The Ramsey Show - App - Ideas to Help You Save $1,000 for Christmas (Hour 1)

Episode Date: October 5, 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 this hour as we talk about your life and your money. It is a free call. Some say the advice is worth what you pay for it. The phone number is 888-825-5225.

That's 888-825-5225. Jessica starts off this hour in Richmond, Virginia. Hi, Jessica. How are you? I'm okay. How are you? Better than I deserve. What's up in your world?

It's kind of complicated i'm contemplating filing for bankruptcy and i just would like an objective opinion about whether or not that would be a good strategy for me or not times are tough huh yeah um i recently left my husband. He was very abusive. Me and the kids left. He had me fired from my full-time job. The house got foreclosed on. He ran up a ton of debt on my credit cards and my name. So I have judgment on my credit now. Collection calls out the wazoo. Like I said, he had me fired from my full-time job. All I can get right now is a part-time job that

barely covers the expenses, just the basic living expenses. So I have no way to, you know, start paying off the debt that he incurred in my name. Yeah, okay. And I'm afraid... Stop a second, okay? I'm sorry. I'm sorry you've been through this. It sounds like you've been through hell. So when did you leave your full-time job?

It's been a couple years now. A couple of years? Yeah. I haven't been able to find anything else comparable to what i did um since then okay well you were let me tell you you're emotionally not past that because you're the way you're describing it it sounded like it happened yesterday yeah i mean you're still living you're still living in the abuse aren't't you? I mean, my kids and I. In your head. Yeah, I mean, my kids and I, we were homeless for a while.

We've just been through a lot. And he's tried to get custody of them. I've had to go to court trying to deal with everything. And it's just been a lot. I hear you. So basically none of these bills, the foreclosure or all the bills that he opened up in your name, have been paid for years. Yeah, correct.

You haven't paid anything on them for years. So there's really nothing on fire today that says you've got to file by Friday, right? No, the only reason I'm considering it now is because I'm applying for other jobs. I've been applying since I lost my other one. And I have a possibility of getting hired at another company. And I've been on two interviews, and they've done reference checks and everything, and everything is moving along. My concern is... What is your career field?

What are you trying to get a job doing? Human services. What I did before was I counseled people who were trying to get work with a nonprofit who helped with housing. I see. Okay. And so you think you've got a lead on that, and you're afraid you might get garnished by somebody suing you if you got that job? Correct.

Okay. All right. Well, the good news is the instant before they garnish you, you could file, and they'd never get a dime. So we're still nothing on fire. We're a ways away from having to worry about this. So you would have to get a job, and they would actually have to file a garnishment at that job and find out you had that job before you went that far. You may end up filing, okay? And it might end up that, and I would certainly understand with all the hell you've been through. It would give you a clean slate, and you'd get a fresh start, and you may end up filing because it may be unreasonable to try to work your way through these things with your income.

But today, you don't have to make that decision. One of the things that happens when someone's been through what you've been through is you feel the tyranny, the tyrant in your head from the background, and it pushes you to do things very suddenly, very quickly, and out of almost a desperation, an emotional desperation. Am I wrong, or am I reading your mail? No, you're correct. Okay.

And so what I'm going to tell you to do is just slow down a little bit, because the worst financial decisions you make are when you're desperate because you feel like you're forced or you're trapped, and you start slashing and flailing around like you're drowning or something, and you really can do some stupid stuff financially. Now, how much credit card debt is involved here? It's probably about $20,000. Okay, good.

And do you have any other debt, student loan debt? I have student loan debt, yes. How much is it? It's probably about $23,000. Okay, that is not bankruptable. Correct. Okay. And do you have any IRS debt?

No, just the foreclosure on the house. Okay, and what type of a home loan did you have, FHA, VA, or conventional? I believe it was, well, it started off with Fannie Mae, but then it got sold and refinanced. And at this point, I don't even remember what kind it was. Okay. It's possible that they're not going to chase you at all for that. So if you just said that's not there, and we start making some money,

and we wanted to settle with two- and three-year-old credit card debt for 20 cents on the dollar, $4,000 if that's the case, and a lot of fighting on your part, you'd have to have your fight back arguing with them. You can probably clear $20,000 worth of old credit card debt for around $4,000, and the student loan debt doesn't change. If that's all the case, and they're not garnishing your wages, and you just begin to work through this, and you could have cleared it for $4,000, and it would have all just gone away without a bankruptcy,

because, see, the bankruptcy starts the nightmare, the credit nightmare, the money nightmare, over again. Right. It starts it all new. But if you can just clear these things up, they drop off into the past a whole lot faster, and they're not as permanent as a bankruptcy is. You may end up being forced into a bankruptcy by garnishment.

But today I would not file based on fear of something that might happen that has not yet happened the boogeyman is not real you got away from him right you're gonna be okay if if i am able to start paying off the debt um would it still be best to go from smallest debt to largest, or should I start with the judgment? I would list them smallest to largest, and I would call the smallest one and settle with them for 10 to 20 cents on the dollar, and then I would settle with the next one for 10 to 20 cents on the dollar.

Meanwhile, I'd get my student loans going on a basic payment plan. That's all after you're back to work and feeding your kids and have lights and water and a place to live and all that, which is infinitely more important than anything we're talking about. Right. Okay. Now, have you been through Financial Peace University learning how to handle money yet? No, sir. I've read the total money makeover from the library.

I want you to go through the class as my guest. I'm going to pay for it, okay? When you're facing this stuff and you're walking through these details and you're walking through these issues, you face it again, you call me. We'll talk about where you are then. Today, you don't have anything to be afraid of. Later, you might. We'll talk about it then. I'll help you. This is the Dave Ramsey Show. Hey, Spencer here from Smile Love. At Smile Love, we'll straighten your teeth

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So if you ever find yourself holding back your smile, get started today at smilelove.com and remember to use promo code Dave to take an additional $100 off. smilelove.com, promo code Dave. Thank you for joining us, America. We're glad you are here. Kimberly is with us in Alexandria, Virginia. Hey, Kimberly, welcome to the Dave Ramsey Show.

Hey, Dave. Thank you so much for taking my call. Sure. I love you a lot. Absolutely. My pleasure. My question is this. My dad is 75 years old, still works.

He works in a steel plant. He makes about $450 to $650 a week. About a couple years ago, he got sick. I found out that he hadn't paid. He was behind on a lot of his bills. Had somehow gotten a $50,000 loan from the bank. And he doesn't have a pension. He gets about $1,500 in Social Security. And I'm just wondering, what can I do at this stage for him?

I do provide him, so I took over all the bills, and I do provide him with about $500 a week on like a debit card for him to buy food. And what are you doing with the rest of the money? I'm sorry? What are you doing with the rest of the money? Oh, I'm paying all his bills. He still has about $15,000 left on the equity loan, $2,000 on a credit card, $8,000 on a car, and $8,000 on the house. And how much are you able to put on the debts?

I'm putting everything. What's it turning out to be though everything on on the day how much money does that amount to what is everything a month i think it amounts to about four thousand a month that's pretty good. Okay. So he's got $15,000 and $8,000 and $2,000. Did I get that right? $15,000, $8,000 on the car, $8,000 on the house, and $2,000 on a credit card. Okay.

And if you divide that by $4,000 a month, I think you're done in a year. Okay. And your first goal would be to get him debt-free. You're done with the debt in a year okay and your first goal would be to get him debt free you're done with the debt in a year right your first goal is to get him debt free because he's 75 years old and he's still working the steel plant that i understand that right yes sir there's going to come a moment and it will come suddenly that he just can't do that and i'm afraid of yeah my prayer is at least that he gets through this year and that way he's debt free and if he's a hundred percent debt free house and everything he can probably make it on his social security if he had to right okay not not ideal not what

we want but we can probably get there and uh then the next step is if we get past that that'd be wonderful let's get debt free then let's build an emergency fund of three to six months of expenses. If we get past that, then let's start building some nest egg for retirement. But the fastest way to build nest egg for retirement is to clear that debt and to have that emergency fund in place. So it is still the baby steps, in other words. Okay. That sounds good well let me ask you this why would a bank loan um um someone at his age 50k and you know for and then to be paid off in 2043 knowing that he wouldn't

live that long well Well, two reasons. One is they're stupid. And the second reason is they're counting on the house. They've got to lean against the house, right? Well, that's true. And so the house will be sold upon his death, and they would get their money. Or they could foreclose on it upon his death, and they'll get their money. They've got the collateral as part of it.

And so that's part of the equation. The other part of the equation is asking a banker if you should borrow money is like asking a dog if it's hungry. I mean, they'll loan anybody that's breathing or not breathing money. You know what I'm saying? The lending has gotten completely out of control and stupid. So there's nothing, you know, just because someone offers you a loan does not mean that you are capable of paying the loan.

It just means you might be breathing. Okay. And so the industry is just stupid is what it amounts to. But so we have to protect ourselves from them offering us things because sometimes people go, oh, they wouldn't have offered me this credit card if I couldn't afford it. And it's like, no, they would have offered a dog that credit card. So, I mean, and dead people get credit card offers. So, you know, it doesn't afford it. And it's like, no, they would have offered a dog that credit card. So, I mean, and dead people get credit card offers. So, you know, it doesn't mean anything. It doesn't even mean, it doesn't mean you're not a dog and it doesn't mean you're alive.

If you got a credit card offer, you could be a dead dog and get a credit card offer. It could happen. So, I mean, you could be that low on the deal. So that's what you got to think through and just, you've got to take care of him and you are, you're doing a really good job. Congratulations. Tim is with us in Dayton, Ohio take care of him and you are you're doing a really good job congratulations tim is with us in dayton ohio hi tim how are you i'm doing fine dave i got a retirement question for you sir okay um i'll be 62 here in about a year and um i have a pension and i'll have a 401k also sitting out there that's sitting pretty good right now.

My question is, at 52, would it be better to file for Social Security and wait a while before I touch that 401k or take the 401k first and wait until full retirement age to get Social Security? You can run the math out, but usually your rate of return on your 401k on the mutual fund, that money is growing at a faster rate than your Social Security check will grow if you delay it. And that's the way you're comparing it. In other words, if you wait from 63 to 65 to start receiving it, what is the rate of return on that? How much more do you get as a result? And usually you'd get more in a mutual fund, generally speaking. And then the other question comes of, you know, even if I don't need it,

should I take it? And, you know, if you're willing to live on less than you make and, in a sense, invest some or all of it by not taking out your 401K or by some other things, then usually it comes out better to take it earlier. But, you know, there's a lot of different parts to that equation, and, you know, if you know when you're going to die, it sure makes it easier to do the equation.

Oh, that would definitely help. Yeah, so you've got to kind of guess, and you've got to say, you know, average death age of a male in the U.S. is 76., average death age of a male in the U.S. is 76. Average death age of a female in the U.S. is 78. But once you've lived to be 60, it's higher than that because those numbers include infant mortality, include teenage death, that kind of a thing. And so, you know, if you're a healthy 60-year-old, you've got a real shot at 90, according to the stat tables right now. And so that's what you've got to walk through and think through in the process. So good question, man.

Thank you for joining us. Open phones at 888-825-5225. Todd is in New Hampshire. Hey, Todd, how are you? I'm doing pretty good. How are you? Better than I deserve. How can I help?

Well, when I spoke to the lady, she said I could ask you a question, and I just got the starter pack off of your website for myself and for my daughter, who's 31. I'm 52, and I've been a dreamer, I guess, or a free spirit, as you would say, listening to your show addictively now for the last two weeks. I didn't know who you were before that. That's all right. But my wife and I sat down, and we've never been able to agree on money. She's the saver. I'm the spender.

And just, you know, I don't know what the money situation is, so I go and spend it. And we've set aside step one. We've got $1,000. Now we've put aside to the savings. She wants to save more than that, but she's always ran the show, and I'm kind of just kind of going along with her at this point. We paid off two credit cards, and we paid off another credit card. My question is, I'm doing so many things right now,

and the one thing that's concerned me is about down the road is my retirement, and've worked for a company for 15 years and i've got about so in the starter pack was the total money makeover book in there yes it is i started to read that i haven't read it this total money makeover has every detail about the seven baby steps it's the seven baby steps on steroids and so it's going to walk you through first thing you do is you save a thousand dollars you get on a written plan you and your wife are in agreement and we're going to walk you through. First thing you do is you save $1,000. You get on a written plan. You and your wife are in agreement. And we're in agreement that we're going to work this plan together. Okay?

And once you do that, then your first goal that you squeeze out of your budget is you save $1,000. If you've already got money saved, then we would save only $1,000 of it. Stop all investing temporarily, temporarily, temporarily. And then you move on to baby step two, which is your debt snowball. And that's where you pay off everything except your home by listing your debts smallest to largest. You attack those because by getting rid of those debt payments, now you've got the ability to invest and grow money from there. Once that's done, you build your emergency fund and then you start retirement as baby step four.

So that book is going to walk you through everything. Make sure you and your wife are working through that together and get on the same page, because I think you can make a lot of traction really fast here once you do get on that same page. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and a struggle to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family

has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of Ramsey Solutions. Hey, Derek, how are you?

Everything's good, Dave. How are you? Better than I deserve, sir. Where do you live? I live in Charlotte, North Carolina. And all the way to Nashville to do your debt-free screen. Well worth the trip. Well, we're honored to have you, sir. Thank you. How much debt did you pay off?

I paid off $45,000 in 18 months. Good for you. Well done. And your range of income during that time? I started at about 50, then around 100, then it got down to about 80. Okay, cool. What do you do for a living? I'm a truck driver. Oh, neat. Well, you are a dressed up truck driver. Thank you. Thank you. This is a big occasion. Most of our truck drivers don't roll in here in a suit and tie. Hey, I'm here in a suit and tie. You got your Sunday clothes on. No, no, no. These are the Dave Ramsey clothes. Well, well done, sir. Thank you. Who do you drive for? By yourself or for a company? I drive for Avid Express. They're out of Cookville, actually. Absolutely. Yeah, I know Gary. So very cool. Good guy. Good, good. Excellent. What kind of debt was the $45,000?

Oh, man, well, I had a little bit of everything. I had a well-diversified portfolio. It was student loans, 10 credit cards, a couple cars, everything, everything. Wow. How old are you? 34. Okay, and I take it you're single since you're standing here by yourself. Yes, with my girlfriend.

Oh, with your girlfriend. All right, that works. So what happened 18 months ago that the phone rings and Derek answers the call and God says, wake up? What happened? Well, I saved up a little bit of money, and I paid on like 10 credit cards. And I thought I was doing a good thing, and then the next month came around,

and I noticed that all of the minimum payments were like $10 cheaper than it was the previous month. And I said, this isn't the way to go. So from there, I just started to search around on ways to pay off debt. And then I had actually saw the baby steps. And then when I saw that, I said, I don't have time for baby steps. I need to get out of debt tomorrow. So I just kept looking around and then I saw the debt snowball. And then I clicked on the debt snowball. So I just kept looking around, and then I saw the debt snowball. And then I clicked on the debt snowball, and then you were talking about the baby steps again. So I said, I can't get away from this guy. So I literally just watched it and then started listening to it.

And I actually went to one of your smart conferences in Raleigh. Oh, yeah. And then from there, I've been on fire ever since then. Very cool. Well done. Well done, sir. How does it feel to have no payments 18 months later? It's surreal.

It's surreal. But, man, it was well worth it. It was well worth it. So tell people when they ask, well, what do you tell people when they ask how you got out of debt? What are the keys to getting out of debt? A lot of hard work. I worked every weekend for about a year and a half solid so from there and then to get my income up i also started to sell things i heard that you always

talked about selling so many things the kids think they're next and i don't have any children to sell i just started to sell everybody else's stuff so i would go to yard sales and i would buy it cheaper and then sell it for a higher oh really yeah i just kept doing that every weekend just to get my income up and pay more on debt just to get it done so where did you resell it ebay amazon amazon okay jump on amazon with a used item and works like ebay and it goes out of there so what was the item that you did the best with reselling uh it's actually a board game. I think it's called Masterpiece or something like that. I think I bought it for $2 and I ended up selling it for like $150. Whoa. Yeah, it's brand new. So

I said, I like this. I like this. I can keep going with this. All right. All right. Yeah, I want to do that again as often as I can. Absolutely. Well, good for you, man. Very, very well done. What was the hardest part of getting out of debt for you? Well, the hardest part, it wasn't necessarily the process. It was more about seeing how debt affected the people around me, seeing how debt just affects society in general. And that just made me want to get out of debt faster and maybe want to tell other people that you can get out of debt and that you don't need to live that way. So that was really the hardest part was just seeing how that affected other people and the hopelessness that they felt. And just let them know that there's another way to do it.

There's a better plan. Those are good words. Those words tell me you'll never go back. Never, never. This is the good life. My friend Rob, that's what he says. We see him every morning. We work together, and he's debt-free too.

And we just talk about how good life is right now. Yeah. Amen. Well done. So you brought your girlfriend with you. What's her name? This is Lauren, and that's my mother, Dini. All right.

So you got the gang with you here. Absolutely. I've got the cheerleading section. So we know you had two good cheerleaders. Did you have anybody making fun of you or detractors along the way? No, no. Not any detractors. I mean, I was at work so much. They were the only people that saw me. Anybody making fun of you or detractors along the way? No, no, not any detractors.

I mean, I was at work so much. They were the only people that saw me. I was either at work or asleep, and that was really it. I mean, I just kept working. And, you know, once you see it going, people can say what they want to say. But at the end of the day, it works. And, yeah, I didn't prove them wrong. Yeah, yeah.

Well, how do you like me now? Absolutely. Here we are. Well done, sir. Very well done. I'm proud of you. I know prove them wrong. Yeah, yeah. Well, how do you like me now? Absolutely. Here we are. Well done, sir. Very well done. I'm proud of you. I know your mom is. Absolutely.

Thank you. I know your girlfriend is, yeah. It's good times. Good times. You got a great start here. You know how to make money. You know how to handle money. Your future's bright, sir. Absolutely.

Thank you. Thank you. I tell you, and you're the most dressed-up truck driver we've ever had on here. I just tell you, it's a very impressive outfit there. You're ready to go. Thank you. Ready to go. All right. truck driver we've ever had on here. I'll just tell you, it's a very impressive outfit there. You're ready to go. Thank you. Ready to go.

All right. And we're going to give you a copy of Chris Hogan's retire-inspired book because that's the next chapter in your story. We want you to be a millionaire and outrageously generous along the way. And I know you will be. I think you're heading that way without a doubt. You know how to make money. You know how to handle money. That's in your near future.

Thank you. Derek from Charlotte, North Carolina. Forty five thousand dollars paid off in 18 months, making 50, then 100 and then back down to 80. Count it down. Let's hear a debt free scream. Three, two, one. I'm debt free. That's how it's done. Yes!

Hey, that's good stuff. Well done, sir. Very well done. Well, you don't need a second mortgage to make your home over. You can get a brand new custom window blinds, and that changes the look. You don't have to pay custom prices, either. You'll find have to pay custom prices either.

You'll find everything you could ever want in designer window coverings at blinds.com. With blinds.com, you get free samples, free shipping, and with the new promos they run every month, you're going to save even more. Always put in the promo code RAMSY, and you'll see the best possible deal out there at blinds.com. Question is from Jennifer in South Carolina. She says, Dave, I've got an HSA, a health savings account, through my current employer. If I leave, can I roll that to the HSA through my new job, or will I just have two HSAs? You can roll it to an independent HSA to park it. You can roll it to the new job, either one.

I always recommend keeping as much independent as you can. So anytime you leave an employer, you take your 401k, your 403b with you by doing a direct transfer rollover into a traditional IRA. You don't have any taxes that way. Same thing can be done with your HSA with the same exact mutual fund company if you want to. And you can control every bit of that and control where the money is going, how it's going, how things work, the whole deal. So that's exactly what I would do.

Lucas is on Twitter. Dave, do you agree with the pay yourself first principle? Well, Lucas, in general terms, yes. But if you want to get more specific uh no the specific no part would be that i'm an evangelical christian so i tithe i give a tenth of my income off the top before i start anything to my local church so i don't pay myself first um but putting yourself ahead of your bills as a general philosophy and saying, I'm going to save money, I'm going to make savings a priority,

I'm going to make investing a priority, this is what people do who build wealth. And so, yes, I would. Famous evangelist Martin Luther said, no, it wasn't. It was John Wesley. It wasn't Martin Luther. What am I thinking? Well, he's a famous evangelist. I got that part right.

Wesley said, if you'll give 10% and save 10% and live on 80%, you'll always be okay. And you know what? That's not a bad formula. But that's also putting God first, you second, and then living on 80. And figure out that to live on your income after you're giving and you're investing and you'll always have money. That part is accurate. And then we evolve that a little bit into the baby steps

where when you're on baby step one, you don't do anything. Do you save $1,000? And baby step two, you're not saving any money in baby step two, including stopping all your investments temporarily because you're completely doing your debt snowballing. You're focusing on the debt. Why? So we can save more later. Soing. You're focusing on the debt. Why? So we can save more later.

So that's the technical parts of the answer. But in general, you've got to put your giving and your saving at the top of your list, at the top of your life priorities, because you're going to have a better life if you always give and save and then live on what's left in some manner of speaking. Baby steps, Wesley's formula, whatever you're going to do, something along those lines. This is The Dave Ramsey Show. Thanks for joining us, America.

Candice is with us in New York. Hi, Candice. How are you? Hi, Dave. How are you? Thank you for taking my call. Sure. What are you? Thank you for taking my call. Sure. What's up?

So I just want to know if you have any tips on saving a house cash because my husband and I were really hesitant on the idea of getting a mortgage. And we also want to know if we're saving cash. Should we still contribute to retirement while doing that? Because we don't want to fall behind on retirement. Yeah. How old are you? I'm 26. My husband's 25. Okay, good, good, okay. And you're debt-free already and have your emergency fund? Yeah, we became debt-free last month and will be done with our emergency fund by the end of this month.

Very good. Good for you. Well done. Well done. So how much can you save a year if you don't do retirement? It looks like we can save, if we're really, really strict on ourselves, it looks like we can save probably about $36,000 a year without retirement. Okay. And how much are you wanting to save total? Well, we were thinking of just starting with a really small house in our area, maybe buying like a co-op, which is pretty popular over here,

or a condo first around like $200,000, and then just keep saving and move up in-house from there. Right. Okay. So if you came, you know, you'd be at about a five-year plan if you were a little under $200,000, right? Yes. $36,000 divided into $200,000, right?

Right. It would be six years roughly if you do the full the full two hundred, a little over two hundred. But somewhere between one fifty and two hundred, you could do it in about five years, not counting getting raises and not counting saving even more. That's the most I would want to go. I don't want to wait much more than five years to buy and I don't want to wait much more than five years out of your retirement system. So, yeah, I mean, whatever you're going to do, I would try to do it in under that. But then, so the point is you're sitting with a paid-for property, no payment in the world at that point, and you're making really good money, and you're 30-something, 31, 32 years

old. Right. And you're making really good money, and you're 31, 32 years old. Right. And so can you become a multimillionaire doing that? Absolutely you can. Okay. If you just pay yourself a house payment from age 30 to age 60, you'd be a multimillionaire. Right. Okay.

Okay, great. So we'll go ahead. And would you recommend maybe if we did, would you think it might be a good idea to do maybe like 10 to retirement and save maybe a little bit less? It's up to you. If you're going to go longer than five years, I'm starting to get pretty nervous about it. Okay. Okay, if you're going to be under five years and you want to do zero,

in your case you're still going to be very young and without a house payment when you pay cash for this house. Right. 31 years old is very young with zero house payment, and you've got the income for the rest of your life to build wealth with. I mean, if you'll just keep paying attention, again, pay yourself a house payment, plus or minus a little, you can be a multimillionaire. Okay. Great.

Thank you so much, Dave. I appreciate your advice. Very well done. Good job. You're thinking. Deborah's with us in Tampa, Florida. Hi, Deborah. How are you?

I'm doing well. Thank you for taking my call. Sure. What's up? Well, I am working on step two of the Financial Peace University, and I have paid off $40,000 in 12 months. Good for you. And, yes, and I'm down to just one debt, which is a hospital bill that we've been paying for many years now with very small payments.

And it's been sent to collections, and we've been looking at our credit report just making sure that all these debts have fallen off and um it it turns out that hospital bill has fallen off of our credit report and because of that my husband's been uh toying with the idea of just not adding that to the debt snowball and just continuing the minimum payments or even not paying it at all. And that scares me to death, but I wanted to know from you, what are the implications of doing something like that? Well, there's two problems with it.

One is you actually owe the money, so you should pay it. Yes. That's one problem. The second problem is that it's going to come back to haunt you. Just because they're not reporting it today doesn't mean they're not going to take an active outstanding account and report it at any time. And so what's happened is the collection agency that you're dealing with,

the collections company that you're dealing with, has just not downloaded their files to the credit bureau. But they could do that at any time. And then you've got a bad mark not just a mark but a bad mark because this is a defaulted this is a bad bill it's not a current bill because they didn't offer you payments at the start they only offered you payments because you couldn't pay them right and you owe them the money and so how much is the bill? It's less than $7,000 at this point. Okay. What I would do is continue to pay them.

I would continue to pay them the minimums, and I would build up a lump sum of $3,000 or $4,000 and offer them that as settlement, and let's get it settled in full and get it in writing. Okay. But in writing, settled in full. And I would do that because it's already a bad mark on your credit and there's no telling how much they've added to it in collections fees and late fees anyway and so i you know i want to i want to discount it a little for those reasons in those

situations but just to ignore it because it's currently not showing up on your credit bureau is unwise because it will end up showing up again. And on top of that, you owe the bill. So clear the bill. Move on with your life. It's worth the trouble to address it. Good question. Thanks for calling in.

Tanya's in Lexington. Hi, Tanya. Welcome to the Dave Ramsey Show. Hello. Thank you for taking my phone call. Sure. What's up? I have a question.

Okay. I am 70 years old and I'm getting ready to think about taking the payment options for my tax-sheltered annuity. And I wanted to know what would be some of the best options. When I took this annuity out, my thinking was to take a lifetime monthly benefit. And so then when I went to ask about it, they gave me several other options. Some of the other options were to take a fixed annuity monthly income, which would be lower, but it would include a long-term care policy. No. Another one was to take another fixed annuity with a nursing care home policy. No. No.

No. Okay, let's go with F, none of the above. Yeah. F, none of the above. So anytime you start weaving in these other policies with it, that's going to entail extra fees and gotchas. Notice I didn't even ask what the numbers are. That's in the insurance world what we call that is bundling. And there's only one time bundling works to the consumer's advantage, and that's when you put your car insurance, your homeowner's insurance together. That often works to your benefit.

But the rest of this stuff is gimmicky gotcha garbage. And so you smelled a rat, and you have a good nose on you, kiddo. So what I would tell you to do is I would tell you to check with an investment advisor, like one of the SmartVestor pros and talk about just rolling this into some very low risk, low volatility mutual funds, and then just pulling an income off of that. I think you'll end up with more money alive and dead doing that than you will messing with this annuity. Because the other thing that you can be sure of with an insurance company or an investment firm, anytime they give you a guarantee, that means they're giving you less than you could have made if you didn't have a guarantee.

Okay? Oh. And so, you know, it's like with your home. You didn't get a guarantee when you bought your home. No guarantee it's going to go up in value or down in value, either one. No insurance company is backing your home. No F either one. No insurance companies backing your home. No FDIC insurance on the value of your home. And yet, you felt really comfortable taking that quote-unquote risk.

Why? Because, well, we can look at the track record of homes and be very comfortable with them. And if I could find a mutual fund that I was just comfortable with its track record, its volatility, as I was with your home at 70 years old, something like a growth and income fund or a balance fund, that kind of a thing, that's probably where I'm putting my money if I'm you at 70. And it wouldn't be anywhere near an insurance company. So I'd be rolling this whole thing over into something else.

Check SmartVestor at DaveRamsey.com. Put in your info. It'll drop down a list of the SmartVestor pros in your area. You can sit down with one of them. They'll have the heart of a teacher, and you will understand it, because I can tell you that type means you're smart before you buy. This is The Dave Ramsey Show. Hey, it's Blake, Chief Production Officer for the show,

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