The Ramsey Show - App - Make Today the Tipping Point in Your Family Tree (Hour 3)

Episode Date: April 4, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Ashley is with us in Kansas City.

Hi, Ashley. How are you? I'm great, Dave. Thanks for taking my call. Sure. How can I help? So my husband and I, about six years ago, bought a home, and it was only about $75,000 and we invested in it for about $46,000. We thought we'd stay here forever, but we decided recently that that wasn't our plan

and we would like to purchase a new home. And we had a realtor come out and he told us we could sell it for around $190 or $195 195 um if we did that we would be able to pay off our remaining debt we've got about 13 000 in debt and then put a pretty hefty down payment down so i just wanted to know if the best course of action would be to wait and save that down payment or to go ahead and use the equity in my home as that purchase payment. Wait and save the down payment. And keep the house if you save the down payment. Right. Is that your idea?

Right. Stay in the home because it's a low payment and just save up our money. Yeah. If you cannot pay cash for your next purchase, you should sell it. And you can't. You can't. So you should sell it. Because I would not tell you to borrow extra on your primary residence to buy a rental. No, no, no.

I'm sorry. We want to move out of this house for a private. I understand. I'm doing it backwards, though. Let's say you were already living in your new house, okay, and it was paid for in the new house. It was completely paid off. And you call me up and say, hey, I want to buy a rental. I want to borrow on my residence.

I would say no. By not selling this one and putting the down payment on the new one, it's as if you borrowed money on the new one to keep this one. Do you follow me? No, not really. Okay. All right. You would have to borrow more money if you don't sell this, right?

Well, the absolute... If you don't sell this house and use the money as a down payment, you'll have to borrow more money on the new house, right? Yes. Okay. So you have effectively borrowed money in order to keep this house. It's like you borrowed money to buy a rental is the way the financials work out. So bottom line is I would sell the house, and i would use all of it to become debt free

and all of it as a down payment on the next one put as big a juicy and put the put the next one on 15 year fixed rate the payment should be no more than a fourth of your take-home pay and then let's get it paid off as fast as you can get it paid off and you're 100 debt free with your emergency funds still in place of three to six months of expenses when you move into the new house. The only way that all occurs is you sell this house. You're not in a position yet to buy rentals because we teach people not to buy rentals or own rentals with debt. We teach you to avoid debt. That part's pretty consistent because it's the shortest method, the shortest direction to wealth.

Not having payments is the shortest direction to wealth. Alexandra is with us in San Francisco. Hi, Alexandra. How are you? Blessed beyond belief. Good. How can I help? Yes, my husband and me just started your steps, and we are on step two, and we're kind of going back and forth for our savings. We have three CDs, and we're trying to figure out if, as they mature,

if we should just pull them out and put it towards our debt or just leave it for our safety net. Well, what we teach folks in our program in the total money makeover or if you go through financial peace university is to clean out all savings that is not retirement and pay off debt and so i wouldn't even wait on these to mature i would just cash them out today the penalty for doing so is just tiny because they're not paying you anything to start with okay yeah they pay you nothing because they're not paying you anything to start with. Okay.

Yeah, they pay you nothing, and they're going to keep half of nothing for cashing it out early. Well, that makes sense. Yeah. The interest rate on your debt is higher than the penalty is going to be for cashing it out early. And it's certainly a lot higher than what they're paying you. So I would, you know, I'll just be, how much is in the CDs? About $11,000. Oh, okay. All right. And how much debt much is in the CDs? About $11,000. Oh, okay.

All right. And how much debt have you got? Yeah, and 63. Perfect. It's just our two cars. Okay, cool. And what's your household income? About 170 was last year, 170.

Very cool. So we're going to throw 11 at it, and we've got 52 left. And how fast are you going to pay that off, making 170? Well, with all our math, we're hoping within a year. Well, I would hope. Yeah. 170 minus 53 should give you enough to live on. Yes.

I'm a stay-at-home mom with two special needs kids, and I'm on disability through the VA and Social Security. And my husband is the sole provider and we sat down and we bought your baby bundle app last week when we got back from vacation. And, um, we sat down and did our budget and we're realizing we should have $1,400 left in our account after the end of March, but we realized how frivolous we spend. So we started it this week when all our April payments are coming in, and we plan on sticking

to it. Good for you. Good for you. That budget's kind of mean. It yells at you. Yeah, it is. It was embarrassing. It's like, oh my gosh, we spend that much money on eating out and stuff.

Yeah. And we could be out of debt so much faster. Yeah, you're going to be out of debt in under a year, and then you'll build your emergency fund and just go right up those baby steps in the total money makeover. You're going to do just fine. I'm proud of you. Well done.

Thank you. You got this. Luke is in Kansas City. Hey, Luke, how are you? I'm fangirling right now, Dave. How are you? That's a little weird. Okay, how can I help?

Well, my wife and I, we blew through Baby Step 2 last year in just under 12 months. And with a big blessing we just got last week we will now be done with baby step three next month yay yeah so we need you to settle a little debate between us whether or not we should hold off the retirement funding a little bit longer or if we should go right through the baby steps. Okay. Well, sometimes folks do a baby step 3B. You've probably heard me talk about that.

And so either way is okay. Let's talk it through for a second. 3B is where after your emergency fund is done and baby step 3, you delay starting retirement, which is what you're asking about, in order to save up a juicy down payment for a house, right? Yes, and we do already own a home, but it still has a mortgage on it. Okay, so why are we saving up a down? You're moving? No, what our debate is is whether we should just stay without putting money in retirement and use all of our extra funds to pay our mortgage off quicker.

Oh, okay. Whoever said that was the wrong one. No, you start putting 15% of your income into Baby Step 4, and then you start Kids College Fund, if that's necessary, in 5. Do something towards that, and then whatever past that you've got, you throw that at the house. But, no, I would not pay off the house without starting your baby step four. I misunderstood your question.

I apologize early. But, yeah, no, that's a, you know, unless you owe $20,000 on the house being paid off in four months or something. But most people, it's going to take them several years to pay off their home. And I want you to get started on retirement. I want you to be a millionaire. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month.

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Enter promo code SAVEDAVE and receive 50% off your first month. That's puretalkusa.com. Lonnie is in Oahu, Hawaii. Hey, Lonnie, how are you? I am great, Dave. Thank you so much for taking my call. Sure. What's up?

Okay, so this is a tax question. So my husband and I started doing our taxes online, and it turned out that we showed that we are going to have to owe federal and state about $1,400 in federal, $700 in state. And we do not have the funds at all to be able to pay those, what we owe. And so just trying to get some suggestion on what you think we should do, how we should pay it. We're on baby step number one only. So we looked at the options of either doing the payment plan, but that, of course, comes with fees and interest and penalties for trying to extend. What is your household income? So it's only my husband working.

So our household income is about $38,000. Okay. You're at home with the kids or what? Yes, I'm at home with our young. Yeah, we just have one. And he's working 40 hours? Yep. Okay.

All right. And, okay, the first thing is this. When you cannot pay your taxes, you file your tax return anyway because there's also a failure to file penalty that is in addition to the failure to pay penalty. It doesn't keep you from having a penalty. It just lowers the amount of penalty by filing on time. So on or before April 15th, I would wait until right at April 15th to file.

Between now and then, I'm going to sell everything in sight. on or before April 15th. I would wait until right at April 15th to file. Okay. Between now and then, I'm going to sell everything in sight. We need a big garage sale. We need to figure out what else we can sell, what we can put on Craigslist or whatever it is, and we need to start moving some stuff out of there. The second thing we need to do is your husband needs to start doing some kind of extra work at night, delivering pizzas or whatever to make some extra money really, really, really fast.

Now, do you have your $1,000? We actually did. We had it, but then we got into we're actually traveling for my husband's work, and so we hit a hard place, and we actually had to use it so we could eat. But we're trying to work back on putting it back in there. How did you hit a hard place traveling for your husband's work? Okay, because we're living out of a hotel, and I guess our trying to eat out of a hotel, since we don't have a kitchen and trying to cook and staying on a budget, it's been kind of hard to feed three of us.

So I guess I spent more money on eating than we were. Okay, so where do you guys live normally? So we actually live on Oahu, but we're in California for three months for my husband's job. He works for the federal government. Okay. And they don't give him enough to take care of his family while he's there in addition to paying him a whole $38,000. Is he military? No, so he's a federal police officer.

Yeah, so he's civilian law enforcement. And they give him $50 a day. Okay, so he's supposed to travel without his family is the idea then. Because that's not set up to support a family, obviously. And how many children do you have? Just one, two, three. Okay. Yeah, being away to work for three months is really, really difficult from a family.

Yeah, that's the little hard part, too, is the fact that, you know, there's more I want to do, but just because we're here. I mean, we will be back on Oahu at the end of this month. So I'm planning on hitting the round running, of course, selling everything I can possibly think of. Also, my husband, I found out. Can he work security on his off-duty hours legally? He says it's a conflict of interest with his job if he works another kind of.

Well, it's not for a regular police officer they do it all the time legally but i don't know what the federal what the what what branch he's in or what they've done with him here but um so all right the point is we've got to get your income up if he's only working 40 hours he can pick up some kind of extra income doing something somewhere somehow because i want you to pay this tax bill super, super, super fast. Okay. And that way you don't even get on a payment plan. So should we stop putting money into the emergency fund

just to focus on paying off the IRS? Well, yeah, you're going to get $1,000. You're in a dadgum hotel. So, yeah, you need to get your $1,000 back. But one month of delivering pizzas on the side when he gets home, and this is paid. Okay. But he's every night. But he's got to get his income up, and you guys got to get on a written budget.

And you don't accidentally end up in a hard place. You all made the decision, and I don't know that I blame you. Being away for three months from your kid is a tough thing. I get that. But you all made the decision to move into a situation you couldn't afford when you made the decision to go to California with him. So the hard place didn't happen to you. You caused it.

And that's what you've got to do is look at that and go, we can't do that. And I can't be away from him for three months. He needs a different job. Or we've got to talk to his supervisor about, I've got to put my family up if we're going to go from him for three months. He needs a different job. Or we've got to talk to his supervisor about I've got to put my family up if we're going to go over there for three months. Or we're going to pay this price and pretend like we're a military family and he's on deployment for three months and we're going to suck it up. But you can't just wander over there and go, oh, we're broke.

Surprise, $50 a day won't feed a family. That's not a surprise in California. That's not a shock. So that's the kind of stuff you got to get your head around. And I'm not fussing at you. I'm saying one of the things that happens when people start handling money well is they decide to happen to their money instead of their money happening to them. And that's my concern with our conversation. This feels like this is all happening to you, that somehow my concern with our conversation this feels like this is all happening to you that somehow you it's not in your control and it's all in your control it's all your decisions now from this point forward you got to have that point now you may be there till the end

of the month it may be a tough month and then we start hard when we get back to oahu that'll be fine sell everything in sight take two jobs you guys go crazy and let's get these taxes paid and let's get moving and get through the rest of these debts and then begin to address his long-term income potential and your household income potential. Rose is in Los Angeles. Hey, Rose, how are you?

Hi, Dave. How are you? Better than I deserve. What's up? I have a question regarding my former boss who I became very good friends with. And one day she told me that everything she worked for will be taken away because she has an IRS debt. And so being that I am debt-free and I, you know, have 401K and debt-free in terms of credit cards, and I am also debt-free in terms of the house, and we're paying for my daughter's college with cash.

And so basically no money problems for me. So I loaned her $10,000. Oh, no. I know. But she's been paying $2,000 per paycheck. $2,000? Yes, $2,000. For how many paychecks?

Well, until it gets paid. I know. How many times has she given you $2,000? Half of it, but sometimes it gets delayed. Half of it can't be possible. $4,000. $4,000. Okay.

All right. So she still owes you three more payments of $2,000. Correct, but sometimes it gets delayed. It's not, you know, her paycheck, really. You still work for her? She's no longer my boss, but, you know, we're still good friends. But the thing is, she's very spiritual. She's very...

There's a lot of spiritual people that are stupid. Okay, she's a Christian, and whenever... There's a lot of Christians that are stupid. I's a christian and whenever christians that are stupid i'm a christian i don't i mean thank god that god doesn't you know he doesn't rule us out because we're dumb but this woman's out of control you got a mess on your hands right whenever i tell her to do your program um she says god will provide so how do i convince her so that whenever she talks about it. God provides the worms, but he doesn't toss them into the nest. The bird has to leave the nest and go get the worms. Those that don't work don't eat.

It's in the Bible. The diligent prosper is in the Bible. God provides because he gave you a brain and two hands to get your act together and clean your mess up. That's what God provided. Don't blame your stupidity on God. That's so aggravating and such a damaging witness. Oh, bless her heart. What a mess.

Bless your heart in southern is, oh, it's me. You don't want to know that. This is the Dave Ramsey Solutions, Dustin and Tricia are with us. Hey, guys, how are you? Hi, Dave. Welcome. Where are you all from? We're from Cincinnati, Ohio. Very cool. And all the way from there to here to do a debt-free screen.

Absolutely. Love it. How much have you paid off? We paid off about $80,000. Wow. How long did that take? Our goal was about a year and uh we did it in about 10 months way to go and your range of income during that time about 150 to 160 000 total pretty cool you must have sold some stuff to make that happen a little bit at the end wow then you have lived on nothing for sure yeah we had a little money

saved up we our direction was saved and then we got uh really really focused okay how much should you throw at the from savings uh probably about 10 000 after like the second month to say all right we're really going to do this really game on okay so what kind of debt was the 80 000 it was all home mortgage you You paid off your house? We did. I'm looking at weird people. That's right. I love it.

Way to go, you guys. So $10,000 at it and got after it. And I guess that was above your emergency fund then. It was. Good. And that was some extra money, so to speak. And then you just knock it out. We're going to be done forever.

How old are you guys? I'm 47. I'm 44. And you're a paid-for house. What's it worth? I'd have to ask a realtor. I don't know. Roughly.

It's about $200. About $200. Okay. Wow. Way to go, guys. Boom, boom. I love it. And the Hawaiian lays, so I'm guessing we celebrated or are.

Tell me what's up with that. Well, along the way, there was another caller that had these links on their mantle, and we submitted some pictures, and we got green ones for every thousand dollars. So every month, we gathered the kids, and we had a little ritual where we would cut off the links, and as we paid extra on the mortgage, we had the new payoff balance. We would cut it off. We would take turns cutting the links, cutting the chains of debt to get out of it. And the very last one was a red one because our goal was once it got paid off, we were going to take the vacation of a lifetime and take these guys to see the volcanoes in Hawaii

and then see the lava. And so that's the plan for this summer. Oh, you've got it scheduled for the summer. Okay, so you're going to the Big Island. Yes, sir. Yeah, I love it. That's a great trip, man. Absolutely.

Very cool. So the guys are here. They're ready to go to Hawaii. What are their names and ages? We've got Andy, and he is how old? 14. 14. And we've got Tristan, how old?

11. 11. 11. Yes. Okay. And they deal with the Dave Ramsey principles. They don't get any allowance. They spend, they save, and they share with their own money.

That they get as commission. They earn it. That's right. And this one just spent some of his own hard-earned money on one of the books in the go-getter. Oh, my goodness. Wow. Wow. Well, thank you for your business, sir.

Wow. Very cool. So what got you guys so intense 10 months ago? What happened? These boys, we were looking at some financial records, and Trisha was like, how much do we owe in the mortgage? And she's like, how do we owe that much? And so I said, well, if we pay a little extra for the next couple months,

we could hit a milestone. And apparently having an 85,000 owed wasn't a good enough milestone. And she says, what do we got to do to get it paid off faster? And we want to make sure we got it paid off before this guy starts high school next year. Okay. So that was like, we want to be with the weird people and not have this debt over our head. And we wanted to take the trip, but we didn't want to take it while we're in debt. It wouldn't have been able to enjoy it. Yeah.

Wow. Yeah. And so what's your connection to us? Were you listening on the radio or what? Just been listening forever. He's been listening for well over 18 years. 18 years ago, he cut up my credit cards and kept talking about this guy, Dave Ramsey. And so we had one foot in the water for quite a few years.

And then when we just put both feet in and got gazelle like you talk about with the mortgage we never carried that but with the mortgage we wanted to do this big trip and we knew there was no way we could do it with having a mortgage payment we had to get rid of it and do it as a celebration when you paid it off did you feel a release? Absolutely. Yeah. And we shared it together. It was tremendous.

We got a picture of going down with the teller and handed her the check. Yeah. We all went together in person and said, this is our last payment. We've got pictures in the lobby at the bank. Really, we're here today. We just want to make a memory with you. We appreciate your show, you driving all those miles late nights the whole thing wow and i want these guys to get a little taste of it so in the future that they can have a big bright future and go as far as they can go mother your family tree has changed and these guys get to remember the day that you

celebrated that tipping point and that's today well done done, you guys. Thank you. Great legacy. Very, very, very well done. So what do you tell people the key to getting out of debt is? Focus and discipline. Yeah. Focus and discipline. And working together. Right. Having a common goal.

And it was funny. Once we started on, just like you say, it's like, all right, the acceleration. The math doesn't work. Once you get focused on it, you'll find ways. More money will squirt up. The math will work in your favor. Things will get paid off sooner than what you had hoped on. We're nothing special.

We've been doing the 401K and some money in a Roth IRA for a long time and being a little too comfortable with having a mortgage, and we just wanted to say, you know what, we're done with this. We're getting it over early, and we don't owe a dime to anybody. Love it. Very, very well what, we're done with this, we're getting it over early, and we don't owe a dime to anybody. Love it. Very, very well done. Very well done. What was easier about this than you thought it was going to be?

I think for me it was the momentum. You came in two months early. Yeah, the momentum. The sacrifices were at the same time the hardest part and the easiest part because the question just kept coming up for me what do I want more do I want what I'm looking at that might be ten dollars fifty dollars do I want to go out to a restaurant or do I want to get rid of that mortgage payment and go to Hawaii and then go to a. And then go to a restaurant. And then go to a restaurant. Or go to a restaurant on the big island.

Exactly. Every decision was like that. It was like, do I want this more or do I want to be out of debt? Because I've had good restaurant food before, but I haven't been out of debt before. Yeah. That's a good point. How long have you guys been married?

Going on years. 18 years. Almost 19. Have you ever been debt-free while you were married? No. Never. Okay. Well done, you guys been married? Going on years. 18 years. Almost 19. Have you ever been debt-free while you were married? No. Never. Okay. Well done, you guys.

You're going to have a blast in Hawaii. You've earned it. I'm so proud of you. Congratulations. Thank you. Very, very well done. We got a copy of Chris Hogan's retire-inspired book for you. That is the next chapter in this story.

You guys will be calling us on a millionaire theme hour now and telling people how to be millionaires because you're right on schedule to do that. Very, very well done. So proud of you. Good job. All right. It's Dustin and Tricia, Andy and Tristan from Cincinnati. They paid off their house, people. $80,000 in 10 months.

100% debt free, making $150,000 to $160,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! And on our way to Hawaii, baby! Yeah! Living like no one else. So later, you get to Yeah! Living like no one else.

So later you get to live and give like no one else. That's how it works right there, man. You don't have a house payment. You know how often you can go to Hawaii? About any time you want. Doesn't take long. I mean, make 150, 160 a year. Zero payments in the world.

I think you can find some money to do some fun stuff, don't you? And in the proso, and still have enough to become very wealthy, which enables you to find money to do fun stuff, which enables you to become very wealthy. I mean, this is amazing. The math on this stuff will blow your mind to not have a payment in the world. You know, a good way to start this out is to start it out when you're a college student. You got a kid going to college? You know a kid going to college?

You're getting ready to buy, you know, you got the friend's kid that's graduating from high school, getting ready to head off to college. Your kid is getting ready to head off to college. You need to get them the graduate survival guide guide because the average college student is going to run up thirty seven thousand dollars in debt that's in the stupid zone now we created the perfect gift it's called the graduate survival guide five mistakes you cannot afford to make in college anthony o'neill ramsey personalities the author co-author, Rachel Cruz. It is a national best-selling book, and it unpacks the five most common mistakes college students make that they regret for a decade. Check it out.

The Graduate Survival Guide, DaveRamsey.com, or call Customer Care. They'll help you. 888-22-PIECE, 888-227-3223. Our scripture of the day, Romans 12.2, Do not be conformed to this world, but be transformed by the renewal of your mind, that by testing you may discern what is the will of God, what is good and acceptable and perfect. Douglas MacArthur said, You are remembered for the rules you break. Of God, what is good and acceptable and perfect. Douglas MacArthur said, you are remembered for the rules you break.

Love it. Justin is with us in Provo, Utah. Hi, Justin. How are you? I'm good. How are you, Dave? Better than I deserve. What's up?

I'm in Baby Step 2, and I make about $50,000 a year, and I have an opportunity to move to the Denver area and make about $95,000 a year. But my wife is unsure of it because the cost of living is so much higher. It would be close to tripling. No, it wouldn't. For our housing, sorry, our housing costs. Denver is not triple Provo. I live in Price, so I live in an old coal community, so I pay $620 a month for my mortgage.

And rentals out there are about $1,500 for one that's, you know, further away from the city but close enough to work. Mm-hmm. Okay. The real estate market in Denver is high, but the cost of living is not triple. And you can double your income. If you would prefer to live in a rural setting and make $50,000 a year, there's nothing wrong with that. You haven't done anything wrong.

But if she doesn't want to live in the big city of Denver, I get that. That's not a problem. If you want to pursue this career and double your income, basically, this is not a bad move at all. Mathematically, financially only, which is never how you look at something, but if that's all you're looking at, this is a move you make. Okay. And then we have about $40,000 of equity in the home that we're in now.

Would we sell the home? Absolutely. Absolutely you would sell it. Okay. Yeah, definitely. And then you'd start, you know, are you debt-free other than the home? No, we have, but it's pretty close to breaking even after we sell the home. We maybe have another $5,000 or $10,000 payoffs after that.

Oh, so you wouldn't quite be debt-free. Okay, well, you become debt-free, build your emergency fund, and start saving for a down payment to buy something in the Denver market. And hopefully your career will continue to flourish, and 95 is just the beginning. Yeah, that's what I'm hoping to. really want to stay there, there is nothing morally wrong with that. You're not a bad person for doing that, okay? And if that's what she's saying, you need to get to the bottom of that before you take her to Denver and she's unhappy. But if it's just a financial discussion, I'd like to do it,

but I'm a little bit afraid of the money, I'd go do it. Okay. Thanks for the call. Patty is in Columbus, Ohio. Hi, Patty. How are you? I'm great do it. Okay. Thanks for the call. Patty is in Columbus, Ohio. Hi, Patty. How are you? I'm great. Thanks. Thanks for taking my call.

Sure. What's up in your world? Nothing much. I have a question about a medical injury settlement that my son is being awarded. He's 10. And what the insurance company is offering him is either a structured settlement or a cash settlement. And so I'm kind of wanting to weigh the pros and cons on both of them. I'm not real familiar with how that's going to look like for him.

And my thoughts are if I take the money as a cash settlement, we could grow it better for him than it could if it's just as an ability. But I don't know what that's going to look like, you know, in his future. Say, for example, if he doesn't go to college or if he doesn't want his scars, you know, repaired, you know, is that money going to be free to him to use if he wishes or is it strictly going to have to be for college or medical? I don't know if those are terms that are specific to each of those options. Shouldn't be. It should be if they offer a lump sum or a structured settlement, either one.

It should be for his use as he pleases and you please when he's a minor. Within reason, obviously, you're not going to spend the money on you. It's not yours. Right. And that kind of a thing um so as far as the actual crunching of the numbers goes it's almost always better to take the lump sum if you're able to invest it okay and you don't you know you don't need it now um and you're not going to waste it and you're going to be in control and so forth you'll make a better rate of return than they have calculated

the they've used some kind of an interest rate, a discount rate it's called, to calculate the lump sum versus the structured settlement. And so because you're getting the money all now, it's called a present value formula in finance. In other words, would you rather have $100,000 today or $100,000 10 years from now? Well, you'd rather have it today because you could turn $100,000 into a million and a half in 10 years, you know, investing it, right? And so you want to invest it and make that money on it as you go along. Maybe not quite a million and a half, but at least a million.

So, you know, that kind of a thing. So that's the present value of money versus the future value of money. And that's how this calculation is done. So if you really want to crunch the numbers, and you probably should, it sounds like it's a substantial settlement, get in touch with one of our smart investor pros and sit down with them. They're one of the investment professionals, and they can tell you what you can do there.

Now, your attorney can tell you about what you're allowed to use it for and will the courts allow you to invest it. Sometimes a court settlement like this demands that you do something stupid with it, like put it in CDs, which is a ridiculous thing. But sometimes courts get all involved in it, and I don't know where you are with that, if you can invest it, it almost always comes out better for him. It's going to be more money if you take the lump sum and invest it. But again, if you want to crunch that, just click smartvestor at DaveRamsey.com. Crunch the numbers with one of them. Put in your information.

It drops down a list of smartvestor pros in your area. You select which one you want to talk to out of that list. They are all people that we endorse are vetted that we've um they have the heart of a teacher and they can sit down crunch the numbers with you and go okay this is what this is worth this is in about a minute and a half two minutes on a financial calculator you can put the numbers in and figure out what interest rate they're using and if you think you can get a better rate of return than the rate they're using, which I'll just about guarantee you it was at 6% that they used, then you can do that. They would much prefer you take the structured settlement because it's cheaper for them usually.

So usually the lump sum is better for you. Manuel's with us in Dallas. Hey, Manuel, how are you? Hey, Manuel. How are you? How are you? Hey, Manuel. How are you? How are you? I'm good. How are you?

Better than I deserve. How can I help? Okay, so I have a question. My question is, about two years ago, I was 18. I purchased a house through a private seller. The down payment was very low. It was about $4,000 for the down payment. And in return, you know, for that low down payment, the interest was very high.

It's at a 12% interest. Holy. Right, right. And he said, the private lender said, you know, you can refinance in a year, which was my plan, but I had no credit to refinance the house. Now, the payment for the house is $700, and that's for 30 years, and I'm giving $850 to finish in about 13 years. Now, my question for you is, do you think I can sell the house now and make $15,000 on it, and I would have those $15,000, and I don't know anything else besides that house.

I still live at my parents' house. So do you think I should sell the house now and get the $15,000, or should I keep the house and just refinance and make more money in the long term? Okay, if you call me up and you said, I'm 18 years old, I live with my parents, and I want to put $15,000 down and buy a rental house at 12% interest. I would tell you no. Since that's where you're sitting today, I would undo it and sell it, yes. I would sell it.

Okay. Now, after selling it, what's the next plan? What would you do with the money? What is your career? Right now, I'm going to college, and I don't have any loans because I'm there on scholarship, so they pay everything. Good. I'm saving about $30,000 a year on that. What are you studying?

Criminal justice. Good for you. When will you graduate? In December, I'll have my bachelor's degree. Well, good for you. You're early. Good for you. Awesome.

Well, I would park the $15,000 until you graduate to make sure that you're able to finish with no debt and then make it your emergency fund. When you come out, I take it you're going in the police force or something like that. Then I would, at that point, I would start looking to think about buying a home or just renting and getting started on your own away from your parents. Thanks for calling in. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace,

and that's to walk daily with the Prince of Peace, Christ Jesus. Kelly Daniel, 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.