The Ramsey Show - App - It's Time to Get Your Money Under Control (Hour 1)

Episode Date: November 1, 2018

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'm Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Michelle's in Indianapolis.

Hi, Michelle. How are you? I'm doing great, Dave. Thanks for taking my call. Sure. What's up? I have a question concerning an HSA. It's open enrollment time with my employer, and we're currently in

Babysit 2, trying to pay off debt, and I just have a regular PPO plan from last year, and I'm just wondering if it's smart to change it to an HSA. We're a young family, three kids, we're generally healthy, we rarely ever go to the doctor. I just didn't know if it was smart to change it right now during the death interval or not. Well, it becomes lower insurance premiums is what it becomes if you're healthy and you're not going to the doc much. Okay?

Because it's a high deductible, lower premium health insurance plan. That's what the health savings account does. Because you've got probably, what, a $5,000, $6,000 deductible on this, right? It's $3,000, yeah. $3,000. That's a low one. Okay, that's good. And you've got $1,000.

I work for a health care company. I'm sorry? I work for a health care company, so I think it's better. Yeah, it is. That's a better deal. Okay, is it 100% pay after that? I believe so, yeah. Yeah, that's what a lot of them are.

And then it's $1,400 is the savings portion of it for the family. Right, but you're not required to do the $1,400 portion. You can just elect the insurance portion, which is a cheaper price, a cheaper premium. Do you recommend not doing the savings portion right now? I recommend not doing that now while you're in Baby Step 2. Yeah, you work Baby Step 2 and you get your $1,000 set aside. But if you're a pretty healthy bunch, I probably would take the risk. Overall, once you're out of Baby Step 2, up into Baby Step 3 and all,

I certainly would do a health savings account, especially if you have a lot of chronic illness, a lot of illness, or you have almost no illness. It works out really, really well either way. Because if it's 100% pay, you're going to blow through the $3,000 deductible, but then you're getting 100% coverage. That's a deal if you've got a lot of sick people running around. And if you don't use it at all, which is what the ramseys have done for years i

don't know that we've ever gone through the deductible on ours i mean we've been a healthy bunch knock on wood and so it rolls over every year doesn't it yeah yeah you don't yeah you don't uh and i but you know i think i've got a hundred and something thousand dollars in my savings account now because i put it in mutual funds and it's never been touched so that's the 1400 portion that you're not doable doing right now but you'll do that later i probably would do it with what you're describing that the risk you're taking is that you had an event that you know exceeded three thousand dollars and you've only got a thousand right so you'd have a you'd have a two thousand dollar problem laying there if you had an event while you're in Baby Step 2. When will you be finishing your Baby Step 2?

It'll be about two years. Okay, so that's your risk. But we've, knock on wood, we've never had any issues. Yeah, that's what I mean. And we have teenagers. We've never had anything. Yeah, I'm taking the risk if it's me. Okay.

And, you know, if you had a problem, you could just stop your debt snowball for a little bit and knock through that extra $2,000 worth of expense and then get back on your debt snowball at that point. But I'm going to try it. I'm going to try it. But, you know, that's just me. Thanks for calling. Phillip's in Knoxville.

Hey, Phillip, welcome to the Dave Ramsey Show. Hey, Dave, thanks for having me, man. Certainly. How can I help? Well, I'm looking at taking a job, leaving the company I'm currently with, and actually going to work for a company I used to work for. And I'm concerned about our mortgage exceeding the 25% rule that you use. We'll be around the 33% mark, and it feels a little tight to me.

So you're taking a pay cut? Well, I'm in sales, so I'll be starting a new pipeline, as you're well familiar, and there'll be a six-month period that the base pay will be five grand less guaranteed, and then commissions will begin to roll in. So it's a temporary thing. I would call it temporary, yes, absolutely. Yeah, I wouldn't worry about that. You're going to make more money long-term, though.

Comparable money, better work environment, closer to home, less travel. So there's some intangibles there that are involved. Cool. But if you're making about the same money, you're going to end up back where you are. Yeah, it's a temporary dip. I wouldn't worry about that. The point is, though, that long-term, over a 5-, 10-year period of time, the more your house payment is as a percentage of your income,

the harder it is to build wealth and to stay out of debt. You know? And that's the whole point. But it's not like for six months. For six months, you can do a lot of stuff. No, that doesn't apply to that. So, yeah, I would do this. I wouldn't slow down on that a bit. It sounds like a good move.

Thanks for calling. Open phones at 888-825-5225. Brian's on Facebook. My wife and I live in San Diego. We're nervous it won't be a buyer's market once we have the down payment for a house. Can we do baby step three and four at the same time? You can do whatever you want to do. But let me just tell you, anytime you start rushing into real estate based on the fact that you're scared of the market outrunning you,

you're about to do something stupid. Every time. Oh, interest rates are going up. I got to go buy. Oh, house prices are going up. I'll never be able to buy a house if I don't buy a house now. When you start sounding like a beagle chasing a rabbit like that because your fear is in your voice,

that's when you're about to make a stupid move. That's the biggest problem with the question. I'm not sure if it's a buyer's market, a seller's market, whatever. What matters is are you in position to buy a house? And you definitely need to be out of debt and have your emergency fund in place and then save your down payment beyond that. And that's what we call baby step 3B. Before you start baby step 4, people pause they're in the middle between

their emergency fund and starting their retirement in order to hit their goal of a good down payment and then they start their retirement that's fine that's what people do all the time i don't have any issue with that but if you're saying um you know you want to save up and buy a house before you have an emergency fund because you're scared of the san diego san diego market then you're saying, you know, you want to save up and buy a house before you have an emergency fund because you're scared of the San Diego market, then you're just not ready to buy. That's what that means. You're about to make a mistake. So anytime you start using language like I'm being boxed out, I'm being forced, I'm trapped. The only way you can do this in this city is anytime you start using this absolute fatalism

type language that usually is right before you're getting ready to do something really stupid with money and you're going to get your because you're justifying you know i had to have a bigger car i got five kids and the car i had didn't have five well then buy another used car you know they got enough you know buy another five thousand dollar car instead of a fifteen thousand dollar car but you you know you act like you're all in some kind of a noble mommy or something because you just went and did something stupid with a car it doesn't make you noble it just makes you stupid and that's what i do it too but you any i catch myself using that kind of language that's when i know know Dave's getting ready to do something stupid.

And that's how I'll know when you're getting ready to do something stupid, when you're using that language. This is The Dave Ramsey Show. We all have smartphones. Isn't it time for a smart plan? Pure Talk USA offers Simply Smarter Wireless that covers 99% of Americans. Stop overpaying for wireless. Unlimited plans start as low as $20 per month and include the same great coverage.

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Do you know where your money is? Yeah. Have you made your November budget? If not, you need to do it. You need to start every month with your money already spent on paper for the upcoming month. Giving every dollar a name, every dollar a mission, every dollar an assignment before the month begins. That's why we named our budgeting app the world's best budgeting app. Every dollar. It's free.

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Roseanne is with us in Raleigh, North Carolina. Hi, Roseanne. How are you? I'm okay. How are you doing? Better than I deserve. What's up? Well, I find myself at 58 years old, separated from my husband of 35 years.

Oh, my goodness. Yeah, I know. It is what it is. But I'm deciding if I should sell my house and buy them out or should I keep my house. So I need some advice. Okay. So what is the home worth? $250,000.

And what is owed against it? $50,000. Okay. And so we've got a $200,000 spread, so you'd have to come up with about $100,000, right? Yeah, he was asking for $80,000, so maybe we can go $80,000. All right, close enough. But in this case scenario, it would be $100,000. Close enough.

How much is in his 401k? In his or mine? Both. Oh, well, I'm thinking he's $150. I'm like $350. Okay. All right. Because you both have marital access to each other's 401k in this negotiation. Half the equity and half of the total retirement savings. I understand that, but we have a separation agreement,

and the agreement was we keep our own pensions and our own 401K. And we decide on the house. Okay. And what do you make a year? I'm a nurse, and I make $80,000. Okay. And where would you get the $80,000 to buy him out? Well, I'm deciding where to go.

I'm not sure. I do have two pensions. I think I can take out some money from my annuities at $59.50, or I would just refinance. I hate to do that because the interest rates are so high now, but I'll be still working for a good four years for sure. Okay. All right. You have $350,000 in your 401K.

Do you have money in a pension as well? I have two pensions, but they're fixed because the pensions were stopped at my other two jobs, so I have probably like $40,000 and $40,000 on each. Okay. In terms of that's the balance for you to cash them out, not in terms of what they pay you? That's the balance that I see on my statement, yes. Do you have any other money other than $350,000, $40,000, and $40,000? I have a savings account, which I had to delete,

well, you know, deplete because of the lawyer. So I have like 5,000 now. There used to be a lot more. Okay. And so if you take money out of your 401K or those pensions prior to 59 1⁄2, you're going to be penalized. So the only way you're buying him out is get a mortgage. Okay.

You're 58. I'm sorry? What if I wait until 59 and a half? To buy him out? No, you would not. I would take the 80 out of the 350 at that point and pay cash to buy him out if you want to do that. And for that matter, I'd go ahead and take out enough, just pay off the mortgage, and you'd own the house free and clear.

Do you like the house that much? Well, we bought it two years ago because we were having problems, and he said he wanted a downside. I felt it was a bad time, but he said, no, I'm in. Let me try this again. You're getting a fresh start at 58 years old. You don't own this house. Would you go buy this house?

Yes. Okay, so you like the house then? I do. It's a ranch, easy to take care of. Everything is new. You know, everything is new. I don't have to buy a new roof, a new floor, nothing. So it's a house you would go buy if you didn't own it?

Yes, it would. Okay. Then will he wait to be bought out? Well, that's the other thing. I could maybe, possibly, if he doesn't. If he'll wait until 59 1⁄2 to be bought out, then that's the best thing to do. If you can make that part of your divorce decree, that at 59 1� and a half you can pull this money you'll have no penalties no taxes you'll have the taxes but no penalties and i'd pull enough out to buy him out and to uh pay off the mortgage

while you're at it okay because i'll because all i owe it would be 5050, right? Yeah. Yeah, pay off the $50 and pay off the $80 and be debt-free. And then, you know, keep working and piling up and, you know, build up as much as you can put into your retirement then, obviously, before you retire. But you're going to be in fine shape. You're going to be okay. You've done a good job. I'm sorry you're facing this. What a horrible thing after 35 years.

Man, that's awful. Sharon and I have been married 36 years. I told her if she leaves, I'm going with her. All right, Laura is in Springfield, Missouri. Hey, Laura, what's up? Hey, Dave, I'm in Springdale, Arkansas. Oh, I goofed up because Kelly goofed up. How can I help?

I'm just, excuse me, I'm extremely nervous, so I apologize ahead of time, but I need some words of wisdom from you. We just finished FPU, and we are in baby step two, going after gazelle intensity like crazy. And we learned in FPU that we're supposed to have term life 10 times my husband's annual income uh we were in the process of doing that we were going through zanders and come to find out my husband is um uninsurable because of his health what's wrong with his health um he is 50 years old he's had two strokes and he's a wartime veteran with uh severe p. Yeah, that would make him uninsurable. Yeah, so we're trying to figure out now what do we do.

Gotcha. He's 50 years old. Do you have kids at home? No. Okay. How much mortgage you got? We have about $150,000. How much other debt do you have?

About $80,000. And he does have, I'm sorry. Go ahead other debt do you have? About $80,000. And he does have... I'm sorry. Go ahead. No, you go ahead. Okay. He does have a policy through his workplace for three times his annual income. That's great.

Okay. And he makes $50,000 a year? No, he makes $90,000 a year. $90,000 a year. Okay. And you have $50,000 in other debt is what you're saying. Okay. $80,000 in other debt. Oh you're saying. Okay. $80,000 in other debt.

Oh, I'm so confused. Okay, anyway, not counting your mortgage. Not counting our mortgage, correct. Well, you could pay off three times his salary. You can pay off the debt if something happened to him. An easy way to get some insurance when you're uninsurable is just to buy a mortgage life insurance policy i don't recommend those because they're about five times more expensive than traditional term but it's all you can get okay and what that does is it pays the mortgage

off if something happens to him it's a gimmick policy but they will issue those policies without medical, meaning they just issue them to anybody, even uninsurable people. So I would get mortgage life insurance. Call your mortgage company and see if they sell mortgage life insurance. They probably do. Yeah, we asked them, and they do not. I did have one option that I was thinking about doing, and I want your opinion on. What if we took a premium and paid it basically to ourselves in a special account and then bought a mutual fund with that every month?

You would do that after you get out of debt. Okay. You're just building wealth is all you're doing. And the whole idea is when you're out of debt and build wealth and the kids are grown and gone, your need for insurance starts to deplete. If you had zero debt and you had $700,000 in an account, you wouldn't have even called me because you would need to insure him at that point. So you're working towards that by becoming wealthy, working your baby steps in Financial Peace University. But no, we don't need to do that today.

I'd pick up a mortgage life insurance policy if you can find one. I think that's the best thing to do. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress.

And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's Zander.com or 800-356-4282.

In the lobby of Ramsey Solutions, John and Skyler are here. Hey guys, how are you? Good, how are you? Better than I deserve. Good to have you. Where do you guys live? We live in Norfolk, Nebraska. Which is? Two hours northwest of Omaha.

Okay. Cool. Well, welcome. Good to have you guys. Great to be here. Thank you. A bit of a haul to Tennessee. A little bit.

A little bit. All day drive, yeah. All the way here to do a debt-free screen. Yes, sir. Good for you. And how much have you paid off? We paid off $53,610 over 13 months. Good for you. And your range of income during that time? We started out right around $52,000 and worked our way up to about $85,000. Wow. Nice jump in one year. Yeah. So lots of extra jobs or what? Lots of extra jobs, especially with this one here. So what did you do, Skylar? I worked, I was a teacher, a substitute teacher at first. And then I also worked at FedEx every morning and every evening. So I got up in the mornings, did FedEx, school all day, and then FedEx at night. You were busting it.

Wow. Yes. What was your extra job, John? I worked at FedEx as well, part-time there, especially through the Christmas season is when we got plugged into that as we were picking up the packages for Christmas. Yeah. Very cool. So what kind of debt was the $54,000?

It was mostly my student loan that became our student loan, but we also had a car in there and then somebody's engagement ring. Uh-oh. So when did you all get married? We got married December of 2016. We graduated school in 17 and started our first jobs in January of 2017 and jumped right into the debt snowball. Gotcha. Okay. So how did you know to do this straight out of school and straight into marriage?

It's a good question. I remember I had a college friend that hooked us up with one of the Dave Ramsey books while I was going through school, and I kind of read it and shelved it and didn't think about it much. And we were getting down to the end of graduation, and we were getting ready to graduate and get married, and all these getting ready to graduate and get married, and all these things were coming at me. And I remember, plain as day, sitting in my college dorm room and thinking, this is about to get real.

And one of these days, I'm going to be the man of the house, and I'm going to have to know what I'm doing. In about 20 more minutes, yeah. A lot was coming down the pipe. And so I knew what to do. I knew the material. I'd been listening to you for a while, but at that point, it was time to put it into practice. And so we ordered the FPU DVDs. Oh, wow.

We didn't go to the same college, but Skyler would drive up and visit me on the weekends. So we sat in the dorm room and watched the DVDs. Oh, that's exciting. Great date night. You guys are fun. This is great. Yeah. Yeah. You guys are fun. This is great. Yeah. Okay, so you did it.

How old are the two of you? We're both 24. Yep. And you're debt-free. Yes. Debt-free millennials. Yeah. You're not victims.

No. You did it. No. I'm so proud of you. Thank you. Thank you. Who were your biggest cheerleaders? You're telling me, yes, you can do this.

Each other. Yeah. Yeah. We really, you know, this. Each other. Yeah. Yeah. We really, you know, we got our first jobs out of college and moved to a new town. And we were off on our own trying to figure out how to be adults. And we really, really had each other there. And we just kind of cheered each other on, I guess, along the way. Did your parents know you were doing this stuff?

Yeah. Our parents both think we're crazy. Good. Good. That's how we knew we were doing it right. Yeah. Okay. That works. I're crazy. Good, good. That's how we knew we were doing it right. Okay, that works. I love it.

Well, congratulations, you guys. So what do you tell people the key to getting out of debt is? I mean, you paid off $54,000 in 13 months. That's impressive. And you've been working your butts off. Yeah. Yeah. Now, what would you say?

I would say you go first. working your butts off. Yeah. Yeah. Now, what would you say? I would say, you go first. Let me go first. Okay. I would say, yeah, everybody comes on here and talks about the budget and doing the things, but I think the big thing is being intentional with it and having a goal at the end. Our goal is always to be free, to be able to do what we please as we grow into adulthood and have more choices and have more freedom. And that was really our goal and that was our why.

And it made the sacrifices easier. Yeah, and for me, with our relationship, teamwork and communication, because every month we had to sit down and we didn't always want to sit down and look at that budget. But like you say, so we kept each other on track with that and kept each other honest like one of us wants to spend the other one says no i probably shouldn't so yeah that just means one more month i gotta be at fedex yeah no we're not doing that that's it well way to go you guys i'm proud of you you realize that once you've done something this

big in the first 13 months of marriage that you can do anything now. You guys can tackle anything. Yeah. At 24 years old. Wow. And also, like, right after we got married, as we were moving in, John threw out his back. He slipped two discs in his back. Oh, good.

So it was pretty much, like, couldn't move, you know? Yeah. And then I also had physical therapy on my hip. So we had those bills and we had just gotten married. I have never lived away from home. So it was really new to be a wife. And now, you know, you say for better, for worse, for sickness and health. I didn't think it would be that soon.

But it was there. You got the whole list like the first month. Exactly. Oh my gosh. Yeah. And then still trying to stay on track with the budget. So, yeah, it really opens your eyes and you're like, we can do this. Yeah.

A lot of prayer, too. Yeah. And you did it. Yes. You did do it. Yes, sir. It's amazing. Well done.

Very, very well done. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired, and that's the next chapter in your story. You're going to be very young millionaires. Yes. And you're going to be calling into an everyday millionaire hour with us and telling us how you did that because you were debt-free at 24 and you learned to work together. That's the goal. Well done.

Very proud of you all. Thank you. Very good. Very good. John and Skyler, Omaha, Nebraska. Well, a little north of there. $54,000 paid off in 13 months, making $52,000 to $85,000. No stopping these two.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free. Love it. Woo. Yeah. free love it yeah that's it man right there well done well done open phones at triple eight eight two five five two two five they paid off fifty four thousand dollars they're 24 years old shut up what about you and that's why we do the debt-free screams because it kind of rubs your nose in it because some of you're sitting there making twice or three times what they're making and you're just still whining about you can't seem to get your act together well it's time it's time it's time you did this stuff and It's time you did this stuff, and it's time you did it right. You need to make a

decision. Are those 24-year-old newlyweds more grown up than you? Ooh, yeah, I just called you out. When are you going to do this? When are you going to do this? Ready? Ready? Set? Go. It's your turn.

You've got to make a decision here, folks. It's an intentional act to say, I'm going to do things differently so that I get different results. You can't keep doing the same thing over and over again and expect a different result. That's the definition of insanity. Ready, set, go. If you want to jump into our Facebook community, it's called The Ramsey Baby Steps Community on Facebook. Joel is in there.

He says, Dave, what's your opinion on a fixed-rate 20-year mortgage? Do the five extra years compared to a 15 make it an absolute no-go or a maybe? Well, Joel, I mean, the best thing is to not have a mortgage. I just don't whine and yell at you over a 15-year fixed because here's the thing. What do you want to do? Do you want to stay in debt? If you want to stay in debt, get a 30-year mortgage. Get a 50-year mortgage.

Keep getting new mortgages. If you want to stay in debt, you can do that. All you've got to do is just lengthen the time. What are you doing? What's your goal here? What is it you're trying to accomplish? And, you know, it's not like what's the least I can do to get by with this let me just tell you we finished the millionaire study for chris hogan's book everyday millionaires

and as we studied 10 000 millionaires the average millionaire pays off their home in 10.2 years so what do you want to do you want to stay in that are you gonna be a millionaire you're gonna be a millionaire then you don't need to do a 20-year mortgage you do a 15-year mortgage and you pay it off in 10.2 years. You could just take out a 10-year mortgage and it would solve the whole thing. Which means you're buying less house and no whining about it. Call the Wambulance. Buy a house you can freaking afford.

This is the Dave Ramsey Show. Thank you. Thanks for joining us, America. This is the Dave Ramsey Show. We're now broadcast on 604 radio stations all across North America, making us the third largest talk radio show in America today. Rush being number one, Sean being number two, or the undisputed number three. Thanks for being with us. You made that happen.

Between podcast and radio listeners and XM, there's over 15 million of you tuning in at this moment. Thank you. Malady is in Denver. Hi, Melody. How are you? I'm doing great. How are you doing, Dave? Better than I deserve. What's up? Well, great. I had spoken to you earlier this year. I was a very depressed person when I called. And just to kind of go back a little bit, I'm taking care of my son who is mentally ill.

And I had a very, very extremely low-paying job. Well, since that time, God has blessed. And I work for another law firm making $40,000 more. Yay! I love it! Touchdown! Yes. That's cool. Yeah, great. I am also working on my real estate investing to get that really up and going again because I know I can do it.

So I was calling because I am like a diehard now on the every dollar. And so I'm making like $76,000. That's my gross now. Yay. As opposed to $36,000. Mm-hmm. And so my debt, as I stated before, I have student loans, which are about $60,000.

Mm-hmm. And then I have the IRS, which is like $19,000. So it's about $79,000 right there. So I have my, in fact, I'm actually looking at my every dollar right now, and I have every penny, and I'm also a tither. So I just basically wanted to know, do I need to budget anything as far as an allowance for myself, or do I just need to stay full speed ahead with what I'm doing? Well, I mean, a small amount. You don't have to put much in there, but you need to have

a little wiggle room. Nothing big. Nothing big., I mean, even if it's 50 bucks or something, you know, it doesn't have to be 5,000 or 500, you know, but just give yourself a little bit of wiggle room, just a little bit of steam release is a good idea as a part of your budgeting situation. But, obviously, the more you budget in that category, the less you've got to pay down on the debt. And so we don't want to overdo it. But it is healthy to have a little bit of wiggle room in your budget because you put some money aside in the miscellaneous category is really what it comes down to. Just kind of a catch-all category. People tend to overdo that category or underdo it.

Underdoing it meaning they put zero in there which really just doesn't work you know you don't live your life that way that's not a realistic life um or then they tend to overdo it and go well i'm just going to put a big chunk in there and that way i can kind of really do what i want to do anyway and go around and screw off and not get out of debt and uh so that's putting too much in there. So just make sure you're putting a small amount in there, like $50, something in that range. In your situation, you're a single mom. It's not going to require a lot for you to have a little bit of an outlet to let some steam off.

Good job. Well done. I told you it was going to be okay. I told you you were going to make it. Wow. One is with us in Salem, Oregon. Hi, One. How are you?

I'm good. How are you? Better than I deserve. What's up? Hey, so my husband and I are having some difficulty coming to a conclusion on an issue, and so I just wanted to get your opinion. Okay. So we're in baby step two, starting at $88,000, and we have a rental house, and the mortgage on that's about $185,000.

So the rental income is enough to cover the mortgage every month, and then we make an additional $300. So our question is, do we sell the house? We have probably about $40,000 to $60,000 in equity. Apply that to the debt. Do we keep the house and add the $300 to the snowball? Okay. And what kind of debt is the $88,000?

So $65,000 in student loans, and then $15,000 in credit card, and $6,000 in an auto loan. Okay. All right, good. Yes, I would sell the rental. I love real estate, but this doesn't have any wiggle room in it. $300 is $3,600 a year. That's one month of vacancy, one bad hot water heater, and you're in the red. Okay. You're not making any money on this property.

I mean, you've got a gross profit of $300. But when you actually do your taxes at the end of the year with repairs and vacancy, which you may not have had this year, but you're going to over the scope of time. That's realistic to do repairs and have vacancy in rental properties. By the time you do that, you don't have any room in this thing. It's not making money. And so I wouldn't keep it even if you weren't in debt. Okay.

So it's not considered. My husband is having trouble letting go of it because he's seeing it as an asset. It's not an asset because you're not making money on it. It is an asset in that it has value and you have a little equity in it, but you don't have enough equity to where that cash flow is real. Do you see what I'm saying? Absolutely. Yeah, I own a bunch of rental property,

and I can do the P&L on that property in about 90 seconds and tell you you're not making money because you're dealing with a two hundred thousand dollar property with three thousand dollars worth of wiggle room a year i mean you're going to get you're going to get you're going to get it on the chin one of these days you have five months of vacancy you're in a whole bad absolutely yeah and that can happen i'm not saying it's going to happen, but it can happen. Right, you just want to prepare yourself. Yeah, exactly.

So I would have the goal of getting rental property again someday, since you like rental property and he likes rental property, but you just pay cash for it, and then it actually cash flows. When you don't have a mortgage, I mean, it cash flows like crazy. But this thing doesn't have enough room in it in the monthly or in the equity. And the equity equates to the monthly, meaning your mortgage is so stinking big in relation to the value of the house that you don't have a lot of wiggle room here. If you had a mortgage that was a fourth this size, then we could think about, okay, the thing's actually cash flowing. Do we really want to sell it or not?

That would be something. But I would sell this house regardless of whether you were in debt or not because it's not going to end up being a blessing. When you look at it over a five-year scope of time, it's not going to be anything super exciting here. Thanks for the call. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Devin is on Facebook. I want to save up $30,000 to buy a mobile home cash and

live there five to ten years. Once I have enough money saved up, I want to buy a house cash. What do you think? No. You're getting ready to take $30,000 and put it in the middle of your kitchen table and burn it. Because you know what a $30,000 mobile put it in the middle of your kitchen table and burn it. Because you know what a $30,000 mobile home is worth 10 years later? Nothing. It's like a car you sleep in. It goes down in value like a rock. So no, I wouldn't do that.

Absolutely wouldn't do that. I wouldn't buy a mobile home because it goes down in value. Houses go up in value. I would rather you rent something cheap. At least then you're not losing 30,000 bucks. Rent something super cheap and buy your house a little quicker. But no, I would, I'd never recommend. Now, the one exception would be if you're buying a, you know, a $3,000 mobile home. I've known people did that, which is a piece of trash, basically. Okay, let's just be honest. I mean, I've lived in stuff like that. When is a piece of trash, basically. Okay, let's just be honest.

I mean, I've lived in stuff like that. When I was going to school, the house I lived in wasn't much. It didn't have heat one winter. We used a fireplace to heat it. So I get it. You can do all of that. You can camp for a little while if you want to do that. And I've known people that bought a $3,000 or a $5,000 mobile home,

but I wouldn't spend $30,000 on it because it's not going to be worth squat when you get ready to sell it. And things are going to be an anchor around your neck as you're trying to move on to the next thing. But if you want to buy something super cheap and kind of camp for a little while, that's fine, but I wouldn't do a $30,000.

That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host, and we'll be back. Hey guys, this is James Childs, producer of the Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.