The Ramsey Show - App - Living With Your Parents Is Not a Long-Term Play (Hour 1)

Episode Date: August 26, 2019

Home Selling, Savings, Retirement, Home Buying, Debt   Tools to get you started: 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'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is going to be Peter in Texas. Hi, Peter. Welcome to the Dave Ramsey Show. Hello, Dave. How are you? Better than I deserve. What's up?

All right. My wife is making me call. She didn't quite see what I see, and maybe you can shine some light on me if I'm wrong. We have a rental house that's paid off after our house, of course. What I would like to do is sell the rental house, whatever profit we walk away with, split it in half, use half to buy another foreclosure like we did the last time, turn that back into a rental, and then use the other half in investments to then take out investments of the growth to feed our Roth IRAs. Where's the bad in that situation other than taxes at that point? So it's a foregone conclusion.

Both of you are saying sell the rental. The only question is what to do with the proceeds? No, no, no. She doesn't necessarily want to sell it. Oh. But. Okay. So she likes the rental.

It's sitting there paid for. Your home is paid off. You're 100% debt-free. Yes, sir. Awesome. Way to go, guys. Well, these are great problems to have. I agree.

Okay, so one option is keep the rental and let the cash flow cash flow because she likes the rental. The other option is you want to sell it and take half of it and buy another rental at a foreclosure deal and then invest the other portion in mutual funds? Yes, sir. To then feed, do our yearly contributions into her Roth and my Roth IRA. Okay. Either one is fine. Neither one is dumb. Both are investing.

And both are, one, staying invested in a property that you think is a good property, and the other one is, you know, taking the money, getting a good deal on something and investing. Conceptually, you could cash flow the Roth. The Roth's as easily out of the existing rental as you could out of mutual funds reinvested. And that is true, and that's what we're doing. But we've seen a few houses come up that, man, that could be a really good deal. But without the capital in hand to go buy it, it's not as good a deal anymore. Well, yeah, because you want to go into debt.

So what's your household income um just under a hundred okay well funding your roths does not solve the the itch that you just told me you had other than you'd have some money sitting there uh oh to buy the next foreclosure that's the part that would scratch that itch i see right okay um well is there like a capital gains on that if we be a capital gains on your rental when you sell it yeah right but i mean you you've been depreciating it and owned it for how long i assume you write it off on your taxes with a depreciation schedule right well that's what the cpa does yeah yeah yeah i've had it how long uh two and a half years okay so your adjusted basis is down a little from that depreciation dropping it down.

Right. And your gain will be the difference in what it sells for minus what you paid for, basically. Right. Minus some depreciation. So you'd have 15% gain on all of that, or 15% tax on all that capital gain. I'm okay either way i probably i mean there's not a right or wrong answer so no i'm not i can't blow the whistle and say both of either one of you is out of bounds we would do either one at the ramsey household and be fine

with it um my tendency would probably be personally if the rental is a good property i'm just gonna lean in and not even worry about the roth ira part of it you're a good property i'm just going to lean in and not even worry about the roth ira part of it you're debt free 100 i'm just going to start piling up cash over here in a good uh like an index fund which is what i've done out of the cash flows and out of out of the cash flows from the rental in my 100 000 and build me up a real estate fund to buy something with and not have to sell the rental to cause that to happen i would just build it up over there in an index fund and then and then have another rental and then do it again and then do it again.

That's what I personally have done. And I'm with you in doing that. It just seems like I'm trying to push the accelerator a little faster than she is. Yeah, I mean, you know, and you've got a lot more hassle factor and a little more unknowns uh it's not quite as slow and steady she's a more slow steady you're more of a a player seems like seems like it yeah personality style that's okay neither one of those are wrong because neither one of them are leading you to you know the slow and steady can lead you to do nothing which is stupid right and the player can lead you to being rash and playing the roulette wheel in

vegas you know which is stupid or bitcoin or something dumb like that, you know, but instead you're just either one of these are solid investment strategies. So I can't, I can't, I can't blow the whistle and throw the flag, Peter. Sorry, I can't help you. I'm probably personally going to do what she's doing, but that's more of a personality thing than it. And it is what I have personally done. I personally bought a rental that i pay cash for

i used my personal cash income to build up more and the rental income to build up more than i bought another one and then i built bought another one and every time i bought another one i had more rental income with no payments and i was able to snowball in a positive way my my purchase of paid for cash rentals and that's how I built my real estate portfolio. It's all, of course, been paid for from day one. So good question, interesting discussion. Thank you for joining us. Open phones at 888-825-5225.

Gabe is with us in Minnesota. Hi, Gabe, how are you? I'm good, sir. How are you? Better than I deserve. What's up? Good. So I have just recently sold my condo, and I'm going to be walking away with about $40,000 in capital gains. For the time being, I'm moving back into my parents' place, which is a great kind of resting point in between places. I'm kind of wondering, you know, I'm looking to, you know, obviously not stay permanently at mom and dad's, but, you know,

is it better to, you know, stay at mom and dad's for as long as I can and stockpile cash and then invest in the next place or just, you know, go straight to the next place? How old are you? 24. Oh, cool. And what do you make a year? I make about $70,000 a year. Good for you.

What do you do? Yeah, I'm a drafter at an architecture firm, drafter and designer. Okay, cool. I wouldn't stay at mom and dad's in your situation more than 90 more days. More than how long? 90 days. 90? Okay.

Yeah. And here's the reason. Why okay yeah and here's the reason here's the reason the cash benefit of having no rent and no overhead uh and mom does your dry cleaning i mean mom does your laundry for you uh the cash benefit of all of that is uh wonderful uh what you lose though is the developmental portion of you moving the rest of the way into adulthood and the dignity of you standing on your own and the dignity of you you know taking a machete and making your way through the jungle my man um there's there's good that comes from that that ends up being in your back pocket in your wallet over time because we're increasing your manhood. But I would stay there for a little while. But no, it's not a math play to sit in mommy's basement and pile up cash. That's not a math play.

Not long term. It's okay as an emergency. It's okay as an interim. We don't have to be harsh about it, but long term it's not a good play. This is The Dave Ramsey Show. your options? Do you wish you could find an affordable biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry, a Better Business Bureau-accred 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, visit chministries.org. That's chministries.org. We'll be right back. Thank you. Welcome back to the Dave Ramsey Show. It's common sense for your dollars and cents. This is the Dave Ramsey Show. We're glad you're with us.

Open phones at 888-825-5225. Up next is going to be Hosanna in North Carolina. Hey, Hosanna, what's up? Hi, how are you? Better than I deserve. How can I help? Okay, I have a traditional IRA, and I was wondering if I should do a Roth

IRA too at my age or not. You should only do a Roth IRA at your age. Are you there? Okay. Yeah. Okay, can you hear me okay? Yeah, I can hear you. Okay. You should only do a Roth from this point forward. I wouldn't convert your traditional into a Roth until you're out of debt and have some extra money. But your future IRAs, you can only do one or the other in a given year. Your future IRAs should all be Roth IRAs. And the reason is,

the vast majority of what is in your account when you get to retirement will be growth. It will not be what you have put in. Okay? So if you do $6,000 a year, how old are you? 20. Okay. And we did that until 65. That would be 45 years.

Okay? You have put in $270,000. That account, if it's invested in good mutual funds, will have grown to about $2.5 million, $2,300,000, something like that, okay? And so if you have $2,300,000, you put in $300,000 of it. The other $2 million is all growth. You want that growth to be 100% tax-free, which is what the Roth is. If it's in a traditional, it's all going to be taxed. So the difference in our discussion with you starting as young as you're starting is particularly poignant,

is do you want to pay taxes on $2 million or not? If you don't, you put it in a Roth. If you do want to pay taxes on $2 million or not? If you don't, you put it in a Roth. If you do want to pay taxes on $2 million, which would make you weird, then you'd put that into a traditional. So you always are going to do Roth. The younger you are, the more the numbers skew in your favor. You've got to get up above 60 years old before it starts even being a discussion about which one to do and when you're going to pull the money out and so

forth. But prior to that, it's all going to be growth. The vast majority of your account is going to be growth, and the fact that it's tax-free growth is a big, hairy deal. Anthony is with us in California. Hi, Anthony. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. I really appreciate it. Sure it sure what's up um just give you a little background um i'm 32 years old my wife is 29 we both have two kids um we are thinking about moving from california to texas um we're just not about california anymore um a little bit of background um we both have two uh car loans, but listening to you and your show, I'm selling my truck. I'm going to buy, you know, car cash out of pocket just to kind of,

you know, live below our means a little bit. But I just had a question and wanted to know if we're trying to buy our own home. I have some money saved up for a good down payment and also an emergency fund. I have no credit card debt. My wife does have about $5,000 in student loan debt, but she has no credit card debt. So I'm just wondering if it's a good idea to move right away, even though she does have that $5,000 student loan debt. We're really trying to get out as soon as possible. How much money do you have saved?

I have around $50,000 saved up. $50,000 saved up? Yeah. What does it cost to move to Texas? I mean, in order to, you know, put a good money, a good portion down on a down payment. No, I didn't ask about buying a house in Texas. I said move to Texas. Well, what is it going to take for us to move to Texas?

Yeah, money-wise. Five grand? No, I mean, not even that much. I mean, we... Okay, so what do you do for a living? I work for the city that I live in, City of Santa Rosa. Okay, so have you got a job lined up in Texas? I work for the city that I live in, City of Santa Rosa. Okay. So have you got a job lined up in Texas?

And that was the other question. See, I'm going to be, you know, leaving a good job and everything like that. And so, I mean, finding a job, I don't think will be a problem, but I'm just worried about the long run. I'm going to be giving up a good retirement and everything like that just to move.

So I was going to ask you about what a good way to start. I wouldn't stay miserable because of the benefits package at my job. Yeah. That's a bad idea. So let's move to Texas, but let's do it wisely, okay? Wisely sounds like this. Number one, go get a job in Texas.

Number two, set aside the moving expenses and pay off all your debts. Okay. And you move to Texas 100% debt-free, and you have an emergency fund of three to six months of expenses, it sounds to me like. Then you start saving your down payment while you rent a property in Texas. Do you own a home in California? No.

Okay. All right. And so how much debt do you guys have total um five thousand and how much on the stupid cars um i mean my my truck is a stupid expense that's why i'm getting rid of it her vehicle i mean we have two kids and we've got to have someone how much do you owe on your cars uh on her car is $14,000, and then there's $5,000 student loan debt. And how much on your truck? My truck would be $20,000.

Okay. All right. And so if you write a check for $14,000 and pay off her car, you write a check for $5,000, and you sell your truck, you gave up $19,000 of your $50,000. That would leave us $31,000 minus $5,000 to move leaves us $26,000, which is probably enough to buy you a $6,000 or an $8,000 truck and still have an emergency fund fully funded.

You rent for a year while you build up your down payment, and then you purchase, and you rent it for a year in Texas, and then you purchase after that with your down payment built up. Meanwhile, you're 100% debt-free, you've got emergency fund fully funded, and you have a job all before you move. And then you pull the trigger and move, dude. Yeah, of course. But do you feel how clean this sounds?

You have zero debt when you move. Yeah. You have a $6,000 truck. You have a $6,000 truck that's paid for. Her car is paid for. Student loan is paid for. And you have $26,000 in your emergency fund as your three to six months of expenses, and you've got $5,000 for your moving expenses.

Life is really clean here. Does that make sense? Yeah. No, I would not tell you to buy a house unless you're debt-free and have your emergency fund in place first. And by the time we do all of those, you don't have a down payment left. Okay. And so that's how I would do that.

So, yeah, good question. But that's how I'm going to apply the baby steps and apply the stuff that we teach around here that we would tell you to do. I do want you to get a house in Texas, and I do want you to move to Texas because it's what you want to do. But I want you to do it in a way that's wise, and you've got the money, thank goodness, to do all of these things. You're in really good shape. You've done a good job with saving.

You just hadn't watched what you were doing with car purchases and, you know, a little sloppy there's all. But you can clean it up. Hey, thanks for the call. Open phones at 888-825-5225 samantha's on facebook at dave ramsey which is about goodness gracious about five million of you or something like that on facebook nowadays um where does paying an irs debt come into the steps well it would come in at baby step two when you're paying off all your debts except your home,

listing your debts smallest to largest, paying minimum payments on everything but the little one and attacking the little one with a vengeance. And the IRS, unless it is a massive IRS debt, would go at the top of that list. We would cheat it to the top regardless of the size. So you owe the IRS $5,000 or $10,000 or something like that, and you make $50,000 to $100,000. The IRS goes to the top of your debt snowball. You do not want to owe the KGB, I mean the IRS, money.

The penalties are high. They have almost unlimited power. The interest is high. Everything about this transaction is stressful, high, and loss of power in your life. So you want them out of your life as fast as you can. And you want to be sure you figure out exactly how you ended up owing them. And you never repeat those steps again. Hope that helps. This is the Dave Ramsey Show. Thank you. Well, this is a big deal.

Our very first debt-free scream in the lobby of the new building on the new debt-free scream stage. Wow. That's a big deal. And Jamie Hill, one of our, Jamie Macy Hill, one of our team members here, we thought one of our team members should do that first debt-free scream in the lobby of the new building. It's a really big deal. You guys are a really big deal. Thank you.

This stage is shiny. It's a shiny stage. It really is. It's pretty incredible. So, well, congratulations, you guys. So let's do the thing. How much debt have you paid off? We paid off $96,500.

Wow. And how long did this take? It took us eight months. Eight months. And you have been with us a little over a year? Yes, sir. Yeah, a year in May. Okay.

All right. So about 15 months or so. And you're one of our customer service advisors over in financial wellness where we work with Smart Dollar with companies all over America, teaching them the stuff we teach as an HR benefit. So you're talking to companies every day. Every day, yes, sir. Very cool. And now you can tell them your own story.

You've probably been telling them that anyway, right? I have, yeah. It's been awesome. And so where did you guys, were you from here before the 15 months ago, or where were you before? Yeah, so we moved from Youngstown ohio uh but i'm originally from west virginia she's from louisiana louisiana all right we were up there right after college for a job and um so 96 000 in debt in eight months eight months that's that's wicked crazy right there that's nuts there's a secret what kind of debt was this? Well, $85,000 of it was a house.

Oh, okay. Yeah. That's helpful. That's helpful. And you sold the house, obviously. Sold the house, yeah. Actually took a loss on the house. And that was where?

Where was it? That was in Youngstown. Okay. All right. Yeah, we bought a house with 0% down and zero money in the bank. Turns out it's not a great idea. Turns out you got hammered, yeah. Yeah.

And then we sold it a year later. And lost money. Oh, yeah. Of course. Yeah. So real estate's always a good investment. Everybody knows that, right? Always.

No matter the situation. Not really. No, we definitely could have done that better. And we'll do it better this time. Wow. Wow. Well, congratulations, you guys. We're very, very proud of you.

So tell us your story. What happened? Got you started on this whole thing? Yeah. Well, in January of 2018, I was in my basement fixing my hot water heater. Of course, in Northeast Ohio, very cold. I was listening to a show, Dave Ramsey's show. And you said, stop what you were doing.

Look at where you're at in your life. Are you happy with it? Of course, I was freezing, didn't have any hot water, and I was wet working on my hot water tank. And so I was like, no, I'm not happy. He threw a wrench across the room. No, daddy, blankety, blank, blank, blank, I'm not happy. We won't fill in the words, but yes, yeah, you're right. And I said, man, no, I'm not.

And you were like, you have the power to change that. It might take a little time. It might take a degree. It might take a move. But you can do it. I thought, man, he's right. I can. And then you just had a plug for the available positions at the company.

Oh, wow. Yeah. And so I think you were on with Ken Coleman that hour. And so I was joking with her. I said, hey, you know Dave's hiring. That would be fun, right? She's like, you should apply. Here we are. But this is how you end up in Tennessee from Youngstown.

That's it. All right. Yeah. Wow. We decided to get debt free there in January that week. We're like, we're doing this. And it was right after Christmas. We had just spent a bunch of money on Amazon.

And so to fund our baby step one, we returned everything that Amazon would let us return. Oh, wow. Yeah. And so that our fast start on a thousand dollars. And then from that point on, we kind of were coasting. Um, we had to move. And, um, when we moved, we had a house payment and rent for five months. Oh yeah. And so our extra jobs were just making enough to keep that up. And then once we sold the house, that's when we started hammering the debt. Right. Okay. So, Macy, what do you do for a living?

I'm a stay-at-home mom now. Oh, okay. What were you doing during this get-out-of-debt time? I was delivering groceries with Shipt. Oh, wow. Okay. Wow. So what were your best part-time jobs, your most lucrative part-time jobs?

Well, we work in Nashville. We live in a beautiful city, a lot of tourists. And so I was a Lyft and Uber driver during some weeknights and every night on Friday night all the night through and most of the day on Saturday. So it was pretty lucrative working for Lyft and Uber. I actually enjoyed that too, yeah. Yeah, and you were getting your career here started. Yes, yeah.

As a sales guy, it takes a little while to get the pipeline full. It's starting to build, I'm sure. Yeah. And good stuff's starting to happen there. Yeah. So 15 months later, here you stand. Okay. Or eight months later from the debt, but 15 months from the whole water heater thing and all that stuff.

Yeah. Wow. Yeah. Well, congratulations, you guys. Thank you. Who were your biggest cheerleaders? I know you got them all around you. They work with you everywhere. Yeah. But aside from you guys. Who were your biggest cheerleaders? I know you've got them all around you that work with you everywhere. Yeah.

But aside from our team, who were your biggest cheerleaders? Honestly, it was each other. Come home, you know, every night, sometimes late at night after working a couple different jobs. And we just dreamed about our future and, you know, what it could be and what it would be once we were done with that awful stretch of, you know, working that hard and not spending any of our money for fun or food. The house is gone. All the debt is gone.

You got the new job in the new town. You're set. How's it feel? Amazing. It's, yeah, it's hard to describe it's a bit of a long trip from the hot water heater in the basement a little bit and yet it was a fairly short trip i mean and the scope of your life it's 18 months 15 months it's not i mean it's not that big a thing as a part of your whole life yeah but um wow well congratulations you guys thank you very well done i know you got a

lot of family and friends with you here cheering you on yeah i know your team is here cheering you on so we got a lobby full of people you got a lot of fans today yeah and they were our next biggest fans i couldn't come to work and not be encouraged yeah yeah they are always asking me how i was going and uh it was awesome to work with this kind of motivation every day. Yeah, absolutely. Yeah. Well, very cool, you guys. We're very, very proud of you. All right. From our own team, our very first debt-free scream right here in the lobby of Ramsey Solutions' new headquarters on the debt-free stage. Okay, now who's joining us here?

This is Zoe. And how old is Zoe? Zoe is 10 weeks oh my gosh wow if they stayed a little out i had 10 they kept growing up one cars yeah well they don't sleep at this age yeah i know i heard the rumor grandpa papa dave knows that part too yeah well well done you guys all right here we go jamie and macy hill from our customer service team and financial wellness ninety six thousand dollars paid off in eight months and that includes a sale of a house count it down let's hear a debt-free scream three two one we're dead free I love it

yeah well done well done you know isn't it interesting way to go you guys we're so proud of y'all we got a copy of Chris Hogan's book for you you probably already got one

Everyday Millionaires that's the next stage in your story the next chapter in your story, the next chapter in your story. Isn't it interesting when you have that moment? Maybe you're about to have one right now. Maybe you were listening to their story and you went, you know what? I do have control over my destiny. I can make decisions differently.

I can decide to even undo some of the stupid things I have done. I can sell the truck. I can move. I can take a different job. I get to control the controllables. You have that dignity as a human. You have that right as a human you get to choose to control the vast majority of what happens in your life now there's some things that happen to us and sometimes there's mean or nasty people and sometimes there's things you don't see coming but those things we we can't control those but if you'll just control the controllables, just control the decisions, you have the dignity to decide about the rest of your life. It's like he had that water heater moment.

That's a great picture. And we all had that moment where we're like standing in the cold, something's broken, and you go, I've had it. I've had it. I'm changing this. That's what Jamie and Macy did. Proud of you guys. This is the Dave Ramsey Show. We'll be right back. David is in Florida.

Welcome to the Dave Ramsey Show, David. Hey, Dave. How are you doing? Better than I deserve, man. How can I help? Hey, so I wanted to call and ask you about your advice when it comes to approaching our student loan payments right now for my wife and I. And we're doing baby step number two, which is snowballing our debt. And it's working well the months that we're able to do it, but there's some

months where some expenses will come up to the point where our minimum payments for student loans can be a little backbreaking. And I know it's never a good idea to go into more debt to help pay them off or anything. I wanted to ask your advice on how to best go about these loans to where we aren't losing out every month on our minimum payment and not being able to snowball the rest. What's your minimum payment? It's about $400. What's your household income? Combined is about $70,000. Okay, and your total student loan debt balance is all together is what? A little over $30,000. Okay.

And your interest rate is what on those loans? Average of 4.6%. Okay. The only thing you would gain by refinancing would be recasting the loans and making you stay in debt longer. Right. And you probably would go up in interest rate to do that because you have a fabulous interest rate. Yeah, yeah, it's pretty good.

The only reason I tell people to refinance is to get a lower interest rate or to get to a fixed rate if they have a variable, and that's only on student loans. And so it sounds like more than anything else we've just got some budget items. How much do you owe on your cars? We have one car and it's paid off. Okay. And how much is your house payment or your rent? $1,250 a month.

And that's really good for the area we're in. That was the cheapest we could find. And what area are you in? We're in Fort Lauderdale, Florida. Okay. And how much is coming out of your check for 401Ks? At the moment, none. And how much of a tax refund did you get last year?

We were unemployed part of the year, so it was lower. I think it was about $2,200. Mm-hmm. Okay. Because with a $1,250 rent and no car payment and only a $400 student loan making $70,000, you shouldn't be that tight. We have a couple other credit cards that we're paying as well. What's the balances on those?

Combined for about $6,500, maybe a little less, and that's across about five or six different cards. Okay, but somebody making $70,000 a year is typically paying off $36,500 in debt in two years. That's not barely making a $400 payment. That's like $1,500 a month going on these debts. So I don't know where your money's going. You're doing the written budget, I assume? Yes, we are.

I can't tell where your money's going because there should be money left in this equation it's not going to 401k you're not got too much coming out for taxes you you've not got a bunch of other payments you've only got thirty six thousand five hundred dollars in debt and student loans and credit cards and you have a fairly reasonable house payment it's not great or house rent it's not great on your income, but it's not horrible. It's not killing you. And so when I do your budget, I don't know where all your money's going. Yeah.

To be honest, I feel like it does go to random expenses that pop up. Like last month, we accidentally rear-ended our neighbor's car while backing up, and that set us back a bit. And, you know, stuff like that, having to fix certain things around the apartment. Well, that's not really our bill. That's the landlord's. But different things like medical bills and stuff like that that are coming up, it can be a little hard when also paying the student loan bill,

especially with insurances that we're paying right now. What I'm telling you, though, is that people living a normal life, doing their debt-free screams on this show, and that we do coaching with, with $1,000 or $1,200 rent, making $70,000 a year, are paying off the amount of debt that you have in two years. And $36,000 divided by two is 1,800, and that's $1,500 a month, and you're struggling with a $400 payment.

So that tells me we have a $1,000 swing in your budget that I can't find. That's what I'm telling you. Other people are doing what you're doing so much better than you're doing it, and that's what I was trying to help you with. I don't know where it's going. I think you need to get on the every dollar budget, and you and your wife need to stay out of restaurants, and you don't need to be talking about a vacation,

and there's no luxuries in this budget. It's scorched earth. And no, refinancing student loans is not your problem. You're going to go up in interest rate and stay in debt longer, and you will have addressed the symptom, not the the problem is we can't find a thousand dollars in your budget right now that's lost and i want you to get in there and find it to scorch earth your budget meaning no life you have no life till you clean this mess up that's what i mean by scorched earth joy is with us in south carolina hi joy Joy. How are you? Hi, sir.

Nice to talk to you. You too. How can I help? I need to know whether or not to go ahead and pay off my house. I have the money to do so, but it's all the money I have. Ouch. How much do you owe on your house? $110,000.

And you have $110,000 only? Well, I have $115,000 plus my $15,000 emergency fund and no debt other than the house. How old are you? 64. Are you retired? And I'm retired. You're retired. And what do you live on? Pension, retirement, military retirement, VA, Social Security. What's all that total up to? About $4,300 a month. Thank you for your service. Oh, thank you. And you're single?

Yes, sir. Okay. All right, so you're not pulling any money off of the $110,000 investment, are you? No. Okay. So really, how much is your house payment? $1,200 a month. Okay. But I'm paying $2,000 a month.

I've actually gotten a year ahead. I bought it two years ago. Okay, let's pretend for a second. Let's pretend you didn't have a house payment, and you put $2,000 a month aside in savings. Okay? Right. In one year, you'd have $24,000. In two years, you'd have $50,000.

Right. In three years, $75,000. And in four years have $24,000. In two years, you'd have $50,000. In three years, $75,000. And in four years, $100,000. And you'd be 69, and all through that time, you would have had a paid-for house. I'd rather do that than what you're doing. Well, I agree. But, again, I didn't know at the time. This was three years ago, two and a half years ago. i didn't know at the time this was three years ago two and a half years ago i didn't know well i'm just saying you got two choices today choice number one is do what you're

doing today and that's two thousand dollars a month and you'll be done in about four years or we can put be debt free today and rebuild the $110,000 in four years. Right, and that's what I thought because I checked with my tax lady, and she looked at the cost basis, something or the other, and she says the tax implications are minimal because my investments are not very good. The tax implications, yeah, yeah, because you're not going to – Yes, I would pay off your house. Okay.

And the reason I would do it – I don't like using up almost your last nickel to do it. I'm with you on that. But the reason I would do it is you're already proving that you have the discipline to put $2,000 a month aside, and it'll be even easier when you don't have a house payment. And you'll rebuild this because that's who you are, Joy, from South Carolina. That's just the kind of person you are. Very well done. Very well done.

Wow. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer, and a phone screener. I am Dave Ramsey, your host. And we'll be back. 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 Nashville and tell Dave your story.