The Ramsey Show - App - Never Buy Extended Car Warranties (Hour 1)

Episode Date: April 1, 2019

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Live from the headquarters of Ramsey Solutions Broadcasting from the Dollar Car Rental Studio, 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. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Katie starts off this hour. Charlotte, North Carolina is calling. Hi, Katie. Welcome to the Dave Ramsey Show. Hi, how are you?

Better than I deserve. What's up in your world? I have a question. So my husband and I sold a rental house, and we profited about almost $140,000. We're debt-free, and we're on baby steps four, five, and six. We want to apply the profit that we made to our primary mortgage, and the holder of the mortgage says they could recast our loan for $300, and we're just kind of wondering if that's worth it. It's only a matter of paperwork convenience to recast it.

It does not change the interest one dime. Right. Well, so the thing that we were thinking is if they recast it and it lowered our mortgage payment the month, then we could pay more towards the principal instead of that, I guess. No, that's not the way it works. When you reduce your mortgage, your interest is calculated on a mortgage like simple interest is calculated. So let me give you an example. Let's use a simple example. Let's say you had a 6% interest rate. That means your interest rate per month would be one-half of a percent per month.

Does that sound right? Yes. Okay. In our example, I'm using this as an example, okay? And so each month, the balance outstanding is multiplied by.05 for your half a percent, or.0005, okay, for half a percent. That amount of your payment is interest. All of the rest of it is principal. And so when you have a lower balance, more of your payment is already going towards principal.

Okay. It slides you forward in the amortization schedule, which is the same thing as running a simple interest calculation. So you don't have to recast it in order to get more of your payment going towards principal. You're only being charged interest on your outstanding balance. If you have a traditional mortgage. Now, if you've got some kind of ripoff mortgage, that might be different. But if you've got a standard Fannie Mae, FHA, VA, that's the way it's calculated.

So it's not necessary to do that. The other thing is, if you did recast it, I would want them to give you a higher payment, not a lower payment, than you have now. Right. Because you're planning to pay it off. Right. Our goal is like four or five years. Yeah.

And so if you want to put it on a five-year and recast it and just set that up on a five-year, you know, it's game on. Or if you just want to leave the flexibility. If you'll keep paying it like you've been paying it, you're going to be done in five years, whether you recast it or not. Okay. So save my $300. As long as you're going to stay, as long as you don't mind the inconvenience mathematically

of you having to kind of watch this and run some of the math I'm talking about to make sure they're doing it right, then that's fine. Yeah, I would save my $300. And as long as you're not trying to get a lower payment, because you're not, you're trying to get a higher payment. But yeah, you're not gaining any interest savings by recasting. So, hey, good questions and interesting discussion. Appreciate you calling in. Christine is with us in Decatur, Illinois. Hi, Christine. How are you?

I'm wonderful. Thank you for taking my call. Sure. What's up? I have a quick question today about, I currently have a simple ira that was offered to me last year by my employer who um he's an independent insurance agent um i've been putting in there he matches at three percent we have just found out that the company that he works for because I am his employee now has it where I can put in $250 to start an account, a traditional, and then put money towards that with no fees since I am his employee. I'm trying to figure out which way is the best way to do it. Okay.

Well, you have no fees as an employee with a simple. A simple IRA is a 401k for small businesses the only fee is a 15 annual fee in most cases anyway unless you're ripping him off and that's charged to him you shouldn't have fees now you may have some commissions when you buy that's the thing but there's no there's no fees for operating it. Now, so this is an insurance product? What are you investing in? It is through, you mean for the traditional? No, yeah, where are you putting your money?

It will be through, I think, Transamerica. Into what? Into mutual funds. Okay. And you're picking the mutual funds? I have not done that yet. Okay. And what about the simple?

Was it through Transamerica as well? It's through Edward Jones. I'm not sure who the... And what mutual funds did you put that into? Oh, I just let them pick it. Okay. That we never do. Okay.

Okay. You always, this is your money. You're investing your money, and the match is yours instantaneously. You're automatically vested day one in a simple on your match. And so you are in charge of this money. It's your responsibility to know what it's going in and understand it. And if you can do both of these, you should be able to do both these products under the law if they're allowing you with policy to do both these products. In other words, you can do a regular IRA and your company, your small business that you work for, can do a simple IRA.

So it's like having a 401K and an IRA. You can do both. You're allowed to do both, okay, if you want to. And so you can do that. And then I suggest mutual funds across four types of mutual funds is how my personal 401K is, growth, growth and income, aggressive growth, and international with long track records that have been open 10, 15 years or longer. And Edward Jones should have access to those unless they're shoveling you into some of their proprietary crap, which don't let them do that, okay?

Okay. Unless they happen to have a good Edward Jones fund. They might or might not i don't know i don't even look at those but um be careful that you don't get pushed off into a name brand something because you're dealing with quote name brand that's proprietary instead you want to pick good mutual funds options and they should have those in the simple if it's a traditional ira you can pick any mutual fund out there if you have a decent broker and i don't know why you would necessarily go through them to get your

traditional i don't think there would be any savings there there might be i don't know what's going on exactly here uh what their relationship is with edward jones and transamerica and all that so you you can learn about it but here's the thing you don't just carte blanche trust people that's how you hear these uh football players that make 10 million dollars and 100 million dollars and they have nothing it's because they just trusted people and it's your job to manage your money you understand it or you don't put money in it and you're on the track to do that because you called today you're're trying to understand. That's exactly what you're supposed to do. Well, well done.

All right. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable 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. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Laurie is in Washington, D.C. Hi, Laurie. How are you? I'm fine today, Dave. It's very good to be on the phone with you today.

You too. How can I help? Actually, I'm calling about... I'm just about 57 years old, and I'm living in a home that I've been in for about 22 years. Unfortunately, before I met you and started listening to you, I refinanced a couple times, so made a few mistakes there. But what I'm trying to figure out now is how I can get the mortgage down from, it's about a 28-year mortgage. I want to get it down to 15 years, of course.

But I also have been contemplating how to get into a home that I would actually love to live in at this time as well as own. And so I'm trying to figure out, would it make sense for me to sell this current home to get a 15-year mortgage and to be in a home that, you know, I actually would love to live in and own at this point? Sure, as long as you can pay the 15-year mortgage. And as long as, you know, I tell people not to have a payment that's more than a fourth of your take-home pay, because 15 years from now you'll be 72, and you need to pay for it before then. Yeah. You don't want to pay for it before then. Yeah. You don't want to be retired with a mortgage.

Yeah, and my lifestyle's a little, I don't know. I'm currently a self-entrepreneur because I did leave a profession a little early in order to get into the profession that I feel is my purpose and that I love, and that's I'm a practitioner for mental health. And so I do get a pension and an annuity, but, you know, I'm also working as a private practitioner and trying to expand that. Between the two of them, what's your household income annually?

My household income, it's about $172,000. Oh, great. No, no, no, no, I'm sorry. I'm sorry. I am so wrong. I'm looking at numbers here, and I'm saying the wrong things. No, I wish it were. It's about at $72,000. Okay. All right. Well, that's $100,000

less. I'm a little down now, a little disappointed, but you're still doing good. I'm kidding with you, but yeah, I think you got to buy a house you can afford and that you can get paid off before you hit retirement. That's your thing. And $72,000 includes your income plus your pension, right? That's actually the pension. I've been in private practice for, I'm almost at five years, and last year I cleared about 12K. I made $30,000. Well, you're not good at that. Yeah.

You've got to get that up. Yeah. So I am this year. My goal is to look at how to expand. You don't have any clients. Or you're working for free. Is that what it looks like? Yeah.

$12,000 a year in Washington, D.C. is called the poverty level. If you didn't have the pension, you'd be on welfare. Exactly. I mean, if I didn't have the pension, I wouldn't be doing it. Yeah, which means that this current career is not going well. That's an understatement. It sucks. So you have got to do some stuff in this current career to get your practice more vibrant

and get some more money coming into it. You need the money. You need to get your house paid off, and you want the one you're going to buy, and you need to be able to retire. And there's nothing wrong with that. That's not being mercenary or greedy or not being unwilling to serve the culture. You want to serve the culture, go make a bunch of money serving them and or make a bunch of money and then just stop and serve them. But you're not you don't have enough money to do that. If you don't have this pension, you know, this pension is keeping you from having to address the inadequacies of these choices so far.

You've got to change your practice. You've got to change your practice. Christian is with us in Los Angeles. Hi, Christian. Welcome to the Dave Ramsey show. Hello. Thank you for taking my call. Sure.

What's up? So I'm 24 years old, and I'm going to be graduating May 18th. Good. And I read your books, and I got out of the credit card debt, and I just want to know, like, I got my full time coming up July 15th. Yay! What are you going to be doing? I know.

I'm going to be working for a general contractor and just building hospitals and high-rises. Cool. What's your degree in? Construction management? Construction engineering, yeah. Good, good. Very good. So what will you be making? $70K. Yay!

Good for you. So I just want to know, I'm going to be investing into my 401K, but do you have any just want to know, like, I'm going to be investing into my 401k, but do you have, like, any other tips to, like, invest in? Should I open, like, personal Roth IRA or invest in stocks? Well, if you read Total Money Makeover, it walks you up the baby steps, and you want to be debt-free. Do you have any student loan debt?

No, nothing. You have no debt at all? No. Way to go. How loan debt? No, nothing. You have no debt at all? No. Way to go. How'd you do that? So my family doesn't make that much income, so I took advantage of the financial aid. Okay. But zero loans.

Good for you. Zero loans and everything, yeah. Well done. I'm proud of you, man. Thank you. Good job. Thank you. All right, so no student loan debt, 25 years old, making $70,000, new degree in construction engineering, and here we go, game on.

I'm going to make sure first you have your, once you're debt-free, that you have your emergency fund in place of three to six months of expenses, and then you're going to start putting 15%, only 15% of your $70,000 into 401ks with a match, especially if they have a Roth 401k, pick your four good mutual funds. If you just do that the rest of your life, you'll be wealthy if you'll stay out of debt and save 15% of your income the rest of your life. From 25 years old on, you'll be very, very, very wealthy by the time you're 55 or 65.

So let's start with that. Then above that, if you want to do some other investing, I wouldn't. I'd start saving for a down payment on a house that you'll probably buy in the next three to five years, something along those lines. So you are right on track. Very, very well done. Our question of the day comes from blinds.com. They're the number one online retailer of custom window

coverings you get free samples free shipping and with the new promos they run every month you'll save even more the promo code is ramsey to get the best possible deal rafi's in california is it okay to go into two hundred thousand dollars worth of debt for law school i'll be living at home average first year salary after afterwards is $90,000, with the top 10% of the class being $160,000. And with the income of the class portion that did not graduate, but still has the $200,000 in law school debt,

it's $35,000. See, debt only works when it works. If everything turns out like you thought it's going to turn out debt always works but if you're old like me you've already figured out that nothing ever turns out like you thought it was going to turn out not everything nothing some things are better some things are worse but it never turns out exactly like you thought it was going to turn out that's not how it works so rafi i do not recommend student loan debt of any kind ever for any situation. What?

You wouldn't have me go to law school? I wouldn't have you go to that law school. Have you figured out another way to get a law degree that was less expensive than that where you get some scholarships where you work and it may take you a year longer? I don't care. But when you have a law degree and you have zero debt, now you're marketable in ways you wouldn't be marketable, and now you don't have to take a job and be abused by some law firm

just to pay your student loan debt. And they do abuse first year and second year out of law school students. They work them 90 to 100 hours a week and pay them as little as they can possibly pay them because they know you have to take a job and they know you're lucky to get into their firm because you have student loan debt hanging around your neck.

And no, I'm sorry. I don't want you to do that. You can do whatever you want. You're an adult. You're allowed to make your own decisions. But you asked me, which is always a mistake because I'm going to do that. You can do whatever you want. You're an adult. You're allowed to make your own decisions. But you asked me, which is always a mistake because I'm going to tell you. Because I am an expert on my opinion. And I will give you that. That's what this show is about. It's helping you

win. And see, a lot of this stuff, folks, it doesn't line up with some of you. You don't think this way. And it makes you mad. I wasn't trying to make you mad. I'm just trying to of you. You don't think this way. And it makes you mad. I wasn't trying to make you mad. I'm just trying to help you. But we have a saying in the South. Don't go away mad. Just go away.

If you're going to get all torqued out and twisted up, just go somewhere else. It's okay. There's 16 million people listening to this show that do want help. So if you want to be pissed off,

just go be pissed off. But I'm going to tell you the truth. This is The Dave Ramsey Show. The last thing I want you to feel is buyer's remorse, especially when you offered thousands more on a new home to win a bidding war. If I've taught you anything, it's that blindly throwing money at a problem is a stupid plan and something you'll regret for years. The key to avoiding this rookie mistake is to call Churchill Mortgage and get certified. This easy program puts you miles ahead of your competition because you are pre-underwritten. Your interest rate is secured, and yes, you can close within 14 days.

Don't fall into the trap of offering more money just to compensate for a poor plan. Call Churchill Mortgage today and get certified. Call 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess. NMLS ID 1591. NMLS ConsumerAccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. In the lobby of Ramsey Solutions, Jeff and Christina are with us.

Hey, guys, welcome to the Dave Ramsey Show. Thank you. Hi, Dave. Thanks for having us. Good to have you. Where do you guys live? We live in Fenton, Michigan, which is just a little bit north of Ann Arbor. Oh, okay, cool. Welcome to Nashville. Thank you. Hi, Dave. Thanks for having us. Good to have you. Where do you guys live? We live in Fenton, Michigan, which is just a little bit north of Ann Arbor. Oh, okay.

Cool. Welcome to Nashville. Thank you. And all the way down here to do a debt-free scream. Yes, sir. Love it. How much have you paid off? $185,000.

Woo-hoo! How long did this take? 19 months. Wow! And your range of income during that time? We were right around $300,000. Ooh, you're killing it. What do you guys do for a living?

I'm a physician assistant in the emergency department. And I'm a medical sales rep. Okay, wow, both of you got great careers. No wonder the income. And so what was the $185,000? It was our house. You paid off your house? Wow, I thought you were going to say medical school loans. Okay, wow. You paid off your house? Wow, I thought you were going to say medical school loans.

Okay, wow. You paid off your house. What's your house worth? Our house is worth $700,000, Dave. And it's on a private ski link. Oh, now you're killing me. This is our dream house. We had our other house paid off,

and we didn't come down to do a debt-free scream then because we just knew it wasn't where we wanted to be and so we took out a mortgage for the second house and let me tell you we thought we were going to be casual about paying it off but no once you've been debt free once you want to be there as soon as possible as soon as possible and in 19 months yes sir you laid down 185 grand and got it paid off wow Wow. Will you ever go back? Never. No. That was about all you wanted was that 19 months. Yeah. Funny story about that. When we first bought the second house,

we were going to be casual, like Christina said. And we said, oh, we'll pay off the house in seven years. In the meantime, we'll do a kitchen and a backyard and this type of stuff. And then we got the first mortgage payment. And we didn't like that very much. So we said, okay, four years.

We'll do four years. We'll just do the kitchen and one other project. And then we got the second mortgage payment. And we both looked at each other and we were sick to our stomachs. And all the plans went out the window. And we just laid it down and paid the house off. Now you can do whatever you want. That's exactly right.

So Private Ski Lake. Tell me about this. What's that mean? Well, it's a man-made lake that is designed for water skiing. So it's got a slalom course on it, a jump. There's a show team on the lake. My wife and I met on the Michigan State water ski team at college. That's our passion.

And we wanted to have the slalom course in our backyard. That's so sweet. So you can just get up and do a run. Absolutely. Oh, man. Our course is on the other end of the lake, so it's a 35-minute boat ride to go down and run the course. And so by the time you get there, you're too tired to run it.

You know, it's just like unbelievable. And I'm too old and fat now, but I'm still barefoot. But, oh, my gosh, you guys. Wow, you're incredible that's that's fun a lot of fun that is fun so you got all the toys in the backyard absolutely and they're all paid for very cool what kind of boat are you running malibu sunsetter yeah that's a great boat very cool good job guys i'm looking at weird people absolutely living the dream man. Live like no one else. Ready to live and give like no one else. So what's the secret to getting out of debt?

Because your story is different. Christina? Well, the secret, I think, is just making sure you're on the same page as your partner and being there for each other to support because, you know, one person is going to say, I want a kitchen today, and the other person is going to say, you know, and just making sure that you're guiding each other back towards the goals that you have together. And that goal is usually followed best with a budget. Yeah, but it started with both of you all just going, ooh, I don't like this feeling.

I mean, you've been free, then you go back in and you're like, ooh, there's this disgust, wasn't there? Absolutely. Yes, very much so. And that was the same page. You both got on that same page after two mortgage payments. You're like, that's it. We're done with this.

Absolutely. That changes everything. Well done. Yeah. Our plan started, or I should say our journey, it started back in 2010, really, to pay off the first house. But the reason, the why, you have to have a why to do this because if not, there's not anything driving you. And it's tough.

It takes a lot of discipline. The why is standing in front of us right here. I have a chronic lung condition called cystic fibrosis. And there's always a storm on my horizon. It's not easy. My health isn't great. So my why was I needed to be a provider for my kids and for my wife. In the instant that something happens and I can't work anymore, we don't need to worry about financial stresses. So my wife was very clear.

There was never any questioning it. So once these kids came into my life, our lives, excuse me, it was very easy because it was something personal for me. I needed to knock that out so that I knew my family was taken care know, my health take a nasty turn. Well, and in the case of this story, every moment is treasured, and you've got the coolest place in the world just to have family time. That's the plan. I mean, you have everybody's dream in your backyard. Well, all of us that ski anyway. Yeah.

Yeah. Wow. So are these two big skiers? They're getting there. Rihanna's on the show team. Cole's learning to slalom, and Cole's doing the same. So we just have a lot of fun every summer. Great, great.

That's some fun stuff. Very cool. Well, we're real proud of you guys. Who were your biggest cheerleaders outside of your own family? I would say probably parents. Mm-hmm. Okay. Yeah, parents were the biggest cheerleaders, and a couple friends knew what we were doing.

Right. And so they were behind us. Well, I suspect you're already there with the value of the home and probably some 401k stuff sitting around or whatever. But we're going to give you a copy of Everyday Millionaires because at least more of those millions are the next chapter in your story anyway. Very, very well done. A great income, great family story. You guys, we're very proud of you. Thank you.

Thanks so much. Very good stuff. All right. It's Jeff and Christina. Oh, and the kids' names and ages? We have Ariana. Thanks so much. Very good stuff. All right, it's Jeff and Christina. Oh, and the kids' names and ages? We have Ariana. She's 10, and Coleman is just about to turn 8. All right, and Cole and Ariana, all from the Ann Arbor, Michigan area.

$185,000 paid off in 19 months, making $300 a year. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Boom! Just like that. Oh, you gotta love it, man. You gotta love it. Very well done, you guys. Very well done. Audrey is in San Antonio, Texas. Hey, Audrey, how are you? Good, how are you? Good, how are you? Better than I deserve.

What's up? I am recently divorced, and I have come into about $30,000, and I just started up my business again, my upholstery business, and I'm in a new location, and I'm wondering if I should, I live in a travel trailer, and I was wondering if I should buy a piece of property and try to set up an RV spot for myself on a piece of property. No. Okay. You should go rent a little cheap apartment and get your business going. How long were you married?

24 years. Okay. And you have children at home? No, none. How long ago was the divorce? Two months ago. Oh, wow. And when did you start the upholstery business?

I started in 1993, and it's been, you know, constant. I've done it a little bit here and there, but my longest full-time running of the upholstery business was four years out of a little hondo, Texas. Okay. So what have you been making lately in the upholstery business? How much money? This month I'm probably going to clear about three thousand great great good for you so you're getting some business in and you're getting some production

out the door yeah i'm just but i'm just getting started this is the first month in this new location so yeah i mean if you make three grand a month that's that's a good start out of the gate you can get it up for you get it up from there yeah you're gonna be all right yeah i would just rent i would set your 30 000 back as a safety valve for now, and let's get your career and your life stabilized. You've just gone through the equivalent of a horrible car wreck. It feels like it. And it takes a little while to heal from a horrible car wreck.

And so your career is going to heal. Your money is going to heal. Your emotions are going to heal. Your money is going to heal. Your emotions are going to heal. Your spirit is going to heal. The way you have relationships is going to heal. And let's not go buying stuff right now that you don't have to buy. Let's just set that $30,000 in a bank account. Forget it's there.

Don't even use it. Make sure you make enough to eat on and just rent you a cheap little apartment. Let's have nothing that requires more work. You've already got enough work that you're doing now. This is The Dave Ramsey Show. I'm Mike Pearson. Gus is in Las Vegas. Hey, Gus, welcome to the Dave Ramsey Show. Hi, Dave, pleasure to speak with you. You too, man. What's up?

So my wife and I have about $16,000 in savings and $24,000 in debt. We want to fix our house up a bit, so I'd like to get your advice on how much we should put towards the debt and how much we should do towards the house. I would not fix up your house until you're out of debt. Completely? Yes, sir. Okay, so should I just keep the $1,000 in the emergency fund and use the rest? Yes, sir. And that leaves you $9,000 to pay off. What is your household income?

About $80,000 to $90,000. How fast can you leaves you $9,000 to pay off. What is your household income? About $80,000 to $90,000. How fast can you pay off $9,000? After the $16,000? After you put $15,000 down, you've got one left. That leaves you $9,000. How fast can you pay off $9,000? Oh, I would say nine months, definitely. I think it's half that.

Possible, yeah. Beans and rice, rice and beans. You need to be out of debt, then you rebuild your emergency fund, and then you save up and pay cash for your repairs. What kind of repairs are you wanting to do, and what will they cost? Well, it's just minor stuff, furniture and some paint and our floor eventually. Okay. Run out a line item on it and put it in order.

Which thing would I do first and what would it cost? Which thing would I do second? What would it cost? Which thing would I do third and what would it cost? And then you have an emergency fund in your house is probably $15,000 to $20,000 fully funded. And so you need $9,000 plus $15,000 plus the cost of these items, and then you're done with this part of the project or this part of the discussion, and you lay all of that out.

I think you're done with all of that in two to three years. A completely renovated house the way you want it, depending on what you're planning on spending anyway, a fully funded emergency fund, and no debt payments. How would that feel? That would feel great. But all I'm saying is if you want to get to Florida, figure out the map, right? Definitely.

Okay. Detail out your steps. We're going to turn on this road, then we're going to turn on this road, then we're going to turn on this road. What are the steps? What are the dollars? And when you lay the dollars all out and you divide them, it gives you a reason to sacrifice going out to eat,

to sacrifice going on vacation because we're going to plow through these things. And, you know, because I'd rather have X than Y. I'd rather have an emergency fund and be debt free than I would go on this vacation. I'd rather have this couch or this new living room furniture rather than do this thing. And so you're always making choices with money because we don't have infinite money. And so when you lay down an exact path, a clear path, and you lay the dollars out, it changes how motivated you are to get there. Brandon is with us in Louisville, Kentucky.

Hi, Brandon. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for answering my call. Sure. What's up? I'm 15 years old and have a job on a farm. I'm making seven an hour, and I work usually three to four hours after school and a half day on the week. I just kind of want to know where my money should be going, like how much I save and maybe spend.

Gotcha. Okay. Well, whether you're 15 or whether you're 55, there's three things you can do with money. You can give it, you can save it, and you can spend it. And you should always do all three. So you're working hard. Farm work is not easy work. So you need to spend a little of this money to enjoy it.

You need to save some for a particular goal, like if, say, you were saving up for your first car. And you need to give some. Always be generous. Always be saving. And always be enjoying your money. And if you do too much of one of those, it means you won't be able to do the other one and so you need to lay out a game plan and take a step-by-step procedure to do that so what are we saving for and how much can i save a week towards that on a two thousand dollar car okay how much can i put towards that if i can do two hundred dollars a month it's going to be 10 months and 10 months from now i will be 16 years old, and I can do that.

So you just kind of lay that out, right, and say this is how I'm going to get there, and if I'm going to save $200, how much can I give and how much can I enjoy? And sometimes you may lean on one of those categories. Your giving is heavier or your saving is heavier or even your spending can be heavier. Most people have no trouble with that one uh but but as you learn to balance across those three things your balance your your uh your value system out and you won't just be blowing money making money blowing money making money blowing money which is what most people do ken is in columbia south carolina hi ken welcome to the dave ramsey

show hey dave how you doing? Better than I deserve. What's up? Hey, I've listened to you for a long time, and I value your opinion. But I'm having a little buyer's remorse, and I don't know if I can do anything about it. But I wanted your opinion. I just purchased a vehicle. It's a 2016 vehicle, but I purchased an extended warranty. Yeah, I know.

I thought you might say that. Yeah, just cancel it. Can I do that, do you think? Yeah. How long ago did you buy the vehicle? About two hours ago. Oh, you can cancel it. You won't be charged a thing. Okay.

All right. Yeah, just tell them you don't want it. Here's why. Statistically, if you're running an extended warranty company, you run out a chart like an actuarial table would run out on how fast people die that are 76 or 42, right? If you're doing life insurance, you run out a probability of death because that's your cost if you run a life insurance company. If you run an extended warranty company, you run out how many cars like the one you just bought are going to break in ways that I have to pay for if I'm the extended warranty company so they know what their cost is to cover a thousand vehicles just like yours and they just charged you one one thousandth of that cost here's the problem 12 percent of what you paid

will cover the probability of your breaks 88 percent went to marketing and commissions and profit. Yeah, that's not surprising. That's why I'm having some buyers. Yeah, you could have covered this same amount of breakdowns on average on a car just like yours for 12% of what you paid extra in your emergency fund. Now, you could be the one that is higher, that makes the average higher. You could be the one that makes the average lower. But I never buy extended warranties.

I self-insure through car repairs. Now, if a car comes with a warranty that is built in, you're buying a new car or something like that, then that's fine. There's nothing you can do about it. That's all good. But we don't write a check to an extended warranty company that's very, very, very profitable for them and for the dealership. The dealership made a ton of money. They're going to squawk like a chicken on a fire when you call them. They're not going to like this one bit because they were making some money off of you.

And they're not going to like me, but they already don't like me. So that's just part of my wonderful life hey folks day after day our debt-free screamers tell us about higher incomes that they got from changing jobs and working extra if you're looking into changing jobs you need to check out the brand new book by ramsey personality ken Coleman. It's called The Proximity Principle, the proven strategy that will lead to the career you love. Yep, Ken Coleman is our trusted voice on careers. His show on SiriusXM, his podcasts are wildly popular, and The Proximity Principle comes out in May.

If you want to pre-purchase this book, it's only $19.99. You get $20 in free bonus items, including the e-book for The Proximity Principle and a video lesson from Ken called Discover What You Were Born to Do. And you can get the book, The Proximity Principle, pre-order it today at DaveRamsey.com, KenColeman.com, or you can call the Ramsey Concierge team at 888-22-PIECE, 888-227-3223. Here's the thing with Ken. He has found a way to walk you through a clear path, a proven strategy that will lead to a career you love.

And you don't have to take a pay cut to do something you like. As a matter of fact, you ought to make more. So don't fall for that garbage. The proximity principle, where you get in proximity of people, you get in proximity of companies that do what you want to do. You're not going to accidentally get discovered. That only happens once in a generation, and the last generation, his name was Elvis. Nobody accidentally gets discovered.

You have to put yourself in a position to do that. The Proximity Principle by Ken Coleman. KenColeman.com and DaveRamsey.com. 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'm Dave Ramsey, and we'll be back. Hey, guys. This is Blake Thompson, senior executive producer of The Dave Ramsey Show.

Did you know over 15 million people listen to The Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country. To find a station near you, head to DaveRamsey.com slash show.