The Ramsey Show - App - I Have over $1 Million in Debt! (Hour 3)

Episode Date: July 11, 2019

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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. Thank you for joining us, America. This is your show. Open phones at 888-825-5225. That's 888-825-5225. Pete is with us in Kalamazoo, Michigan, to start off this hour.

Hi, Pete. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. I appreciate it. Certainly. How can I help? I have a question.

I'm currently in baby step two. I have about $8,000 left in credit card debt. I have about, in up-to-date credit card debt, I have about $13,000 in old debt, like unpaid, that I was just irresponsible about. And I recently got a lien put on my house and a notice of garnishment for that old debt that I was irresponsible with. And I was wondering if I should focus on that, like try to maybe contact them, talk to them, settle, negotiate a little bit, or work on the steps as lined out. So you've got a notice of garnishment, so they're about to garnish your check.

They currently have. My last two checks, they've garnished. Okay, all right. And can you scratch up any money to offer them a lump sum settlement? I think I can. I know you say about a quarter on the dollar. It would take me a couple weeks to possibly scratch up that amount. Well, now that they're starting to get a bite out of your check,

it's probably going to take more than a quarter on the dollar, but I would at least start the discussions at the time you've actually got to that point, and then you keep saving because it's probably going to take you a little more than that. But, yeah, I'm going to get this out of my life. If you can settle it for a quarter to 50 cents and begin that negotiation and talk to them and so forth. How much is it? $13,000, right? Yeah, $12,500 roughly.

Okay, and how much did they get out of your check? How much is it? $13,000, right? Yeah, $12,500 roughly. Okay. And how much did they get out of your check? About $350 per check. Okay. So they're getting $700 a check. They're going to get all their money in like 12 months. Yeah. So let's see.

That lowers their need to negotiate. Okay. That's what I was thinking too. thinking too you've lost your negotiating edge at this point so but if you offered them six thousand bucks they might take it okay and oh and what kind of was an old credit card debt yeah how long ago uh a couple years probably about coming up on two okay they probably sold that bad debt to a debt buyer for pennies on the dollar? I believe so. I believe I got that in the mail.

And so they probably paid a nickel on the dollar for it. Yep. Five to seven cents is what debt buyers buy old credit card debt for. Oh, wow. And so, you know, if they can get 50 cents and they got 5 cents in it, they 10x their money. They may take that. Okay. Or they may just sit there and milk your check, too.

That's a possibility. So now that they're getting a pretty big bite there and pretty juicy. So anyway, yeah, I would save up the $3,000 or $4,000, and I'd start talking to them about it. And then if you can get a solid offer and you can put the money together to meet the offer up in the 50% range, I'd definitely take that in a heartbeat. Okay. Hey, thanks for the call, man. Be sure you get it in writing and no electronic access to your checking account. You're just going to send them a cashier's check or a prepaid debit card or something like that.

Ella is with us in New York. Hi, Ella. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you so much for taking my call today. Sure. What's up? I am in a terrible situation.

I'm about a million dollars in debt. It's personal debt on my businesses, but it's all personal. And, um, I can tell you that in credit cards, I have $252,000, um, $47,000 in a line of credit, um, business loans, uh, $134,000. And I lost a lawsuit that was due to a plumbing issue in one of my restaurants. And that's at $300,000. And then the balance is sales tax. How much do you owe in sales tax? About $400,000.

Okay. Are you losing money in the restaurants? So the restaurants, like I said, there are two. One is in the black for about $8,000 a month, and the other is in the red at about $5,000 a month and the others in the red at about five thousand dollars a month and i've spent so much so much of the money is going back to pay the debt that i'm getting into a situation where i can't pay rent to stay open um i'm doing it but i can see where it's headed quickly really really, really quickly.

Okay. And the attorney I have is telling me I need to file bankruptcy, and I'm talking to you. You may be bankrupt. There's a couple things you can try to avoid it and see if you can turn the corner, okay? Okay. Any chance you could get a buyer on the restaurant that's losing money i've been trying to do that i've been trying to do that and it's been closed and then it falls through and then it's been closed and it falls through okay let's let's try to keep that rolling that's thing number one thing number two is you start paying your sales tax immediately do not

steal that sales tax money anymore because what's happening is you're using that to do other operating things and pay this debt and it's running that sales tax bill up and and i always call it stealing the sales tax because in a sense you're it's money that was paid in the sales tax by the customer and then you didn't forward it on to the government instead you used it for cash flow problems okay right so if you'll start treating that in your mind, like it's stealing, it'll help you to remember to never do that anymore. Okay. So moving forward, which I have already planned on doing, figuring it out no matter what to pay sales tax. Yeah. No matter what from today forward, you pay the sales tax as it comes in every month. Okay? It comes in, it goes right back out.

That's not your money. And I'm afraid that $400,000 in sales tax may not be deductible or may not be bankruptable. I don't know in your state what the situation is. I'm sorry? It isn't, from what I understand. Yeah. And so that's a reason to try to stay alive rather than file bankruptcy, is to turn the corner on that $400,000. The rest of these loans are not, they're at the bottom of the list, okay?

Okay. So the top of the list is sales tax and operations, staying open, paying your rent, paying your payroll operations staying open paying your rent paying your payroll staying open the only thing you can use to pay on debt is money that is left over after you stay open so you don't use rent money to pay a stupid credit card the credit card goes late not the rent. Right, and I foolishly have been doing that. Yeah, you've got to prioritize this and say, what are necessities? These unsecured creditors, $134,000 in business loans,

line of credit, credit cards, they're unsecured creditors. They're at the bottom of the list in a bankruptcy, and they're at the bottom of the list right now. You stay open to live to fight another day

and see if you can't fight your way through it, and then we'll go back and deal with those unsecureds later. Don't pay them another dime right now. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated, and they have a sense of fear and intrusion. It can be overwhelming. It's scary and infuriating at the same time.

People question your character. You try to figure out how it happened and you worry it's going to happen again. Then you have to deal with cleaning up the mess. Bill collectors, credit bureaus, even the police just make the nightmare worse. And trust me, ID theft is not going away. That's why I personally worked with Zander Insurance to develop an ID theft plan that provides the best protection and value. Smart strategies to help reduce your risk so you don't feel so helpless, along with taking over all the work if you do become a victim,

and without wasting your money on gimmicks or things you can easily do for yourself. Go to Zander.com or call 800-356-4282. Do not wait until it's too late and you have to go through this nightmare on your own. Go to Zander.com. Coming up at the bottom of the hour, Rachel Cruz, Ramsey Personality No. 1 bestselling author. And my daughter will join us for a half hour answering your questions with me. So if you've got a question for Rachel, you can jump in now. The phone number is 888-825-5225. That's 888-825-5225.

Brad's in El Paso. Hi, Brad. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? Okay, so I'm working on paying off debt.

I'm still a few years away. I make about $80,000. About $68,000 net is what I bring home every year. With my fiance, we make about $120,000 net is what I bring home every year. Um, with my fiance, we make about 120. We have about a four year plan. We've listened to you and we have a four year plan. We should be good to go. Everything paid off house, uh, the vehicles, we have everything. My question is part of my income right now, I'm also a full-time student. Part of my income is a retirement pension I get. I'm 33 years old. I'm a disabled vet.

I get about $3,000 to $3,500 a month for my retirement pension. This is the one thing I haven't heard you say. What should I do with that once everything's paid off? I'll have a better-paying job at that point. I'll have graduated. What should I do with that? I was thinking to just throw that entire thing as if I don't even get it into a retirement plan at that point. But I want to know what you think.

I would not segment it that way. I would say let's always do your budget by adding all of your income up and putting it at the top of the page. This is a source of income. That's what it amounts to you've got this income you've got your income when you and your fiance are married we've got her income at that point and so those three incomes or four or whatever other if you owned a rental house or whatever any income you have goes at the top of the page and then we just do smart things with that income depending on what baby step we're on, right down that page from there.

And so I wouldn't segment it out and say, well, let's just set that whole thing over there. You might end up setting more than that into investments. You might end up setting a little less than that in investments. After you figure out what your overall budget is and where you're setting aside that money, I mean, you're just making all of your income behave. You're making all of your income go towards your goals, your traction. And so that's all you're trying to do here. I would not segment it out. I don't segment out child support.

It goes at the top of the page. You're supporting your children, and all of your income is going to support your children and usually more than you receive in child support if we actually allocate out what each kid is using in electricity, shelter, and so on. And so you just keep going that direction all across the board. So that's how you work it. Good questions, you guys. Appreciate you joining us. Zach is with us in san diego hey zach welcome to the dave ramsey show hey dave thank you for taking my call sure what's up so about a year ago i got in a light fender bender and uh it was in the three-day period that my my six-month insurance policy i forgot to renew it so it was completely over, I forgot to renew it. So it was completely over.

Um, I forgot to renew it. I was just working and I got in a fender bender. And so then all of the responsibility for the payments were on me. So after a couple months, you know, the, the damages come in and it was 3,200 bucks and that was in October. So I paid that up, uh, up front and I thought it was all settled. And then the, about six months ago or not, about three months ago, they came around with another invoice, um, for $4,000 that was out of the blue, um, for me. And now I'm out of the blue for me, and now I'm kind of in a pickle because I'm trying to figure out.

Okay, wait a minute. You paid $3,500. Is it a $7,000 accident? I paid $3,200. I know, but now they want another $4,000. What did it take to fix the car? Was that the car cost? They said it was medical.

Oh. take to fix the car was that the car cost but they said they said it was medical oh they said the 4 000 was medical and the 3200 is his car but yeah so i'm a little like hesitant so what what what is the what is the nature of their injury were they injured in the accident? The time of the accident, everyone got out of the car. It was a fender bender, about 10, 15 miles an hour. And everyone was fine. We talked, and then a month later, I guess, they decided to have a hurt neck or something. I don't know exactly what the injury was, but I guess it's confidential because of financial reasons or medical reasons. No, it's not confidential if they're wanting to collect from you. Got it.

Not confidential anymore at all. So I suspect you need a lawyer because I think you're getting scammed. Got it. 15 miles an hour creates a $4,000 medical injury? Yeah. It could. It's possible. But that doesn't sound right to me.

Doesn't sound right to you either. Yeah. So that's what I was saying. I watch the show. So Mercury Insurance is an insurance company. They had several IQ, which is I think their recovery partner or something. So they billed me for 4 000 i told them um i need uh receipts and i need to see what it was for and they said it was confidential of course and that

they could pursue further action if i don't pay now tell them what you're gonna do is you're gonna sue them got it and go get a lawyer got it so yeah i mean they offered to take a thousand dollars off of it and i said well now no now i just know like yeah i'm not going to pay it but like now i just see that they're definitely kind of bluffing and so now it's a whole different um collection agency yeah you need a lawyer i need a lawyer yeah all right yeah you're not gonna because you're not gonna you're trying to catch an octopus here there's too many tentacles on this thing in there got it as soon as you cut one leg off you got seven more coming at you

yeah and so yeah that's right until you give these people some money that you don't think is real they're not going to go away they're going to keep handing this off to somebody else, and it's going to come back at you again. And you need an attorney, and you need to sue the person in the other accident, on the other side of the accident, and stop this. What would I be suing them for? I don't know. Talk to your lawyer. All right. But, I mean, the thing that you really need, because you're going to have to take some kind of a return action here,

because they're coming after you, and if you don't stop this, it's just going to grow and grow and grow. You cannot ignore it. You cannot ignore it. And I'm with you. I don't want to pay it. I would spend $2,000 or $3,000 to keep from getting scammed, and this just sounds wrong. It doesn't sound right. So it's real simple if i if you hurt the guy and he comes

forward and says look here's the you know here's the bill for my neck that was hurt i got whiplash and here's the doc's bill and you look at it and you go okay well i mean it was my fault and you just write him a check because you did hurt the guy but if they're just screwing around and trying to milk money out of you because they think they can, I don't think we're going there. And that's what it smells like. It really does. I hope not, but that's what it smells like. Again, coming up at the bottom of the hour, Rachel Cruz joining me to answer your questions. If you've got questions for her, you can jump in now.

We're opening up some phone lines for her. The phone number is 888-825-5225. Andrew is in San Antonio. Hi, Andrew. How are you? Hey, Dave. I'm doing well. How are you doing?

Better than I deserve. What's your question, sir? So first things first, I just wanted to say I'm new to you listening to your show. I just started listening about two weeks ago, and I dove headfirst. I love what you're talking about and the tough love stuff, so I appreciate that. Thank you. So I just want to start off by saying i have the three to six emergency fund that you advocate for we've got

a budget and we found some excess money to allocate my question for you today is basically how to prioritize that so my wife has about 25 excuse me 25 000 in student debt and i personally have about three thousand dollars in a car loan, $3,000 in a ring. What you do is you take all of your debts and you list them smallest to largest. You pay minimum payments on everything but the little one. And you attack the little one with a vengeance. And you use all of your savings down to $1,000. Any money you have that's not any investment of any kind you have that's not in retirement is used to attack these debts in that order, smallest to largest. You get your

three to six months is back down to $1,000 and you use it on the smallest debt. So it's not like you're probably paying off your car. And then you just work your way right through it with a really, really tight budget. Hang on. I'm going to send you a copy of the book, The Total Money Makeover, which will give you great detail on exactly how the baby steps work and exactly every detail of the clear plan. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members.

I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait. One hire can change the direction of your company. Post a job today at linkedin.com slash Ramsey

and get $50 off your first job post. That's linkedin.com slash ramsey terms and conditions apply joining me this half hour rachel Cruz, number one bestselling author, Ramsey personality, host of the now big time Rachel Cruz show on YouTube. Also a regular appearance for the last month or so on Good Morning America. Two times in the last two or three weeks, right? I think that's right. Yes.

Yeah. And it looks like you're going to be going back again. So you never know. I never know. They're all over the place. It's wonderful. So good stuff. And here to answer your questions, the phone number is 888-825-5225.

And you guys just dropped another episode on YouTube, another episode of the Rachel Cruz Show. Yes. And it's interesting. We always get different. You can tell the response of the videos from the comments or the views. You can tell people the ones that people share, the ones that don't. And this one has, we've hit a nerve.

And we knew we would, but it's all about how to talk to your parents about money and making sure that they're in a spot financially that is good for them because ultimately their money decisions will in turn affect you uh and so if they get if they get themselves in a crack you could have to bail them out or you might have to feed your own mom and dad that's right move back in we talk about boomerang millennials that you throw them out into the real world and they turn on come back home parents are doing that too because they're getting to a place they can't they don't have retirement they don't have all this so making sure it's taken care of and you know especially if you have older parents the reality that it's terrible to say but it's true right we all don't live forever

that when they do pass making sure that they have everything taken care of because if they don't then it's you and your siblings that are trying for the funeral paying for everything paying for things and just trying to figure out possibly because they don't have a will they don't have their estate plan yeah and they don't long term care and I mean all it's just this huge topic that a lot of my audience is starting to feel the burden of and so we did a whole episode on it and it was really good so what are the four critical things you all are talking about that you need to ask your parents about and make sure they're dealing with yes so a will is a huge thing making sure and that it's communicated within the family and this is always a little hard because in my show i'm talking

to the quote-unquote child so it's obviously easier if the parent is directing these conversations but sometimes as the child you have to start these conversations which is always awkward and But in the long run, at least getting communication out that you want to know these things. Your parents know that you want to know that and opening that door of that conversation is important. So the will, long term care insurance, you want to know about their debts. And this is one thing I've been realizing that there's like these milestone moments in people's lives and in their stories with their money where they realize reality is not what they thought it was. And you may have experienced that at five years old when your parents filed for bankruptcy, right? And you realize, oh, wow, the world is not what I thought it was. Or for some people, they realize it at 25, 30 years old where for the first time ever, they realize, oh, well, my parents are not in financial as a good in financial shape and i never knew that because now i'm realizing wow they have a ton of

debt and all that so figure that out know what your parents owe because if your name is on any of those debts if you co-signed then you're liable something happens to them they become your debt so they don't become your debts if you did not co-sign no no no but if you co-sign if your name's on those debts yeah right then then it's like a parent plus loan or something right right you know those kinds of things that you could come back and bite your car loan would they co-sign for you or something like that all of that yeah so just knowing that but i thought that was interesting that i've had a lot of people talk about that they didn't they always thought their parents were okay and it's kind of that first reality of oh wow they're they're not I get that call on the air here on my show from the millennial that's like 27 and just woke up and realized mom and dad are 54 and are broken.

He or she's really worried about their mom and dad. They feel a burden to take care of them, and they're just getting their life started. Right. Oh, yeah, it's a real thing. And again, I think for this perspective as the quote-unquote kid, you want your parents to do well for themselves, right? I mean, it's not just for you, but then there is a reality of a certain percentage of the population

where they're not having to take care of their parents financially. And so what does that look like? And kind of talking about that. And then also, obviously, just term life insurance, seeing what kind of insurances they have overall. So you can execute their wishes. That's right. You need to know what's in the will and know what the assets and the liabilities are.

Mom, Dad, what do you want me to do with it? We're certainly not teaching you to go make sure your name's on the list. That's not the point. Go find your inheritance. Yeah, no, no, no. That's not the motivation yeah so it's it's really to to bless them and their legacy and to kind of approach it in that way but it's an awkward and you talk about it here on the show i know but like it's an awkward conversation when it's the

roles reverse and it's the kid that almost takes on the parental role of the subject of money and trying to help and talk to their parents uh and it's it's awkward it's hard i had a girl um on the show actually she was a guest and she kind of explained you know even her situation with her parents and we talked through it and gave her some guidance in it but i mean it's a real thing people just don't talk about it and so uh the amount of chaos that is lowered when something happens uh is it's monumental and And I had Pastor Mike Glenn on the show. He had a book come out with his mom, talking about his mom and Alzheimer's. But even he talked about, as a pastor of a huge church here in Nashville, though,

walking with so many people through grief throughout the years. And just like, he's like, people that don't take care of their families in this way, you feel it in the environment during the grieving process, which is just so sad that on top of the grief, here's this other element of stress where the families that it's taken care of, it's communicated, and things may not be perfect, but it's there. I mean, there's at least a plan in place. There's a structure, a will, an estate plan.

There's insurance. Everybody knows where everything is. We're not in the backyard with a metal detector trying to find where Papa buried the fruit jar. Totally, yeah. But even the grief with a metal detector trying to find where Papa buried the fruit jar. Totally, yeah. But even the grief of a person, right? I mean, like the emotional things that you go through in that time, how healthier it is when all this. So there's just so many elements of it.

And so we just did a full show on it, and it hit a nerve. So it's great. Yeah, very cool. Yeah. And you guys talked about some of the investments that aren't. Oh, yes yes we did it's basically like if there's an actor from the 80s or 90s on the tv commercial you probably just don't want to buy the products because that's probably what they're selling but all the reverse mortgages

you know even like the gold commercials now buying gold it's all directed towards the elderly it's like you know when you listen to even the way they phrase things within those commercials it's fear and it's all this stuff and you're like no no no um we talked about uh accidental death insurance not to get that you know so just some of the sort of the scams the financial products that are out there that prey on that sector of the population uh that's a waste of money and um yours well i asked you about them, a few of them, because I was like, I want to make sure I'm not teaching the wrong thing or something. But even prepaid funerals. And I asked you, okay, so prepaid funerals, that's not a great idea, right?

And you're like, no. Because if you just took that money, which you would have put for a prepaid funeral and invested it, you could have buried King Tut. Like how much money you would have had on the back end versus paying for a prepaid funeral. So it's things like that that you just don't really think about but when you look at the math and you know take those financial products to length you see oh yeah that's a bad investment so

we talk about that as well that's a good that's a good conversation there very good so difficult conversations with mom and dad talking about wills and long-term care insurance so sorry this has been a little bit of a debbie downer subject but there was one lady she on my instagram and she commented and she said that she talked to her she was she and her mom sat down and did it all and found out her mom was a millionaire her net worth when her mom didn't even know it i mean the way the comment read no she was like yeah my mom i sat down with her for the first time we looked at everything and we realized she was an everyday millionaire she's like it was so exciting i'll never forget that day i was like yeah my mom i sat down with her for the first time we looked at everything and we realized she was an everyday millionaire she's like it was so exciting i'll never forget that day i was like that's a good so some positive things could come out of this it doesn't have to be all doom and gloom but well it gives you some peace when you know what's going on yes there is a and certainly

gives you peace when you're dealing with a grieving situation when you can know okay i know what the will is i know where the will is i know what the will is i know where the will is i know what to do yeah i know where the insurance papers are you know we have a legacy box you know a box where all the papers are a file drawer where you can go to where you know where everything is and you just walk in there and pull it out and it's all lined out the um so it's that and then we've talked about recently you and and I, in a different conversation, but there's even a little bit of a fear within people that they're going to end up like their parents. And so even touching on that and realizing, yeah, there is a real sense of, oh, gosh, I don't want to end up that way.

And so people are learning for themselves. This is how I want to do it for my kids. Right? So it's a generational knowledge. I don't want to work my whole life and be broke. That's right. That's right. That's cool.

Rachel Cruz joins us this half hour back with your questions right here on the Dave Ramsey Show. Thank you. Our scripture of the day, John 14, 6, Jesus said to him, I am the way and the truth and the life. No one comes to the Father except through me. Cecil Beaton said, Be daring, be different, be impractical,

be anything that will assert integrity of purpose and imaginative vision against the play, it's safers. The creatures of the commonplace, the slaves of the ordinary. Ooh, I like this guy. He's great with words. Very fun stuff.

Rachel Cruz, Ramsey Personality, number one best-selling author, joins me this hour to answer your questions. Shay is in Battle Creek, Michigan with a question. Hi, Shay. Your question for Rachel and me. Hey, Dave. Hey, Rachel. My question is, my husband and I are getting ready to start Baby Step 1.

And I've got the budget. I've got all of our debts laid out. I just am stuck on where to allocate the paychecks to go into the budget, if that makes sense. So my husband is a retired veteran. So his paycheck is in the beginning of the month. It's a lot larger than mine. And then I get paid biweekly. So I'm just worried about running out of money in between. So my question is, how do you decide where to allocate, where you pay the bills, where the money comes from? Sure. Well, there's always kind of two ways I look at this. There's one that you

are super specific about what bills are paid when, because sometimes bills are paid on the 30th or the 1st or the 15th, depending on where it lands. And as the money comes in, you pay the bills that are there during those dates, and then the next paycheck funds the latter half of the bills. But one of the best ways to honestly to do this, to do the zero-based budget, I have found if you can, to get ahead enough a month where you're able to use last month's money to be able to fund the current month. Because that paycheck that comes is going to have to fund the rest of the month. And so I find that some people end up with like zero basically in their checking account, which is super dangerous because a zero-based budget does not mean zero money in your bank account. Some people take that translation. So if you can get a little bit of a head to have some of that money in your checking account that you can fund some of those bills before the paycheck comes, if that makes sense.

It's almost like you're a month ahead. That helps. I know that helped my husband and I when we started the zero-based budget to do that um but if you feel like oh we don't we don't have time to do that or like that's just too much then that's when you have to be super super specific about when each bill lands the good news is is that um you know three quarters more than three quarters of your house pay comes in the first half of the month because his big check comes on the first and one of your checks and then you're one of your smaller checks comes at the end of the month right

uh well and bi-weekly well i mean the second weekend you get that you get a check but you get your other check and his check at the first of the month and so you got a big lump of money there to do a bunch of stuff at the very first of the month. So if you just lay out and make sure that every dollar has an assignment before the month begins, you should be able to pull this off, but Rachel's right. Get a little bit ahead and or just be super specific about assigning, okay, house payment's coming out of this one, we're taking this much food out of this one and that much food out of the other one,

and we're going to do the cable out of that one and so on. And it gets hard is i think when some people first sit down do a budget they say okay we've allotted six hundred dollars for groceries for the month or whatever the amount is you may not you're not going to have that six hundred dollars on the first of that month and so you're going to be taking from other paychecks throughout the month to fund that 600 so it just takes a lot of intentionality but we say it around here all the time and it's true it takes about 90 days to kind of get that flow down and to know what amounts go in each category. But after you get that flow down and after you actually get on a plan and you're intentional, some of that cushion in your checking account is going to help you with that kind of like freaking out of like, oh, I don't want to run out of money. That'll help a little bit of that.

But it's just getting in this totally new habit. It's like changing the pattern of the way you think about money. So it takes a little bit of of time so it can be kind of confusing that first budget especially with multiple paychecks like you're saying but once you get in that rhythm it picks up and you see it diana is in cleveland ohio hi diana welcome to the dave ramsey show hi dave hi rachel how can we help hi so i have a like two questions but question is, so I, it will be two years in December since I graduated from college. I, my parents couldn't afford to help with college, so I had to end up taking some federal student loans. And I know I want to go back to grad school before I get married, before I have kids, now that I have time and the momentum to do it. So I'm thinking maybe fall of next year.

My question is, though, is because I've racked up, like, some student debt with my undergrad, and then I, because my car gave out on me last second, I ended up getting a used car as well. So I have a car loan as well. I wanted to start the, like, you know, the baby steps, but my question is, right now, should I devote my time and effort towards the baby steps, or should I start saving towards grad school so I don't end up getting more debt? How much debt do you have in your student loans in your car loan total total um probably a little under 50k like 10k is in federal perkins a little under 15k is under just federal loans and What do you make? Gross, like 50K. Yeah, you went crazy on your car, didn't you? Yeah.

Well, here's, I guess, a side story. Okay, what are you going back to grad school for? My nurse practitioner. And you're a nurse now? you're a nurse now i'm a nurse now i cut back actually on my hours from 40 hours a week to 36 so that i could go back to waitressing so i could do nannying because i want to like use that money and kind of just like i'm sorry you can make more being a nurse than being a nanny. Why did you... Yeah, but then, but the amount of, like, well, I don't know if this was just me just being discouraged every time I saw my paycheck.

So much of it was going towards taxes. Whereas, like, when I'm nannying, like, you know, a psychic, like, I guess... You have to pay taxes on the nanny income, too. We have a federal income tax in america all income is taxed it's not tax-free income now you need to go back to being a nurse and nurse your tail end off and get these debts cleaned up and then save up and go back to nurse practitioner school yeah i was gonna say that i was say diana make sure i mean and the whole car situation you can chime in she sold a car and all of that but when it comes to your schooling

yes go back or stick with nursing and then waitress at night no just nurse but you make more but yeah but you can waitress at night if she doesn't have a shift a nursing shift you can get all the shifts you want nursing to pay off debt you can work 80 hours a week as a nurse i don't work in the medical field but i know that you can take extra jobs to pay off debt that's what i'm saying work extra do what you can work extra as a nurse you'll make more than waitressing or nannying okay fair totally fair and then pay off the debt and then your emergency fund and then save up for grad school. But car, go. Yeah, well, it's okay.

I mean, the thing is you make more being a nurse, and yes, you get taxed more when you make more, but that's how the income tax works. You don't get away from that. And so, no, don't be a waitress and don't be a nanny. Be a nurse. You make twice as much doing that as you do anything else and go to work in 80 hours a week and clean up your mess. You can be debt-free probably in a year and a half.

And then you can save up the money and go to – you can even keep the car and be debt-free in a year and a half. But if you want to go to grad school debt-free, save up and pay cash for it. And you'll be able to do that because you have a fabulous career field. You've chosen a fabulous career field because you're always going to be able to find a job and you can always work extras yes that's fair and and i hear this a lot from younger people that they think well once i get married or i have kids then i don't have those options anymore but you still do so i would make it a priority to clean up your mess now pause a little bit on grad school too you can save up and pay for it and even if you're married you can still go to grad school even when you have kids does it make it a little bit on grad school till you can save up and pay for it. And even if you're married, you can still go to grad school. Even when you have kids, does it make it a little bit more difficult?

Sure, there's some logistics there, but you can still go back. So, like, that's always out there. Don't feel like this urgency that you have to do it in the next 12 to 18 months. If you want to be super urgent about it, though, go sell your car and get you a $5,000 car. That's true, too. And that would speed up how fast you get to go to be debt-free and how fast you can have the money to go on to grad school. A nurse practitioner is a great thing to go get.

I'm with you on your path. I just want you to readjust how you're getting at your path. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, guys, it's Blake Thompson, Senior Executive Producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Rants, debt-free screams, and the very popular Everyday Millionaire segment. Go to The Dave Ramsey Show YouTube channel and Catch the most watched Dave Rants, Deathly Screams, and the very popular Everyday Millionaire

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