The Ramsey Show - App - Instant Gratification Is Not an Option (Hour 2)

Episode Date: January 2, 2019

The show about you

Music Music 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 am Dave Ramsey, your host. This is your show. We invite your calls toll-free and nationwide at 888-825-5225. That's 888-825-5225. Mike starts off this hour in Battle Creek, Michigan. Hey, Mike, how are you? Oh, pretty good. How about you? Better than I deserve. What's up? I saved my $1,000 from Table 1, and I'm starting to pay off my debt. My question is, I owe about $35,000 to the IRS, and I'm also behind on my property taxes.

So do I put those in front of my other debt, or do I... How much do you owe on property taxes? About $4,000. Okay. And what's your household income? Right around $75,000. Okay. Why are you $35,000 behind with the KGB, I mean the IRS?

I owned a business, and I finally had... They kept getting lower and lower in business, and finally I had to just give it up. But I kept on to it longer than I should have, obviously. And you didn't keep up with your taxes. Okay. No, I didn't. I had a lot of illness in my family, and I wasn't able to. Gotcha. Do you have that on an installment plan right now?

Yes, I do. Good. Okay. As long as you're paying that, they generally will not jump in and screw up your life too severely. So, yeah, I'm going to clear up the property taxes first and then the IRS second for this reason. Number one, the property taxes are significantly smaller, and you'll be able to knock them out pretty quick and be done with it. Number two, you've got the IRS on an installment plan, so they're not going to come after you.

Property taxes will, though, if you don't pay them. You're going to have a problem. So, yeah, I'm going to go ahead and clear that, and then I'm going to work on the IRS, and then I'm going to work on the rest of my debts. But let's clear the IRS before you clear any other debts, and it's going to take you a little while. But you need to really roll up your sleeves and say,

we're going to cut everything in sight and get this paid off as fast as we possibly can. John is in San Francisco. Hey, John, how are you? Hey, pretty good. How are you, dude? Better than I deserve. What's up?

Great. Hey, so I don't know if you know anything about the Bay Area, but it's incredibly expensive, and the top three in the United States, and I expect for this to live. So I work here in the Bay Area where I do not live, and I live about an hour and a half away. I have to take the trains, about $350 a month, and a bunch of buses. So I kind of travel for maybe four and a half hours per day, doing some work. My wife and I live in Antica.

We just had our new baby, who is two and a half months old. Congratulations. I'm sorry. Thank you so much. I'm trying to figure out, should I try to move away from here and get to another state where it's cheaper to live? Right now I pay about $1,250 on my monthly rent. What do you do for a living? I work in shipping.

Okay. And what do you make a year? Around $57,000 to $58,000. Yeah. It pays well in the Bay Area. I can't work anywhere outside of the Bay Area and do as well necessarily. Well, yes, to answer your question, I'm very familiar with Bay Area real estate prices and Silicon Valley and everything else and L.A. and San Diego and, you know, the California issue, Manhattan, you know, same situation.

And so, yeah, there are some of these markets, and Silicon Valley's got a real problem. I mean, they're having a problem getting just people to do service work because they can't afford to live there. It's the same issue. And, you know, but just on a regardless of the macro situation, in other words, the overall economic discussion, regardless of that, you're a young man with a baby, and you're spending four and a half hours a day traveling to make $57,000 a year. That doesn't sound fun to me. Yeah, my commute's seven minutes. I can't even imagine you know and so i uh um you know i i really uh yes i would do something different i mean uh you know you the thing you've got to be careful of is you

need to find what you're going to do before you just quit you can't just walk out the door you know you got to feed this baby and you know and take care of your family so you've got to feed this baby and take care of your family. So you've got to think about your career choices as well as where you're going to live. But the situation you're in is not one I would want to be in for very long. No. We do have debt, too. Yeah. We do have, yeah, like $90,000. But I work for a great company that also is in Texas and Florida.

I believe Florida is actually cheaper than Texas, but we want to get to one of those. So I know where to look. This is kind of like a six- to 12-month future goal, maybe even a little bit more. Yeah, I would just start saving towards making that move, and you think you can transfer to one of those other locations? Yeah, definitely.

I don't know if they would give me like type of pumping compensation and travel thing but uh but yeah but i guess is it okay to stop the debt snowball we have baby step one done yes tax season's coming around there to get some money yes if i were in your shoes i think you'll i think you'll pay off your debts faster by moving. Yeah, that's what I'm thinking, too, because we have, like, 400 to 500 variables to our debts every month. Yeah, I can. Well, you've got a high cost of living. You've got a ridiculous commute that also eats into your cost.

I mean, it's into your budget. But more than anything, your quality of life is not great with a new baby and the travel schedule you've got. So if I woke up in your shoes, yeah, I would put the debt snowball on hold, and I'd build up some cash and make that move to Florida or Texas, particularly if you can make sure you have a job when you make the move. That makes it a whole lot easier to make that decision. And, yeah, you're right. It may take you five or six months to do that,

but it sure makes that commute a lot more bearable if you know you're not going to be doing it forever. And that changes the whole picture then. So congratulations on the baby, man. And thanks for being a listener. We appreciate it. You know, a lot of folks live in Los Angeles, the same situation. The commute is hours.

It's not unusual at all. In order to have affordable housing, quote, unquote. And, you know, the same situation in Manhattan. You know, you end up outside of the island somewhere in, you know, one of the other boroughs or maybe even Jersey or whatever, but the commutes, you really have to make some money to live in one of these high real estate costs, high cost of living areas. And it's not really like the cost of food that kills you. That's not it. And it's not even usually like utilities.

That's not usually the deal. But it usually does tie back to the real estate cost, and then that drives your transportation costs because you you end up having to commute so far in order to have a quality i mean in order to uh to get a house and get housing that you can afford so what he's facing is not that unusual you just got to make some bank to be in one of these expensive markets is what it amounts to so hey good question man congr Congrats again on the baby. This is The Dave Ramsey Show. Your goal this year is to get rid of your debt, but here's the deal.

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NMLS consumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Thanks for joining us, America. We're glad you're here. Eric is with us in New York City. Hi, Eric. How are you? Hi, Dave.

How are you? It's a pleasure to speak with you. You too, sir. How can I help? Okay. About a month ago, I lost my job of 15 years. Hmm. And I found out that my wife had $75,000 in hidden credit card debt. Ouch.

Yeah. Ouch. So what are we doing? So it's been really rough. I bet. I bet. Why was she hiding credit card debt? She said she was doing it for us.

You know, kind of we were living a lifestyle. We were making, you know, like $74,000 a year combined, but we were living like we were making, you know, $150,000. So she was handling all the bills and you weren't helping at all. That's correct, sir. All I was doing was just giving her my paycheck at the end of each week, and that was like that for the last 20 years. Okay.

Well, I guess that changes now, which it should. It's already changed. Yeah, the two of you working together. Yep. So the good news is she didn't hide it maliciously. She hid it because she wasn't very good at handling money or saying no to the family by herself, and you left her to that task alone. And so you're at fault, and so is she.

But we'll get through this. So what did you use to make it your job? I made $47,000 a year, and she made $30,000. She gets the full benefits for us, the health benefits. Good. And she's still working? Yes, sir. Good. And you've been out of work for us, the health benefits. Good. And she's still working? Yes, sir. Good.

And you've been out of work for a month? One month. Okay. So how's the job hunt coming? It's rough. I mean, I really, the last time I was out of work years and years ago, I found a job in two days, and it's just been really rough. Yeah. What do you do?

Sales. Sales? Good. Good. it's just been really rough yeah what do you do uh sales sales good i know i knew you were going to say that good it's the best thing to do right yeah you can sell you can do anything yeah i thought you've heard me say that then and i'm a big believer in that um i mean were you good at selling? Yes, sir. Okay. Why were you only making $47,000? I think it just had a lot to do with the job that I was at. I probably should have branched out a lot longer ago, better myself, but I didn't. Yeah, so this is a huge blessing. God pushed you out of the net. Fly legal.

Yes, sir. Yeah. I mean, so what is it you're going to sell that's a lot better product and that pays a lot better commission and you can sell a lot more of? Like make twice what you used to make. Lots of salespeople. Lots of salespeople make six figures. What were you selling before?

My question for you, what was I selling? Yeah. Cars. Okay. Hmm. Okay. Good. And your question's what then?

Well, my question for you is, Dave, is that my only way out of this is, I mean, the only thing I can think of is a cash-out refi. I have currently $70,000 of equity in my home. Thank God. Well, you can't borrow your way out of debt. You've got to earn your way out of it. I think your best way out of it is your career shift. And so I go back to our original conversation.

You know, you sell cars. Why did you lose your job? The business was not doing well at all. Okay. Because the new car, were you selling new cars? Smaller family-owned dealership. Yeah. You were selling new cars, though?

No, used cars, sir. Okay. All right. Well, I mean, cars are selling like crazy right now. It's a wonderful business. The car business is booming. Dealers are making more than they've ever made anywhere right now. All of them I'm talking to are smiling.

So I'm shocked that if you've been selling cars all those years, you can't land something selling cars. There's got to be somebody hiring. Well, every day I'm out there with the nice clothes on, and I'm going place to place, so I'm hoping something soon. To car dealers? Yes, sir. Okay.

Well, the other thing I would do then is expand my horizons and say, what else could I sell? If I wasn't selling cars, what could I sell? And that would make me more money. Because, again, if the net result of this is you're out of work for a month and a half which you're going to be by now by the time this all settles in and the net result is that you move from 47 to 77 on up to 100 over time that is a wonderful net result agreed agreed and you find this uh that your family was out of control financially and now you're going to help your wife and the two of you are going to work together to

form a plan that we both stick to living on less than we make you can work your way out of debt i'll help you do that that's what we show people how to do every day here you can do this but right now you just got two you got punched in the mouth and in the gut. I mean, you lost your job? Punch. Then your wife comes in and goes, oh, by the way, we got $75,000 in debt. Oh, crap. And so you're feeling like a country song right now, man. I mean, you're feeling like everything that can go wrong will, right?

Keep the dog out of the street, you know? I mean, things are bad. That's how you're feeling. And that's a normal set of emotions to have in this situation. But I'm sitting on the outside of all those emotions going, dude, this may be the best thing that ever happened to you. The next 20 years of your life could really be incredible. I mean, you could really make more money and be in better control financially

and build more wealth than you've ever built by the fact you fix these two things, the overspending and out of control, working with your wife instead of just tossing the check at her and getting an income up because your career changed. This is awesome. This is great. It's going to turn out awesome. Is it going to be? Is the next 12 months going to be a pain in the butt? Yep. The next 12 months is going to be a pain in the butt, but at least it's going somewhere. I think you're going to be in fine shape.

If you need some help on the getting out of debt thing when you land your new job, you give me a yell. I'll walk with you on it, dude. You can do it. Thomas is in Chicago. Hey, Thomas, how are you? Hey, Dave. Thanks for taking my call. Sure, man. What's up?

I'm doing well. My wife and I are following your routine. So we've been together coming up on 10 years, and we started off life with a combined income of probably $25,000 together. She had about $65,000 in student loans and a $20,000 car loan. And since then, we've paid off the... That was 25 years ago? No, no, no, 10 years ago, sir. Oh, 10 years ago. Okay. Yes, sir.

Yep. No, she had the $65,000 in the loan, and then the car loan on top of that. Mm-hmm. So since then, I've really expounded my earning capability. We've had a child. She's a homemaker now. And we're going to pay off the last of her student loans this coming month, which is exciting. So then we're down to our mortgage.

We've fulfilled our emergency fund based off your book. Good. So my concern right now, though, is we're still kind of living scorched earth, you know, rice and beans and beans and rice. And I'm working seven days a week, long days a week while she's a homemaker. At what point? I still owe probably about $160,000 on my house. Okay.

Once you finish your emergency fund, that's when you let your foot off the accelerator a little bit after baby step three. And you breathe. Yep. I'm sorry. I didn't mean to interrupt. No, that's okay. That's when you breathe a little.

Okay. So, yeah, we're at that point now. Like I said, we still owe about $160 on the house, but the emergency fund is covered. Good. She's a stay-at-home mom. Good. So, like I said, I think I still have my foot on the gas too hard right now. I'm working seven days a week, 12 hours a day.

Yeah, and you're getting tired. I'm getting tired, and she's getting tired of me not being there. Yeah, physically and emotionally, and you need to get back in balance because you've done the scorched earth to get where you are, and now it's time to relax just a little bit. By relax, I mean we don't have to work seven days a week, and we don't have to do scorched earth. You let up on the budget a little bit too,

but not to the point that we're going back into debt and not to the point that we're not saving for future purchases and that kind of thing. So you keep working your system, but you just don't have to work it with quite the level of intensity. If you were a 12 out of 10, you back it down to a 7 out of 10. And most of us live at about a 7 out of 10. Those of us that are working this plan and just being intentional with money, which is very smart on your part. Very well done, sir. Good for you. Thanks for calling in.

This is the Dave Ramsey Show. I'm going to go on a little rant here for a minute. I took a call from a father who wanted to know how to plan for the care of his special needs daughter after he dies. Why is it that parents of special needs children are so deliberate in their planning, while other parents have a tendency to be sloppy? Do the needs of your family matter less if something happens to you? Oh, I'm sorry, did I just guilt trip you into getting some term life insurance? Well, then good. Your family needs you to step up. Having the right amount of term life insurance is a matter of personal responsibility.

If you want to use the new year as a reason for doing the right thing, then do it. Term life insurance is something every family needs, which is why I talk about it every day. It's not complicated, it's not expensive, and you need to do this now. Zander Insurance is the only place I recommend. Visit zander.com or call them at 800-356-4282. Please learn from other people's mistakes and get this taken care of. That's 800-356-4282 or zander.com. In the lobby of Ramsey Solutions, Jeremy and Tammy are with us. Hey, guys. How are you? Hello.

Welcome, welcome. Where are you guys from? Kent Island, Maryland. All right. Well, welcome to Nashville. And you brought the whole crew with you. We did. What are your kids' names and ages?

We have Mackenzie. She's 15. McClain. He is 14. McKaylee is 12. And McGavin is 9. All right. Good deal.

Well, welcome. And all the way down here to Nashville to do a debt-free screen. Yes. That's right. Love it. How much have you guys paid off? $50,364 in 15 months. Way to go.

Good job. And your range of income during that time? It stayed at about $87,000. Cool. What kind of debt was the $50,000? We had a clarinet. We had braces. We had a bicycle.

A lawnmower. Braces. And two cars. Okay, cool. What happened that put you guys on this journey 15 months ago? It kind of started a little bit before then usually it was when i was training for a race and i wrecked my bike and it was i'd spent five months training for a race and i wrecked this brand new four thousand dollar bike that i'd finance oh and um right

and uh and four thousand dollar bike is a yo finance it is a yo wrecked it is a double yo right three days after i got it right so i couldn't do this race and i got pretty depressed and i decided to do home improvements so that's where a lot of the debt came from some of it i guess oh um so we did that uh and you know we were chugging along. And Mackenzie went on a trip to Haiti. She went on a missions trip to Haiti. And when she came back, she said two things to me. She said, Mom, I'm sorry I ever asked you for a bigger house.

The people there have nothing. And she said, after I graduate college, I want to go there. And I want to work in the missions field for a few months after college. Wow. Cool. And it hit us then that she can't do that if she has college debt, and we can't help her pay for it. Right. So it dawned on us that, one, these guys aren't ours. We just have them on loan.

And two, our money is not ours. God just gives it to us to manage for a little while. And we weren't doing a very good job. Not at all. Nothing like a good, he Haiti wake-up call. Yes, it is. Wow. But you answered the phone, so there you go.

So what did you do then? I guess after that, I learned how to cook. We've been married. You ate out a lot. We ate out a lot. We've been married at that point for 15 years, and I just didn't cook. Jeremy did most of the cooking, and we ate a lot. So I learned how to cook, and he stayed with me 15 years of marriage and me never cooking.

So we got on a budget. We did every dollar, and we just nickel and dimed everything much to their chagrin. How did you run into us? Well, that started quite a while back. We knew we were in a little bit of financial trouble before, not terrible, but through our church we had heard of you. Her mother actually gave us a book one time and I was like, hey, let's try and do this.

I'm the hard-headed one. Being a little headstrong that we are here. She said no, and then it took another year or so before it became her idea. Right. Actually, about five or six years ago, I had sought help at church, and I had asked a couple. I knew that we weren't doing a good job with our finances, but I didn't know exactly what to do. And so we went to their house.

They invited us over and we had dinner and they tried to get us to sell insurance. And I got really angry. So I said, fine, we'll just keep doing what we're doing. And five years after that is when we finally grew a brain and started doing what we were supposed to do and started following the movie steps. Way to go. Very cool. What a great story. I love it.

So what do you tell people now that you've done it? You paid off $50,000 in 15 months. I mean, you went at this like you were training for a race. Yes. You went hard. You went all in. Yeah. And, I mean, nobody got nothing.

We're getting out of debt. No. Yeah. So what do you tell people the key to getting out of debt is now that you all have done it? Living on a budget. Learning how to cook. Agreeing on what not to buy. Right.

Right. And then not buying it. He says looking at her. Yeah. He's great. Oh, my gosh. That's incredible. What do you think the kids took away from this

this this this really hard 15 months i'm hoping that they took away that um it is god's money and that if you want something that's fine but you save up to get it um instant gratification is not an option will you go back into that ever? No. You're done? Yes. Okay. Very fun.

Well, congratulations, you guys. I think you changed your family tree. I hope so. I think there's nothing like when you're in your teenage years, you go, my parents went crazy. They got this Dave Ramsey guy, and they got on a budget. That's why we're here. We have no life.

It's awful. We wanted to make sure that when they go to therapy, they really had something to go to therapy for. They cannot identify who sent them. Right. Right. Well, the interesting thing is, is the Haiti dream can now come true. Correct. She has another trip planned this summer.

And this one's going as well. And this one's going as well. And you can work on the mission field if you stay out of student loan debt. So making different choices now. The whole family has changed. Everything's changed. And there's no telling where that will take you guys. Well, congratulations.

Thank you. Very, very proud of you. Did you have people cheering you on or people questioning your sanity? They questioned our sanity pretty much. So we have a poster on our refrigerator, and it's just a thermometer to track our progress. And we wrote on there, you know, debt is dumb, cash is king. And my sister came in and wrote, Jesus, not cash, is king. You know, so we just had people poking fun at us everywhere, and it was fine.

Yeah, these people that are over-saved, yeah. Don't get the concept, yeah. She does. She just picks on us all the time, and it's wonderful. That's fun. I love it. All right. Well, we've got a copy of Chris Hogan's number one best-selling book,

Retire Inspired, for you. That needs to be the next chapter in your story, that you become millionaires so you can be outrageously generous and finance mission trips and do all kinds of things that way. And you've got the ability to do that now that you're in control of these dollars. Congratulations. Very well done, you guys. Thank you.

Thanks for visiting us. All right. It's Jeremy and Tammy, McKenzie, McClain, McKaylee, and McGavin, all from Baltimore, Maryland. $50,000 paid off in 15 months, making $87,000 a year. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Well done, you guys. The crowd goes wild. Very, very fun. Very fun. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money.

Jorge is with us in San Diego. Hi, Jorge. How are you? Hi, Dave. Thanks for taking my call. Sure, man. What's up? Well, my wife and I just had our first baby. Yay!

Yeah, and so we actually are in about $28,000 to $30,000 in debt, and we decided to have a better future for our daughter. So we decided to get out of debt. Uh-huh. What's your household income? About $50,000 a year. Good. And how much debt do you have, not counting your home? Well, before I started listening to you, I actually leased a car. And that's the biggest thing we got. Yeah. What else? And I have another car that I owe about $6,000 and some hospital bills

and about $2,000 to $3,000 in credit cards. Okay. All right. Well, this is doable. You can do this. How old are you guys? 26? Well, I'm 35 and my wife is 30. Okay. Good. All right. Well, you guys, you've just got to work the basic system. If I hired you to straighten out somebody's money, the first thing you'd do is put them on a budget, wouldn't you? Right. So I'm going to put you on a budget, and that's what we're going to do. Jump on EveryDollar and download the app.

It's free for your phones and for your desktop, and you can start doing your budget there. Make EveryDollar behave. EveryD dollar have a mission, and then start working those baby steps that we talk about. I'm going to send you a gift for your baby. It's called the Total Money Makeover. I'm going to give her dad a gift, and he's going to learn how to handle money because he's ready. I can tell you're going to do this, dude. If you need some more help, you call me back. I'll walk with you as you go through

this. But hold on. I'm going to send you out a Total Money Makeover book. This is the Dave Ramsey Show. Thank you for joining us, America. We're glad you are here. Open phones at 888-825-5225. That's 888-825-5225. Brent is in Oklahoma City. Hi, Brent. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. Certainly. How can I help? Hey, I am trying to decide whether to buy a rental property or to buy a new personal home. And inside my house, I'm way over on the saver side, maybe to an extreme. And my life is maybe on the side of the free spirit. We've got opportunity for a house that is actually in our neighborhood across the street

that we could purchase and use as a rental. Or we could sell our house and then purchase a property that my wife has found that she likes. Okay, so what would your house sell for? So my house would sell for around $220. Is it paid for? Yes, sir. And do you have, how much do you have in cash to use towards this rental that you're talking about buying? It'd be around $300.

Okay. And the rental is around $300 and you have that much in cash? Yes. The rental, we purchased it around $190. Okay. And so the idea is we could purchase that one in cash and let it start cash flowing, or we could sell ours and combine it with the cash we have in hand to buy one for us. That would be like $550 or so.

Right. Yes, sir. Okay. All right. Cool. And your household income? It's probably between $350,000 and $400,000. Okay. And good gracious, what do you do for a living? Well, we've been blessed. We own a little real estate company. Good for you.

I didn't little. You're doing great, man. And how much other assets or net worth do you have, nest egg? You know, that's really new. We don't have any debt anywhere. We've been blessed by your teachings to clear that all out over the last few years. So the income at this level is new? Yes.

You know, it continues to keep growing that way okay and so that's probably maybe you haven't been making 450 a year you haven't been making 450 a year for 10 years and have no money no no no no no no that's what i'm saying yeah no okay no we've had lots of debts it's clear but how stable do you feel like this income is? It's continued to rise over the last three years. So, like, you know, it's hovered right around there for the last three years. So I think it's fairly stable. Okay, good. And you got this dialed in then.

Okay, good. I would hope so. Okay. It's real estate, so. Yeah, well, I mean, it can come and go. The market can slow down. The interest rates, I mean, different things happen. But, I mean, the can come and go. The market can slow down, the interest rates. I mean, different things happen.

But, I mean, the reason I'm asking is for someone making $350,000 to $400,000 to own a $550,000 house is extremely reasonable. Okay. And $220,000 is pretty cheap. Okay. So your wife's right in that regard. But the only downside of this is that and here's the thing you you will have a nice home a reasonable home you're not buying a five million dollar house you're buying a 550 000 house which is a nice house especially in oklahoma city you can get a lot of house for that but um but you're not over buying it's not super opulent and given your income sitting there with no

payments i mean you'll have 190 in no time to go buy your rental yeah okay it won't take you 10 minutes i mean you know in two years you'll have two or three of these rentals okay in addition to this 550 000 house and um you're um yeah you're right you're over on the uh the saver side pretty heavy and she's she's not as far over on the spender side as you are on the saver side. Got it. Okay. I think it'll be a good investment in your marriage, in your life. It's very, very reasonable for someone to own a home that equals roughly their annual income.

I mean, my goodness. If you made $100,000 and you lived in a $100,000 house, or you made $50,000 and you lived in a $50,000 house, that would be a very reasonable home purchase. So that's what we're talking about here. And not a bad way of looking at it, given that the income is stable and trending up. Yeah, I'm going to buy her house, and then I'm going to save up and buy my rentals after that. And I think you'll see that that'll work well for all parts of your life.

John, John's with us in Lima, Ohio. Hi, John, how are you? I'm great, Dave, how are you? Better than I deserve. What's up? Hey, so we're on baby step two, doing pretty well so far, but we have a total of $90,000 in debt left. And our seventh debt, so the final thing in the snowball,

is $60,000, and it's a student loan. Right. And we're currently set up on an income-based repayment plan, about $400 a month. And right now, only $30 of that goes towards principal, so it's really not going. But anyway, it's that time of year where I would normally renew the income-based repayment plan. Should I renew that, or should I just go ahead and pay the $300 extra and, you know, let it not be on an income-based plan and just pay off quicker.

What's your household income? This year we made a combined $100,000. Okay. So how quick are we going to pay off this $90,000 total? Two years? We're on pace to pay off about $35,000 this year, so we're thinking three and a half, maybe two years, but that's aggressive. I'd probably crank it up a little.

I'd get a little more aggressive. I mean, $45,000 a year is doable out of $100,000. I mean, it's beans and rice, rice and beans. You've got no life, but I'm knocking this stuff out. So here's the point. If you do income repayment and you throw every, if you're on that kind of a pace, a three-year pace or a two-year pace, whether you do income repayment doesn't matter because you're not going to be in it very long.

Yeah, I mean, mathematically speaking, I didn't really see a big difference between being on it or not. There's no difference. It doesn't change your end date on debt freedom either way because you're going to start hammering this thing as soon as you finish off the other $30,000 in debt that's in front of it, which is about one year or less. And after that – Yeah, that's what I was thinking. Yeah, so this decision is a nine-month decision. You know, it's just not – it's not going to matter much.

And so do we hover there and throw a little bit more at the other stuff and knock it out, yeah, probably. I'm probably going to leave it on income-based just because it's basically treading water, $30 a month towards principles, treading water, right? So I'm just going to let it sit there and hover and tread water, and then when I get to it about eight or nine months from now, I'm going to just start smacking it around. So this is not a long-term decision to leave it on income-based. It's just a debt snowball question kind of a thing.

But if you didn't, it will not change your end outcome. It just slows down how fast you pay off the 30 that's in front of it. But then when you get to this one off the back end, this one's going to be smaller because you will have paid more down on the principal. So the P is still under one of the shells in a good way, and so that's the math on it. You're just moving the math around to the front end or the back end. And, you know, I love the idea of moving it all to the front end, meaning let's keep it on income-based because I want to pay off the other stuff and continue to feel and see emotionally this progress

as well as mathematically and factually. So, hey, good question, man. Thank you for joining us. Open phones at 888-825-5225. Matt's on Twitter. What steps do I need to take to get term insurance instead of the whole life insurance I have? Well, Matt, I buy my term insurance at Zander Insurance, and I've recommended them for about 20 years.

Because when you go on their website at zanderinsurance.com, you fill in your stuff. I mean, like, in just a moment, you have a quote from a bazillion different companies, and you can look there, and, you know, it's really easy to get term insurance, assuming you're healthy and can get insurance at all. Then when the term insurance is in place and you have it in your hand, the policy has been delivered, only then do you cancel your whole life. I wouldn't cancel it until you're there because I don't want you to get caught, you know, something happened to you in between the two policies.

That's not a smart thing at all. So, get the term insurance in place, Zander, and then cancel your whole life. Exactly what I would do. Good question. Thank you for following us on Twitter, at Dave Ramsey. This is The Dave Ramsey Show. I'm excited to announce that we're now carrying on 600 radio stations across the country. To find one near you, head to DaveRamney.com slash show.