open phones at 888-825-5225 you jump in we'll talk about your life and your money well these days we're always an arm's length away from our cell phone right i bet your phone's right next to you now mine's right next to me you know what Well, it means your budget is always within reach. That is, if you're smart enough to use EveryDollar. Because you can create a budget on EveryDollar if you want to win with money, and you can't get ahead if you don't know where your money's going. People that don't tell their money what to do, it leaves. And with our free budgeting app, EveryDollar, it's easy to know how much you've got left to spend.

Your budget's right there in your pocket, right there in your hand. And with EveryDollar Plus, your budget can sync across all your devices and to your bank. So all the charges land right there on the budget. Oh, it's so easy. Download EveryDollar, the budgeting app, for the iTunes Store, the Google Play Store, whatever you need to do. Sign up at EveryDollar.com. It is free. Almost 5 million people are using this. Hello!

What do they know that you don't know? Well, they know that people that pay attention to things win at those things. And we're not obsessing about money. We're just going to be grown up about it. We're going to be intentional about it. We're not going to be immature. Ad it. We're going to be intentional about it. We're not going to be immature. Adults devise a plan and follow it.

Children do what feels good. Adults devise a plan and follow it. Children do what feels good. And what's interesting is well, sometimes children are in old people bodies.

This is the Dave Ramsey Show. We need to talk about something you've been hiding. It's your smile. Your teeth aren't straight, and you think you don't have the money or the time to get them fixed. You think your only option is to go on covering your teeth every time you laugh. Well, here's some good news. With Smile Love, you can have a completely confident smile, pay thousands less than what you expect, and do it without all the appointments. Here's how it works. We'll send you a kit with simple instructions to make molds of your teeth at home.

You send that back to us. One of our dental professionals evaluates your case and creates a plan that includes a preview of how your teeth will look when you're done. If you like what you see, we produce your perfectly clear aligners and mail them to you. In a matter of weeks, you'll start loving your smile. Smile Love's proven streamlined method is the most affordable option for straightening your teeth. We're talking about saving you thousands. Order today at SmileLove.com and use the promo code Dave to receive $100 off. SmileLove.com.

Promo code Dave. Thank you for joining us, America. Jim is with us in Houston, Texas. Hi, Jim. How are you? I'm doing good, Dave. It's an honor to speak with you. You too. How can I help? My dad recently passed away and left us a pretty big inheritance. I'm sorry. About $150,000.

I'm sorry. How long ago did he pass? About a month ago. Oh, my goodness. And I know you're going to stay in our detachment for like six months, and that's exactly what I plan to do. Wow. How old are you? I'm 30. Okay.

And you're receiving the whole $450,000? Well, that's split between me. My brother and I will be getting a $452,000. Oh, okay. Each of you will so he was a millionaire yes sir yep he was one of your everyday millionaires that you're talking about yeah wow pretty incredible well i'm sorry you're facing that um i mainly i'm talking about spouses when i'm saying i don't want grief of the love loss of the loved one to cloud their decision-making. Obviously, losing your dad, you're grieving as well.

I don't mean that, but it's a little different. It might not take you a long time to be thinking clearly. Where are you in the baby steps? Well, thanks to you, we are debt-free other than the mortgage since February. Gotcha. Okay. And how much do you owe on your mortgage? Well, thanks to you, we are debt-free other than the mortgage since February. Gotcha. Okay. And how much do you owe on your mortgage?

We owe $120 on the mortgage now, and we just closed for a bigger house because we have a bigger family yesterday, and that's $350. We had a plan written out within six years about we would have both houses paid off. So that's my question. Yeah just i would just pay it off pay off the the one that we're in the one you're going to live in 120 the one you're going to live in the one over the one for 350 yeah you're gonna have 450 that leaves you 100 right yes sir and then you're keeping the other property? Yes, sir. And you owe $120,000 on it? Yes, sir. Okay. I'm just working the baby steps here is all I'm doing.

Do you have your emergency fund in place? Yes, sir. What's your household income? About $150,000. Okay. So you're saving 15% of your income towards retirement. And you've got kids' college? That's what we were planning on doing with this inheritance, going ahead and getting the kids' college. That's what we planned on doing with this inheritance,

go ahead and getting the kids' college set. Okay. Well, I'd pay off my house, and I would use that other $100 above that to work on kids' college, and then I would use cash flow to pay off the rental. Okay. But if you want to wait a little while to think that through and make sure you're thinking clearly, that's fine. It's up to you. You and your wife can talk about it and make a judgment as to whether or not

you think you're making a clear choice the thing that we're doing with money here is there's nothing here that's going away i mean you pay off your house and you hate it you can go get a mortgage right right it's not like you can't undo this but i don't think you will, surely. So, yeah, that's what I would do. I'd pay off my house, and I'd use that other $100. How many kids you got? Five. Five to old. Yeah, okay.

Well, you got some money. That $100 will go a long way, $20 each towards college. And how old are they? Three all the way up to 12. Okay. The other thing I always ask myself as a way to check myself if I'm in your shoes is I think about the person who passed. Your dad was obviously very good with money. He was obviously a hardworking person, a very responsible person. And I think, okay, he's sitting in heaven looking at me. Is he going to be happy? Is he going to be smiling in heaven at these decisions? And you having a paid-for home and his grandkids college-funded from his inheritance, I can't imagine him not smiling. That's kind of our thinking as well.

Yeah. So it's very honoring to his legacy to do things, you know, that are affecting his family tree, affecting his legacy. So that's what you're doing. And then, of course what you're doing. And then, of course, you're making sure the girls understand that, you know, my grandpa paid for my college. Right.

And so I have a responsibility to study while I'm in college to honor his legacy. I have a responsibility to study something that causes me to have a great life to honor his legacy. And, you know, I'm not going to guilt trip them, but I'm going to let them feel the push of that. Okay. Depending, you know, as they get older. I mean, you don't do that to a two-year-old. But, you know, baby girl, this is your, this is, grandpa did this for you.

And, you know, you need to respect that legacy by your behavior, that kind of thing. So it's kind of thing. So it's a good thing. That's how I would do it, brother. I'm sorry for your loss, but what a wonderful tip of the hat to your dad. And just say, well done, sir. Very, very well done. Open phones at 888-825-5225.

Kimberly is with us in Houston. Hi, Kimberly. How are you? Hi, Mr Hi, Kimberly. How are you? Hi, Mr. Ramsey. How are you? Better than I deserve. What's up? Excellent.

So last year, we took out a FEMA loan for $100,000 due to Hurricane Harvey. And we now have the opportunity to put the loan and the mortgage together, and I've never done anything like that before, and I was just kind of curious what you thought about that. Okay. And so your first mortgage interest rate is what? $3.75. And the FEMA interest rate is what?

$1.75. And why would you put them together? I guess to, well, for one, the lower interest rate and then hopefully to pay it off faster. I'm sorry, where would the lower interest rate come from? The FEMA loan is 1.75. You get to incorporate your home loan. Oh, so the FEMA will loan you enough to pay off your first and add it to the FEMA balance? Yes, I'm sorry. Oh, I misunderstood. Okay, so you can get rid of $3.75 and get $1.75 on your first mortgage. Yes, sir. But it was a loan, and then it's a mortgage,

so I didn't know if that was something that you thought was a good idea or not. It's a great idea because you're going to pay it all off anyway. Yes. So what's the balance of your first? $166,000. So you're going to owe FEMA $266,000 at $1.75? Yes. And what are the terms?

It is a 30-year loan. And no prepayment penalty? No prepayment penalty. Okay. And if you sell the home, it pays off like any other mortgage? Correct. They just get their cut first. No, I saw it.

They all do. Yes, that's true. They all do. It's a simple, low interest rate disaster federal loan. Correct. Well, I'm all over that. Yeah? Okay.

But then treat it like any other mortgage, and let's try to get her paid off in about six or seven years, right? Yes, that is the plan. Very cool. Neat. Neat. Well, good. Good question. Interesting.

I don't know a lot about that, but with what you've described to me, I don't see any roadblocks. I don't know. I've never read the documentation on that or anything like that um but i don't suspect there's any hooks in it so i just i suspect it's a pretty clean deal just make sure there's no prepayment penalty of any kind and you're not giving up something to the government here other than a simple lien on your home which is what a mortgage has any way open phones at 888-825-5225. Anthony is on YouTube and says, while on Baby Step 2, does investing 15% into retirement include an irregular income from a second job? Yeah, 15% of your income is Baby Step 4.

And so if you have two jobs, three jobs, six jobs, one job, 15% of your income. If you have bonuses and a base, 15% of your income. If you're going to be staying on that second job, then I would set it up that way. Now, if you're getting ready to quit the second job in two months, then don't set it up that way and then turn around and have to undo it. That's a pain in the butt. But conceptually, if you're staying in that, if that's going to be

the rhythm of your life, then I want you to save 15% of your income while you're in baby step four. Above that, that leaves room in the budget when you're debt-free except the house to pay towards the college and baby step five for your kids. And above that, it leaves room as you run into other money, any other money squeezes out of the budget or shows up or any lump sums or inheritances or bonuses, whatever, we just throw that at the house. The typical family doing these total money makeover baby steps are paying off their home in seven years. Almost all of them are paying them off in ten years. And then once that's done, that's baby step six, then you're in baby step seven. Then you just make sure

everything is maxed out, and we're building wealth like crazy, and we're outrageously generous as we go along. So, great, great question. Interesting. Thanks, Anthony, for following us on YouTube. That puts this hour of the Dave Ramsey show in the books. Thanks to James Childs,

our producer, Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey, your host, and we'll be back. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word.