The Ramsey Show - App - Jesse in Fargo Needs a Car Though (Hour 1)

Episode Date: October 23, 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'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call at 888-825-5225 that's 888-825-5225 cleveland ohio starting off this hour cassandra is with us hi cassandra how are you good how are you better than i deserve what's up in your world i just want to tell you first off that we thank you for what you do. You've changed my husband and I. Our lives have really changed. But right now we are on baby step two, paying off

our debt. We have paid off $30,000 and we started in May of this year. Good. And we are questioning whether or not to, we have a Roth IRA, and we're questioning on whether or not to pull from it to pay off one of our debts that we have. It's actually a travel trailer that we use with our children, and we're wanting to keep it, so we want to pay it off. And we were sitting here, and we're like, we don't know whether or not to pull from it or not. What do you owe on the trailer? We owe $27,000 on it. We're getting ready to make a payment of $5,000 here at the beginning of November.

What's your household income? $5,000. What's your household income? $140,000. Okay. And what are your cars worth? We just recently paid off one of our cars. It's worth about $15,000. The other one? What's the other one worth?

And the other one is about $30,000. Okay, you have too much. And the other one we kind of need to pull the travel trailer. You have too much tied up in things with wheels on them. Yeah. All of the things with wheels on them. No, listen, all the things with wheels on them go down in value. Yeah. And you make $140,000 and you've got about $85,000 tied up in rolling stock.

And it doesn't make sense. I mean, you're going to struggle to get ahead financially as long as you run with that value system. And we haven't officially went to a financial peace university. My husband's read the books, and so have I. I'm actually reading the one your daughter wrote. Here's the rule of thumb, okay? When you buy stuff that goes down in value, you don't get rich.

Okay. So even like if it's something that he enjoys doing with us. And when you buy a whole lot of stuff that goes down in value, you get really unrich. Yeah. That's where you are. You bought too much crap. So you want to keep the travel trailer, sell the $30,000 car. Get you a $10,000 car and you want to keep the travel trailer sell the thirty thousand dollar car get you a ten thousand dollar car and pay cash pay the travel trailer off you have too much tied up in things that are going to be worth half of what they're worth today

in two years and then you're scratching my husband that yeah i told him he should have sold a truck and he you know he didn't want to listen to me on that one. Okay, I don't care. I don't care. I don't care. You guys do whatever you want to do. You call me, though, and ask me what I think you ought to do. I think you ought to buy things that go up in value, not tie up all your money in things that go down in value. I don't mind you having a decent car and having a travel trailer, but given $140,000 income, $80,000, it's going to be worth $40,000 in two years is called stupid.

Okay. It's under the stupid column about what about trying to pay that travel trailer it doesn't change the equation gotcha it's still going to be worth eighty thousand you're turning into forty thousand in two years even if it's paid for even it's paid for and i wouldn't use my retirement to finance my stupid because that's what you're doing. And no, no, absolutely not. So here's the thing. You guys can do whatever you want to do. If I woke up in your shoes, having coached more people into wealth and out of debt than anybody else on this planet, what would I do?

I would sell something, a car or a trailer. And I don't care which one. Which one do you like more? Do you like his truck more? I mean, he can drive a $10,000 truck. The difference between a $10,000 truck and a $30,000 truck is not much. It's really not. I got both of them sitting around here somewhere.

But it's just not that much. And so I don't care. If the trailers, if your children's entire psyche is wrapped around the fact they get to stay in this trailer occasionally Fun for the kids is not much fun for you. And it's not $27,000. It's $270. You might want to go that route for the children. I don't know if Bubba wants to keep his truck. I'm fine either way. But it's a math thing, kid.

You're not going to get rich. Owning stuff goes down in value. Brian is with us in Destin, Florida. Hi, Brian. How are you? Hi, Dustin. Welcome to Destin. Hi, Dave. redneck we're here how are you doing today uh we're gonna have to get your phone fixed what's the problem with it

um i don't know yeah that thing like where are you talking to it okay try that all right how are you doing today dave good how can i help um i had a good problem that i ran into this um last few months i when i was 19 i was in the navy and i got a wonderful 30 000 bonus and i had a great advisor tell me to invest it back at 19 and when i did that i put a hundred dollars a month in while I was in the Navy for four years. Well, I forgot about it. And it sat there for now 42. And we were going through doing a yard sale trying to get out of debt and found the old statement. So I looked it up. It's now worth $1.3 million.

And I need to know what to do because I know there's a tax implication because it's a regular mutual fund, not a retirement fund. Wow. Wow. And you've not paid taxes on it? You've not paid taxes on the growth all these years? I have not. And I've already contacted the company and got all the disbursement letters from the last 22 years.

And they are up there. The first thing you have is there's two kinds of growth in a mutual fund. There's dividends that are reinvested, which are taxable each year, and then there's just the growth of the value of the stocks. That is not taxable until you cash it out. But you have 22 years of inaccurate tax returns. Yes. That's your first.

And that's what I've already contacted one of the ELPs to figure out how we feel about getting that corrected. Good. Cool. So how much debt have you got? I've got $14,000, which is going to be paid off in a few weeks once I get those tax returns. Yeah. Absolutely. Yeah.

And so here's what I would do. I'd get the tax advice. Yeah, absolutely. Yeah, and so here's what I would do. I'd get the tax advice. You're going to have to file admitted returns back however

many years. It'll either be three or five years. They won't take you back all 22 years. And you're

going to have to file. So some of this money is going to go to taxes, but it's not going to be a

ton. Then as you cash it out, some portion of what you cash out will become taxable because some

portion of that has been growth, but it'll be taxable at 15% on a capital gains rate. So it's a very, very tax advantageous situation for you. Very good. So get good tax advice, what you're doing on filing your back returns and on what your liability there is and your liability if you were to use some of the money. Do you all own a mortgage?

No, we don't. Actually, me and my wife started dating when we got this information about what we're going to do. You don't own a house? We don't own a house right now. Okay, then I would allocate some percentage of this money to buy a home, maybe $200,000 or $300,000, and sit down with a smart investor pro on investing it, where you can learn about investing, and this time keep up with it. Hold on, and this time, keep up with it. Hold on. We'll get you hooked up with that.

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 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 at Dave Ramsey. Is it okay to accept a job that pays less but has excellent employee benefits? No. Because you are placing value on those benefits that is absurd. And you're making your decision using wrong critical thought.

Okay? You're assuming that the only way to get excellent benefits and the only way to cover the issues that the benefits cover is to take less pay. Why don't we go with another option? Make more money with excellent benefits. But see, everybody has to dumb this down. You have to assume, the only way I can be happy is make less money. The only way I can get security is make less money.

The only way I can get benefits is make less money. The only way I could get security is make less money. The only way I could get benefits is make less money. Why do you always have to put make less money at the end of these sentences? Why can't you go, I can make more money and be happy? I can make more money and get benefits. See, you've got to look at it that way to start with. I can live my passion and make more money. But it's amazing that people think that there's some kind of a tradeoff here. It's a false logic, which is actually an oxymoron.

But it's bad critical thinking skills. So, no, no, no, no, it's not okay. It's not okay. Not okay. Just for that reason, it's not okay. Is there a difference between a FICO score and an Experian or Equifax score? Equifax has been given a score. It said we suck.

We released all of our data to the entire world. That's the Equifax score. And Experian doesn't have a score. No, no I'm serious I don't think either one of these have a separate scoring other than FICO I don't I'm I'm not aware Experian's website doesn't show anything except FICO score on it now maybe they have a program and I'm just not aware of it where they started their own score um or maybe Equifax has if Equifax has I don't care nobody cares what Equifax does about anything anymore, except their former president who made like $180 billion for quitting.

But no, I wouldn't worry about it. I wouldn't worry about any of these scores, by the way, because they're all based on you borrowing money. And so, again, it's a set of false logic. It's bad critical thinking because the only way you get a high FICO score is to borrow money. And why do you get a high FICO score? So you can borrow money.

This whole thing is about playing kissy-face with the bank somewhere, worshiping at the altar of a false god called FICO. FICO is not your provider. The only thing FICO will provide you with is the ability to borrow money, which provides you with debt, which takes your income, which takes your ability to win with money away. It's gone. Bye.

Kalina is on Facebook. I know life insurance is less expensive the younger i am if i'm 32 what is the best age to purchase term insurance what exactly does it cover death um i still have school debt that doesn't matter you don't need life insurance unless someone is dependent upon your income for their ability to eat. So, Kalina, if you are a mom, the income that you are making, you should get term life insurance today. And it doesn't matter whether you're 32 or 42 or 22. If you're a mom and you're earning an income and your kids are counting on your income,

then you would need about 10 to 12 times your income on you. And, yeah, life insurance covers death. And statistically, the older you are, the more likely you are to die. So it gets more expensive. It's a pretty simple math formula. And so, yeah, 32 is more than 22 and less than 42 years old. The premiums are less, but it's not that expensive to get 15- to 20-year-level term insurance,

10 to 12 times your income on you, and that is not a baby step. That's a start right now. Go get it now, and just check out ZanderInsurance.com. They'll give you a quick and easy quote and um you know it'll be real easy for you to uh get dialed in on that and zanderinsurance.com takes about like i think 11 or 12 seconds to get a quote back from 10 or 12 companies and it'll it's the

shop a bazillion companies and throw out the best prices for you right now in your situation. But, you know, you don't buy it when you're young because it's cheaper. You only buy it when you're young if you need it. So if you're 32 and you're single and you have no dependents, no, you don't need life insurance. If you're 32 and you've got two kids and, you know, you're married and you've got people depending on your income or the economic value that a mom brings to the household, yes. Yes, you would need life insurance at that point to make sure you're taking care of your family in the event something happens. Joe's with us in Midland, Texas.

Hey, Joe, welcome to the Dave Ramsey Show. Hey, sir. Thank you for taking my call. Sure. All right. So my question for you today is starting in on baby step two here. And I was listening on my desk snowball. And I noticed on my truck payment, I'm about six grand shy of, you know, about six grand upside down on it. And I'm a single guy.

I only have the one vehicle. i was wondering you know where should i kind of look at that the baby steps should i stack some money away so i could buy a cheaper truck just for cash and then sell that and pay off the difference or uh what do you owe on the truck uh i owe 32 on it and it's worth about 26 who,000. Who said it's worth $26,000? Kelly Blue Book on a private sale. Good. Okay. And what's your income, sir? My base is about $75,000, but I think this year I'll be clear at about $120,000.

Okay. You like the truck? Yeah, but I also kind of like it. I already sold the Harley, so I'm kind of motivated to get out of debt and how much other debt have you got uh all total inclusion the truck is about uh 50 so i got about 18 in credit cards okay so how quick can you clear 50 if you don't sell the truck? You know, just kind of going on the safe side with the 75 for next year. No, no, no, no, no.

I'm not going on the safe side. This isn't a budget we're projecting. This is your life. You know what you're going to make in the next 12 to 24 months on average. You're going to be working your butt off to get out of that. So you ought to pay that 50 off in 18 months or less. Yeah. Oh, yeah. Hopefully I can do it in about 14 months.

But I'd like to be able to be debt-free in about six. Well, if you do that, you've got to turn around and move it back up and truck, right? I don't know. I think I could live with a $5,000 or $6,000 truck for a few years. I don't care. If you want could live with a $5,000 or $6,000 truck for a few years. Okay. I don't care. If you want to, that's okay with me. But you can afford to pay this truck off inside of two years,

and it's less than half your annual income, and you'd be debt-free not counting your house inside of two years. That meets our guidelines to keep the truck if you want to. Okay. But if you want to jump out faster, you know, you're going to be done in 14 months anyway. It isn't like you're calling me up and, you know, you make $36,000 a year and you owe $32,000 on your truck or something like that, which I do get sometimes, you know. And that truck's gone there.

But, you know, because you can't get out of it. And it's more than half your annual income. So this one, if you just want to jump the gun and be done, and then, you know, hey, I'm going to drive a $5,000 truck, and I'll piddle around. I'll move up with cash, move up in truck a little bit in two or three years. If you want to do that, there's nothing wrong with that. All right. Well, I appreciate it, sir. Thank you for all that you do.

You too, sir. We appreciate you being a listener. Open phones at 888-825- 5225. The average car payment in America right now is $503 over 84 months, according to the National Auto Dealers Association. If you

invest $503 into a decent growth stock mutual fund from age 30 to age 70, you'll have somewhere around $5.6 million in your mutual funds. Hope you like the car. Car is the most expensive thing we all buy that goes down in value. If you can pay it off inside of two years and be 100% debt free, accept your house inside of two years, and it's less than half your annual income and you want to keep it, that's fine. Any more than that, you've got too much car.

Cars are the most expensive thing we buy that goes down in value. This is the Dave Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Maggie's with us. Hey, Maggie, how are you? I'm good, Dave. How are you? I am better than I deserve. Welcome. Where do you live? Reston, Virginia, which is outside Washington, D.C. Absolutely. Cool. Well, welcome. Good to have you here. And you're here to do a debt-free

scream. Yes, sir, I am. I'm so excited. I've been waiting a long time for this. Absolutely. The only thing is, when you go back to Washington, D.C., you have to take this message, okay? I'm working on it. I'm working on it. I'm teaching. I'm an FPU coordinator. Oh, there we go. That's a good start. I'm working on it. We'll get you doing that down at Congress. We'll be all right. All right. So how much have you paid off, Maggie? I paid off $30,698.83 in 23 months. Good for you. And your range of income during that time? I started out making about $60,000 and up to $80,000 to $85,000. Wow.

And what do you do for a living? I teach preschool, and I was delivering pizzas. That's how I paid this off so quickly. You jammed it, huh? I did. You always say when you're out of debt, there's a good place to go is to work. And I decided it was okay to work 70 hours or so a week. For a short period of time?

For about 16 and a half months. And that got the snowball going. I had first heard about you about 10 years ago and took FPU and learned to budget and paid off all the small debts. But then I had a big monster student loan and some credit card debt and then ended up with a car loan. And I made a decision at some point that I wanted to be debt free by the time I turned 33 and 10 years after I had first heard about you. And about in 2015, when it was two years away, I was like, something has to change. I took FPU again.

I kept, and my snowball started rolling. But as a teacher, in the summer, it's really easy to make extra money because you're not teaching nine to five. You can do lots of different jobs. But then the snowball slowed down. And then in March, I was listening, trying to figure out what to five. You can do lots of different jobs. But then the snowball slowed down. And then in March, I was listening, trying to figure out what to do.

I was thinking I need another job. And you told somebody on the radio to go deliver pizzas. And I said, okay, I think I can do that. And the nights I'm not working, I also had another part-time job, but I could work a second part-time job in the nights and weekends. And that's what I did. I went in on a Wednesday and, or went in on a Saturday and by Wednesday I was

delivering pizzas. Wow. And I did that, um, for 16 and a half months. And I, you know, worked every, uh, most days I worked at least two jobs. If I was working one job, it was kind of a vacation. Um, I don't think I ever did three three at once, but I worked a lot. So I paid off my car really quickly. And then I had student loans and my credit card. And then this past March, I got $5,000 forgiven for my student loans because I teach at a Title I school. And the balance on my student loans was then $783, I think. And I paid it off the next week. And that was the best feeling.

And then it was March of this year, and June was coming up for my birthday. And I was really afraid it wasn't going to happen. I had talked to myself. It's going to be okay if you're not debt-free by your birthday. It's going to be okay. You'll do it in June. It'll be fine. But on May 30th, when I got paid for June, I paid my last $300 on my credit card.

I love it. And I was debt-free. And I worked another about month delivering pizzas to start my emergency fund going. But I just kept. What was your best month delivering pizzas? Best income month from pizza? About, I think it was about $1,200. I made about, in the 16 months, I made about $20,000, over $20,000 delivering pizzas. Okay.

And how many nights a week? Four to five, depending on the week. Okay. It changed everything, though. That extra $20,000, I mean, you're paying off $31,000 in 23 months. That's a big deal. five depending on the week and based you know um it changed everything though that extra that extra 20 grand i mean you're paying off 31 000 in 23 months that's a big deal it that that made a big that made a huge difference making the focus on yeah um and all that extra money the my other i mean that's hard work and that's a lot i mean you were gone all the time you had no life you

were just working i had no life was it was it worth it it was so worth it my friends would ask me to do stuff and i would say say, well, I can't. I'm no fun right now. I'm going to be fun here soon again, I promise. So I'm fun again. I promise them I'm fun again. But they were all really supportive. Have fun like no one else, so later you can have fun like no one else.

Yes, and just delivering all those pizzas in the snow and in the rain. Wow. Look at you. Yeah. I love it. Way to go. I'm so proud of you. Thank you. Look at you. Yeah. I love it. Way to go. I'm so proud of you. Thank you.

So did you have people cheering you on? I did. A lot of my family did, but especially my mom, who's here with me today. Hey, mom. She's been my biggest cheerleader. She was the person who would say, I would call her and be like, mom, I want to do this. And she's like, no, you can't do that. Like when I got tired and wanted-

Oh, she was your accountability partner. She was was my accountability partner my biggest cheerleader the person that would tell you know all of it yeah if i needed something i went to my mom and so very cool and then you start teaching financial peace university i did yes i decided i needed something to keep keep me going and keep me keep the um momentum going so okay so i'm also interested in the other part the part where it didn't work. Like when you first started, you took it and you were like 23, 24 years old. Yes. And it didn't take.

You didn't go crazy. You didn't do this. You waited like six years before you got mad at the debt. It did. What made the difference that caused the switch to flip for you? I think coming up that it was close to 10 years that it was getting closer to when I've been doing this. So the calendar shamed you? A little bit.

I wasn't a gazelle at first. I was a tortoise for a long time. I was sort of just going as a teacher didn't make a whole lot of money. I started teaching and then you know 2009 and 2007. So you were 26 and you were fun. Yeah and I was doing some stuff.

And then I was using that credit card that I kept for emergencies, for all those emergencies. And you did slunk the class is what you were going to say. I kind of did. So I took it again. And now I teach it because I need that reminder. Now you know. Now you know.

Good. So what it amounts to is you got the information. You didn't apply it all before. But then just the fact that it's just not getting anywhere, no traction, and the decade's coming up, and that got you fired up again. Is that right? Is that the right answer? That is. And I had to learn to budget and had to kind of figure out the cash and telling my money where to go.

That doesn't take a decade. It took me a little while. It took me a little while. I like to spend. Your want to changed is what it It took me a little while. I like to spend. Your want to changed is what it was. I think it did. You wanted to do it, and all of a sudden, and when you want to do something, there's no stopping somebody. I mean, rain, sleet, snow, and delivering pizzas.

And get her done, baby. Get her done. You did good. I'm proud of you. Thank you very much. Very well done. Anybody make fun of you? No, not really.

Some of your friends have said you weren't fun? They were just like, okay, they understood. They never made fun of me, but they understood. In fact, a few people, especially in the beginning when I was using the envelope system, would make fun of me a little bit. They kind of were like, what is that? Kind of eye roll. What is that?

What are you? You joined a cult. Why are you using all this cash? What are you doing? Well, very, very well done. What's your advice now that you're teaching the class? What if somebody's in your class and you think they're going to wait and they're not going to do it for six or seven years?

How are you going to get them moving? I tell them that it's worth it and that you have to try some new things and it's going to take some time. And I kind of give them suggestions of what worked for me. One of the main ones that worked for me was cash. Yeah. Because with a variable income, you can always kind of maneuver that budget, move that money around a little bit.

And when it's straight, when there's cash and it's the end of the month and there's like $20 in your account, you can't go buy new shoes or go shopping. You're incredible. Well done. Very well done. We've got a copy of Chris Hogan's number one bestselling book for you. That's your next chapter, Retire Inspired, that you retire a millionaire, become a millionaire, and outrageously generous along the way.

You're going to do it, I can tell, because now you know what to do. Now you know how to, you've got Maggie running for Maggie now. This is good. That I do. Good for you. Very well done. All right, it's Maggie from for Maggie now. This is good. That I do. Good for you. Very well done. All right, it's Maggie from Washington, D.C. She did it.

$31,000 paid off in 23 months, making 60, oh no, three jobs, up to 85. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free scream. Three, two, one. I'm debt-free! Love it! Well done, kiddo. Very well done. Isn't it interesting that as humans, we have the power. We have the power to decide. You can decide to do nothing. You can decide to do something. You can decide to do something wide open, baby. Oh, yeah.

If you're going to do it, let's do it. This is the Dave Ramsey Show. Thanks for joining us, America. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. Thanks 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 will remake your blinds for free. Yeah, check it out. Free shipping, free promos, or free samples. They do new promos every month, and they use the promo code Ramsey.

Victoria's in New Mexico. My 38-year-old sister still lives at home. My parents recently bought her a car, and they pay for the gas and insurance. They even paid for a trip for her and her fiancé of eight years. I worry about my parents. They're getting older, and this is a financial strain for them. How do I talk to them or my sister about this? Well, that's what's called extreme levels of dysfunction.

Engaged for eight years is dysfunction. Thirty-eight years old and your mother's still buying you cars is dysfunctional. Thirty-eight years old and your mother's still paying for your trips is dysfunctional. So somehow I don't think just one conversation with these people is going to make all of this toxicity, and your sister's going to suddenly become a fully functioning adult, and your mother and father are going to cut her off. It just depends on what you want to do. I mean, I would say you interfering is going to have a low probability of them changing.

A very low probability. Now, if they ask you your opinion, now that's starting to say that they are starting to recognize that there's something wrong. But right now, none of them think anything is wrong with all this craziness. And it's crazier than it being is what it is. Unbelievable dysfunction. But I guess you could just sit down and say, Mom, you know, enablers are the nicest people that you'll ever meet. Mom, you're one of them.

You're a nice person. Nice. You're so nice. You cannot say no. You're so nice that you think by doing things for my sister that you're doing her a favor. And the actual truth is enablers are not nice people because they actually bring harm to the people that they're enabling. Because they are enabling, they're causing them, they're helping them to do things that are bad and doing things you know not being a fully functioning self-supporting adult at 38 years old is a bad thing and to enable that to cause that to occur you you've done harm

to your daughter if you're listening to me and you have a 38 year old living in your house that has been there for a long time and you're buying them cars, unless they're mentally deficient in some way, you are doing them great harm because they have never had to grow the strength of character to stand on their own. And when you die, they're going to be up a creek. I mean, you built out a trust fund baby here while you were still alive is what you did. Oh, so awful. Dan's with us in Charlotte.

Hi, Dan. Welcome to the Dave Ramsey Show. Howdy, sir. How are you doing today? Better than I deserve, sir. How can I help? Good to hear. I actually, I have, I'm 25 years old.

When I was born, I think three months after I was born, my family gave me series EE bonds. I've had them ever since. They total about $4,000 as of March. I haven't double-checked to see. I haven't had time to sit down and do it. But I was curious on your opinion. Should I cash those in and get liquid? Immediately.

Should I keep them? Because they're immediately, even though their interest rate is 4% on them. Yeah, but don't you have any debt at all? No, no. I actually graduated college luckily with no debt. My parents helped me. Do you have your emergency fund built with three to six months of expenses? I actually just took a hit on it.

My truck water pump broke. I would use this money to make sure you had an emergency fund. And once you've done that, if there's any of it left, I actually just took a hit on it. My truck water pump broke. Okay. So I had to dip into that for that. I would use this money to make sure you had an emergency fund. And once you've done that, if there's any of it left, I would start investing and move on through what we call baby step four, 15% of your income going into retirement. So, but, yeah, they're not, it's not a great place to park money long term, and it's not a great place to park money short term,, and it's not a great place to park money short-term, either one. So I don't use savings bonds for anything. Jesse is with us in Fargo, North Dakota.

Hi, Jesse. How are you? Jesse? I'm doing good, Dave. How are you? Good. How can I help? So I'm debt-free.

I live in my house about two months ago. Good. debt-free other than my house uh about two months ago uh good my car yeah so my car uh is worth six thousand dollars and the engine just went out on it a couple days ago not good so i i have uh seven thousand dollars in my emergency fund right now um my i'm deciding do i go out and buy a seven thousand dollar vehicle or do i spend uh three two four thousand dollars to fix my current vehicle okay well the car is probably worth a thousand dollars as it sits salvage right correct and so if you can spend two thousand on it that'd be kind of like spending three because you could have got one for it put two in it it's worth and then you could sell it

for six even if you were going to turn around and sell it if you can get it running for two that's probably what i would do much north of that i'm going to start to think about it but i mean that you know you're going to lose five thousand dollars now or you're going to start to think about it. But, I mean, you're going to lose $5,000 now, or you're going to lose $2,000 by fixing it and selling it for six. You follow me? You're right. So I'm probably fixing it. I'm probably fixing it with an old used engine.

What happened to the engine? The mechanic said that there's something broke in it, and he doesn't know what. It's just I was driving it, and it just started cluttering and wouldn't go anywhere. Okay, you need a new mechanic because I need to know what's wrong with the car. I mean, something broke in it. Well, no kidding. In the engine, so it's not. I know.

Yeah, I don't know exactly what it is i know you don't know what it is but the mechanic ought to be able to tell what it is i mean if it dropped a rod that means it blew it's what we call blown engine and in that case you're probably going to buy a used engine from a junkyard and have someone put it in there and you can probably do that for a couple grand what kind of car is it it's a ford explorer like an 04 okay i mean you could have burned a valve or something and that might be 600 800 bucks to fix it no he said he said it blew the engine yeah but he didn't even know what it is you said. Right. Yeah, you need another opinion, dude.

You need to find out what happened to your dead gum car. But anyway, your worst case scenario is you put a used engine from a junkyard in there for a couple grand, and you sell the car for six. Put six in your pocket, minus two that you've taken out of your emergency fund, and then you put some money with that and move up in car a little bit. But you're probably going to repair this up in car a little bit but you're probably going to repair this car before you sell it because you're probably going to make more money on it that way uh even net of an engine but not net of a five thousand dollar engine net of a two

thousand dollar engine so again a six thousand dollar car does not get a brand new engine in it you put a used engine from a salvage yard and it's what you do kelly is with us in antigua hi kelly how are you i'm good how are you dave better than i deserve what's up um i'm calling because me and my husband just finished baby step two and um we came across a house that's for sale and it's way below market because the lady is trying to sell it quickly so that she can move back to the UK. And we don't have our down payment saved up yet. And you're still in debt?

No, no, no. We finished Baby Step 2. Oh, I thought you said you were in it. I'm sorry. Okay, so you're out of Baby Step 2, but you don't have your emergency fund or your down payment. Correct. So she said that she would be willing to essentially kind of owner finance it for us for 18 months, and then she would put the entirety of those payments that we made to her, $1,500 a month, towards the balance of the loan at the end of the 18 months. What's your household income? About $70 a year.

Okay. Cool. What's the house selling for?70 a year. Okay. All right, cool. What's the house selling for? $147. Okay, excellent. Which is so cheap for here. Yeah, okay. Well, here's what I would do that would work very similar for her, okay,

but I'm just going to structure it a little bit different. I want you to rent it for that 18 months with an option to purchase it for X price. And the price could even slide down $1,500 a month if you want. Okay? Okay. But that's the exact same financial transaction for her, but the house doesn't go in your name until you have the down payment and the emergency fund saved up during this 18 months.

So you've still not purchased a home, but you have the right to purchase a home. So it's a lease with an option to purchase for that 18 months. Exact same transaction for her financially, but you don't buy a house until you have your emergency fund and your down payment. Hey, it's Blake,

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