The Ramsey Show - App - It's Where You're Going That Matters, Not Where You Came From (Hour 3)

Episode Date: September 24, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. 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. Joshua starts us off this hour in Miami, Florida. Hey, Joshua, how are you?

I'm good, Dave. I'm a new listener, and it's a great honor to get to talk to you. You too, sir. How can I help? So I'm 19 years old. I've just got a car not too long ago, been saving up for it probably a few months ago now. And long story short, I had Gaines Co. for my auto insurance, and I've decided I'm going to be moving out to Texas to live on my own. And so I switched to Allstate. Now, in the process of doing this, you know, I went to my old insurance agency to cancel. And as far as I knew, everything was all

good. They sent the paperwork out to Gaines Co. And then about a week or so later, I'm still getting stuff from Gaines Co. It's actually probably close to a month now. I'm still getting stuff from Gainesco. I called Gainesco, and they said that the policy is still active, but they never got anything from the agency, and now I've got Gainesco coming after me for debt collection because I never paid in, you know, I didn't pay the bill after I was supposed to cancel. What do you think I should do? Your agency should take care of this.

Right. Did you call them? Yeah, I've called them a bunch of times. It's hard to get a hold from anybody over there. And really, it's kind of like a shady place, honestly. They're not really helping me out here. Okay. Well, I mean helping me out here. Okay. Well, I mean, you've got two choices.

You're either going to pay it or your agency is going to pay it because Gaines Co. didn't do anything wrong. Right, right. They weren't notified. Since they weren't notified, you owe the money. Somebody owes the money. Right. So either the agency says, oh, we screwed up,

and they talked Gaines Co. into dropping this as a favor to them, or you're going to pay, it's probably, what, a month's worth of insurance? Yeah, it's about $367. Yeah, you're going to pay it if you can't get the agency to get them to waive it. It's one of those two things. And let me tell you what not to do. Don't ignore this. Don go oh well screw it i'm not paying it i don't know it i'm driving off to texas forget it it'll end up being three thousand

dollars in collections fees and lawyers fees and chasing you 10 years from now so put this thing to bed put a bullet in this thing stay on it it's worth a lot more than 360 dollars for you to finish this and so i'm going to be doing two things simultaneously one is i'm going to make a total nuisance of myself at this agency you said you went over there they have a physical location go over there again. Sit there. I want to talk to the manager. You guys screwed this up.

Now this company's chasing me. I need you to fix it. Get on the phone while I sit here. And you fix it while I'm sitting here. And then you get me something in writing from these goobs that it's gone. You ride their butt. If it takes you an hour, you made $367 an hour. If it takes you two hours, you made $150 an hour. Right?

Right. Because otherwise, you're going to end up paying it. Or you're going to raise Cain with Gaines Co., who really didn't do anything wrong in this story. And, you know, guys, it was canceled canceled and i need you guys to call the agency and i need you guys to waive this it's not my fault it's not your fault either but i canceled it i've you know did you have any paperwork to showing you canceled it at all well i don't have anything on my end when i actually went into the agency you know we had a i had to sign and date everything yeah did you didn't get a copy of

that they never provided me with any of that go get go to the agency get a copy of that don't leave there without a copy of it okay because that too will give you a fight a way to fight with gainsco because the agency represents them not you that's the problem and so yeah you just got to make a nuisance of yourself with both of these people until this thing goes away or until you pay it but do not walk off from it it will follow you my brother so take care of business here put a bow on this put a bullet in it finish business it's over and and get everything in writing and keep a file because you're dealing with, as you said, shady people. Alexa is with us in Tacoma, Washington.

Hi, Alexa. How are you? Hi, Scott. How are you, Dave? Better than I deserve. What's up in your world? Well, what's going on right now is me and my husband have $22,000 in debt. My student loan just got discharged because I'm going on disability,

but I want to know if I should just go back to work. because I'm going on disability, but I want to know if I should just go back to work. But I'm going through trauma therapy as well, so I'm trying to figure out, do I wait after trauma therapy and then go back to work, or just go back to work immediately? Your student loans were discharged, then you have been disabled a while no no i've been disabled for about i'd say nine months and you've been permanently disabled during that nine months uh yes so um okay sorry because it's it's it usually takes a long time to get your student loans discharged. They just did it immediately. Wow. That's amazing.

Yeah. Okay. Yeah. Well, you realize if you, I don't know what the ruling is, how quickly you can go back to work without them reactivating those student loans. So the only thing is I can go back to work, but I can't make over $16,000. For how long? In a year.

For three years. Oh, okay in a year. For how long? For three years. Oh, okay. What did you used to make? I only made, the max I've ever made is $22,000. So that's not a big, how much was owed on your student loans? $30,000. $30,000, okay.

So if you made $22,000 instead of, and you made $16,000, that's $6,000 a year you have to work for less than you used to work for, right? Yes. And you do that for three years, that's $18,000 that you're taking a hit in order to get $30,000. None of this sounds very fun to me. What was the nature of your disability? So it's a long story, but it has a really traumatic childhood. And for some reason, after I had my second miscarriage within the first year, it just kind of all came back and I was having nightmares, cold sweats.

Um, I had to end up, well, when I was 20, I had to go on antipsychotics. Um, unfortunately, that's the, that's the nature of the trauma therapy that you've been doing. Okay. So, uh, but now you're okay? I'm not okay. I'm not finished yet. I'm still going through some intensive trauma therapy.

I go twice a week. But I really want to help out my husband, and I don't want him to feel alone, that he has to take the financial burden alone. And I really want to be helpful. I just don't know how I can be helpful. Get well. That's how you get helpful. Take the time to heal, kiddo.

You've been through some horrible stuff. Take your time to heal. Listen, what's the best 20-year plan? You go back to work too quick and still have a relapse, or you get this stuff put away because you go through a healing process, right? That's the best way you can be helpful to your family is you get well. You're okay. You're okay.

Just get well. And then when you do, then we'll deal with you going back to work and making a lot of money and cleaning up all your student loans if they come back, Whoop-dee-doop-dee. But let you get well first. Don't worry about it right now. Business leaders, if you're not using LinkedIn jobs, you're missing out. Our Ramsey Solutions Company page on LinkedIn has over 100,000 followers. That's 100,000 potential like-minded people our team communicates our current openings to.

We also post our jobs on LinkedIn because we know the best candidates already have jobs. And LinkedIn makes it easy by doing the legwork for you. It's no wonder a hire is made every eight seconds on LinkedIn. And over 600 million members visit LinkedIn to make connections, learn, and grow as professionals and discover new job opportunities. Get started today with LinkedIn Jobs and get $50 off your first job post. Visit LinkedIn.com slash Ramsey. Terms and conditions apply. Thank you for joining us, America.

Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure or you pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best deal. Hannah is in Georgia, so my husband and I are on Baby Step 3B. Now what that means is that they are debt-free except their home, they've saved up their

emergency fund of three to six months of expenses, and 3B means beyond that they're saving for the down payment on their house. We want to take our two young children to Disney World. You should. We're currently saving to build our new home on property we bought in cash already. We can cash flow the trip by not saving for the house for one month, about $3,000. I feel guilty for both not taking a family vacation and for not saving the money. Where's the balance?

You're guilty a lot, aren't you? I mean, you're stuck because you're just going to be guilty. You're guilty if you go to Disney and you're going to be guilty if you don't. You know what I'd do? I'd be happy if I did either one. I'm not going to be guilty either way. It's your money. It's your choice.

You're smart either way. You're out of debt. You have your emergency fund and you're saving up for expenditures. One of the expenditures is you want to build a house for cash. That's an awesome goal. Second one is you want to spend one month of that money and go to Disney. About $3,000. Either one is wonderful.

You should not feel guilty either way. But I'll tell you what I would do. I'd go to Disney. You have little kids. It's perfect age for that. It's something you obviously do want to do, something they want to do. It's not something I want to do, but you, it's fine. I mean, Rachel Cruz loves Disney.

She just took her little baby down there. They had a wonderful time. Not sure how great a time her husband had, but they had a wonderful time not sure how great a time her husband had but they had a great time and uh no but i mean if it's what you want to do you've saved up the money you're not going into debt you're not getting out of debt and going on vacation you're out of that you have your emergency fund this is the point in the baby steps where you enjoy some of the money and i don't suggest consuming all of it and hitting no long-term goals. But I think if you don't consume some of it and only hit long-term goals, then you're not enjoying your life. You live like no one else so that later you can live and give like no one else.

During the first three baby steps, you're extremely intense. You don't do anything except beans and rice, rice and beans, until you're out of debt and have your emergency fund in place. Then you let your foot off the accelerator some to where you can do baby steps four, five, and six, and purchases are in there all at the same time. Baby step four is 15% of your income going into retirement. Meanwhile, you start putting some for your kid's college, and five and six is when you find extra money to pay off the house early.

In that sense, that's what you're working towards. In the middle of all of that, we don't go 10 years and never go on vacation. That's when you'd go on vacation. We don't go 10 years and never upgrade the couch that has springs sticking out of it. That's when you'd upgrade the couch. You just pay cash for the stuff, and you realize that every time we consume something, it slows down our long-term wealth building. But the purpose of long-term wealth building is to be able to consume and to be able to give.

Money piled up just for having a pile of money's sake is not worth anything. It's only worth something when it does something for your family or you're able to do something for others. That's all it's good for. Jay is with us in Orlando, Florida. Hi, Jay. Welcome to the Dave Ramsey Show. Hey, Dave. Thank you for taking my call.

I'm a first-time caller. Sure. About two years ago, I began commercial helicopter training, and I finally received my commercial helicopter certificate. However, unfortunately, I need about 80 hours of more training. As I discovered, this industry is highly regulated by insurance, and in order to become insurable, I need about 200 hours, and I'm trying to figure out how to pay for those 80 hours

and be ready to work the upcoming season as a commercial helicopter pilot. Okay. Is there any way you can do it as a co-pilot and get the hours? No. Unfortunately, the job opportunity I have is a single pilot. Wait a minute. You just said the wrong thing. You said the job opportunity. There's only one person in Florida hiring helicopter pilots.

Wrong. Well, I didn't tell you another thing, too, Dave. I work as a firefighter, so that's my primary income source. This is kind of like a secondary thing that I kind of went off and did, and that's kind of why I'm kind of limited as far as the jobs that I can take. Do helicopter pilots not make more than firefighters? No. Believe it or not, firefighters definitely make more. Okay, so you're not planning on quitting the firefighting degree or career.

You're going to continue that and part-time helicopter pilot. Yes, yes, that's what I want to do. Okay. And so it forces you to stay in that particular area, and it forces you to work in a regular schedule that you can control. And so it does limit the number of jobs available, which means that having your helicopter pilot's license has a very limited value. Yeah. It's not that valuable to you because of the way you're going to utilize it. So, I mean, you have to just cash flow this.

It's like a hobby you're getting paid for. You're going to make some money, but you're not going to make enough money to even justify the expense you've gone to. Yeah. So, I just, I feel I'm too far into it to just. I'm not suggesting you quit, but there's just no way in the scenario you've laid out here that it makes sense to do anything except just slow down and go, it's going to take me a little time because I've got to cash flow this and I've got to find the time to do the hours.

Right. You say don't rush to get the job. Yeah, because the job's not worth that much. Yeah, and it doesn't pay that much either. That's what I mean. It's not worth that much compared to what you're paying. You're not even going to make back your 80 hours with a training in the first year. No, no, you're right.

Yeah, so not to mention all the money you've already put on it. So what I'm going to do is look for a place. I mean, if you've got connections in the fire department, are there life flight guys or something that you can get some hours in the co-pilot seat and get some takeoffs and landings and get some of that counts? No, unfortunately, those are more complex aircraft, and I'm currently on the Robinson & Taylor aircraft, so very simple type aircraft, not even turbine yet.

But, I mean, I've even reached out to people that own their own aircraft and, you know, offered to pay for fuel and things like that to kind of do get those opportunities. And, unfortunately, a lot of those guys are very busy. So I can get an hour here, an hour there, but nothing really constant. So you're going to end up just paying for these hours. What does 80 hours cost? Well, considering some of the hours can go upwards of, you know, on the cheap, you could get some at $250, $300, $500.

It all depends on the aircraft and what kind of deal you can get, you know. Okay, so you're talking about $20,000, $30,000. Yeah, pretty much. Pretty much, yeah. And you don't have that laying around, obviously. Negative, negative. All right. Just take your time and cash flow it.

Because you now have, as we've continued in the conversation, you've even narrowed your opportunities down further because you're at an entry level. The simpler versions of helicopters, not all of them, which limits the number of jobs you can take even more. And so this is slightly above a hobby. Yeah, yeah, it definitely is it's a passion that's why i went out and there's nothing wrong with that as long as you pay cash for it yeah yeah i've got a i collect handguns and shoot them a lot and uh and you know so i burned through some ammo it's a but it's a i don't make any money doing it i'm not trying to

make money doing it but it's just a hobby. And so that costs money. Hobbies cost money. And this one's not going to cost you money. It's actually going to make you a little once you get past this. But up until the point you actually get a check, it's going to cost you money. And, you know, you're just going to put another $20,000 into this, $30,000 into this before you get paid. And that may take you two years to cash flow that instead of one year.

You're not going to make this year. Unless you can find some way that the guys that are hiring for the season want to pay for it in return. You promised to work there three years or something like that, you know, and they want to pay for your hours or something. Maybe there's somebody looking for a pilot that, you know, with that much intensity. Sometimes an employer will pick up some education costs in order to get somebody on board if they're having trouble finding the help in that area. Hope that helps. Interesting discussion. Interesting discussion. This is the Dave Ramsey Show. We'll be right back. Folks, let's cut through the bull.

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getting up front so you can make the smartest choice and save the most money. Go to churchillmortgage.com. Do it today while rates are low. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee, 37027. In the lobby of Ramsey Solutions, Ben and Stephanie are with us. Hey, guys, how are you? We're doing great. How are you? Better than I deserve.

Welcome. Where do you live? Raleigh, North Carolina. Awesome. Well, welcome to Nashville. And all the way over here to do a debt-free scream. Yes, sir. Love it.

And how much have you paid off? We've paid off $207,000. All right. And how long did this paid off? We've paid off $207,000. All right. And how long did this take you? Just under three years. Good for you. And your range of income? When I started this journey on my own, I was making $60,000, and then we got married and

combined our income, and now we're at $225,000. There we go. Wow. What do you all do for a living? I write software. And I'm in marketing operations. Very cool. Good to have you guys. Very fun. So you start out ahead of time. What kind of debt was the 207?

The 207 was very normal. We had about $25,000 in credit cards, $45,000 in loans to family, and the rest, about $137,000 in student loans. Wow. So how much of that was yours because i take it you guys got married during this right two years ago today okay so three years you've been working on it so a year to you and then two years as a couple so uh how much of the 207 was yours stephanie all of the 207 was mine all of it yeah been married in. He did. He actually paid off all of his student loan debt long before we'd ever met.

Okay. He was smart. Wow. So what started you on this process a year before marriage? Ben really got me started. Oh, okay. Yeah. So when I graduated college, I was single.

I bought a house. I didn't really know what to do with all this money. And I just started looking around for mentors, for someone to learn from. And I sort of read books and listened to podcasts and I found yours and it just resonated and started listening and realized, you know, I've got $27,000 in loans and $10,000 in stock. Why am I holding this when I should be paying off that? And got started. And so I paid off $27,000 in nine months. You make it sound so logical. Well, you make it sound so logical. It's just when you do the math and put everything in priority order, it just makes sense.

Yeah, why wouldn't I? And so in nine months, I had paid off my loans. And then I was going through the process of dating. And in the conversation of, oh, no credit cards, I don't pay cash for everything, came up in the date. Usually it was a little bit awkward. But with Stephanie, she was like, oh, this is interesting. Tell me more.

Yeah, what do you mean you don't have credit cards? Yeah. How do you buy stuff? And I was like, oh, well. It's called money. Yeah. So he got me hooked on it, and I think we were dating for about two months,

and I signed up for FPU, and I said, I'm going, you can come with me. Oh, wow. He joined me, and that's kind of where it started, two months into dating. Wow. And it kind of stuck. So Stephanie, that first conversation, though, I'm intrigued.

That's interesting. So you're on a date with Mr. Software developer, super nerd. He's paid off everything. You're like the other end of the spectrum, 200 grand and debt. And he's like, no credit cards. And you're going, not only are you intrigued, but you also must have kind of gone gulp. I've got to tell him I've got this much debt. Did you have a gulp?

I did, mostly because I hadn't even calculated it at that point. It was so normal to have debt. I just expected to have it for forever that when I thought through that and I had to actually count what was there, it terrified me when I found out. But it was a huge relief to be able to tell somebody because we don't talk about money and so many people don't and so being able to tell him and saying and have him not run away afraid yeah was a number on it you know instead of having this big unknown blob yeah having a number that you can start chipping away at well ben's not like uh an over reactionary kind of guy he's kind of an easy guy to talk to so i'm thinking it wasn't too

intimidating to tell him but it had to be kind of like i gotta tell this guy i got two thousand dollars there had to be a little bit of that in there i was prepared for him to turn and run away he stayed and so that was that was proof enough for me he stayed and and wasn't afraid but you know helped keep me uh on a path and was an amazing accountability partner all throughout dating. You know, he stayed there. He helped cash flow. He not helped. He did the cash flowing of the engagement ring, the entire wedding, the honeymoon, and let me focus on debt until we combined our finances after marriage. And then you knocked it out fast.

Really fast. So I get a lot of questions around this. That why i'm bringing it up okay because people are always asking me these things and i don't know because i've never been there uh but ben um i'm also curious on the other side of that equation why did you not run out the door with your hair in the fire i mean i know she's a catch i got all that but don't don't give me all that but i'm talking about there had to be some kind of a lot because you're a logical guy. I mean, what was it that went through your mind that went, well, okay, I can do this? Because it's not where you are.

It's the direction you're going. And you felt like she was going that direction? Dude, as soon as we started talking about this stuff, I hadn't even talked about going to FPU. And she's like, oh, I signed up. You can come too. Oh, okay. So it wasn't the debt. The debt would have freaked you out if she wasn't freaked out exactly but yeah okay i got you the fact that she was with very little prompting

just turning and facing into it and starting to dig into it i said okay like we can work with this it doesn't matter how far down you start as long as you're moving upward and getting faster as you go up but if she had wanted to just say i'm going to be in this debt the rest of my life it's no big deal you're just crazy that would have been a deal breaker have a nice life yeah okay all right okay well that's what i tell people to do i agree it's not where you're coming from it's where you're going and i don't tell people they need to be debt free to be married i don't you know we'd love to get out of debt so get married why go and get married as long as you're both heading in the right direction that's the thing and so that you guys are a perfect answer to this ongoing faq i get around

here frequently asked question i get around here so congratulations 207 000 man how's that feel amazing we have choices now that we didn't have, and it's priceless. Now, when you were sitting in Financial Peace University, did you believe it then that you were going to be able to do it? No. It seemed huge at the very start. But the thing is, I'd already been through it, and I just had a little sticky note, and I started doing a little math on the back of it, and I said, okay, at this rate, three years, you know, if you have this much income and, you know, you put about half of it towards the debt and, you know, just doing the math. And I wrote it out on a little sticky note and she kind of looked at me like I was crazy. Like, no, no way it's that easy.

And it wasn't easy, but it, you know, month by month, you just, just follow the process. And, and here we are at the, at the end. And, um. It's how you eat an elephant a bite at a time. Exactly. Yeah. Well done, you guys. Did you have cheerleaders?

Yeah. We've had a lot, and we've had just so many friends. They haven't gotten out of debt themselves, but being so public about our story has really helped people to reach out to us and ask us how we did it. And so many people are just… What did you do, like a social media blog or something? We did a few things.

We have our charts we color in, and we would post our progress along the way. When we hit our first debt snowball milestone where we paid off all the credit cards, we actually took them to the shooting range and made a whole video shooting them up with a shotgun. Love it. Yeah. Put the buckshot on them. Exactly. We did a little bit of everything, and we were very open about it,

which just brought so many people forward. We've been through FPU a few times. Anytime we hear about friends getting married, our gift to them is always an FPU kit just to introduce them because it's the best marriage or premarital counseling we could ever think to have. I just glanced down at the video they posted on YouTube, the picture of it. Those were not shotgun clips in your belt. Those were handgun clips and mags in your belt. We did a bit of everything, one of everything. We started with the rifle and the holes were a little too small.

The pistol made a bigger dent, but the shotgun was really satisfying. Yeah, that's satisfying is a good word. I love it. Yeah, the rifle just drills a pencil hole. Exactly. Barely showed up on the video. Yeah. That's fun, you guys.

Well done. So the whole Financial Peace University going through that, having the cheerleaders around you, that did it, huh? Absolutely. I think that there's more power in, you know, like going to those nine lessons in the group while you're in your membership, you're one in your membership, that accountability and that encouragement changes everything. Well, well done, you guys. I'm very proud of you.

Congratulations. Thank you. Very well done. What's the secret to getting out of debt right quick? I'd say just learning to live without having everything you want when you want it. It's hard at first, but you realize how much you really don't need in your life and how much of a burden stuff is. And what's really important is the experiences and the people that you surround yourself with.

Amen. Good job, you guys. We've got a copy of Chris Hogan's book for you, Retire Inspired. That is the next chapter for you to be millionaires. You're well on your way with this income and no debt. You're in great shape. Good job, you guys. Very proud of you.

Count it down. $207,000 paid off in three years, making $60,000 to $225,000 and got married. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo! Love it!

Love it, love it, love it! This is how it's done. Man! Love it, love it, Hebrews 13.7, Remember your leaders who spoke the word of God to you. Consider the outcome of their way of life and imitate their faith. Isaac Newton said, I have seen further, if I have seen further, it is by standing on the shoulders of giants. By the way, if you pick up an English

pound, I believe is the coin, around the edges of the coin, I believe it's the English pound, around the edges of the coin, if you look along the edges of it, not either face of it, but around the edge, it says, standing on the shoulders of giants, from that Isaac Newton quote. Justin is with us in Orlando, Florida. Hi, Justin. How are you? Pretty good.

Thanks for taking my call. Sure. What's up? Got a question. I'm on baby step two right now. I want to know if I should stay off my house in baby step two. Depending on what your answer is, is how long it's going to take me. Okay.

How much do you owe on your home? About $73,000. Okay. And what is your household income? About $90,000. Okay. Gross. Gotcha. All right. Okay. Gross. Gotcha.

All right. Interest rate is 10.9%. Ooh, that's awful. It's private money. Yeah, obviously. Very bad. Okay. And you're out of, are you down, are you out of debt in Baby Step 2, not counting the house?

No. I started about $220, 220 and i've sold one of my cars i was really car poor i stopped financed about 70 000 cars but i got out of one i had to save up the money to pay off the difference obviously for a nissan maxima 2016 but i still got a uh 2017 silverado fully loaded it's 56 00056,000. I currently owe just under $40,000. Okay. So when will you have everything cleared but the house? Well, I think I can have everything but the house cleared in about a year. I think it'd probably take me another year and less than a year because I got $44,000 in student loans

and about $20,000 in other debt. Are you selling the Silverado? Yes. In about six months, I think, is probably when I'm going to be in a position to be able to sell it. Okay. All right. Because otherwise, I can't get you out in a year. I can't see $90,000 paying off $90,000.

No, no, no. Yeah, no. The Silverado is gone. Okay. I ended up buying a 2004 GMC Oddboy. Okay. All right. I got it for like $2,000.

Okay. I got it for like $2,000. Okay, so you basically got the $44,000 to pay off the student loans and a little bit of other odds and ends, and you're going to do that in a year? Yes. Okay. Yeah, I think so. That's doable in a year. Okay. That makes sense. And then you would build your emergency fund if you're following the baby steps of three to six months of expenses,

and so that'd be like $20,000. Okay, give or take. And then you'd start putting 15% of your income away into retirement. Do you have children? Yes, I have two. What ages? 16 and 13. Okay, and how are you planning to pay for college?

And how are you planning to pay for college? I was just going to get out of debt first and see if I can cash forward. I know she's getting scholarships, too. She's working on it. Yeah. But you're not going to be out of debt by the time she goes to college if you're counting your house. I think I can get out. I think including my house, if I get my truck gone, I think I could do it in two years.

You have $110,000. It's going to be close. Yeah, okay. Yeah, but that's just going to, all right. But then 15% would be $15,000, and $20,000 would be $35,000 off of that, so you could do it in three years if you did it on the baby steps. Yeah, so the 10.9% interest is what's making me want to stick it. What's the house worth?

About $240,000. Okay. Is your credit destroyed? Yes. Okay. All right. You know, the 10% interest rate is just, it's emotionally maddening, but it only amounts to about $3,000 a year over the three years

because you're going to get all paid off. You pay it off in three years if you work the baby steps. You pay it off in two years if you don't. You understand that? Yeah. So what we're talking about here is a year. Okay. And not a year of 10% at $70,000, a year of 10% at probably $20,000 or $30,000

because you will have paid it way down by then. Yeah, and that's if we sideline college, and you're going to cash flow college at that point. You're going to have to make college work the first year. But, yeah, the point is when we work through the math together, really you feel like you're doing some big thing when you advance it to baby step two, but you're not. It's about a year. Okay.

And so it's not worth it. I would start, I'd follow the baby steps and push it on through. I'm with you. I hate that 10%. That's why I was asking about your credit. Well, it's my proof of income, really. This is going to be my first year that I'm actually getting 1099, so I'm going to be able to file taxes.

Oh, good. Okay. Then listen, listen. I know I need two years of... Proof of income is not an issue. I thought your credit was gone. Okay. So run down...

It's only like 579. Okay. But run down to the credit union and tell them that you have a... What did you say the house was worth? About 240. Okay. And you can show them proof of what you have coming in on the 1099. You just have to show them pay stubs and so forth, right?

Yeah. I don't have two years of it, though. Yeah, but I mean, I'm not trying to qualify you for a traditional mortgage. You can't qualify for a traditional mortgage, but you can borrow $70,000 on a $300,000 house at the credit union on just a HELOC. They can make that loan. They portfolio that loan, meaning it doesn't have to meet any conforming guidelines.

They just look at the house and go, oh, we hope he doesn't pay. That's what I thought. I mean, I tried to do this two years ago, and nobody wanted to take it. Well, you may run into trouble, but I think I'd go shop it around a little bit just for the fun of it. But more than anything, the 10% is just emotionally aggravating. It's not mathematically that aggravating. We're talking about if it was $70,000 for three years, it'd be $21,000 in interest over the whole three years, but it's not that much. It's probably less than half of that.

So it's about $10,000 worth of interest over this three-year period of time, roughly average. In the total, total, $10,000 to $15,000, somewhere in there in the interest. And so that's not the deal with the money you're making. The good news is you have become alive, and you are addressing this. You have woke up, so you are ready to get after it. And that's what I would do. Yeah. No, I would stay with the baby steps.

It disgusts me as much as it does you, but there's a real good reason to have your emergency fund in place with a kid going off to college. There's a real good reason to have your emergency fund in place, period. And there's a real good reason to go ahead and get started on that retirement. There's not that much to it. It's only 15% of your income. That's baby step four.

It does not prohibit you from paying off this house. You're going to get there. Oh, by the way, during this coming three years that we're discussing all this happening, I suspect your income is going to go up too. Eden is with us in Minneapolis. Hi, Eden. How are you? Hi, Dave.

I'm great. Thanks for your time. Sure. What's up? My husband and I are looking for guidance for Baby Steps for the future. We're both 25. We have two kids with steps for the future. We're both 25. We have two kids with one on the way. We're both in school.

I'll be done in a few weeks. I'm an RN just finishing up my BSN and he has two and a half years left. As of right now, we don't have any student loans just because of scholarships and paying out of pocket as we've gone. We do have about $10,000 in debt. We've got $3,000 in our car, about $1,500 in a hospital bill, and the rest is a loan through our in-laws. We had two 401ks, a pre-tax and a regular. Last week, we just cashed out the pre-tax one, and we're going to use that to pay off uh we're going to use that to pay off some of our debt um and we were wondering if i guess based on your reaction to that you're not going

to like it we're wondering if we should cash out the rest of it no and use that well i mean we kind of did our baby steps really out of order i mean he was working for you know six years before he decided to go back to school you You know what happens when you cash out a 401K? Well, that's part of our concern is that we just got X. Well, it's supposed to increase. You know what happens when you cash out your 401K? They charge you a 10% penalty plus your tax rate. So you're borrowing money at 35% interest to pay off your debt.

That's dumb. No, we don't do that. No, we don't do that. Period. Unless it's to avoid a bankruptcy or foreclosure, and you're not bankrupt or foreclosure, you have $10,000 in debt. You're named close. Now, I want you to get out of debt,

but I don't want you to borrow money at 35 interest to do that and effectively that's the math of what you're doing when you start cashing out 401ks early so i would i'd never recommend that so that's why it's a real simple thing it's just the math is just horrendous it's not good for you that puts us out of the day ramsey show in the books we'll be back with you before you know it. In the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-free scream live on the show,

make sure you visit DaveRamsey.com slash show and register. We would love for you to come to National and tell Dave your story.