The Ramsey Show - App - Is Using a Credit Card Smarter for Some Purchases? (Hour 2)

Episode Date: July 20, 2018

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Live from the headquarters of Ramsey Solutions, this is the Dave Ramsey Show, where your money and your life are the focus. Sitting in for Dave, I am Chris Hogan, and I'm excited to be with you. America, we want to hear from you. So if you have a question about money, you've got a question about life, give us a call. The number to call is 888-825-5225. Again, that's 888-825-5225. Again, that's 888-825-5225. And always, you can follow us online with Twitter at Ramsey Show. Again, I got tongue-tied there, at Ramsey Show. And if you're watching us on YouTube, we welcome your questions and your feedback as well. I'm so excited to be with you today, America. We've got a lot going on.

People have questions. And so I'm going to go to the phone. I've got Chris on the phone from Ontario. Chris, how can I help you? Hi, I'm calling in, long-time listener, first-time caller. I've just finished buying a house, and I'm stuck in a position where I'm wondering if I should pay the house off first

or if I should save toward the business plan that I was coming up with. Ah, okay. So you just bought a house. How much did you purchase it for? $167,000. $167,000, and what size mortgage did you take out? I put 20% down, so I have a little over 130. Okay, good, good. And so looking at this, so you're focused on, and the question is, should you pay off the house or focus on a business? Tell me about the business you're thinking about. Well, since I was 16, I'm 28 now, and since I was 16, I have been working in convenience stores

and gas stations. I'm currently the manager of one. Okay. And I was just thinking about possibly starting my own private convenience store or something, small outlet like that. Okay. And so with that small outlet convenience store, what do you think it would cost to start one of those? I'm looking at a safety number around $50,000. Okay. $50,000. And, $50,000.

And so that's to start it up. How much have you saved toward the business as of today? This is kind of a really recent plan. I have saved up my nest egg and stuff like that. I have about $20,000 to my name, but that's for my emergency fund. Okay. But other than that, I make about $55,000, $60,000 a year. Okay. Outside of the home, do you have any other debts?

No, I've been debt-free my entire life. All right. Chris, this is a great call. I'm so glad to catch you right at this point because you have, obviously, you saved up. You've got a home. You put 20% down, have no other debt, but you have this dream inside of you to start a business. I'd encourage you to leave. Leave the emergency fund that you have set up right now, the 20,000.

Leave that alone. That needs to park in a money market account and be there because if life happens, you've now got money there to be able to go to. But the idea of moving through the baby steps, and for those of you that are new out there, this is the game plan that we've used and helped millions of families out there pay off debt to be able to take control of their money and save so they can retire with dignity. So I want you to continue to pay extra and pay toward the house. But looking at your budget, you've got an opportunity to begin to create a new line item in there that's called saving for your dream. The idea of being able to start this business, that's a great opportunity. And I think you can do a lot of things right now as you wait, Chris, meaning put together

a business plan, begin to walk through the process and understand what type of convenience store you looking to open. Where are some locations? Who's your competition? How much is it going to take to get started? How soon can it start to make money? Your new part-time job needs to be working on that business plan for your new idea in their dream. And again, stay focused, create a line item, create a separate account that you can save into for your business and just take your time. What too many people out there go into debt to start a business, and that's a false thing. You don't need to go into debt to start a business. What you have to have is patience.

So, Chris, thank you again for your call. We appreciate you, and thank you. A lot of people out there need to hear that. I'm going to stay on the phones, America. If you've got a question, call us at 888-825-5225. Again, that's 888-825-5225. Next up, I have Julie in Atlanta. Julie, how can I help you?

Hi, Chris. Great to talk with you today. Thank you. I just got a recent kind of part of an inheritance, and we had a question about what to do with the money. We are planning to put some aside to pay the taxes. Also, put some aside to fund our retirement and our kids' ESA this year. But then what should we do with the rest of it? Should we put it on our house to pay that off or do some kind of fixer-upper things around the house?

We may possibly be moving in the next year or so. So we just kind of wondered some advice. Oh, no, this is a great, great question. Julie, do you mind me asking, who did you get the inheritance from? My parents have a family farm, and the state is taking some of the road frontage on the farm, and so they just went ahead and gifted that money straight to the children. Ah, good old eminent domain, huh? Yes.

Yes, okay. So they got it. They paid some money. Everybody got some. Do you mind telling me how much you got? $55,000. Okay. So looking at this, you you all do you have any other

debt outside of your home uh we owe about 5 000 on a car and that's it okay and what's your household income um about 110 000 okay all right so sitting where you are right now anytime i i talk to people and they get an inheritance uh depending on how they got it you know if it was a loss of a family member or something like that, I would tell them to park the money and take some time just to get your emotions right. But you all got this from the sale of land and the family wanted you to go ahead and have it. I think whenever you get a chunk of money like this, I like to do what's called the

pie graph approach. What I mean is if you've got debt, number one is we've got to get this car out of your life. Okay. So i would attack the car uh then from there you talked about again set aside taxes attacking the car you want to put some toward retirement and some toward uh your kids education pay some toward the house and i think putting a dollar amount you can also use some of that to have some fun i don't think that that's a problem at all. And see what I'm doing, Julie, with that pie graph approach, I'm spreading this money out. So it goes somewhere intentionally and I don't accidentally let it slide by. So what I mean is, is don't park this money in your account because whenever you have money just sitting there and you don't have it attached to a

goal or something, there's a name for it and it's called spent. So you all have an opportunity to make some progress in multiple areas by following this approach. Julie, thank you so much for your call. I appreciate that. And speaking of saving for retirement, I want to tell you something. Summer is here, and that means family vacations, backyard grilling, and even taking things a little bit easier because kids are out of school. But unfortunately for most of us, it also means getting a little sloppy

with our investing goals. But if you set up your contributions to happen automatically, you don't have to remember and you don't have to go back and transfer any money. You can enjoy your summer break. So here's what I want you to do. Go to chrishogan360.com

and click on the Dream Team button. I want you to find an investment professional in your area that can help guide you and help you automate your investing. That way, you set yourself up to be able to have success this summer. And it's a great opportunity. We have to keep our eye on the prize, America. You have to remember the government is not going to come in.

They're not going to save the day. We have to make sure we get our own cape. And when we have our own cape on, we understand the goal, we understand what we need to do, but most importantly, we understand why it matters. You're listening to The Dave Ramsey Show. Thank you. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs.

That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps.

That's Zander.com. Or call 800-356-4282. Zander.com. Hello, America. You are listening to The Dave Ramsey Show. I'm Chris Hogan filling in. And we are talking about your life and your money. So if you've got a question or you want to share a success story or you've got a question about life or money, I want to hear from you.

Please give us a call. You can call us at 888-825-5225. Again, that's 888-825-5225 because we are here for you. So I'm going to go to the line. I've got Sarah on the phone. Sarah, how can I help you? Hey, Chris, I just had a quick question for you. Okay. So my boyfriend, he has a credit card. I don't have a credit card anymore. I like paid that off. But his mom was saying that it's better to use a credit card if you're going out to dinner or if you're, you know, paying for something than it is to use a debit card. I know cash is king and I, I personally use my debit card for things just because it is easier,

but how do I tell him that it's not as good to use a credit card because I don't want him to like get into debt or anything like that? Well, Sarah, I like what you just said. I mean, just explaining that because, you know, you're right. You know, you are correct. Your future mother-in-law is wrong. And I want you to go tell her she's wrong. Oh, gosh. I'm just playing.

Don't do that. That's not a good way to start that relationship. But here's the deal. You sound like somebody. Have you been in debt before and had to pay it off? I'm currently paying off my student loans. I called a few months ago and I paid off $7,000, which I'm pretty proud of. You should be. But I still have like $20,000 to go.

Okay. How old are you, Sarah? I'm 24. 24 years old, a millennial. You've paid off debt. You're attacking your student loan. But here's the deal. You're in the middle of attacking student loan debt, so you know what debt can do. And it sounds like you like this boyfriend. How long have you all been dating? Um, almost three years now. Almost three years. So it's getting pretty serious, isn't it?

Yeah. Okay. Well, here's what I want you to do. In talking with him, help him to understand what it is you've learned. Because the problem is, is most people in America, Sarah, think like your future potential mother-in-law. That they think using a credit card, it's smarter. It's more savvy. And the reality is, is that it's not.

When a debit card is connected to your bank account, when you spend money, money comes out of your account. You don't pay interest. You don't pay fees to anybody. You pay for the service that you requested or the item. When you have a credit card, now what you're doing is opening yourself up to have to pay interest. And I tell people all the time, interest can be kind of two things. Interest can be your friend when it's with your investments and it's growing and you're earning it, but it can be an enemy when you're paying it.

That means you're paying someone else money. So Sarah, you are correct. Sit down and talk with your boyfriend, help him to understand the reality and you stay on the path. And I know you're going to have that student loan debt out of your life here pretty soon. Thank you for your call. I've got next up is Jim in Billings, Montana.

Jim, how can I help you? Well, Chris, thank you for taking my call. My wife and I have about $15,000 to $17,000 in credit card debt. My job changed about three years ago. Went from about $90,000 to about $35,000. My wife is disabled, and we're starting to get some letters and stuff. My question is, this national debt consolidation type plan, is that something that is a good thing,

or should I try to negotiate with each credit card company myself? Okay. Jim, what happened? How did your income get cut from 90 to 35? It got laid off from the coal industry. Okay. Jim, what happened? How did your income get cut from 90 to 35? It got laid off from the coal industry. Okay. My goodness. That's a major cut. Yeah. So are you on path to try to get back to that money, or are you shifting careers? What are you doing? Well, I got a side gig, and that gives me a little bit uh each month so maybe a somewhere

on 800 to a thousand a month okay good and so you mentioned you got 15 to 17 000 in credit card debt i want to talk to you and honestly and and i'm a former banker and and most of the time people think consolidating the debts is actually a helpful thing. And the reality is it's not. Because if you consolidate them all together, now you're dealing with one big payment. And they show you by fuzzy math how it looks like you're saving money, but you're not. Here's my example. If you owe $10,000 in credit card debt, let's say your payment's around $2,000 a month or $1,000 a month. If you're paying that $1,000 minimum payment, these consolidation companies will tell you,

okay, now what we're going to do is put that all in together, and now your new payment is only going to be $600. Well, on paper, paying those separately, you're paying $1,000 a month, but with the consolidation, now you're only paying $600. And anybody that knows math would say, well, Chris, $1,000 minus $600, I'm saving $400 a month. This is where they get you you because you're actually not. Because the reality is, is in order for them to get to that new minimum payment of 400,

they had to extend the period of indebtedness. So that means they've stretched out how long you're in debt, which means you're also paying interest much longer. So, Jim, you're doing the right thing. Leave these credit cards separate. You can talk with them and try to negotiate with them one-on-one, but you're going to be better off leaving them separate and attack them using what we call the debt snowball. List out the debt smallest to biggest and attack the little one first, because getting out of debt has nothing to do with math.

It has to do with momentum. Jim, thank you again for your call. I hope that helps. Next up, I have David in Grand Rapids. David, how can I help you? Hi, Chris. I had a quick question about a possible house refinance. Okay. What I'm looking at is my wife and I, I'm 47, she's 48. We have about close to, between our retirement account and our personal savings, we're about $1.5 million.

All right. A little over. We owe about $250,000 on the house. It's worth about $400,000. And we're on a 30-year mortgage right now. Mm-hmm. So if I do it to a 15-year mortgage, the interest rate would stay the same. But by my calculation, we could cut almost half off of what we're going to

owe in interest if we go to a 15-year. The payment will go up about $400, and we're going to pay $700 a month on it extra anyway. I just don't know if that's a good move yet or not. Okay. We may not stay in this house the entire time. We're looking to retire at 55, which is another, you know, seven, eight years. So I don't know if it'd be worth refinancing or not if we're not planning on staying in the house.

Okay. As you talk about not staying in the house, how soon would you all be looking to make a change in home? Probably maybe not until we retire seven or eight years. Okay. All right. So here's what, david as you were talking again refinancing from a 30 year to a 15 is a fantastic idea and you're right the payment will

change around four to five hundred dollars so that's a great move here's where i'm confused how is your interest rate going to stay the same um i just because when we um uh when i closed the financing on it with the house that we built when i closed the financing on it uh three years ago it was at four and a quarter and since interest rates have since uh gone up from their low okay three years ago four and a quarter i've called churchill that's about the lowest they could get us right now it's four and a quarter still okay all right and so you got a really good deal on the front end. And so now with things chicken up, I'm going to tell you, I like number one, where you are. You are a millionaire. And so with that, you all have worked hard, you've been intentional, and you've earned the right to do some stuff. And I like that you have your goals laid out of things that you want to accomplish,

that you want to retire in seven to eight years. And I feel like with your income and what you've got going on, this is a home you can pay off before you all start looking at moving to the next house. So yes, definitely I would refinance it, run the numbers on it so you can understand the closing costs. You all are already paying 700 extra each month. And so on paper, I think you're very motivated. But take a look. Look at the refinance costs. Then you can decide about moving to a 15-year fix, but still paying that extra. $700 extra, you're going to chop this thing down. And I think as you all start to get in tune with your dream for the next home, you're going to move even faster. But I want to give you a tip, David.

I want you to make sure that when you all pay off this home and you move to this next one, I want you to go in it with cash. I don't want you to go backwards. So now start to pay extra toward that house, be intentional. And now you start to think, okay, we've got 400,000. That's what this home is worth. So you're going to have some money to be able to go and look at what are we going to do next, but do everything with cash. You've paid a price to reach millionaire status. You, David, are an everyday millionaire. That's fantastic. Stay focused, my friend, and keep working. Goals don't happen by accident. They happen for people that are intentional. You're listening to The Dave Ramsey Show. Okay. Okay, I need you to listen to this. Because one normal routine that everyone does can cause total chaos in your life. I'm talking about the simple act of using Wi-Fi.

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But this is where we take calls about your life and your money. So you can call us at 888-825-5225. Again, that number is 888-825-5225 because we want to hear from you. So we're going to go next up on the line. We've got Rachel on the phone from Greenville, South Carolina. Rachel, how can I help you? Yes, I am 26 years old. I'm married.

I've got three kids. My husband currently works full time, and I'm a stay old. I'm married. I got three kids. My husband currently works full-time, and I'm a stay-at-home mom. I'm hoping to go back to school. I'm actually looking at a tech school where I could possibly do a work-and-school combo, bringing in a little extra income to pay for child care for the school and also at work. Okay. I'm trying to figure out if that's the best route to go. Since all three children are still fairly small, it's more in childcare costs.

Okay. We're not really getting anywhere with my husband's income alone, and his hours don't condone for a second job. Okay. What is the household income right now? Right now, we're sitting about $85,000. Okay, $85,000. And you said that's not enough.

What do you mean? We currently pay $1,100 a month for vehicles. One of them we don't even own. It was a repossession. We also have a mortgage payment, a couple of various different credit cards and things along those lines that we are trying to do the debt snowball with, but we're not really getting any traction besides minimum payment. Okay.

All right. So you've got $1,100 going out in vehicles. You've got a mortgage. How much is your mortgage payment? $1,476. Okay. And how much in credit card debt do you owe? All together, I would say probably about 15 to 18 grand. Okay. All right. And so you're looking at going back to school to go to work

to be able to bring in extra money to attack debt? Yes. And also the thing is with the work in school program, my school would be paid in full, the books would be paid in full, as well as any tools and supplies. Okay. So I would come out of school debt-free and be able to make an income at least $65,000 a year. Okay, that was my next question. All right, so anticipated income of around $65,000. How old are your children? I have a 4-year-old, a 3-year-old, and our daughter will be 1 tomorrow.

Okay, you are busy. Yes. Yes. Very, very busy. What do you feel about going back to work? I love the idea of it. It does bug me staying at home and knowing that I could work and bring income, but I have no degree, so getting an income that would give us

enough traction without all going to child care is our biggest problem right now okay all right and by the way just for the record you do work okay you work inside the home okay you definitely yeah i understand but you definitely work and and looking at this as you all are sitting down and talking about this uh how does your husband feel about you going back to work? He's extremely supportive. The biggest thing is just trying to figure out when is the ideal time to do it.

Is now the time to do it, or do we push it off and hope jobs are still available and the same programs still available a couple years down the road? Okay. Are you excited about the tech field? Is that your passion? I'm extremely excited. Okay. All right. So now it just boils down to, like you said, logistics.

It boils down to sitting and running numbers and understanding. A, is this a viable option? When I say the word viable, it means, is this something that's going to bring a result? Is this something that's going to move you in the right direction? You've obviously done your legwork, Rachel. I like that you know how to be able to go to school and be debt-free, and you even understand the income you could potentially be earning. But you also bring up another factor, having three little ones at ages four, three, and one. Now you're going to have to make sure if you are working outside of the home, we've got to

make sure that you're bringing enough income that you're able to kind of kind of come out ahead despite having to pay child care. So I want to encourage you all to continue to run those numbers to continue to look at kind of where you are and what makes sense. Your husband is extremely supportive. You're excited about this career path. Now we have it boils down to timing. What is the timing to be able to go about this plan? But I want to also tell you this.

You guys got to stop living beyond your means But I want to also tell you this. You guys got to stop living beyond your means. $15,000 to $18,000 in credit card debt, that means you all are doing stuff and vacationing and eating out all based on the credit card. That's got to stop. And then we get intentional. But you can start to work in the evenings. Maybe when your husband gets home,

you said his schedule doesn't allow for him to take a second job. Brainstorm other options. If this is the best option and you're excited about this one, that's fine. But I want you to find options B and C because there is a way that you can bring in income. There is a way you can bring in revenue to be able to start to attack this debt. You mentioned you're paying for vehicles. You know, we got to get those things sold. You guys need to buy a car with cash and start to really slow down and readjust your expectations.

Right now, you're doing things that the world is doing and the world is primarily broke. So I want you to be weird. I want you to be different and I want you to stay focused. Rachel, I know you and your husband can do this. I want you all to sit down, have a game plan and give some timing on this. This is a big decision. This is not something you're just going to decide to do and just go. We have to really look forward in it and say, hey, is this the direction we're going?

Because it's a family vote, because it's a family decision. Thank you for your call. Next up, I have Alicia in Kansas City. Alicia, how can I help you? Yes, I have a question. We are selling our house and with that sale that will bump us up over maybe step three and four, five and six. We are looking at smart investors and we actually interviewed four of them and we liked them, but we're kind of confused on kind of who to pick because they basically all said the same thing except for there was one that kind of balked at us about being a fiduciary when we asked them that. And then they were talking about fees-based versus commission-based.

And we're like, okay, who do we choose from this? Because, you know, they kind of seem even keel when it comes to that. Okay. So we just need to know kind of what direction we need to go. Right. Alicia, I would say this. As you're talking, you're not looking just to pick a financial professional. You're looking for someone to join your team.

And so in thinking about that, most people are looking and they say, I just need to find an investment professional and they'll tell me everything to do. And I go, no, not at all. You're hiring that individual to join your team. So as you're looking at this and as you're talking to people, I want you to kind of really start to ask them some different questions. Ask some questions where you kind of get a feel for their personality and their style. Definitely, you don't want to use anyone that's making you feel uneducated or making you feel bad.

You want to talk to someone and deal with someone that's really joining a part of your family. So, if you haven't found one of those yet, I'm going to encourage you to keep looking. You want to make sure that you are doing everything in your power to find the right person. But you and your husband both need to be involved in that process. So ask some different questions. Ask them how they their typical client, you know, what do they do? What do they enjoy about the world of investing? Why do they do what they do? I love to get a feel for people's personality. And I want to work with people that understand me, but also someone that I feel like can help me grow in my knowledge. And so it's okay for you to keep looking. It's just like if you were looking for a babysitter for your kids or you're looking for a job. You want to go somewhere where you're valued. You want to go somewhere where you can feel like you're contributing to something. And when you bring on an investment professional, that's exactly what you're looking for.

I also want to tell you, we got a call in from Kansas City that we're going to be there October 13th with our Smart Conference. Smart Conference is one of the best events that we do where we talk about all types of things. We deal with your parenting. We talk about money. We talk about marriage with all kinds of speakers. Dr. Meg Meeker, Dr. Henry Cloud, Dave Ramsey, obviously will be there. I have a chance to be there. Rachel Cruz. It is all out fun. So again, with the smart conferences coming to Kansas City, Missouri on October 13th

at Municipal Arena. And if you have not attended the smart conference, I want to encourage you. It's one of the best events that we do where you come in and you get help on your marriage, your parenting. Like I said, we obviously are talking about money. We're talking about growth. And so put it on the calendar, Kansas City, or if you are in the surrounding area, it would be worth your time to come attend this event. I promise. You're listening to The Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another.

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Hello, America. You are listening to the dave ramsey show i am chris hogan filling in for the big man uh where we're taking your calls we're taking calls about life money career whatever you want to hit on just give us a call you can reach us at 888-825-5225 again that's 888-825-5225. Again, that's 888-825-5225. I want to go to a social media question. You all need to know here at Ramsey Solutions, we are heavily involved in social media. You can follow this show at Ramsey Show on Twitter. You can follow me on Twitter at ChrisHogan360. That's at ChrisHogan360. But here we go.

So from Barbie on Twitter, she she goes we're on baby step number one i've halted my 401k contributions as dave suggests i do however have two different 401ks from past jobs just sitting there she asked should i roll them over into my current employers 401k and not actively contribute but just roll it over to there or leave them where they are or roll them over into an IRA. Well, Barbie, number one, I want to acknowledge you are what we call gazelle intense, because when people are in debt, we tell them to pause the 401k contributions and now send all that money toward the debt. So being focused and being intentional, that's something you are definitely doing.

So congratulations there. But now to answer your question, you've left the job, you've got some old 401k sitting there. What do you do? You mentioned the idea of rolling it into your current employer's plan. That's if you can. Most plans won't allow outside funds to come in, but you also hit on that you can't actively contribute to those if you roll it in. So I would instead roll it over into an IRA. That way you can control what it's invested in, and it's going to give you an opportunity to get more growth.

So definitely roll it over. You don't want to risk that money or lose any. You want it to make sure it's following you wherever you go. So, Barbie, again, thank you for your question. And if you're out there and you've got a question and you want to send it in via social media, again, it's at Ramsey Show. All right, I've got to get back to the phones because that's what we do. I've got Jamie on the phone. Jamie, how can I help you?

Hey, thank you. My question is about retirement. I'm 48 years old. I've owned my own little crappy construction company for... Jamie, I'm going to have to ask've owned my own crappy construction company for... Jamie, I'm going to have to ask you, my friend, to give us a call back. Call quality was not good. All right, so I'm going to move on. I've got Kendall here in Fairfax, Virginia. Kendall, how can I help you? Hello, Mr. Rogan. Thanks so much for speaking with me. It's an honor. Well, thank you. Great. I do have a question, and it's very pertinent.

I am on baby step number three. I have paid up all my debt. I have saved up $30,000. I'm driving a beater. I've been driving it for two years. I'm currently melting in the Virginia sun in 90-degree weather with no air conditioning in the car. And it's time for me to buy a car. I wanted to use the money that I have saved, and I would still have the $1,000. My family,

should I buy the car now? Number one is my question. And number two, my family, they do have plenty of means and they've said that they would help me as well and add $15,000 to buy this car. I was looking in the $30 realm and then they said we weren't really finding what I guess I wanted and they said they would help me. So number one, should I buy a car? Number two, should I accept the money from my family? And number three, to keep in mind is that I will be moving and so I will have more expenses kind of coming with a new house that I'm just renting. But I would, by August 6th, i would be able to have three thousand dollars in my my savings so i'd be saving two thousand dollars every month as well okay i just wanted to get your thoughts all right kendall you got a lot going on i know yes sir you do all right

now tell me this what what do you what kind of debt do you have right now i have no debt no debt all right and you've got thirty thousand dollars saved up yes sir okay. All right. And you've got $30,000 saved up. Yes, sir. Okay. So you've got an emergency fund. You're at Baby Step number three. You've got that sitting there. So you're essentially asking me, Kendall, you're saying, Chris Hogan, should I pull money out of my emergency fund to go buy a car?

Right? Yes, because the car that I currently have, I mean, I go to meetings sweating. Okay. All right. Tell me about this vehicle. What year, what, what year car are you driving? I am driving a 2004, um, my sister is from college and I've been borrowing it from my family. Okay. And my, it would be less than half of my, um, income. All right. How many miles do you have on this car? 94,000. 94,000. So the only issue is the air conditioning.

No, sir. It doesn't charge phones. It doesn't have a right blinker. It's got a lot of problems. I think it's time. All right. Well, hold on now. You said it doesn't charge phones.

All right. Because that's why we have houses and outlets. You know where I'm going. This blinker issue. Okay. What else is the problem outside of you not liking this car? Well, it's difficult to do my job because I travel on the salesperson. I travel to a lot of different areas. I have a car taking calls. I can't charge my phone. Okay. It's just, it's starting, and I go to meetings sweating, dripping wet because I don't have air conditioning.

All right. Well, here's the deal, Kendall. You've got $30,000 saved up. There is no way I'm going to ever advise you to pull all that money out to go buy a car. Your family is talking about being able to loan you, right? 15,000. So that's called debt when it's called a loan. Whether that, you know, so looking at this, I'm going to do this. This is radical. Why don't you walk with me here? I want you to pull some money out and I want you to go meet a mechanic and find out how much it's going to cost to fix that air conditioning. And then I want you to figure out how much it's going to cost to fix the little blinker issue.

And then I want you to go buy a Mophie. That's one of these portable batteries that you can plug into and it'll charge your phone. You see, what I want you to do is to slow down. I know this car is getting on your nerves, but you've worked hard to get to where you are. We've got to be careful. If we ever start to get confused and we want something so much that we actually pretend that we need it, it causes us to start to move in a direction that we don't need to go. And that's a knee-jerk reaction.

I don't want you to make a knee-jerk reaction. I want you to think this through. Repair the air conditioning, get you a Mophie, fix the blinker, and now you can start to do what you need to do. But yes, the amount of miles on that car, at some point you're going to need to upgrade, and you can do that, but I don't want you to ever upgrade with a payment. If you take on a payment, it's called going backwards. You've worked too hard to come this far.

I want you to keep pushing forward. Kendall, I hope that helps. I'm going to jump on the lines. I've got Steve in Portland, Oregon. Steve, how can I help you? Hey, Chris. I've got some medical expenses that came up. My water well died.

I've got $13,000 in existing credit card and also had some property taxes and income tax come up that I didn't know about. And so all of it, you know, total is about $36,000. And I only was expecting, you know, $13,000. So it's an additional $23,000 in expenses this month that came up. So my wife and I are wondering, should we go into my 401K with a 401K loan? Should we give, you know, because we don't have the cash on hand to pay for these medical and taxes

and well house. Well, listen, you know, who's the medical debt. What's that for the expenses? Um, it is for hospital visits. Okay. Well, Steve,

where you are right now is in the middle of what I call life happening. And again, it can be easy to look at this money that's sitting aside in the 401k as an opportunity to just to grab that. But no, that's money you set aside for your dreams. And if you touch aside in the 401k as an opportunity just to grab that. But no, that's money you set aside for your dreams. And if you touch money in a 401k, it can cause a problem. You're going to lose up to 50% of it in taxes, penalties, and fees because you can't access that money until you're 59 and a half.

And so with the water well and the property insurance and the IRS, I mean, I understand that's life happening, but I want you to look at your budget. If you're not budgeting, you got to get intentional. You can go to every dollar.com and begin to learn how to budget the right way and the way we teach, but you all need to get focused. And Kendall, uh, I mean, Steve, you guys got to get plugged in and you got to get some help. You got to get serious about where you are and about where you're going, but no, don't steal from your future to try to clean up a mess that you're currently in. What I want you to do is scale back your lifestyle,

begin to look at ways to bring in extra income, sell some stuff. You see, bringing in money will help you all start to begin to fix this. And again, one step at a time. This stuff didn't happen all overnight. But property taxes, those are due each and every year. You need to get a schedule and start to budget

and save those things. But don't steal from your dreams to try to clean up now. You've got an opportunity here. And I want to invite you and your wife to join Financial Peace University. If you stay on the line, Kelly will get you that information. And you all can get plugged in and start to work on this. And if you need to, you can get connected with a financial coach to allow you to understand what you can do and how to do it. All those things are detailed are on DaveRamsey.com.

Well, listen, I want to thank associate producer Kelly Daniel. I want to thank Zach Bennett. And I want to thank you, America, for your calls today. This has been a blast. You've been joined and we've had a blast hanging out with you and taking your calls. Please stay connected with us and we look forward to talking to you again this is the dave ramsey show hey guys this is james childs producer of the dave ramsey show i'm excited to announce that

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