The Ramsey Show - App - Living Below Your Means Is Critical to Success (Hour 1)

Episode Date: September 19, 2019

Budgeting, Savings, Debt, Home Selling, Home Buying   Tools to get you started:  Take TDRS listener survey to win a $100 Amazon gift card, click here: http://bit.ly/2krRePv Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

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 am Dave Ramsey, your host. Thank you for joining us. It's a free call here. The phone number is 888-825-5225. Katie starts off this hour from Raleigh. Hi, Katie. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call. It's an honor to be speaking with you. You too. What's up?

My husband and I are on Baby Step 2. We have $62,000 left just in student loans. It's my student loans. We took advantage of this excellent housing market and sold our house and cleared $40,000 from the sale of our house. And pretty much the day the money showed up into our account, we found out that we are pregnant with our first child, and we are trying to figure out if we should put any of it or all of it or part of it towards the student loans, or should we just leave it there and save it until after baby comes? Wow. So where are you living?

We bought a new house, so we used a tiny bit of the equity, so the $40,000 is what we have left. Oh, so you bought a house but didn't put as much down. Right. Didn't put it all down. Okay. So the housing situation is settled, and you still have $50,000 worth of debt but $40,000 in the bank. $62,000 in debt.

$62,000 in debt. Okay. Yeah. Yeah, I'm just going to let it sit there until baby comes. Okay. It's not upsetting at all. We always push pause on your debt snowball or your total money makeover steps, whichever one you're at, when you get pregnant. And let's pile up cash as big a pile as we can get.

Because this is a, it's one of the most wonderful times of your life. Yes. And I don't want you thinking about anything but this. And the fact that you have this big old, huge, fat, sassy emergency fund sitting there causes you just to relax and be pregnant. Yes. That's fun. Well, as fun as being pregnant can be anyway.

But you're going to get to enjoy the whole process. And, you know, baby comes and comes home healthy, and you come home healthy, and there's no hiccups of any kind, then you're game on again. And you take that money out of the account at that point, and you throw it at the student loan debt, and we finish up that lousy $22,000 that's left as fast as you possibly can. What's your household income? $110,000.

Okay, so you're going to knock that other $22,000 out in about three or four months, I guess, five months. Really, really, really fast. Really, really, really fast. Whatever it is, right? We're not going to mess around with it. It's not going to be there for a year. It's not going to be there for two years. You're going to get done with it, and then you're going to build your emergency fund

again, and you'll be rolling again. All right. Thank you so much. Congratulations on the baby. Thank you so much. Beth is next in Pittsburgh. Hi, Beth. How are you?

Good. How are you? Better than I deserve. What's up? I have a son that is going to college, and we have $11,000 in his 529, and we have $43,000 in mutual funds, and we need about 33 total for him to complete his college. So I'm wondering where it would be better to take that money from.

Where is he going to college for four years for $34,000? I'm sorry, what? You said you needed $34,000 for him to go to school or $34,000 more than you have? No, total. And that will finish his schooling. So you have more than you have no total and that'll finish his schooling so you have more than you need correct and where is he going to school for 34 000 for four years um he has two years left so he oh okay so that's two years of tuition that makes more sense okay yes and so so you've got the money. Right.

So we need to set $34,000 aside to do that, right? Now, are you paying, that covers tuition or room and board or what? That covers everything. And we have $11,000 in a 529. We use it, for sure. Should I use that first or should I use it more towards the end and give that a chance to grow more? Because I'm going to have to use his mutual funds eventually anyway.

No, use it last. I'm with you. But make sure you use it. Right. Yeah, clean it out. I mean, you don't want to leave anything in a 529 unless he's got siblings and you want to transfer it to a sibling, do you? Yes, he does.

He has a sister that is a year behind him. Yeah, if you mess this up, you can transfer to a sibling. But it sounds like you're going to need the money anyway, and you've got the money. Well done. You saved for college and sent your kids to school. Look at you. Yeah, we did things a little backwards we're not out of debt but we my when my father passed away he left that money that we put away for schooling so that was

a blessing in disguise there wasn't disguised much it was just a blessing it was good and he left it straight to them so it wasn't your money to deal with anyway you're just taking care of making sure they go to school with it. Good for you guys, and good for your dad. That's a good legacy right there. That's neat. Very well done. What's he getting his degree in?

Software engineering. Oh, ding, ding. That's going to pay off. Very good. Okay, fun. Yeah, just make sure you clean the 529 out. And you're right, let it grow as much as it'll grow. It's not going to grow a lot in two years, $11,000.

It's not going to double. I mean, it might make $1,000 or $2,000, but that's that much you don't pay taxes on. So, yeah, that's the way to maximize that instrument out, for sure, is let it sit there as long as you can. Good question. Thanks for calling in. Open phone's at 888-825-5225. Paul's in Atlanta. Hey, Paul, how are you?

I'm good, Dave. How are you? Better than I deserve. What's up? So I found your show a couple of days ago, and I've been thinking about the choices I've made lately. Uh-oh. You there?

Yeah. Yeah, I'm here. Okay. And? I plan on going back to school very soon, but I have some debt I want to get rid of before I go back. How much debt do you have? I'd say about $33,000. On what?

On car payment. What do you owe on your car? I owe, let's see, $27,000. Mm-hmm. Okay. And you have $33,000 total, so what's the other six? Credit cards. Okay.

All right. And what do you make? I make $25,000 a year. Okay. Cool. How old are you, 26? I'm 23. Okay.

All right. Cool. Well, I have done so many stupid things, and if you've been listening to me, you've heard me say that, but it's true. And so what I try to do is not do the same stupid thing twice. And the fewer stupid things I do, the wealthier I get when it comes to money anyway, in general, for that matter. But stupid things just cost money, whether they're money stupid things or not. But you have a car standing between you and your life goals. Your life goal is to get an education, which is a great goal.

Then you can get you a car later. When you're 23 years old, you make $25,000 a year. A $27,000 car is known as brain damage. Insanity. Crazy. a year a $27,000 car is known as brain damage insanity crazy so i don't even know how you got the loan it's nuts so if i woke up in your shoes sir i would name that car stupid and i would sell it and i'd get on with the business of getting my education and do it really really fast as soon as i can even if you're not going back to school, that car has got to go. This is the Dave Ramsey Show.

Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually

supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills. To learn more, Thank you. Eric is with us in New Jersey. Hi, Eric. How are you? Hi, Dave. It's an honor to Hi, Eric. How are you? Hi, Dave. It's an honor to speak to you. How are you? Better than I deserve, sir. How can I help? Yes, sir. Okay. I'm on baby step two. I'm married with two beautiful daughters. And I have a question for you.

My wife, she believes mostly on everything that you said, but there's an issue. She works on a bank, so she sells those products, those credit cards, loans. She actually got a training two days ago about HELOCs and mortgages and stuff like that, and she also gets compensated when she sells this type of product. So I'm trying to pull her away from that world, but at the place she works, it's like a fight that I'm constantly living. So she actually believes in that, but at the same time, she's trying to follow the plan in order to work together with me, and I need wise advice from you

it's very difficult to be good at something that you don't believe right and whether that whether that's her coming home and working beside you and saying okay we're going to be good at getting out of debt when i I think debt is awesome, if you think debt is awesome, you're not going to be good at getting out of debt. On the other hand, if you're trying to get out of debt at home, then you're not going to be good at selling debt at work. Right, right. Right now, the last thing she agreed on the plan,

it was a seven-month argument and fight. I put in some videos of you. I was able to convince her for her to allow me to pay her credit card so we can put everything together. We have combined finances. And the only debt we have so far is our car. And she's pretty much following every advice I'm giving her, but I'm a little bit concerned of what she's doing at work and what we're doing at home. Well, it's just a conflicted thing. I mean, that's reasonable.

It's hard to do that. And so I understand. I understand what she's facing. What does she make a year? She's making $31,000. Okay. And how long has she been at the bank? Well, this year will be her 10 years of experience in banking.

Right. And what do you make? I'm making $46,000 right now. Okay. Well, I mean, what we might do is start setting a goal that allows her to change careers and maybe do something that she likes better. She says she likes real estate. She likes real estate? She says that, but she has no knowledge

whatsoever. And she is already 38 years old. Well, that's okay. So why don't we start working towards getting your real estate license while she stays at the bank? She can do real estate part-time. Yeah. And learn about it and get going, get her career moving.

Because if she started making as much money doing real estate on the side as she was at the bank, she'd quit the bank, right? Yeah, definitely. And she'd be doing what she loves. Right, right. She's been there for all these years because that's the only job opportunity she found. Well, there's lots of job opportunities.

And one of them is real estate. I would pursue some real estate. She doesn't have to quit today, quit her banking job today, but, you know, hey, she's 38. By the time she's 42, I want her being a real estate agent. Yeah. We're going to be debt-free in a year and a half.

Mm-hmm. So, I guess, and we're doing pretty good. Hey, dude. To be honest, that's my... The answer to your question, how do you get your wife on board, or how does my wife deal with this conflict of selling debt at work but getting out of debt at home, is help her gradually, step by step, step into her dream of being a real estate agent you be a good husband serve her

help her live her dream and when you do that it's going to solve all of this stuff but it's going to take a little bit of time it's not going to be quick it might take two years she's going to stay in the banking job for next couple of years probably but she gets her gets some knowledge, as you said, starts to learn about the business, makes a couple sales, working on the weekends and evenings when she's not at the bank, which is, by the way, when most people look at houses anyway, and gets a couple transactions under her belt. You guys are out of debt.

You start to build up some savings. You feel more comfortable with her because she's making money in real estate, but maybe not quite making as much as the bank. Then she could quit the bank and make the transition. And I think you help her live her dream. Sounds to me like. Thanks for the call. Dee's with us in New York City.

Hi, Dee. How are you? Hello, Dave. Thank you for taking my call. How are you doing? Better than I deserve. What's up? I own a house in Orlando,

but I live in New Jersey. I would like to know if I should put it up for rent or sell it. I would sell it. Sell it? Yes. Very few things happen that are good when you long

distance landlord. It's very hard to watch over the property adequately. I do not own rental property that is more than 50 miles from my home. Even if I get a management company to do it for me? So are they going to watch it as close as you do? No. I hope so, but I will have to pay 10%. Why do you want to keep it? I wish to move down there eventually in the

next three years or so. Well, buy a house when you move down there. Okay. That house is not anything magic, is it? It is a dream home for me because I've been wanting to. It was an emotional decision. I've been wanting to own a house for a long time. It was a dream to own a home. But that particular home is not anything magic, is it? No. Okay.

So sell it, and when you get ready to move to Orlando, buy your house. Okay. So I would have to take it lost since I just bought it this summer. Why did you buy it when you live in New York? Because I was planning to move down there, and my cousin helped me to get into it and i realized that the money that i get paid here compared to orlando would not be here wouldn't be near the same but you're not living if you were living in it that logic would work but your logic's flawed all you did is you're just a person that lives in New York, and you bought a rental property in Orlando.

That's all you did. You've never moved in the house. You never lived in it, right? No. Okay. I mean, if you want to keep it, you can keep it. You called and asked me what I would do. I wouldn't have bought it in the first place.

I don't own as long as this rental property. I think you're going to get yourself in a pinch. That's how you end up with a tenant changing their Harley oil in your living room. Some management companies half-butt watching something. They half-butt collect the rent, and they double charge on half the repairs. And not all management companies are that way, but some of them mail it in. And you're in New York. You're watching over a property in Florida, I think it's a good way for you to have a really bad, nightmarish real estate experience.

That's my opinion anyway. You can do whatever you want to do. I'm not going to be mad at you either way. So good luck. Open phones at 888-825-5225. You jump in. We'll talk about your life, your money. It is a free call.

Dave, my work offers SmartDollar. Is Financial Peace University also recommended as my wife and I go through this journey? We're on baby step two and knocking them out. Now, if you've got SmartDollar and you and your wife are going through it, you've got access to the information and most uh mostly the very similar teachings on the videos smart dollar is a very comprehensive program that it's basically with some changes but it's basically your company offering financial to pay for financial peace university for you is what it is and um yeah i would just make sure your wife and you are both on it kevin that's the big thing

but smart dollar has been very successful we've got huge companies in america Yeah, I would just make sure your wife and you are both on it, Kevin. That's the big thing. But SmartDollar has been very successful. We've got huge companies in America paying for their entire employee base to go through it. It's great. This is the Dave Ramsey Show. Hey, guys. At the Dave Ramsey Show, we really value your input. It helps us to know what's important to you so we can deliver relevant content to help you crush your money goals. We just launched a brand new survey, and we'd love your feedback. It only takes a few minutes, and you'll be entered to win a $100 Amazon gift card.

No purchase necessary. Take the survey at DaveRamsey.com slash survey or text survey to 33789. Aaron Aaron and Crystal are with us in Washington, D.C. Hey guys, how are you? Good, Dave. How are you? Better than I deserve. I see you're debt-free. How much have you paid off? Dave, we paid off

$193,981.48. How long did this take? Two years. Love it. And your range of income during that time? We started at about $155,000 a year take-home and finished at about $185,000. Cool. What do you all do for a living?

I'm a photographer. And I'm an IT project manager. Excellent. What kind of debt was the $194,000? Dave, what kind of debt wasn't it? There was some cars on there. I had $80,000 in student loans. And I had a dog and a burrito and a couch.

All on credit cards. You financed a dog? Yeah. He's crazy. How much did you pay for your dog? $300, Dave. Okay. I didn't have $300 that I needed that dog.

I hear you. Well, I mean, it's probably worth $300, but not on a credit card. So what kind of dog is this? It's a pit bull mix. Oh, cool. You still got him? Yes, I do. Good, good.

He's a paid-for now. He's a paid-for pit bull. I love it. That's good. That's the best kind to have. Cool. So how long have you two been married? Two years.

Okay. So that's what started all of this. You get married and say we got to be we got to do this thing now we got to get out of debt tell me how about the adventure tell me about the journey uh well it started actually a little before we got married i took fpu at my church and then um when we started dating i actually dragged dragged Aaron to the next class. Ah. So we took it together while we were dating, and then we got engaged,

and then it was on separately, of course, and our goal was to be able to pay cash for our wedding. So half of my guns got sold. Oh. My Maserati got sold. Oh. Maserati and guns both. Man, you cut to the bone here.

Ouch. Yeah. She's worth it. Man, I'm telling you. Wow, look at this. So how much of the $194 was from selling stuff? Actually, that stuff just went to pay for our wedding. Oh!

Okay, that'll do went to pay for our wedding. Oh, okay. That'll do. Oh, my gosh. That's so fun. The 194 started on the day after our wedding, sitting in a little cottage that we rented, signing our wedding gifts over to the bank. How old are you two uh i'm 34 and i'm 33 okay all right very good very good wow you're impressive very well done so it was game on and the first two years of your marriage you did this so what's the secret to getting out of debt? You pay off $194,000 in two years.

Big things are a couple of T's. There's tithing and there's teamwork. But the biggest one is living below your means. Like we make in the six figures, it sounds like a lot of money. But if you notch down your expectations about three notches from how you think you should be living that's probably a little bit more accurate and then if it ain't broke don't fix it i have an iphone 6 dave no there you go okay so no upgrades you beans and rice rice and beans live way less than you make, let's get this thing attacked, right? Definitely. Good for you guys.

Did you have cheerleaders? We had detractors. We had the family members that thought we should be building a rental empire on debt like they were doing, or that we were foolish to not be traveling or enjoying our first couple years of marriage together. But, you know, we're free now, and I think we enjoyed it just fine. Yeah. You didn't die from it anyway.

No, not at all. And you're 34 years old. You've got the rest of your life to live with no debt. You had a $194,000 weight around your necks when you walk down that aisle. Wow. That's impressive, y'all. It really is. So you didn't have anybody hardly cheering you along, huh?

No. Well, we actually started leading FPU while we were going along this journey. And so we did have some cheerleaders in our classes. So that was helpful yeah and that's also the ultimate in accountability to coordinate a class going through it's one thing coordinating a class while you're doing it that's like i i can't be fake i actually have to do this stuff because i'm up front yeah yeah it's the it's the hypocrite test right yeah nothing make you learn something like teaching it you know way? Wade, well done, you guys. Well done.

We got a copy of Chris Hogan's book for you, Retire Inspired. You got cheerleaders here at Ramsey. We're proud of you. I'll just tell you that. You're dadgum heroes, man. This is so fun. Thanks, Dave. Thanks, Dave.

34 years old, making $185, not a payment in the world. Why? Because they got a brain, and they decided they were going to make money behave instead of wondering where it went. Way to go, you two. Way to go. All right, Aaron and Crystal in Washington, D.C. Y'all can go down to Congress, teach them something if you want.

$194,000 paid off in two years. 155 to 185 minus a Maseratierati minus the guns plus a pit bull. Count it down. Let's hear a debt free scream. Three, two, one. I love it. I love it. I love it, I love it, I love it. That is so fun. You know you're in full-on consumption mode when you finance a dog. I mean, really.

That's full-on consumption mode. I love it. Those guys are great. Such smart people. Such wise young couple. Well done. Mark is with us in Cleveland, Ohio. Hey, Mark, what's up?

Wife and I are looking at trying to make a hard decision. Okay. Short and sweet. We got less than two and a half years to pay off our current house. But we had a thanks to your wisdom. You're breaking up a little bit. You have two and a half years to pay off what? The only debt we have left our uh our house cool

and uh we got there thanks to your wisdom a little bit of hard work and uh trying to stick to our guns with limited cheerleaders but um the confusion has approached uh we had stumbled across uh prospectively our uh our dream house project house, trying to figure out, just because we can, should we? I'm sorry, would you move into the house? No, no, no. We're still living in our current house. I know. Would you?

If you bought the project dream house, would you move into it? Within a few weeks, yeah. There's a couple things that have to get done before we move in. house. I know, would you? If you bought the project dream house, would you move into it? Yeah, within a few weeks, yeah. There's a couple things that have to get done before we move in. But you'd sell your house? Yeah, yeah, yeah. We would buy a house. So the project house price is what?

$180,000, $200,000. And what's your house worth? $125,000, $135,000. Okay, and what's your household income? About $,000, $135,000. Okay, and what's your household income? About $90,000, $95,000. Okay, and what's the balance on your home now? About $33,000. Okay, so you're probably going to go from $33,000 up to about $80,000, $90,000 in mortgage, right?

Depending upon how we do this, yes. Yeah, and then you're going to reduce that really, really quickly. And how old are you two? I'm 43. She'll be 43 in a couple months. Okay. One more time, what was the income? About $90,000, $95,000.

Okay. Yeah, I mean, it's within the guidelines we teach. It's hard to go further in debt while you're trying to get out emotionally, and I don't want you doing that very often. But if you did it one time, and then you said, okay, game on. We're going to lean into this.

This $90,000 new $90,000 or $100,000 mortgage is going to go away super quick. That's not the end of the world. That's not over in the stupid column. It's just you slowed down your overall plan to get out of debt. But you can do it. You can pull that off, I think. This is the Dave Ramsey show. Victor's in Philadelphia. Hey, Victor, welcome to the Dave Ramsey Show. Hi, Dave, good to speak to you. How are you?

Better than I deserve. What's up? Well, my dad and I run a small food retailer that we bought around this time last year for $500,000. We didn't have $500,000 last year, but we thought it was a good idea to buy it because we're really familiar with the industry because we also own a food distributor. So fast forward past all the discussions, here's how we ended up paying for the $500,000.

We had $100,000 in an account receivable from the owner of the retailer that was put to the purchase of the business, which left us with $400,000 left to pay. $150,000 was arranged for us to pay the owner over a time period of 18 months. We have $50,000 left to pay on that, and it should be gone in about six months. And the remaining $250,000 was from a business contact of ours. We called him up. We told him about our situation, and the next day, he wrote us a $250,000 check, and we were on our way. Although that money came with just a phone

call, he gave us $250,000. I had a 36% interest rate. And currently we're only paying interest on the money, because we have to pay back the $50,000. I'm sorry, I think my headphones are messed up. Did you say a 36% interest rate? 36%. I can't breathe. Okay. You made it sound like it was so easy.

Well, no wonder it was so easy. No, no, no. It's that. What in the world made you think 36% was a good idea? Because of the revenue that the business pulls in. We're pulling in about $110,000 a month in revenue, and we'll be able to keep up with the loan. We're able to pay back the $150,000. We're current with everything, but it's just that money and interest

could be better used for investing in the business elsewhere. Okay, so when are you going to pay it off? There's no term on that. No, I didn't ask that. I asked when you're going to pay it off. I'm sure he doesn't want you to pay it off, asked when you're going to pay it off i'm sure he doesn't want you to pay it off but when are you going to get rid of this mess uh we were planning on either paying the 50 000 that we're paying now and it should be going to 6 000 that we'll start

paying that aggressively so you haven't got much margin in this business because you told me you're making a million two gross uh that's about right yeah and so what's your what's your net Margin in this business? Because you told me you're making $1.2 million gross. That's about right. Yeah, and so what's your net? About $500,000. Okay, and so why is it taking six months to pay $50,000? We just set it up to be paid over 18 months, so we started paying $150,000. Okay, let me stop for a second. If I had $500,000 income and I had a $250,000 loan at 36% interest, over 18 months that we started okay let me stop let me stop for a second if i had 500 000 income

and i had a 250 000 loan at 36 interest it would be paid off in less than a year i would not have that crap you make a ton of money why are you sitting with this debt at ridiculous interest rates uh because we also have very high expenses to with the to run this i ask you what your net was you said your net was 20 you meant you meant your gross profit not your real profit net net profit net taxable income is what a year oh we're about just about breaking even we're just about breaking even on that. Which means you have a 10% margin. Oh, Lord.

Okay, so how can I help? So we have about $50,000 left to pay on the first one. On the first one. The original owner. And then we'll be able to apply. We'll be able to apply $8,333 every month according to our current payments, and we'll start paying back the $250,000. But we've been looking into getting a loan from a, you know,

a formal loan from a bank, but not very much is available for us now since we've only been in business for a year. I just wanted to call to see what you would suggest to be the best way to get us out of this mess. Yeah. Well, I mean, if you have the ability to refinance it at a lower rate, anything's better than 36% because we're talking about, what, $100,000 a year in interest. About $90,000.

Yeah, that's kind of ridiculously close to $100,000. Okay. And so, you know, if you could cut that down by half, if you had an 18% interest rate, that would be another $50,000, $45,000 to apply towards principal in a year. So any refinance you could do, crap, if you could put it on credit cards, you'd be better off than where you are. Right. And so anything you can do, but for sure I'm going to have this business living and your personal lives living hand-to-mouth until you get this payday loan you have paid off.

Unbelievable. Wow. Yeah, I mean loan you have paid off. Unbelievable. Wow. Yeah, I mean, you've really got three options. One, sell the business and get out of the mess. Two is cash flow, the debt reduction. And three is, you know, three is to refinance the first debt or the $250,000 debt, if at all possible. Even if you could refinance portions of it and reduce the principal, that would help.

I mean, if you could get a $50,000 loan here and a $50,000 loan there, you'd be better off. You've already got the debt. If we can restructure it and then make the reduction of the debt happen that much faster as a result of the restructure, then that's going to be okay. Um, but I think you guys need to, um, the first, I would be scared to be around you guys if you're not willing to sit down and the two of you look at each other and go, this sounded like a good idea at the time we did it, but this was one of the dumbest things we've ever done in our lives. Because if you make it out of this without

bankrupting, you know, you beat the odds. Because you look to me like a bankruptcy looking for a place to happen. You've got no margin. You've got a huge gross and some slip. You know, you have a 10% movement in sales. You've got a real problem here, a real problem. If something happens, the economy slows down, I mean, you are set up for failure. And so if you guys don't, A, say this was a mistake, and the fact that that was a mistake now tells us we will never, ever, ever, ever do anything like this again,

then, you know, I think you're going to get it one of these days. You know, you're just playing with fire. You're going to get burned. Man, you are standing right in the middle of a bonfire. Unbelievable. Kat is with us in Springfield, Illinois. to get burned. Man, you are standing around in the middle of a bonfire. Unbelievable. Kat is with us in Springfield, Illinois. Hi, Kat. How are you?

Hi, how are you? Better than I deserve. What's up? Okay, so I'm in Baby Step 2, and I've taken a few. And I know that you say when you buy a home, you should have a 15-year mortgage with 20% down. I have a 30-year mortgage because, obviously I was about my home before I took this class. I'm wondering if I should refinance my home now

or do I need to wait until I complete Baby Step 2 to do that? You do not need to refinance your home ever just to go from a 30 to a 15. All you have to do is just pay your 30 like a 15, meaning calculate your 15 payment amount and pay that much extra above the 30 and you will pay off a 30 in exactly 15 the only reason you would refinance a home is to get rid of a higher interest rate mortgage if you could reduce your interest rate or if you've got an adjustable rate or a balloon and you want to get rid of those um you know either thing like that but you do not need to refinance to move from a 30 to a 15 just pay it off pay it like a pay your 30 like a 15 and it will pay off in that period of time

our question today comes from blinds.com they're the number one online retailer of custom window coverings they have site-wide savings right now plus they'll take an additional 5% off if you go to Ramsey. Blinds.com slash Ramsey. Blinds.com slash Ramsey. Will's in South Carolina. Dave, we're debt-free, including the house. We've led Financial Peace University at our church. Thanks for all you do. I'd like to have part of my emergency fund in cash. I have a home safe to store the cash. How much cash on hand is good? And what should I do to document how much cash there is in case of fire or theft? Would my homeowner's policy cover cash? Well, you'd have to check with your homeowners to see how much cash they cover. They typically do have a limit. The only way to document is video it and keep a copy of the video, just like you do all your

other valuables. It's not a bad idea to have a video of, you know, things that are valuable, a photo directory of things that are valuable in case of fire or theft. That's not a bad thing. But, yeah, you know, if you've got a $10,000 emergency fund, you have $5,000 at home in a safe, that's not the end of the world. I would not be sitting there with $200,000 in cash in my safe either. So I don't know what you call your emergency fund. But as long as it's something like a fairly normal person would have, then yeah, that's okay.

That's okay. But again, make sure your homeowner's policy covers it so you know what it is and make sure you've got a good safe. That puts this hour of the Dave Ramsey Show in the books. Thanks.