The Ramsey Show - App - Loans and Beer Pong Are Not a Good College Plan (Hour 3)

Episode Date: January 30, 2019

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🎵 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. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Sally is with us in Minneapolis. Hi, Sally. How are you?

Hi, Dave. I'm good. How are you? Better than I deserve. What's up? So I have a question for you. My husband and I are in our mid-20s. We've completed Baby Steps 1 through 3, paying off $82,000.

Way to go. And we're in Steps 4 through 6. Thank you. And our goal, we want to keep increasing our income to pay off our house faster. Super. So at work this week, we just completed our reviews and raises, and I found proof that I am being paid less than my male counterparts in the same position, and we both received the same rating on our performance evaluation. My husband and I want to start a family in the next couple years, so I don't want to leave because I'm eligible for FMLA, but is there anything I can do?

I feel like if I bring it up, I might be on a short list to get let go. How do I navigate this? So the corporate culture is if you accept this level of sexism and ridiculous treatment that you're going to be let go. If you accept it, you can just don't rock the boat, you're okay. But if you come in and tactfully, not belligerently, bring up the question, you feel like the corporate culture is very threatening. Yeah, so I saw the information. Probably I wasn't supposed to,

but it's proof that I'm being paid less for the same role and the same performance. What does probably I wasn't supposed to mean? You were snooping around in something you weren't supposed to be in? No. Or it was left on your desk accidentally? Yeah, it was left out by my manager when he was showing me mine

okay then that's innocent you weren't being conniving or manipulative and so um well i you know here's the thing um um i i don't think i could work there if you can't sit down and ask the question calmly. If you're unable to do that, you need to look for a job. You really do. Because this is not right. Forget all the laws and forget a feminist movement it's a simple thing of you're doing the same work as someone else man or woman and got the same rating and um you're due an explanation

as to why you didn't get the same pay change that's a fair thing okay let's say it was three ladies in the area and and not not you know it wasn't male female right and it was and it was and you looked down and you went well i mean i got the exact same rating as these other two chicks and i didn't get nothing you know that's just wrong i would want to know that and so i think maybe that's the way to couch the question and and not make it sound like some kind of raving feminist thing it's just a basic fair human fairness thing right and it's um because it's not right i agree with you um and if that was happening inside of our organization i would have a fit uh if if it you know now it if there

if there are other factors that go into deciding a raise other than just this performance review, then that's something you'd want to learn about. I at least want to know the reasoning, if it's valid, that we're there. So who can you talk to in your leadership team very calmly and say, I accidentally saw this. My manager left it right in front of me when we were doing this. I wasn't snooping in filing cabinets. I'm not trying to stir up trouble. But if the roles were reversed and someone did this to you, regardless male or female, and the people in your department, male or female, were making the same review that you

were making and you didn't get the same pay and didn't get the same raise as them, you would want to know why, wouldn't you? A normal, reasonable human would. And if you can't ask a leader in your organization that question very calmly and not get on a short list to get fired, you do need to get out of there. Thanks, Dave. I really appreciate your advice. Can you?

Yeah, I think so. I mean, I really like my manager and respect him, so I think it's worth having an adult, respectful conversation with him about it. Thank you. I would start with that. I would start with that and go, hey, listen, this is awkward as crud, and I really don't want to have this conversation, but I would be up at night and feel like crap if I didn't have it, and I respect you so much, and I like you,

and I just think I can talk to you about this without stirring up trouble because I'm not trying to stir up trouble. I just need some help understanding. And maybe couch it that way. If somebody came into my office and said that versus, I demand to be paid the same, I'll just fire somebody's butt that starts that stuff, okay? And I'll deal with the repercussions. I don't do with people demanding stuff when I own the place.

But if you come in respectfully and you go, hey, I really respect your leadership. I really like you as a person. I accidentally saw this, and I need some help. I'm struggling with this. And it's not a male. And I really would take the female part of it off. It's not a male-female thing. It's just the same people in my same area doing my same work are making more than me with the same reviews.

I don't understand that I do something wrong. And if you couch it that way, they might be really, really red-faced and embarrassed and go, oh, my gosh, we've got to correct this. But the threatening thing or the belligerent thing has got to be way off the table. You didn't approach me with it that way, so I don't think you will, Sally. But I think you've got a good guy there that you can at least ask the table. You didn't approach me with it that way, so I don't think you will, Sally. But I think you got a good guy there that you can at least ask the question. And if you do it that

way and you still get on a short list of some kind to be fired, then you do need to it's okay. You took the right chance. You took the right risk because that's not a place you want to work. If they straight up just because somebody's female don't pay them, that's just not a place. If they straight up, that's their policy that's just not a place if they straight up that's

their policy that's not written down but they actually do it on purpose you don't want work there long term or short term for that matter you know because i got ladies in this place that outperform the guys and they get paid more you know it ain't anything to do with you know i don't care you know what color you are i don't care what sex you are. All I care is you get crap done, you know, and you get paid based on that. We don't pay you based on the other stuff. We don't pay you. You know, one guy said, I got a lot of degrees.

And I'm like, yeah, well, you know, your raise here is effective when you are, Bubba. So I don't care about your degrees, you know. So it's that kind of stuff. And that's how most good business people think. But not everybody's good. Sometimes people just straight up are racist and say are straight up sexist, and you just don't want to hang out

with those kind of folk. But don't make it a belligerent political issue either. You're not going to gain ground doing that. I would just leave all that off the table and just say if it was a bunch of ladies, I'd still feel exactly the same way. Why am I not getting if I'm not as good? Did I do something wrong? Teach me. Lead me.

And I think the guy's going to be embarrassed. I bet he corrects it. I bet they correct it. I bet it scares the crap out of them. It should. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance?

Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way.

Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. Thank you for joining us, America. We're glad you're with us. Jeremy is in Chicago. Hi, Jeremy. How are you?

Hey, Dave. How's it going? Better than I deserve. How can I help? Well, the last time we spoke was on August 10th of last year. I told you that you were my number one hero. I come to you again today with another question. Now, I promise you nothing's changed, okay?

You're still my hero. But one thing is I have 17, I have a little short of 18,000 in my account. I have about 17,000 spread across the Good Growth Stock Mutual Funds and Roth IRAs. But I went on my community college's website, and I found out that two years at community college here, plus an in-school state tuition is I think 31,000 or somewhere near that 32. Um, I was just, I was just wondering what your thoughts are on, uh, using the money that are in my Roth IRA, uh, traditional IRA and all that towards it.

I know that I can only invest what, um, I put in myself, what I've contributed. Um, but you know, for the last year and a half, I've been, you know, savings rate has been like $1,000 per month towards my account. But I was just wondering what you were thinking on that. Okay. How old are you? I am 20 years old. Okay.

And you're working full time? Correct. And you're getting ready to start school? Yeah. So I went to school for the first two semesters paying out of pocket, but I was only coming out by the skin of my teeth. I just figured if I stayed away from school for a little while and then I saved up my money so I can just afford to go to college

without having to worry about how I'm going to afford next semester. It'll graduate debt-free and all that. That's my goal. Okay. So when do you plan to start back? This time next year, hopefully. And by that time, if we don't include interest on the accounts, I should have about 32 or something in my accounts,

but it might save up a little bit more. And that's what you think it'll take you to complete yeah um i mean i'm going to meet with my uh my advisor my schooling advisor uh upcoming on the 8th of february so i'm going to go speak to him and see what's up and what what that'll cost me okay all right but your your estimate is it takes you 30 something thousand dollars to finish your remaining two years, correct? So, yeah. So it'll be two years at ECC plus two years at in-state tuition to get my bachelor's. Oh, I thought you'd already gone to school.

So, yeah, I did for two semesters, but I've had a change in what I wanted to do. I went there originally for computer science, which is a great degree. I mean, total diversification throughout the market. Okay, so you're starting over. Yeah, that's what I was going to say. And you're going to study what? I wanted to go into finance. I wanted to get a bachelor's in finance.

Okay. And you're going to do two years at community college and then two years at state school and finish. Correct. That's your plan, okay. And it takes you $32,000 to go through the community college. It says that for the ECC plus the, or sorry, my community college plus the in-school state tuition.

Oh, so that's all four years you can do that. Yeah. Okay, I'm interested. Okay, all right. And how much of the money of the $32,000 that you're going to have at this time next year is in your Roth IRA? If we don't include interest, I'm saving $1,000 per month. And the only way that I can, by the way...

No, you shouldn't be putting $1,000 a month in your Roth IRA. If you're not adding... How much is in your Roth IRA now? I maxed out last year, but right now my Roth IRA is $10,147. Okay, so of the 30, 10 is in the Roth. Yeah, right now. Give or take, okay. But you've got four years that you've got to walk through this whole process. So I would stop adding to Roth.

I would stop doing any long-term investing, and I would just start piling up cash to get through school as high as you can pile it. And, no, I would not cash out your Roth unless you got down to the very last semester and you can't get out without borrowing money. Then I would. But I think you can make it through without touching that roth you got you you know you're going to have 20 of 20 something thousand of the 30 something thousand that you need but you've also got four years to come up with that other 10 and that won't kill you okay yeah because the last 10 is what we're talking about not the first

10 the first the first 20 something you've got already not counting roth don't add anything else to the roth save like a crazy person like you said you're piling up the cash piling up the cash piling up the cash and you can work some when you're in school it won't hurt you you can do it you can get through four years of school and four years while working i did most people did and so um you know you're gonna have to do that anyway because all we're talking about here's the tuition because you've got to cover uh expenses uh living expenses and other things so you're on track man you're gonna do it here's the beautiful thing about your situation you're actually planning this you're actually going to do it 99 people go to college just go borrow money here i am beer pong you know and

you're just you actually actually have a plan you're actually doing this on purpose that's going to make you more employable by the way than the degree is but we'll see how that works out 10 years from now colby is with us in phoenix arizona hi colby how are you good sir how are you better than i deserve how can i help uh my wife and i are currently in uh baby steps four five and six um my truck just died and i'm wondering if it's an emergency fund situation or if i should kind of go back to like a 3b step and pile up money and buy something. Yeah. To that extent.

So Define died for me. What happened? Well, it's got 200-plus thousand miles on it, and it's kind of been a hand-me-down truck. And you weren't saving up to replace it? Not to this point, no. We just got out of Baby Step 3 in December. So January was our first 4, 5, and 6 experience. So you started up your 401K and then the truck dies?

Yes, sir. Oh, my goodness. We do have $60,000 in our 401K. That's good. Kind of started that years back. Gotcha. What's your household income? $78,000 gross.

Okay. And what do you think you're going to need to buy a truck? My wife has a car, so I think I could probably go, you know, six months without having to ask. So the only question then is if you don't stop your 401K, can you have enough in six months just squeezing it out of the budget to get you a little truck? Or if you need to stop the 401K for six months and save up to buy the truck, then I would. Okay. I just wanted to make sure that we were thinking about that correct, kind of backtracking a little bit.

How much is in your emergency fund? Right now it's $14, a little over $14. What are you talking about spending on a truck? I would think $10 to $12 would probably be just fine. Okay. All right. Well, having a car is a bit of an emergency, so I'm tempted to use that. But I hate to spend that much out of 14. I might spend like eight out of 14 and then definitely stop four, five, and six

and go replenish your emergency fund. Yeah, I probably would. I'd go buy an $8,000 truck today out of your emergency fund. Yeah, I probably would. I'd go buy an $8,000 truck today out of your emergency fund and then stop everything, rebuild your emergency fund, and then restart again. Okay, that sounds great. Hey, Colby, thanks for the call, man. I appreciate you joining us. This is the Dave Ramsey Show.

It's common sense for your dollars and cents, but sometimes we just need a place where we can talk things out, and that's what this is. We're here to talk it out with you and show you what to do and how to do it and so forth. Jenny's on Facebook. Dave, what do you think of the new Starbucks Rewards Visa credit card? That's funny, Jenny. I don't care who you are. This is The Dave Ramsey Show. Are high health care costs getting you down?

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Now, a lot of the calls that I take here, and honestly, those people that go through Financial Peace University, the correlating factor, the data point that we see tied to success the most. In other words, what do you need to do to be successful with money? The thing we find is we find, okay, so-and-so is successful, so-and-so is not. So-and-so is successful, so-and-so is not. What's the difference in the ones that are successful with money, those that aren't? One of the big things we find is if we can get people to doing a written game plan, a budget, a goal, a blueprint for your money on purpose, on paper before

the month begins, those are the ones that win with money. A zero-based budget. A zero-based budget is each month before the month begins, every dollar has an assignment. Income minus out goes zero. If every dollar has an assignment each month unique to that month, and you and your spouse, if you're married, agree to it, that is the highest, that is the one thing you can do that gives us the greatest indicator you're going to get out of debt and be in a position to build wealth.

People that don't tell their money what to do are always shocked that it leaves. You have to tell it what to do. A budget is people telling their money what to do instead of wondering where it went, John Maxwell says. Zig Ziglar used to say, if you aim at nothing, you'll hit it every time. And if you aim at nothing with your money, you will hit nothing every time. And you'll be making, I'll make $160,000, I have nothing. I can't figure out where it all goes.

It's because you have no idea where it went. You didn't tell it where to go. I don't care if you make $16,000 or $160,000. You've got to tell it where to go. And every time you tell it where to go, I don't care if you make $16,000 or $160,000. You've got to tell it where to go. And every time you tell it where to go, you will feel like you've got to raise. We've been doing that for 30 years. So I guess it was about five years ago we're sitting around going, you know what? All the budget apps that are out there, we don't like them.

They don't do what we teach people to do. They don't do the zero-based budget. They're hard to work with. They're hard to understand. They've got 9 million ads in them trying to sell you some kind of debt thing every time you open up your budget app it's trying to sell you debt credit cards or rocket mortgage or whatever right i mean you can't get through anything without getting you know hammered with an ad while trying to do your budget i mean the irony of that was not lost on us right so we're looking

at this thing going okay okay, how can we? So we started a process that took about two years and about $3 million, and we built the first launch, and now it's iterated a million times since then, of what is the world's best budgeting tool. It's called EveryDollar. We named it that because we tell you to give EveryDollar a name, and we thought we were cute when we did that, so shut up. So EveryDollar. EveryD every dollar a name. And we thought we were cute when we did that, so shut up. So every dollar.

Every dollar has a name. Now over 3 million people are using every dollar. It is the most elegant, most robust budgeting tool, and it's completely free to use it. You cannot beat that, right? So get it for your iPhone. Get it for your Android or whatever. I your, you know, your Android or whatever. I mean, we've got it for everything.

It's out there. You can use it. It's completely free. If you want to tie it to your bank, they charge us a fee to do that. So we charge you a fee. That's every dollar plus. And tied to your bank means this. So let's say your debit card, you go to a restaurant and you eat a hamburger at Burgers R Us or whatever, right?

And your debit card pops up on your phone, notifies you that there's a charge that needs to be budgeted. And you look down there and it says Burgers R Us. And it's got a little circle and you put your finger on that little circle and drag that little circle up into the restaurant category on your budget. And you have just budgeted. Wow! It does not automatically do it for you. Some of them automatically do stuff, and they put stuff in the wrong categories, and it makes you lazy, and you're not tracking your money.

You need to track your own money. I don't want a computer tracking it for you. You don't feel money if you don't watch it move. They call it currency because it has a current to it. It's like a river has a current. It's flowing from something to something, and you need to be involved as to how it gets there. So we're very intentional to keep you involved in the way this thing is built out so that you manage your behaviors and your relationships and your family to hit your goals.

Very carefully done done there's no accidents with this i mean we've spent too that got much money on it to just kind of hope it works it completely works and it gets better every week these guys i got a whole team up here that does nothing but sit up here and rewrite stuff and iterate stuff and you know fix little bugs and make it a little better here and a little better there and change this little thing and it's not only easy to use it's can build your budget in about 10 minutes. I'm so proud of this team. They have done such a good job.

I mean, when you start talking about several million people doing their budget on this thing, that means we did it. And the only problem is there's only, you know, there's less than 5 million and there needs to be 50 million on it. So where's the rest of you? Come on. Everydollar.com. Or get EveryDollar for your phone.

And if you want to hook to your bank, we charge you a little bit, but it ain't going to kill you. And we're making our money back on it. It works. But you can set it up and it works. But you got to use it like anything else. I don't want you doing stuff. I don't want to put your money on autopilot.

When people put money on autopilot, they end up broke. You don't put money on autopilot. You manage your money. You keep your fingers on your money. You make it behave. You crack the whip on it. Samantha is in Lansing, Michigan. Hi, Samantha.

How are you? I'm good, thanks. How are you? I'm good. Thanks. Good. How can I help? My husband and I are on baby step three right now, and we have a small business. It's a greenhouse forest garden center, and within the next two years, two of our greenhouses are going to need to be replaced or have major repairs. And we don't even know where to start with how to pay for that. We don't make enough to pay for it outright in the next two years. Then you can't do it.

We keep going. You got to figure out something else. Listen, around here we run this business debt free and so we have the money we do it we don't have the money we don't do it we sit at the old desk until we can afford a new desk we use the old computer until we can afford a new computer so what's a greenhouse cost well probably 70 000 each we only, the two that need replacing would be replaced with one. They're, like, from the 30s, and so. Okay.

So they made it from 1930 to now. Why are they failing suddenly in the next two years? The actual, like, the brick part of the structure is not, but the, like, the braces that hold up the tarp are starting to rot out because it used to be a glass house, and it's been converted into the tarps, and the wooden pieces are starting to rot. Okay, so what does your business make? What kind of income does your business make, net profit, taxable income in a year. I mean, I know that it's like $300,000 runs through it in like sales, but I think like at the end of the year our like adjusted income was like $50,000. Okay.

But I don't know. I don't really know. Yeah, that's your net profit. That's your taxable income on your tax return is what you're saying. Yes. Yeah, that's your profit. That's your taxable income on your tax return is what you're saying. Yes. Yeah, that's your profit. That's what you made. Okay.

Okay. And so what I've got to do in this is I've got to say, all right, how am I going to patch this until I can save to replace it? Or what other options have I got? Because here's the thing. You don't make enough money to support a debt payment on a greenhouse right so it's not an option it's it's probably if we try to patch it it's probably five or ten thousand and that'll get us through another five years there you go and during that time you save up and pay cash for 70 that'd be 14 000 a year you got to save if you're going to do it in five years

not counting the 10 that it takes to repair it but that's how we do stuff around here i started this on a card table in my living room i've never borrowed a dime there's 700 people here now in five different buildings we um so then we you say we should build our emergency fund, though, before we would do that, though, right? Oh, yeah, definitely. Definitely. Okay. But what you've got to do is just begin to think differently. Because if you go borrow $70,000 on a greenhouse, you're going to be broke.

You don't make enough money to support that debt. And so, no. That's not even an option. So once you take that off the table, you go, okay, how are we going to patch this thing until we can save the money? What can we do to make some more money so we can do it faster? And you start going, what has to be true? What have I got to do that I'm not doing now to get me to my goal of getting this thing redone or replaced, one of the two? Or is there a different way to do it that's less than 70? Maybe it's 35. Maybe you're looking at Cadillac and you need to be looking at a Chevrolet. Or is there a different way to do it that's less than 70? Maybe it's 35.

Maybe you're looking at Cadillac and you need to be looking at a Chevrolet. This is the Dave, Matthew 5.16 In the same way, let your light shine before others, so that they may see your good works, and give glory to your Father who is in heaven. Jackie Robinson said, Life is not important except in the impact it has on other lives. Thanks for joining us, America. We're glad you're here.

This is the Dave Ramsey Show, where we give you the same financial advice your grandmother would, only we keep our teeth in. It's called common sense. Josue is with us in Delaware. Hi, Josue. How are you? Hi, Dave. Doing good. Good. How can I help?

I had a question. My employer provides between a 401k direct contribution and an associate sharing program. I get shares from the company. It's a total of 15%. So I'm actually not quite on the baby step of the 15% because I had to use some of my savings for an emergency. But anyway, the question for you is, does that count for that 15% into retirement, or should I be doing 50% on top of that? So this is direct contribution I get from them without requiring any match from me.

So it's free money. Wonderful. That's fabulous. Well, I mean, you can do whatever you want to do. Obviously, the more money you save, the more you're going to have. Right. And so you could say, I want more money, so I'm going to do 15% myself, and all this other stuff is gravy on the biscuit, you know?

There's nothing wrong with that. Or you can say, I'm trying to reach over and get my kids' college fund funded, and I'm trying to reach over and get my house paid off, and so I'm going to count some of this, and I'm still going to do some myself. I would recommend you do something yourself. Okay. And so, you know, I would do 7% or more yourself. I'm going to cut it about in half, okay?

I think you're going to be okay. I mean, if you stay with this job, and even if not, if you roll this over and then started doing 15% yourself, you'll be okay. You're going to be fine. So let's talk about these other goals. Kids in college or what? Yeah, I've got five kids, so it's a big hurdle. Yeah, and how old are they?

From nine all the way to a one-year-old. Okay, and your household income? I'm at around $120,000. Good. $120,000 a year. Very cool. Okay. Yeah, so I'm probably going to back this down and get a pretty serious start on the college thing.

Right. Get something going for each kid. The older the kid, the more you will allocate to them monthly. And so open five 529s or five ESAs. Sit down with your SmartVestor Pro and do some calculations because it's going to take more for the nine-year-old to have the same amount as the one-year-old because of compound interest, right? So, you know, calculate some of that out. You might not fully fund college at this point, but let's get a pretty healthy start. And maybe I'm probably going to do 7% if I'm you of your own money into retirement.

And then above that, I'm going to start getting really on this college thing pretty hard because you've got a bunch of kids, nine years old. You're going to blink. You're going to have an 18-year-old. And then the house, baby, step six is until I get this college thing really comfortable, I kind of got it in my sights that we're going to get it, you know. Then I'm going to start putting money on the house that was my question the priority between the investing for retirement versus paying off the house which i kind of want to do even more so as well so you'll

get there that's been my balance is of not putting any additional because i was paying off extra on the house already yeah but you're not doing enough for college right i'm more concerned about college because you're going to get to the house and uh if you don't deal with this college it's going to come at you with five kids you're going to feel like you walked out into a traffic jam man you'll feel like you walked out in the middle of an interstate so no i i i wouldn't stop i wouldn't do nothing i i just there's something about the touchstone of touching all three bases that's good. It's just how hard we touch all three bases.

So if I'm in your shoes, I want you to get the house paid off, too. Believe me. This is Dave Ramsey you're talking to. But I'm going to put that as a lower priority today. Let's do a few years of the rhythm of a small amount you put into retirement, 5%, 7%, something like that. Let's get pretty strong on the college. And if we can find some extra, a bonus comes in, a little inheritance comes in,

or we sell a boat or something, whatever happens, you throw that at the house. Okay? You throw that at the house, okay? But then reach over, and you'll reach a point that the college is, you know, is almost done either because you've saved enough or because you've worked your way through them getting through school, and then you'll just reach over, and the house will almost be knocked out anyway as a matter of nature. And so you're going to get there. You're going to be fine because you're focusing on all three.

You're working the baby steps properly. You're asking these questions correctly as far as I'm concerned. And so I think with your intentionality and your income and this wonderful benefit that you have, thank goodness, then you're going to be okay all the way around. You're going to get to do all three. You're going to have a paid four house, a lot of money in retirement, and all the kids are going to go to college. You've just got to think it through as to how to let the ebb and flow of this money across baby step four, five, six. Which one? So right now I'm saying I'm going to hit five a little heavier, fairly light on retirement,

and if there's anything left after the wave goes over, I'm going to throw it on over to the house. And then once I kind of get five under control in my mind, get a little catch-up going there, and it looks like we're going to be okay, nine-year-old's going to go to school with no student loan debt, then I'm going to reach over and might get a little more serious on the house at that point. So, hey, good question, man. Thank you for joining us. That changes if you change jobs and lose this benefit. Amber is with us.

Amber is in Phoenix. Hi, Amber. How are you? Hey, Dave. I'm good. How are you? Better than I deserve. What's up?

Hey, I have a question for you. I think I know how you'll answer it, but I want to see if maybe it does differ a little bit. Every year I get a bonus that nets about $20,000. Wonderful. And right now I have a car pay or a car payoff amount of $7,200 and a signature loan at $9,500. Total monthly payments on those two is $6,7250 and my husband's out of work, so money's kind of tight at home. And if I were to pay these two off, that frees up that $675, but they're not my smallest debts. Okay. So what are your smallest debts? I've got some credit card loans.

I mean, one is as low as $95, and they go up to $2,200. But the minimum monthly repayment on those is $264 a month. But the bigger portion of the $672 is the car? Of the $672? By far, the bigger portion is the car. Well, yeah. And with $20,000, you could pay off all your little ones in the car. And then leave the signature loan at the $372,000?

Yep. Work your debt snowball. Perfect. Okay. Cool. And then I have another question in the same sequence because I have the bonus coming in. And I think our HVAC may fail this summer here in Arizona. So can I keep a little extra for that, knowing that that expense is going to come

or has a strong potential to come? Okay. I probably would. Yeah. Because, I mean, air conditioning is an option. Some places it's not in Arizona. Right. It's not in Phoenix.zona right it's not in phoenix it's 110 110 120 degrees it's

a dry heat no it's like sticking your head in an oven okay so shut up it's hot yeah you need air conditioning okay perfect okay hey thanks for the call open phones a triple i mean in the south in the you know southeast here you know you can you can whine and get you a window fan, right, and make it through. But, I mean, that's stinking bake your brains out over there, man. It's unbelievable. It's big time, big time. Daryl is on Facebook. Can you close a credit card account without paying it off first, and is there a benefit to closing the card?

You can close it to further charges, but the account is not closed until the balance is paid. And you can certainly chop it up today. And I would recommend that. That's called plastic surgery or sometimes known around here as a plasectomy. There you go. And he says, should a six-month emergency fund be based on six months of essential living or normal living? Normal living. Reasonable normal living, not super spending.

Thanks to James Childs and Kelly Daniel in the booth. They make this show happen. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. show one of the top five most downloaded podcasts last year to get your daily dose of motivation and inspiration subscribe today