The Ramsey Show - App - It's Time to Start "Adulting" (Hour 3)

Episode Date: July 31, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Roger starts off this hour in San Diego. Hi, Roger. How are you?

Hi, Dave. I'm great. How are you? Better than I deserve. What's up? So, I am active duty in the military. My wife and I have paid off all of our consumer debt. We have a fully funded emergency fund, and now we're focusing on retirement investing and college savings for our

two kids. Phenomenal. Well done. Thank you, sir. So my question to you is, would you recommend just sticking with the TSP for retirement, or would you recommend moving our funds out of that and into a civilian option? What kind of a civilian option do you have? Well, I mean, just like a regular civilian retirement account, like an IRA or like a Roth IRA or whatever. Does your wife work civilian? She's a stay-at-home mom, and she's in the Army Reserve.

Okay. All right. Well, thank you both for your's in the Army Reserve. Okay. All right. Well, thank you both for your service. We appreciate that. Thank you, sir. The TSP is fine. It's not bad, and it's not like the best thing on the planet either. It's kind of lukewarm.

And what we tell people to do there is the C plan with the bulk of it. Okay. Because the C is basically an S&P 500. It's going to do about what the market has done. That's been its track record. It's the best performing fund in the bunch. I don't do the L's. I don't do any of that stuff.

And then I put some in the S and some in the I. Sometimes people do 60 in the C, 20 S and 20 I. Some people do 80 in the C or 10 S, 10 I. And S is the small company, and I is the international options. They're good. They're not great. The C is the best player on the block, and that's why we weighted a little heavier than we normally would.

But that's what I always recommend with a thrift savings plan for federal and military, both. In terms of options in the open market uh yeah the the roth ira is going to outperform that uh you can do the roth tsp and that's what i would do but it's going to outperform because assuming you select good mutual funds but i think you can find mutual funds that will outperform matter of fact i know you can that would outperform the mix I just gave you. Because basically that's like buying an S&P 500 fund. And can you beat the S&P 500 with mutual funds in the open market? Why, yes.

Sure you can. Do all of them beat it? No. No, not all of them. But, you know, every time you sit down with a smart investor pro, they can show you, okay, this fund performed this, and here's how it compares to the S&P. And if it doesn't outperform the S&P, don't buy it. You know, I wouldn't buy a mutual fund that does that. So, yeah, sit down with SmartVestor Pro.

You can do a couple of Roth IRAs in your situation, $5,500 each, $11,000 total. And you can start there and pick some mutual funds. We suggest four types of mutual funds evenly spread across those, growth, growth and income, aggressive growth, and international. That's how my personal 401K is done here at the office. I do the Roth 401K here at the office, and I do backdoor Roths. I do the exact same thing with those. And so if you want to do some more or need to do some more at Baby Step 4 to get 15% of your income going into retirement,

you can go do some of what we just talked about in the Roth TSP. And, you know, again, heavy on the C plan if you're going to go into that. Thanks for calling in. Tamara is with us in Houston, Texas. Hi, Tamara. How are you? I Texas. Hi, Tamara. How are you? I'm doing good, Dave. How are you doing? Better than I deserve. What's up in your world? I am calling because I am recently married, and me and my husband, we are wanting to purchase a

home. I have debt. He has very little debt, and we're just trying to figure out our financial situation. But I have debts that are in collection, and I'm trying to figure out how should I attack the debt that is in collection. Okay. Well, to start with, if you're married, you should act like all of your finances are one. Okay, we do. We do that. Okay, well, you said I have debt, and the proper terminology is we have debt. I brought it in, but we have debt. the proper terminology is we have debt i brought it in but we have debt so how much is in collections that we have um in collections without my student loans i would say it's about seven thousand well no about six thousand okay how much is in student

loan debt um three okay and what else is there um Um, well, I have my truck, um, my truck, um, I have to finish paying off. That's only 4,000 more to go on my truck. Um, and then I have, um, credit cards that are in debt and, um, some medical bills. How much on credit cards? Um, credit cards, I would say roughly probably about two, maybe 2,000, more than less, probably less than 2,000. And, uh, does he have debt that we have that you haven't mentioned here? Well, we have, well, yeah, he probably has a credit card that's probably about $500.

So, yeah, we have one that's $500. There's no payment on the car that he drives? No, we only have one vehicle. Okay. And what's your household income? Our household income, we looked at it last night, it was probably about $80,000. Okay. Well, you only have $15,000 in debt.

Yes. And you make $80,000. Yes. But to start with is, you guys are just starting to think about this because you've got a little bit of house bug, and hopefully that'll be the motivation for you to get your act together because you don't even know where you are. As I'm asking you these numbers, you're just, like, guessing. Yes, sir.

So it's time to get on top of it, every detail. Pretend like I have. What do you do for a living? I am a secretary in the radiology department. Okay. Pretend like I came to you and I said, I'm going to hire you. I want to pay you $ hundred thousand dollars a year and your job is to take these people named tamra and her husband and clean up their mess okay you know how to do details you know how to execute on tasks

you would comb the tangles out of this hair in about 20 minutes if you're paid big bucks to do it right yes sir well you are paid you're paid 80 grand a year if you're paid big bucks to do it, right? Yes, sir. Well, you are paid. You're paid $80,000 a year, and you're wasting it because you're screwing around. Agreed? Yes, sir. Okay, so time to get organized. Okay. Time to comb the tangles out and really bear down on this. What's going to happen is you're going to feel so much freedom so quickly,

you're going to be amazed at how quick this turns. Yeah, and I think that's because that's the way i was before we even much the start decided that we were going to purchase a home it's like it's it's bugging me but it's like we're always trying to figure out okay well how do we do this and how do we do this yeah so i think it's just more so of us trying to exactly just figure out how to start and where to pretend like it was your full-time job to clean up this mess okay and you're gonna get fired if you didn't do it okay okay because that's god looking at you he's going i gave this money to manage and you pretty much

suck right now you need you need to straighten up yourself okay that's what he's saying right yes sir he did he said that to me he took all mine away because i was so bad at it so i know how it feels i had to start over he, you're really bad, son. So you only got 15 grand. You're just disorganized and not on top of the details. So jump on top of it. Get on every dollar and download the budgeting app. It's free for your iPhone or your Androids. Get both of you, you and your husband.

Get that going. Start telling every dollar what to do. When you start settling these collection accounts, you call them. Get in writing from them what you owe them in writing and what you're willing to pay them or settle for or whatever works out. And then once you've done that, you give them an outside check of some kind, no electronic access to your checking account because they'll take more than they're supposed to. They lie. Work those through, get all this paid off. Get your emergency fund in place before you buy. Let me tell you a story about two families that are very much alike in a lot of ways.

Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance, and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and that does happen, their well-being would be destroyed.

Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Our question of the day comes from Blinds.com. You know, Jay Steinfeld, my friend, started Blinds.com about 20 years ago to make the complex process of ordering and installing new custom blinds simple.

With Blinds.com, you get free samples, free shipping, and with the new promos they run every month, you're going to save even more. Always put in the promo code RAMSEY, and you'll see the best possible deal out there. That's the magic word, RAMSEY, at Blinds.com. Todd is in Texas. I currently own, oh, I think he says own. I think he means, oh, $6,000 on my house, and I have $17,000 in my savings account. Should I pay off the house today knowing I can replenish my savings account in about two months?

Yes. It's a no-brainer, dude. I mean, $12,000 is not a bad emergency fund, and your house is paid for. Bing. Just like the $11,000. I'm sorry. That would be what you'd have left. And then, you know, you rebuild after that, and life is good.

That's how it's supposed to happen. You know, I was telling that last caller, the funny thing happens is this whole process of deciding you're going to take care of your money. Now, some of us are nerds. I mean, even before I did this stuff, I would sit down. Y'all remember the old checkbook registers? Any of you old enough to remember old checkbook registers in the back of your checkbook before there was the web and before there was the Internet?

And you would write down every check, and then you would, with your bank statement, there was a physical paper bank statement with the actual physical checks would come in the mail each month. And you would check off the checks in the statement and make sure that the right amount was charged, the amount that you had written down. And you would reconcile, physically reconcile, with like a calculator. They had these things called calculators back then. Physically reconcile your checkbook and really know what was going on. I'm the guy that did that from the time i was 16 on just i'm that big a nerd i really am and some of you did that now i mean

with the internet and you know you can online banking you can balance your checkbook and about what reconcile your checkbook in about what 30 seconds now it doesn't take time at all it's a very very fast to do. You know, people don't even realize they're doing it hardly anymore. But it's a good exercise. But I was that nerd. Most people are not that nerdy. I mean, I had yellow pad lists.

I always had a list before there was a budget. There was even a list, you know. And, you know, always sweating it, worrying about it, you know, fretting over it. Most people don't do that. Most people have an experience like that last caller. They're going along. In the South, we call it diddy-bopping. They're just diddy-bopping along, kind of in a phase, kind of in a haze,

kind of foggy, but everything's good as long as there's no bumps in the road. There's no reason to steer the car different. We're just rolling along here. And then something happens. There's a big layoff at work. They didn't get you, but they're probably going to get you next time. Transmission goes out on the car. Aunt Henrietta dies halfway across the United States.

You've got to buy an airline ticket and you don't have any money to go to the funeral. You want to buy a house. That was the last call, right? Something happens that goes, you know, I look at this money thing. I need to pay attention. I'm going to start paying attention. And the first thing that happens is you kind of start making these lists in your mind. You don't really write them down because you're not as nerdy as me,

but the fog starts to clear and you start to go, you have an oh crap moment, don't you? You're like, oh crap, this is a mess. Oh no, I got debt. Last caller, I got $6,000 in collections. And oh, and there's this oh-no moment, right? And you kind of get the sweat going. You remember the sweat usually like right above your lip, a little bit in the palm of your hand,

sometimes a little bit right above your eye. Your eyes dilate, your heart rate increases, and you're like, oh, crud, I got a problem here. This is like grown-up stuff. I'm going to actually have to pay attention. That's the first thing that happens is you realize there got a problem here this is like grown-up stuff i'm gonna actually have to pay attention that's the first thing that happens is you realize there is a problem that is the best day of your financial life if you let it be my dad used to say 90 of solving a problem is realizing there is one you ever meet people who have uh misbehavior in their lives but they're not

self-aware enough to know it? They don't even know there's a problem. They're oblivious. They're unconscious about life and about their problem. They're never going to fix it because they don't even think there's a problem. They don't know there's a problem. It's the same way with your finances. You're not going to fix it until you know there's a problem.

The best thing that can happen is you go, there's a problem. Oh, my gosh, there's a problem. Then you start to realize, I'm the problem. It's my fault. No one did this to me. I'm not a victim. It's my fault. Well, unless you want to play the victim.

And if you want to play the victim, you can always go, I'm a poor millennial. I have student loans, and the society is taking advantage of me. Or you can play all that crap. But most people just go, it's my fault. I screwed up what am i going to do and this sense of oh being overwhelmed is very real changes your heart rate it stresses your butt out that is awesome as long as you do something about it because if that that's in psychology

they call that dissonance. And if that inconsistency, that dissonance in your life, says I'm going to move away from this pain towards something that fixes it, you will move towards doing your budget. And when you do your first budget, you will have this release moment, like you breathed in cool mountain air, like a sigh. Because when you do your budget and you really detail everything out very seldom are things as bad as they felt when you didn't know the details not knowing the details is a monster in the closet the boogeyman is in the closet and he's never really there as bad as you think he is now some people discover it's worse than they thought it was but very few most

people when they write it all out i mean that lady made eighty thousand dollars a year she had fifteen thousand dollars in debt i mean you guys listen to this show that's just nothing i mean people pay that stuff off in 20 minutes listen to the show they but you know but she was completely freaked out in the corner like oh god this is so, because she hadn't moved to that next step yet of writing it all out in detail, combing the tangles out of the hair. And when you do that, you're going to discover we've got the money to fix this. And when you do that first budget, that's why I always tell people, you feel like you've got to raise. And the reason is you feel like there's not enough money when you're overwhelmed.

You feel like, oh, we're stuck. Oh, my gosh. Oh, we're going to die die and you go into the drama queen mode right but as soon as you do the budget it all calms down it's like you know i think we can do this i i think we make enough where's all the money going all we gotta do is stop doing this and stop doing this and sell this and all we gotta do is this and and you're you have all the all we gotta do moments all through the thing right all we gotta do is all we got to do is. And it's readily apparent to people with common sense right there as soon as you write it down and you do that budget. You feel like you got a raise because you can see how you're going to get traction to win.

This is why 3 million people use EveryDollar, our online budgeting app that's completely free for your iPhone or your Droid. The reason three million people are using it is they have that moment, and they go, I'm going to have to be a grown-up. There's a phrase going around, the new phrase that cool kids use i'm adulting where adult has become a verb being an adult as a verb i'm adulting have you seen that yeah it's a cool way of saying i used to be a child and now i'm going to act like i'm a grown-up even though i've been walking around a grown-up body for maybe a decade. Now I'm adulting. But that's all it is, is you're deciding I'm going to be grown up. I'm going to take responsibility for my actions, my future, my destiny, and even my past. I'm going to put it behind me with a plan, and I'm going to execute on the plan.

This is why every dollar the app is exploding, because it's giving people the power to do that. If you're really ready to get control the first step is you have that old crap moment and then the second step is you begin to do away with the anxiety that comes with that moment by laying out a plan a detailed nerdified plan the good news is we've been doing this so long it only takes you about 10 minutes on every dollar you do all this with like 19 yellow pads and stacks of bills on your, you know, all over your kitchen table. You know, you're just going to get more and more and more stressed out. But jump on every dollar.

It's designed to help you put the thing together quickly and easily. Did I mention it's free? And did I mention that there's 3 million people out there that seem to know something some of you don't know? Don't wait until you have an oh crap moment. Just decide. Huh, I'm going to adult. See, I used to do it as a verb. Did you see I did that?

That's pretty good. I'm going to adult. I'm going to get on every dollar. I'm going to be a grown up. This is the Dave Ramsey Show. 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. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and every search you're doing online. It doesn't matter if you're on your cell or your laptop.

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or go to hotspotshield.com. You can be secure in seconds. Download Hotspot Shield by Anchor Free today. In the lobby of Ramsey Solutions, Nicholas and Dara are with us. Hey, guys, how are you? Hi, we're great, Dave. Hey, Dave, how are you? Welcome, welcome.

Where are you guys from? We're from Mamaroneck, New York, in Westchester, just outside of the city. Yeah, very cool. Westchester, beautiful area. Yeah. Very nice. Well, good to have you guys, and you're here to do your debt-free screen. Yes, sir, we are.

We can't wait. Fun. How much have you paid off? We paid off $33,042 in 10 months. Good for you. And your range of income during that time? We went from about $90,000 to $155,000. Wow.

Big jump. What was the big jump? He got a great raise, and then he ended up taking a new job. Oh, a great raise and a new job. Yes. There we go. With a great raise. Yes. There we go. With a great raise. Yes.

There we go. Very good, good, good. What do you do for a living? I'm a photographer. I own my own business. I shoot families and kids. Oh, wonderful. And I'm a project manager for a construction company.

We do tile and marble installations in New York. Oh, very nice. Very nice. Well, good for you guys. So what kind of debt was the $33,000? We had about $6,000 on a credit card. We had $10,000 in student loans. And we ended up getting a car about a year and a few months ago for $16,000.

Oh, that was the big dog. Yes. Okay. That was during Baby Step 2. During? Yeah. Well, I called in September because I kind of had an epiphany, and I was like, should we sell my car? Should we sell his car?

What should we do? And just to put it lightly, you ripped me a new one, and it did not go over well. And I walked around with my tail between my legs for about two weeks. And I was like, we got to just do it. Got to start it. What did I tell you? That you shouldn't have bought that car? Well, I told you, which I shouldn't have. I said, you know, Dave, the whole time I'm sitting there filling out paperwork, I can just hear you telling me not to do it.

And you go, yeah. You said, well, why'd you do it? And I said, I don't know. I'm so sorry. And you said, you interrupted me. And you go, no, you heard me telling you not to do it. So why'd you do it? And I'm like, I'm so sorry. I don't know. I'm so sorry. And you said, you interrupted me. And you go, no, you heard me telling you not to do it. So why'd you do it? And I'm like, I'm so sorry.

I don't know. Please don't be mad at me. So yeah, it's a featured video on the YouTube channel. It's great. Yeah. So I had to stop reading those comments, you know? Oh, no. We're here now.

But we're here. You're here. You made it. So what did you do with the car? You sold it or you paid it off? No, we paid it off. Okay. That was the $16,000 car? It was. Okay. But we're here. You're here. You made it. So what did you do with the car? You sold it or you paid it off? No, we paid it off. Okay. That was the $16,000 car?

It was. Okay. Yeah. All right. Oh, so you're telling me you did this while you were in Baby Step 2. That's what you told me. Yeah, but that was like... Yeah, okay.

That's why I let you up. We were halfway. I mean, we were not really doing it, you know, and my car gave out and we didn't have savings. And you went and bought a car. Okay. And it was done. We're here. Now I know why. Now I'm starting to figure out why I got you. Because I you went and bought a car. Okay. And it was done. But we're here. Now I know why.

Now I'm starting to figure out why I got you. Because I don't usually just bump somebody unsuspecting that way. But I get it. Okay. You got me. Wow. Sorry. That's okay.

Glad you survived. It's all right. I accept your apology. Oh, my gosh. So what happened? It sounds like there's two phases to this whole process emotionally. You were kind of lightweight doing Baby Step 2. What got you started doing that?

And then was it that phone call that got you on board and you decided to go all in then? Tell me how this all worked out. Go ahead. We were making decent money, you know, for our age and, you know, what we were doing. And we couldn't find any money at the end of the month ever. And I said, this is crazy. We're making too much money to not know where the money's going. So I think with that compounded on top of this phone call, it got us really jump-started

into being serious about it. Okay. But you were kind of working Baby Step 2, literally. Kind of, yeah. And you knew what it was, and you had the debt snowball laid out. Right, we did. You were just not intense. Correct. and i'm a zero to 100 like there's really no in between for me so she's not dipping her foot in the pool she's either on the deck or jumping in yeah so i

something had to happen kind of within me um not to quote your commercial something has to happen inside of you um and that's what happened is i just i was in bed and i'm like we gotta we gotta do something and i was like you know i'm just gonna call dave tomorrow and then that happened so and then the rest is history yeah so that you so you went after it after that correct okay yeah i had heard about you um and we we grew up in florida um in orlando and my mom used to listen to you on AM radio all the time. And I would, you know, I knew your name. I knew who you were.

And I didn't think, I don't think it really was visual of what Dave Ramsey was and, you know, the whole plan until we got very involved in our church and somebody was leading a class. We never took the class, but somebody was leading the class. That made it conversational, made it part of the thing. Okay, cool. Cool. So how does it feel now that you're debt free? It feels amazing. Somebody was leading the class. That made it conversational, made it part of the thing. Okay, cool. Cool. So how does it feel now that you're debt-free? It feels amazing.

For me personally, I never really knew it was a heart issue, you know, belonging to the church. Like Dara said, we're leaders at our church. And so for us being able to do this, I know God doesn't need our money or want our money. He wants our hearts. And so that was the biggest thing for me that it's built my faith throughout the process. Cause in February I told her we're not going to be able to be debt free by July when we go on this trip. And she said, would you have a little faith? Oh, and, um, you know, God provided in ways I can't even imagine. Um, so that, that was the really cool part for me is, you know, it feels great. Yeah. But I'm looking forward now to what the future has in store for us.

Amen. How long have you two been married? Three years. Three years. We've been together since we were about 14. When she was about here and I was about here. Yeah. He had to, you know, get a little spurt.

Yeah. Well, we've been married for about three years, yeah. Okay. Well, congratulations. Thank you. We're so glad to be here. Very proud of you. We have a lot of friends watching. Thanks. It you i'm proud i'm proud of you very well done i bet you parents and everybody are looking at you going way to go guys yeah they're all watching now so that you know cheering us on so that helps a lot yeah our friends think

we're you know strange but that's okay we we appreciate being weird we're weird but so you you by doing their debt-free scream you kind of get to you know put it in the face of all those negative youtube commenters yeah i know i know should i go back and read them i don't know no no no no you just put the thumb on them by doing this you proved them all wrong i love it yeah we made this trip into a um we're actually going to the grow conference at church of the highlands. And so we knew we were coming here for this. So that was why it was kind of our goal. We knew we were coming on this trip. So we just made a road trip on it.

We were in Lexington visiting family this weekend. We came here yesterday and hung out and met everybody. It's just amazing. I watch the show on YouTube every single day. Oh, my gosh. And so walking in here yesterday, it was like seeing people, you know, somebody who works here was like seeing people you know um somebody who works here was like these are like your co-workers i'm like yeah they're you know i

while i work every day this is what i do so um it's been really surreal and so we're going to alabama tonight go to church of the highlands and then we're going to memphis i'm a big elvis fan to kind of you know seal off the trip so well chris and the guys at highlands are buddies of ours are good folks they're amazing you guys have guys have a good time while you're there. So the one you're in in New York, is that an arch church up there? Yep. No, it's not. Oh.

No. We kind of follow their model, but it's not. Not technically. Okay. Cool. Yeah, we're super excited. Well, fun, you guys. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired.

That's the next chapter in your story. To be millionaires, and you're well on your way. Thanks, too. You guys are fun. Thank you. And it's a great, great story. I love it. Thank you.

Thanks for joining us. All right. Nicholas Adara, New York City area. $33,000 paid off in 10 months, making $90,000 to $155,000, and didn't even have to sell the car. That's right. Let's hear a debt-free scream. Three, two, one. making $90 to $155 and didn't even have to sell the car. That's right. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! I love it, you guys. I love it. That's fun. Very well done. So some of you wonder, some of you, the ones of you that are listeners that are the nice people you're always worried that i'm too tough on somebody and um it turns out you know a good coach will love you they'll they'll get all up in your grill right and they'll love you and put their arm around you when you're struggling and sometimes i do it the right way

not always but sometimes i lean on somebody I kick their butt just when they need it, and it turns out for their best interest, hey, that's what this is all about. I don't get entertainment value on this show out of just destroying someone. There are shows that do that kind of stuff, and we don't do that. If we're after somebody, it's for their own good. It's kind of neat to hear one of them that actually turned around too isn't it that's kind of funny and uh kind of uncomfortable and awkward but kind of funny too you know very interesting stuff so um remember i jumped just really railed on this girl because she was going

to buy a couch for her mother-in-law to come visit i'm like she can sit on the floor that night i'm at a restaurant and she comes over and says hey i'm the lady on the show this is my mother-in-law i'm going how's the floor this is the dave ramsey show Guys, let's talk about that timeshare pitch that you fell for. They promised you exclusive access to travel anywhere you want. Tropical beaches, mountain getaways, or whatever. Oh, my gosh. They claimed it was the affordable way to travel,

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Call 844-999-EXIT. It's free to talk. 844-999-EXIT. TimeshareExitTeam.com. Our scripture of the day, Romans 12, 6. Having gifts that differ according to the grace given to us, let us use them. Arthur Ashe says, start where you are. Use what you have. Do what you can.

I used to work with a guy who said, all you can do is all you can do. And that's enough. That's all you can do. Justin's with us in Madison, Wisconsin. Hi, Justin. How are you? Hi, Dave. I'm doing great.

Thanks for taking my call. Sure, man. What's up? So my question is, well, first of all, my wife and I have been following your plan for like 11 years now. We're on baby step six, working on paying our home off.

However, we're also looking at putting an addition on our house, kind of an upgrade and remodel. And just to give you the details on that, we owe about $198,000, and the addition remodeled maybe about $250,000. $250,000. And we're just wondering, you know, is that a foolish decision to do that? Or kind of, you know, what is your thought on that? What's your household income?

$250,000 to $300,000. That's awesome. Okay. Yeah. And thanks to you, actually. What is the home worth? Right now it's worth about $350,000. Okay.

And what is the top selling price in the neighborhood? It's kind of a rural area, so it's on some acreage. But, you know, some neighbors have gone for over a million. Most of them are going for, you know, $450,000 to, I don't know, $550,000, something like that. This is not a traditional remodel. I mean, you're spending more on the addition than you owe on the house now, and you're spending almost as much on it as it's worth. Right. Yeah, that's the concern.

Yeah, and so it's more the concern for me is two things. This is like you calling me up and saying, hey, we make $250,000, we're debt-free except the house, and we are thinking of buying a $550,000 house on a 15-year fixed. Sure. Okay. Which you could do easily. Yep. And pay it off very quickly, right?

Yes. Yes. So that equation makes sense. A standard remodel, if you call me up, when I saw this on my screen, I said, take a loan for a remodel, I was laughing to myself going, I hope I don't have to kill this guy, you know, because I thought you were calling up and going, you know, I want to finish out my carport for $14,000. Yeah. And, no, you save up and pay for that one.

You know the answer, right? Sure, yep, yep. But this is more like a tear-down rebuild. Yeah, somewhat. Yeah, it's kind of like we like the location, so we want to stay. So the question is, do we sell it now? The financial equation is okay for you to do that. I would end up with a one mortgage, a first when I'm done, a refinanced first.

You're probably taking out a construction loan, I guess. Yep. And then use your fabulous income to go ahead and put this thing on a 15, but in your mind, put it on a 7. Sure, okay. Because you've got the ability to finish out baby step 6 very quickly. So that's the great news. The only other concern is are you building a white elephant, meaning something that no one can ever sell. Right, okay.

For anywhere near what you're going to have in the thing and so you've got to have the architecture and the design when it's finished in such a way that this property should be worth you know 800 grand finished okay okay from an you know just because someday somebody your kids your grandkids somebody's got to sell this thing right and you don't want them standing out in the front yard scratching their head going what was the old man thinking you know he created a dad gum he built the ark back here you know we can't do anything with this thing we're stuck okay and so don't build some monstrosity or something that's so poorly designed you'd be better off push the whole thing down start than to do that okay um but you're gonna have you know the equivalent of 300 to value today plus $250.

And so you're going to have the equivalent of $600,000 roughly in this thing. Okay. So it ought to be worth in excess of $700 or $800 when you're completed in today's world. From an investment standpoint, I think it will be if you're smart about your architect, your drawings and how the house flows when it's done and you know uh how the addition really which is as big as the stinking house probably um is gonna work out for you so all the numbers make sense you're 550 000 in debt you can pay it off fast making 250 um that all fits within our 15 year fixed rate payment no more than a fourth of your take-home pay plan to pay it

off early routine that you've heard me say a thousand times if you've been following me for 11 years um then that all fits just don't build it in such a way that you're you're stuck with it or someone else is stuck with it that that would be the thing good question and congratulations on doing so well man that's awesome what a great income all right dan, Daniel is with us in Charlottesville. Hi, Daniel, how are you? How are you, sir? Better than I deserve. What's up?

Okay, well, first of all, thank you for what you do and the services that you provide. Thank you. So my situation is I'm a 32-year-old immigrant, moved to the United States five years ago. I have a college degree, but I cannot get a job with the job that's required. A college degree because it's from overseas, although it's been evaluated. What is your degree in? Law school. So I was a lawyer.

But I cannot practice the law here because all the complications that come with it. However, that's why I got into trucking. I have been in trucking for a year and a half, but by now I think it's time to go back to school. So the options that I have now is either to go back

to four-year college and spend about four to six years in school because I cannot do it full-time. I have to work with it and get up to 120 credit hours or go right away to get my master's in business. And that's only 30 credit hours and costs less than $20,000. So my question here would be, is it worth it to go and get an MBA degree with no experience in it or not?

Well, an MBA is a great degree to have. The education is wonderful. It does help in the job market. It is not the magic bullet that you seem to think it is. I've got plenty of folks here on my team that have MBAs, and I have plenty of folks here on my team that don't have MBAs that out-earn the MBAs. And I've never hired one. I mean, we've got 600 employees.

I've never hired somebody because they had an MBA. And I've never not hired someone because they didn't have an MBA. We're looking more at the person and can they execute the job that's at hand. And the MBA is merely an indicator that you've got some basic knowledge of strategy and some basic knowledge of business. And in some cases, some fairly sophisticated stuff, but a lot of it's not even usable in 90% of the marketplace unless you're going into a high corporate position. And so it's not a guarantee of a job.

And so, no, a guarantee of a job. And so, no, I would not borrow money to get an MBA. But could you pursue an MBA as part of your career track? Is it a bad thing? No, it's not a bad thing. And if you spend $20,000 on it, it's probably worth the money in that you probably will make more over time because of that knowledge, not necessarily because you have the degree. But I would just pay cash for it as I go along. And I'm probably going to look to insert yourself somewhere in a business setting.

When you say trucking, I assume you are driving a truck is what it sounded like. And I would try to insert myself in a business setting to where the MBA might even be paid for by the company you're working for. And so take an entry-level business job somewhere, knowing that you have a law degree from another country that doesn't give you the ability to practice law here, but obviously that is a sign of accomplishment and a way to get your foot in the door. And go in and prove yourself in those businesses, and then go after your MBA. That's how I wanted to go about it. But would I borrow money to get an MBA?

No. Is the MBA going to be a silver bullet that solves all of your career track problems? Absolutely not. Absolutely not. It's not. No degree is. No degree solves your career issues. None of them. Hope that is. No degree solves your career issues. None of them.

Hope that helps. Thanks for joining us. Open phones at 888-825-5225. If you're subscribed to our YouTube channel, you've probably gotten to see the great work our video has done in creating episodes for our Turning Point series. If you need encouragement during your baby steps or feel like you're losing traction, then you need to check these turning point out. These are people who hit the wall, crashed, and turned it around. And they are inspiring. We've got 27 of these inspiring episodes now on my YouTube channel at the Dave Ramsey Show

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