The Ramsey Show - App - I Have a Loan at 53.7% Interest! (Hour 2)

Episode Date: March 19, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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 this hour as we talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225.

Starting this hour off, Shirley in New York. Hi, Shirley. Welcome to the Dave Ramsey Show. Hi, sir. How are you? Ramsey Show. Hi, sir. How are you? Better than I deserve. What's up? I'm calling because I need your opinion about my current job.

I have a pension that I've been grandfathered into, you know, like the old systems. I've been there for about 12 years. Now, my question is I'm looking to move to another state i don't know if i should stay and wait for the pension or just go for another job with another pension okay what do you make now 114 what do you do uh corrections okay and you're thinking about moving to where texas texas and uh what would you go what kind of field would you go into there Corrections. Okay. And you're thinking about moving to where? Texas. Texas.

And what kind of field would you go into there? Probably a police department. Okay. And what would you anticipate making there? It would be a definite pay cut for the start. I believe they start at $23 to $30 an hour, I think, after you do the academy. Now, I'm also doing your baby steps. I have about $10,000 left, which, of course, I'm going to wipe out before I do anything.

Gotcha. Okay. Okay. So what are you moving to Texas for? New York has become too expensive. Okay. All right. But you're talking about a $50,000 a year income instead of $114,000 a year income.

New York is more expensive than Texas. It is not twice. Okay. So we need to do a little different thing on your career. Is there anything else that's drawing you to Texas in particular? Just getting away from the snow, and that's pretty much it. So you don't have family there. You don't have something that's drawing you outside of work and money and warmth. Nothing.

Warmth. Okay. So somewhere in the south, in other words, is what you're saying, and a lower cost of living, wherever you could get the best possible law enforcement type job because that's obviously where your passion is and where you've been trained. And, you know, you're coming out of corrections. You go into police work, right?

Yeah. Yeah. So, I mean, Texas is one place you can hit at. But obviously you could, I mean, there's nothing saying you can't go to Georgia. Nothing saying you couldn't go to Florida, right, and so on. Right. So anyway, I'm not trying to sell you against Texas. Texas is fine.

It's a wonderful state. Anyway, I would not make this decision based on the pension. Okay. I think you need to make the decision more based on the other things we're talking about here. I want you to find a better job than you have in your mind. I wouldn't cut my pay in half, pension or no pension. I mean, and I don't think you have to, by the way. If you have a plan where you say, okay, I'm going to land, I'm going to make 60 year one,

but I can see a path back up into 80 or 90 well yeah that's gonna equate to 114 in new york just taxes alone new york's taxes are ridiculous so that alone is gonna that's gonna set you free you go to an income tax free state um it's gonna that's gonna that's $10,000 for you right there. So now then what I would do is with your current pension, if you have a level of vesting, and you may or may not after 12 years, if they allow you to roll over a lump sum, I would do that. I would take your lump sum distribution and roll it directly into an IRA. No, they don't allow me.

What they'll do is they'll vest me out and then pay me what I've earned in my pension starting the date that I was supposed to retire. Okay, okay. So you'll get it, but you'll get it later. It's just a reduced amount. And then you get the new one later if you did a pension there and the two together would probably come close to equaling what you would have gotten anyway yes so you're fine it's a break even in that scenario the last thing i'd comment on is i don't want you depending upon a pension for your retirement it can be part of It can be part of your plan, but I want you to use your baby step four and put 15% when you get there into yourself, put it into 401ks, Roth IRAs, and that kind of thing so that you've got money aside from pension money over and above pension money to retire with. Hey, we're honored to have you listening. Thanks for calling in. Jamie is with us. Jamie is in Palm Springs.

Hi, Jamie. How are you? Better than I deserve, Dave. I hear you. How can I help? Well, I'm very new to your education and about three months now, and I'm getting ready to really embark on baby step two. Um, and I just, I, I kind of don't know where to start. I've got a handful of, you know, things here, but, uh, to break it down, um, I went through

a divorce last year and I also had a medical condition that came up that caused me to not be able to work pretty much nine months out of the year. Wow. And so my income was completely peeved, and therefore I went from having zero debt as of like last June to I have $62,181 in debt as of today. And there's a couple medical bills that I haven't opened yet that I'll be adding to that that just came. Break that down for me. What kind of debt is that? Okay, so where do you want to start?

How much on credit cards? How much on credit cards? Credit cards, like revolving credit cards, about $8,200. Okay. All right. And how much is medical bills? Those have medical bills that I'm aware of at the moment, $7,000. And then I had, in August, taken a consolidation loan.

And that's the main reason I was calling you for $10,600. What did you consolidate? Medical bills. Okay. All right. Because I was off work and I needed to continue paying my health insurance out of pocket. Okay. And so my understanding of it was that the $600 was the fee I got $10,000. I called yesterday because I'm getting ready to do my babysit too, knowing that I had made between, you know, $3,000 and $4,000 worth of payments already to find out what the payoff is,

and they've only subtracted $343 from that loan. I was not aware or I blissfully didn't read the finding. What's the interest rate on that loan? $53.67, and I only found that out yesterday, which is what prompted my call today. 53? 5-3? 5-3.67. Good Lord.

They are automatically withdrawing from my bank account, which I've heard you say is a bad thing. Well, only if you're in a fight with them, and you're not in a fight with them. They're winning. Okay, what's the other $25,000 in debt? You've only given me $25,000. You have $60,000. Oh yeah, that's what I mean. I have a Jeep Grand

Cherokee that I bought a couple years ago. Hold on a second. We come back from this break. We'll keep talking. I'll help you walk through this, kiddo. 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,

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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. All right, we're talking to Jamie in Palm Springs, California. She's got a 53% loan on $10,000, $8,000 on credit cards seven thousand on medical thought she had sixty two thousand dollars in debt so let's get to the bottom of the rest of it because that's 25 where's the other 35 now you're telling me jeep cherokee uh jeep grand cherokee um and it's tied up in a divorce kind of situation i also have a house tied up in a divorce kind of situation. I also have a house tied up in the divorce. Basically, my ex got to keep the house in lieu of alimony,

and I got to keep the Jeep, but I still, you know, owe the money on it. And so if I want to sell it or whatever, like the clause in the divorce is that they get it. They get to just take it over and continue to make the payments. And so January 24, 2024, both the house and the car have to be paid off or refinanced at that time. Okay, so how much do you owe on the Jeep Cherokee? How much do you owe? $41,613. And I'm about $10,000 to $6,000, depending on if I just slice it up. So the divorce is final, but that's what the divorce decree says on those two issues, the Cherokee and the house?

Yes. Okay. And he's in the house? Yes. But your name's on that mortgage, and your name's on the Jeep, and his name's on the Jeep? Correct. Crummy divorce lawyers. Okay. Weep correct crummy divorce lawyers okay divorce lawyers unfortunately yeah bad news all right and are you working now so i'm back to work part-time um the year i bought

the jeep and when everything was great i was in the like 170 i make commission um 175 000 range but last year i only made $40,000. Okay. What were you doing when you made $175,000? So I sell property and casualty insurance. Okay. Is there any reason to think that you can't get back to that? No.

You can get back to that? Yeah, I definitely can get back to that. It's just going to take some time. I've only been back to work for three weeks. Okay, good. Well, I definitely can get back to that. It's just going to take some time. I've only been back to work for three weeks. Okay, good. Well, I'm glad your health's recovering. You've been through hell, kiddo. Oh, what a mess.

All right. Well, do you have... There's one other thing. Okay. So it's a good thing, though. Going through all this, you know, yesterday when I found out about the loan, I was looking at some stuff, and this, you know, yesterday when I found out about the loan, I was looking at some stuff. And I, you know, was turned on to you by a friend and coach of mine who's helping me. And she reminded me that I was contributing 12% to my retirement.

But since I was off work, I wasn't even on my rate. I went in and checked it yesterday. And there was a company I'm part of that was sold, and the dividends were supposed to be transferred into my 401K. But for whatever reason, there's like $26,000 that they can't absorb, and they're like, well, what do you want to roll in and do something else? I didn't make enough money. And I could take it as a cash out, and the only thing I would pay is 20 percent like tax like put aside for taxes okay

that's that's wrong that's wrong information that's a 20 withholding it is not a 20 tax rate you'll be taxed at your tax rate whatever you make yeah they withhold the 20 percent for tax and then i guess at the end of the year i would get a refund or pay or whatever yeah or you'd pay more if you make $175,000. You'll pay more on it. So, yeah, take that money and pay off the $10,000. Okay. The $10,000 or the other debt?

No, the $10,000. Fifty-three percent! Oh, my gosh! Well, okay. Yeah. And if you don't get your income back up to six figures in six months, you need to sell this Jeep. And if you do get it back up, you've got to get the Jeep paid off,

regardless of the divorce decree. You have got to get rid of this debt. A $40,000 car debt is not going to cause you to win with money. Right. So if you need to go amend the divorce decree and pay an attorney to get some dadgum common sense injected into your nightmarish mess you had back there, that's fine. But this Jeep debt has to go away right now. The ten thousand dollar debt goes away and we're going to use the rest of the money above that to start paying off medical or credit cards. We're going

to list them smallest to largest and get in attack mode. And then as soon as that that's all gone we're going to start paying off the jeep and if you have to pay a lawyer to go get that figured out and do that with some common sense as opposed to the way your divorce degree was put together which was ludicrous um you need to go you need to have a separate life and you own your own freaking car and not have to stay in debt till 2024 that's so toxic and ridiculous. So you've got to fix that, and you've got to work around it. But, yeah, take the money right now immediately and pay off the $10,000, the 53%. And then let's take the rest of your debts and put you on baby step two,

which is the debt snowball. List your debts, smallest to largest. Pay minimum payments on everything but the little one. And attack the little one with any money you've got left over. Work your way right down that list as fast as you can. And as money comes in, you work your way down that list. Your largest debt, not counting your home, being the Jeep, it'll be the last one you get to. But you're going to have to come up with a plan on how to deal with a divorce decree by the time you get there.

So all of that. Wow. Well, I'm glad we're here to help you. Hold on. I'm going to send you a copy of the book, the total money makeover, which will help you know how to lay out this whole baby step system. I just did for you and exactly what to do when and why step by step by step. So you can do this.

You can do it. You've been through enough. You're tough. I mean, you're a scrapper. You're going to be all right. Thanks for the call. Jessica's with us in Oklahoma City. Hi, Jessica.

Welcome to the Dave Ramsey Show. Hi, Dave. Hey, what's up? Well, I wanted to get your financial advice on where to pull my step one emergency fund and how to handle small payday loans. Right now, my husband hasn't been working as much. He's in the oil field. He moved rigs, and there haven't been any rig moves lately, so he's not bringing in as much income as he was. So in not having enough income, I have completely put off paying the small payday loans. Oh, Lord.

So now I've got them calling me. How much do you owe these loan sharks? Well, in all, I've got four loans, and in all, it's about $3,000. Okay. Okay. Okay. Number one, you never set foot in that building again after you get these paid off. No. This is poor people stuff. You're going to be poor your whole life if you do this.

You are being completely, it's 800% interest. They're loan sharks. You can never go back in there do you hear me i i understand 100 number two your household is desperate enough because of your husband's drop in income that you did this stupid thing i've done stupid things too i'm not picking on you but this is stupid okay so we have to fix the desperation on the income if all rigs aren't moving then something is he's going to go move something it may be pizzas yeah i'm door to door i mean start to start delivering pizzas tonight you can make 1500 a month delivering pizzas you know five nights a week so today's the day baby

uh got a lawnmower handy let's cut some yeah i didn't i didn't think about that honestly i more so thought you know i mean he's still going to work, so he's just not bringing in as many hours. Yeah, so on the off hours, he's going to have to pick up some income because your household's getting desperate. Did I miss something? No. Because there's not many people wandering to payday lenders that aren't desperate,

so I'm assuming you're desperate. Yeah. Yeah. It's scary, isn't it? It is. It's very scary and now that they're going after us and yeah well there's not they're just bullies don't worry about them so you got a thousand dollars saved you said no i i don't i'm trying to figure out where to where to pull the emergency fund um what kind of income do you currently have?

Right now, he's bringing in about $70,000. Okay. And you couldn't live on that? Well, we can. But the problem that we're running into right now is we've got a wage garnishment going through. And then before that, we had another wage garnishment and then we've also got two more wage garnishments lined up okay you've lived out of control for a long time it's time for y'all to stop this hold on we're gonna have kelly pick up we're gonna hook

you up with one of our coaches and we're gonna pay for it and we're gonna put you in financial peace university and we're gonna pay for it You've been living in desperation to desperation for a long time. It's time to stop it. So we have to stop this right now. You make $70,000 a year, and you're broke. This is The Dave Ramsey Solutions, Daniel and Rosalie are with us. Hey, guys, how are you? Hey, Dave, how are you?

Thank you so much for having us. Absolutely. We're glad to have you. Where are you guys from? Where do you live? We're from Westchester County, New York. Okay, cool. Welcome to Nashville.

And all the way down here to do a debt-free scream. Yes, sir. I love it. How much have you guys paid off 383 781 and 24 cents goodness how long did this take 30 months sir 30 months what is your household income uh we started at around a little over 220 and then then we ended up around 360. whoa what an income what do y you all do for a living? I'm an OBGYN.

Oh, there we go. Okay. And I'm a chef. There we go. Good. Okay. Good. Wow.

Big numbers here. Yes. Big numbers. So I'm guessing med school debt. Yes. What else? That was it. That was it.

It was both of our student loans. Chef debt, doc debt. Oh, yes. Okay, cool. Where did you train to be a chef i went to the culinary institute of america oh cli in napa uh hyde park new york okay cool all right good fun good for you guys wow two booming careers good stuff but debt out your ears oh my goodness yes so how long have you two been married uh we have been married it's going to be four years this

september that's right okay so you've been married four years but a couple of years into marriage you look up and this mountain is standing in front of you and something happened and you get an attack mode here what happened well actually um it started about uh five years ago um i was finishing up residency and i knew that my income was going to increase. And I had done the stupid and put my student loans in forbearance, and it was just accruing interest and I wasn't making any payments. And I sat and spoke with my father-in-law, and I said, I'm very nervous. I don't know. I'm kind of really nervous.

I don't know how to handle money. He said, read this book. And then we read it, and I was like, ooh, I'm not ready for that just quite money. He said, read this book. And then we read it. And I was like, oh, I'm not ready for that just quite yet. We have to plan a wedding. Before I go on a diet, I want to eat some chocolate cake. Here we go. We got married. And for our first Christmas as a married couple, they bought us Financial Peace University. Oh, he's persistent. Yes persistent yes yes so we are so happy that they're here to celebrate with us because we ought all just to them very cool so then you end up

early in your marriage then in the first year or so your marriage going through financial peace university and then you go i think i can do this now ready to go we got a mess but we got it we got a big hole but we got a big shovel yes that's right and that was that was that was it we didn't upgrade we we live in a very small two-bedroom apartment we drive uh i think my car is now 15 years old or something like that look at you a weird doctor i got stopped at least uh the first year i was working like three or four times like you cannot park in this doctor's lot like no no i work here i am a doctor shut up exactly i'm not a broke doctor though look at you man way to go you guys that's funny yeah you couldn't get in the doctor's lot yeah what were you driving i gotta know that oh i have an 044 to skate there you go that's perfect yeah you can't get in the doctor's lot

yeah so you sit down together going through Financial Peace University. Even with all of that, that mountain, almost $400,000, that had to be a little overwhelming. It was. It was very, you know, I had spent a lot of residency just with my head in the sand. And when I came out, I looked and I was like, oh, my gosh, four years, I had accrued almost 60,000 in interest. And that's kind of was when I need, we need to do something. I need to do something. And we just went all in and it was great. So you sat down, did the budget and said, okay, well, it's game on. Yes. That's exactly what happened. We, as soon as we realized that we needed to get on

board with the plan, the budget just became our path. And when we had hard times and, you know, good times and bad, it was always, we were fortuitously working towards something. And we knew that at the end of the day, the sacrifice, the delaying gratification would all make it worthwhile in the end. I mean, a good chef knows how to follow a recipe. That's right. So there we go, you know. I mean, you've got the recipe right in front of you. You're either going to make chocolate cake or you're not.

Right. I mean, you know, let's just follow the recipe. So it's a system and a process, and both of you learn systems and processes. And certainly Rosalie knows how to delay pleasure because she's in school half her dadgum life. And so to get out. And so you can delay pleasure and follow a process. can get through this right that was the hardest part though the state being able to say okay we're not gonna we're not gonna buy a house we're not gonna get a new car we're gonna we have to focus on this and focus on this and it was it was very difficult because

a bunch of our families and friends are buying houses and and all my friends are going with their doctor lives. And I was like, no, we got this big mess. We got this big mess. We got to take care of it. They got doctor cars. They got doctor debt. And they got doctor houses. But they can park in the lot.

Yes. Yes. But what was really helpful is halfway through, it was almost exactly halfway through, Rachel Cruz's book came out. And I was like, I need to listen to that. And it was just kind of midway through, Rachel Cruz's book came out and I was like, I need to listen to that. And it was just kind of midway through is kind of like reinvigorating and just helped focus me again. Love your life, not theirs.

Oh, yeah. Absolutely. And I kind of like listened to it in the car and I was like, yes, OK. It was a very good way to help motivate me. Neat. Very neat. Very cool. So what do you tell people the key to getting out of debt is? You pay off $384,000 in 30 months. It was all just due to the budget. We stuck to the budget. We stayed within our means. We didn't get caught up in anything. And we didn't really have any fights about it just because, like I mentioned,

it's just we were working continuously towards paying off all of our debt and achieving that goal. It was worth every moment of it. This was Herculean lifting. I mean, now you have no payments. You make $360,000 a year. How does that feel? It feels, you know, it's kind of, this is our vacation celebration, so it's like, oh, we can buy stuff.

We can go out to eat. Yeah, yeah. I want a pair of boots. I think you need a car. Yeah, yeah. I think you need to go home and buy a car. Oh, yeah. Yes, yes.

That's on the list. That's on the list. It's on the list. So what's the big celebration thing other than coming to Nashville? Seriously, what's the big way you're going to say something big you've been holding off, holding off, and holding off? Is it a car? Is it a house? What is it?

We're in baby step 3B and saving up for a down for a house, yes. Okay. Good. Good for you. That's a good way to celebrate. I've been hearing purse for the past two years as well. There's a purse somewhere out there. Somewhere there's a really, really nice purse. That's a good way to celebrate. I've been hearing purse for the past two years. Purse? There's a purse somewhere out there. Somewhere there's a really, really nice purse.

That's it. We're talking a purse that really is better than the car. Yeah. Okay. Or a car. I hear you. Or a car or both. Yeah.

Way to go, you guys. You live like nobody else. Now you can live like no one else. I'm sure mom and dad are just so proud. They're unbelievable. Yeah. Their buttons are bursting over there. We're seeing them.

Good. Good for you guys. Well done. We've got a copy of Chris Hogan's Retire Inspired book. We'll add that to your collection with Rachel's book and the others as well. And that's the next chapter in your story to be millionaires. You'll be there in about 20 minutes. And, man, oh, man, and outrageously generous along the way.

Enjoy your money. Give your money. Give your money. Invest your money. Keep doing those three things. I'm really proud of you. Way to go. I know your mom and dad are proud of you, but we're looking at you going, wow, you are a neat couple.

I mean, a lot of money involved here, but you're a neat couple. This is very cool. Well done. Thank you. All right. And along the way, you had a baby. Yes, we did. And the baby's name is?

Her name is Kamiya. Kamiya. How old is Kamiya. Kamiya. How old is Kamiya? She is 14 months. All right. And she's here for the debt-free scream. She is. And dad changed her family tree.

Well done. Daniel and Rosalie Kamiya from New York City, $384,000 paid off in 30 months, making $220,000 to $360,000, though. Man, their future's bright. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Wow.

How fun is that? Man, those numbers. Wow. How fun is that? Man, those numbers. Wow. You know, most of you listening, you're going, man, I don't know, I don't make $360,000. Well, I'll just tell you, you don't have $384,000 in debt either. So it's all about ratios, isn't it? The ratio of your income to the ratio of the hole that you're in, your debt.

You know, if you make $100,000 a year and you have $100,000 in debt, it's about the same numbers that they just gave us right here, right? This is doable. When are you going to start? Talking to you.

When are you going to start? This is The Dave Ramsey Show. Tracy's with us in Hartford, Connecticut. Welcome to The Dave Ramsey Show, Tracy. Hello, thank you so much for taking my call. Sure, what's up? My question is, I work for a hospital and the pension plan where I work has come to an end. So it's terminated in February of this year and I received a letter in the mail and they're asking me whether I want to take the pension as

an annuity when I retire, in which I'd be getting about $800 a month, or whether I wanted to take it as a lump sum payment of $68,000 and roll it over into my 403. I would take it as a lump sum and roll it to your 403 or to an IRA if you can, but the lump sum will be better. And here's why. Okay. Let me help you with this. The $68,000 will grow to enough by the time you retire to provide you with $800 a month

at about 7%, 6%. That's how the pensions are calculated. If instead you took the $68,000 and invested it into good mutual funds and made 10 or 12 percent, you would have a lot more, and therefore the income off of it would be more than $800, right? Okay, yes. Okay. Second thing is when you die with a pension, money's gone. It dies with you.

When you die with $68,000 having turned in, how old are you? Fifty. Fifty, okay. So 15 years, if $68,000 turns into $300,000, which it probably will, and you die, and that's in your IRA, guess what? There's $300, dollars for your heirs and your ira it doesn't die with you so you're better off when you're alive to take the lump sum and you're better off dead to take the lump sum okay so we take the lump sum and and you roll it to an ira into good growth stock mutual funds with long track records. Get with a SmartVestor Pro to help you do that if you can.

If they're requiring you to put it into the 403B, you can put it in there. You can probably move it out. A 401K, you're not allowed to roll out while you work there, but a 403B, you can roll out while you work there. So you may have to do it as a two-step procedure. It may have to roll into the 403B and then on out to an IRA. But I think you can get it out to an IRA. And I always personally invest and suggest people to invest evenly, 25% in each of four types of growth stock mutual funds.

Growth, growth and income, aggressive growth, and international, all with long track records, 5, 10, 15-year or longer track records, where they've been out there a while and you can look and see how they've done in up markets, how they've done in down markets, and what your average annual return has been, would have been, had you been in those particular funds. And it's very interesting to study a little bit. And so if you need some help with that, if you don't have a mutual fund broker to help you, an advisor to help you, jump on DaveRamsey.com, click Smart Investor, put in your stuff, your information, it will drop down a list of Smart Investor pros to choose from in your area.

They do not work for me. They pay us an endorsement fee and we vet them very carefully to be the right kind of people that we send people to. So SmartVestorPros at DaveRamsey.com by clicking SmartVestor if you need some help with that. Portland, Oregon. Casey's next. Hi Casey, how are you? I'm good, and how are you? Better than I deserve. Casey's next. Hi, Casey. How are you? I'm good. How are you? Better than I deserve. What's up?

So I bought a car last year for a little over $13,000, and I didn't know what I was doing. And long story short, I agreed to like a 19% APR. So last year, I paid like $4,000 in interest and only about $1,000 worth my loan. So I'm wondering what you think I should do. I'm sorry, I didn't hear the last part of your question. Say it again. I'm just wondering, I'm like at the point where I'm like ready to give my car back to the bank, and I'm wondering if you think that's a good idea or if that's a bad idea.

Voluntary reposition is never a good idea because they're going to take that car and sell it and sue you for whatever it doesn't bring. What is the car worth today, do you know? It's worth about $11,000. And if I'm going to pay it off, I still have to pay over $12,000. Right, okay. And what do you make a year?

I make about $40,000. And you're single? Yes. And how old are you? 22. Okay, all right. Now, I would suggest you work your butt off and get on a really tight budget and save up the difference so that you've got a couple thousand bucks

to write a check for the difference and let's sell the car, and that gets you out of it without them chasing you. If you hand them the keys back, that's called a voluntary reposition, and like with a regular repo, then they take the car and sell it, and they want the difference anyway. The problem is, what does a repo sell for? A lot less than you're going to sell it for. So if the car is worth $11, they're going to sell that car for $7, and you're going to put yourself $4 if the car is worth 11 they're going to sell that car for seven and you're going to put yourself four in the hole instead of one or two in the hole and so you do not want to do a voluntary repossession on top of that it destroys your

credit of course but that's a side issue the big issue is you lose control of the transaction and so you want to sell the car pay the difference out of a pocket that you've saved up some money into and then go get you a beater for pay the difference out of a pocket that you've saved up some money into, and then go get you a beater for a couple thousand dollars. And with the payments you've been paying, kiddo, you can save up money to buy a better car real fast, right? Yeah. My payments are like $334 every month. Yeah.

I mean, you start saving $500 a month in 10 months, that's $5,000. Yeah. That'd be pretty cool cool and you could do that once you get so let's get you about a thousand or two thousand dollar car write a check and get rid of this one and not get dinged and then start saving five hundred dollars a month while you're driving that two thousand dollar car for about 10 months and then you'll move up to about a seven eight thousand dollar car you're about back up where you are now. Yeah, and that's only a year away from now. But you're going to have to get on a really, really tight budget.

I don't know where your money's been going, but you're making $40,000. And if that's your only bill, I want you on beans and rice, rice and beans, no partying, no eating out, no money's being spent. We've got to get out of this mess we made. And the bad news is you did a really dumb thing, signed up for a 19% car loan. The good news is you're 22, and you have the rest of your life to live never doing that dumb thing again. You learned that lesson early. And my thing, I don't mind doing something stupid.

I don't really want to do something stupid, but I try not to do something stupid twice. That's my thing. So the good news is you got that one out of the way. That's one less thing for you to do stupid. You've done it. You fixed it. Impulse a car, buy a car with bad credit, let a bank rip you off because you weren't thinking and you had the fever. I need this car.

And you talked yourself into stupid. And you'll never do that again after this pain. So that's great news, Casey. You've learned that lesson. You've graduated from that class. Chelsea is with us in Dallas. Hi, Chelsea. How are you?

Hi, Dave. Thanks so much for talking to me. Sure. My husband and I, we are looking to grow our family. I'm sure there's a lot of couples in our situation. We both work full time. But child care costs in this area run about $1,000 per child. So with a combined income of about $5,000 a month, if we add another child,

we're looking at $2,000 in child care every month, and I just don't see how we make that work. And I know this is one of those things, oh, if you wait until you have the money, you'll never have another child, but we don't want to be foolish either. I agree with the last part. What do you make? I bring home about $2,000 a month. My husband brings home about $3,000. So if I were to stay home, even then it would be pretty tight, yeah.

Well, you actually make money over a $2,000 child care bill. You make money because, you know, your costs are less when the kids are at home. You don't have to, you know, the costs you have associated with working, driving to work, buying clothes for work, buying food while you're at work, all that kind of stuff goes away. And so, yeah, if your child care is truly going to be $2,000 a month and you're making $2,000, it doesn't make sense. You'll have to learn to live on his income, which really only is $1,000 difference than you are now.

It's not $2,000 difference. Well, actually, our child now, she goes across the street to our neighbor. She's in her 70s. She only charges us $10 a day to watch her. But she's let us know, you know, in the next year or two, that's not going to be able to work. Well, the other option is to find someone like that that will watch two children, and there are those out there.

I mean, you found this lady, and so, you know, but if you're going, if your only reasonable method of analyzing this is $2,000 versus your $2,000 income, then, you know, you're right. You're just going to have to run your budget out where you live on his income and figure out what we can do that you can make money from home, like a business boutique idea or something, you know, a Christy Wright idea. Or the third option, of course, is that that's not the only way to analyze it. You could find the equivalent of your 70-year-old that watches two children and you move them that direction. This is The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry.

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