The Ramsey Show - App - NEVER Take On a Car Payment for an Employer (Hour 3)

Episode Date: January 30, 2020

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

Tony is on the line in Illinois. Hi, Tony. Welcome to the Dave Ramsey Show. Hey, Dave. How are you, sir? Better than I deserve. What's up? Fantastic. Let me, let me start by saying thank you for taking my call. Um, my wife and I, uh, were looking at ourselves in a really tough financial spot. We made some really stupid decisions financially.

And, uh, when I got fed up with it, I went to my aunt who was also my godmother and she I was looking for any tools I could I could find to fix our problem and she loaned me your total money makeover and my wife and I are raving and and we're gazelle intense we're ready and so we saved a thousand dollars and we made the really tough decision for my wife to go back to work after being a stay-at-home mom, taking care of our two boys. And so now that she's back at work and we have the snowball effect in full action here, she is eligible for a car package at work, which will give us $500 a month, including a gas card and paid full car insurance with her job.

But that means she has to trade in her old car that's paid off in order to get a car that's 10 years old or newer, and we have to take on potentially a car payment. So I wanted to see what answers I've got to give you to find out how we've got to handle this, how do we've got to take this on. Okay. We're not taking on a car payment under any circumstances. Okay. So that means we're not doing this right now.

And the downside of this is if she doesn't work there anymore and you took out a car payment that was supposed to be paid by this car package, she didn't get the car package anymore, you still got the car payment. Right. And so she quits or gets fired or changes jobs or whatever. Things happen. So, no, we're not taking out a car payment based on a car allowance ever. And I certainly wouldn't do it here. Now, so she has a car and she can get back and forth to work. Correct. And what does she make? she makes 45 000 a year okay and what do you make 55 okay so we have a hundred thousand dollar

household income and how much debt do you have not counting your home um we are renting including the other hall uh the other car which has,000 left on it. We have a total of about $15,000 in debt. Okay. All right. And so how quickly, making $100,000 a year, will you have $15,000 paid off? About three months. We can probably net $3,500 a month with our new income after our bills are paid. How long after that does she plan to work? Indefinitely. We plan to make it a career, and once we get to that step,

we're both going to jump on that 15% of our income for our 401K. So we're excited about that step when it comes. Okay, so the idea of her being home with the boys is on hold? Yes, my mom is watching our boys while we both work now. And so this is a permanent decision, not a temporary decision to get out of debt? Yes, until my youngest is in full-time school, that's a decision. Okay. All right. Okay, cool.

All right. So you're debt-free in three months. Is that what you said? Yes, sir. Okay. And then the next step is to build the emergency fund of three to six months of expenses. And then what is her current car worth? Her current car is probably worth $2,000 or $3,000 at the most. Okay. And they want you to

buy a two-year-old or newer car, and what was the other stipulation on it? Or two-year-old or newer? Ten years old or newer. Oh, ten years old or newer. Yes, sir. Okay. Yes. And what was the other stipulation? Anything? No, that's it um you know with if we with our tax return coming in soon we're getting about eight thousand dollars so we could use that definitely towards a car and if you're already out of debt before that yeah yeah no kidding okay so yeah i mean eight thousand and three thousand eight thousand and11,000. You have to have your emergency fund. So let me back up. Okay. What would I do? I would get out of debt, I would build the emergency fund, and then I would save to move up in car beyond the emergency fund. Buying a car is not an emergency,

and you would not upgrade in your case. So I would not upgrade a car, which is not an emergency, until after you have your emergency fund in place and you're debt-free. So when your tax return comes in, it's probably not going to the car. It's probably going to the emergency fund. Right. Okay. Then we're going to use the fact that we have no payments in the world, a newfound control over money called a budget, this unity,

this doubling of income because she's gone back to work, all of these blessings that are in your life mathematically to build up some money and go pay cash for a car and move up in car. My guess is about September she's going to be buying a $12,000, $14,000 car you pay cash for with a $3,000 trade. That's the idea. And then you can take the car package. But we're not going into debt to get the car package.

Right. Too many downsides. Plus, you kind of have to make this decision, is I or isn't I? You know, am I going to live the old way or the new way? Because there's kind of no middle ground. The ish thing just doesn't work, you know? And that's why I feel conflicted. I'm looking for all the tools I can.

Yeah, that's cool. Yeah, well, the conflicted feeling was accurate because for all the tools I can. Yeah, that's cool. The conflicted feeling was accurate because you were getting ready to go perpendicular to the new things you were learning. So, well done, sir. Well done. You guys are in the hot of it, man. You're fighting it. You're scratching, clawing. We're ready.

We're ready. I can't wait. I think you're going to be out of debt in three months. You're going to use your tax return, adjust your W-4 so that doesn't happen again. You're going to use your tax return to build up that emergency fund. Then you're going to be out of debt in three months. You're going to use your tax return, adjust your W-4 so that doesn't happen again. You're going to use your tax return to build up that emergency fund. Then you're going to start saving for a car probably around September, $3,000 trade-in because it won't go down in value much between now and then. And about a $10,000 cash above your emergency fund with that puts it in your $13,000, $14,000 car, all that. And that's the plan.

So well done. That's cool. I like that a lot. And then by Christmas, man, we're sitting in a, we're going to Zoom Zoom now. Starting to save up for a house at that point, probably. So good stuff. Crystal is on Twitter. My husband is not agreeing with Baby Step One.

He feels the $1,000 should go towards paying our debt and not sitting around for something that might happen. How do I get him on board? Isn't that humorous? That's just so cute. How precious. A broke guy has no money, disagrees with a system, a proven process that has gotten millions of people out of debt. That's precious.

Isn't he sweet? Dumber than a rock, but he's sweet. Nah. So how do you get him to get on board? Probably not that way. But, you know, I think you talk to him about how important the emergency fund is, and let's try something new. We've done it your way, and here's where it got us.

Let's try a different plan. Let's try this whole Dave Ramsey thing. It's a different thing. Try it. Worst thing that can happen is that I'm wrong, and I'm not. So there you go. This is The Dave Ramsey Show. Are high health care costs getting you down?

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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. Whether you're putting in a kitchen sink or fixing a gas leak, there are some jobs that make you ask, should I do this myself, DIY this? Or should I hire somebody who is an expert? Now, sometimes it's really obvious. Like, you know nothing about cars, so you take your car to a mechanic. You don't pull your own teeth. you know, that kind of stuff.

But sometimes it's not so clear, like doing your taxes. There are definitely some cases that are complicated and require a tax pro to make sure that it's done right and doesn't come back to bite you in the butt later, right? If you own a small business, you've got multiple sources of income, you've got a lot of deductibles, you've got a lot of different filings to do, don't risk doing all that yourself. Get an expert. I certainly don't do my own taxes. But if you aren't sure, and you think yours might be simple enough to just do it yourself, go to DaveRamsey.com slash tax quiz and take our quick tax assessment. It's five minutes.

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April is in Wisconsin. Hi, April. How are you? Hi, Dave. Thank you for taking my call. Sure. What's up? So ever since I graduated high school, I made bad decision after bad decision.

Currently, I am 29 with a one and a half year old. And I filed and did my whole bankruptcy last year. So that's over with that behind me now. I don't want to dwell too much on the past. But I after listening to you, I just found you. I feel like I could have done it. Had just done the right steps and known about it. But again, I don't want to dwell too much on that. My question for you, Dave, I only have $10,000 of student loans that obviously survives the bankruptcy. So I want to apply your teachings to my current situation, even though I didn't do the steps noble. Would I be then at the end here of baby step two, being that I now have my,

I have just a little over $2,000 for my security fund. And I own my own house. That was one of the only smart things I ever did was to own my little fixer-upper, and it's all good for my daughter and I. And you reaffirmed the mortgage and the bankruptcy and kept the house? Sir, I bought that straight out of cash. It was a fixer-upper, so we bought it cash and we fixed it up and I live there now. Okay, good for you. Okay. Yeah.

Alright. And you did that I guess after the bankruptcy or the house was under Wisconsin law gave you enough homestead exemption to where they didn't take it in the bankruptcy? Yep, yep. I got to keep it. It didn't go in the bankruptcy at all, so I got to keep that. Good didn't go in the bankruptcy at all. Gotcha.

I got to keep that, yes. Good, good. Okay. What do you make a year? I make $41,000. Good. Okay. So I went through a bankruptcy when I was your age. It was larger and dumber than yours because I was dumber than you

because I did stupid with zeros on the end. I have a PhD in DUMB. So, um, I know exactly how you feel. Uh, it was a little different setting, but it doesn't matter. It was a business deal, but I just, I was dumb. And I, you know, like you said, I made bad decisions and I reaped, uh, uh, I reaped the whirlwind. I reaped a hurricane in my life. And so I sowed stupid and I got hurricanes, right? So, and that's kind of what you went through. So the thing I want you to do is this, and I, you know, that was, you know, I was 28 years old and I'm turning 60 this year.

So it was a long time ago. And yet today, I don't want, I like what you said, I don't want to dwell on the past. What I did at that time, and what I still do in a sense, is I look at the decisions that I made that put me into bankruptcy, and I want to pretty much do the opposite. Right. Okay. So the only reason to revisit the bankruptcy is not to shame yourself, not to feel condemned by your past and that kind of a thing. But the reason to revisit it is to kind of do a CSI on the patient, figure out why he died, you know the why the why this why this financial situation die i killed it now what did i do that killed it right and so i you know i figured out i don't

borrow money anymore i figured out i didn't have any money for savings i figured out i wasn't living on a budget i figured out um i was doing everything the opposite of what i teach today and so i went broke well no kidding you know and so what you want to do is say okay here's the three dumbest things i did why did i do those and why will i never do them again and then put a lock on it and leave it in the past correct so learn from it's all you really want to do and then and then no condemnation no shaming on that and we move forward because the rearview mirror in the car is smaller than the windshield the windshield is grace the rearview mirror is looking back at the stupid stuff we've done

it doesn't need to be too big we don't want to spend too much time there but enough that we don't cut over into that lane and knock somebody out in the ditch, right? So all of that to say, that's what I would do there. And there's a real good mental health kind of feeling to that, an emotional health kind of feeling to that, spiritual health kind of feeling to that, to get the good stuff out of the pain and then leave the pain back there. That's what I would do. Correct. I like to think of it like i gave my daughter and i a fresh start

um all of those were very old debts yeah but if you do a fresh start and you keep doing the same stuff and didn't learn anything the fresh start doesn't count because you're right back into the soup so you got it you got to change direction you know you have to repent is what a christian would call it turn another direction okay so all of that. Now, then where are you? You are in baby step two. You have $10,000 in debt. You make $45,000 a year. You have a paid-for house.

You need to get your debt paid off, and then you need to build an emergency fund of three to six months of expenses. And so you need to get on every dollar, and you need to get into Financial Peace University and finish learning the lessons that take you into a positive future away from a negative past. That's where you are. So hold on. We're going to sign you up. We're going to help out a single mom here. Got a little girl. Got a new life, a fresh start. Let's put her on solid ground. We'll put you into Financial Peace University, the one-year

membership, the class, every dollar plus, all the communities, all that stuff is going to be there to help you. It's going to rock your world, kiddo. All right. Lynn is in Minnesota. Hi, Lynn. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking that call.

Sure. What's up? We just finished step three, starting four, five, and six, essentially. Just did our budget and everything. And after putting 15% in and doing the educational savings account, we're just sort of deflated with what's left over to put into the mortgage. We're like thinking we'd have more for that. We had a five-year goal to get that done.

We get, sort of my main question, I guess, we get employee matches. So, would it be okay to like do 10% because the employee is paying four or 5%? Well, you're grown people, you're grown people. Anything's okay. You're out of debt. You're out of debt. You're investing, you're saving for college. You're putting stuff on a mortgage. Anything in this, in this lineup is okay.

Uh, what would I do? I would stick with 15%. You just now turned the corner. You're just getting used to the rhythm of this. I'd be putting 15% of your income into retirement. How much are you putting in kids' college? We are planning on doing about $160 for each of us. How many of them are there?

Two of them. Okay. So $300, that's $3,600 a year. What's your household income? $140. Okay. How much are you wanting to put on your house? Well, we have $150 left on the house.

We'd like to get it done in five years. You're probably not going to make it. Probably going to be eight. Oh, well. You're still winning. This is the Daveave ramsey show so Okay, I need you to listen to this. When you're on Wi-Fi anywhere in public or at home,

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people worldwide have downloaded CyberGhost VPN. Download it now. Just search CyberGhost on iTunes or Google Play or go to CyberGhost.com. Thank you for joining us, America. This is the Dave Ramsey Show. Common sense for your dollars and cents. Teaching you to live on less than you make. A concept Congress can't grasp. Duncan is with us in Georgia. Hi, Duncan.

Welcome to The Dave Ramsey Show. Hey, Dave. How's it going? Better than I deserve. How can I help? So I'm having some employment trouble here, so I'll kind of just get straight to the point. My military obligation, I believe, is kind of hindering my employment-seeking capabilities. So I'm in the National Guard, which normally has a commitment of about one weekend per month and

about two weeks per year. However, the unit that I'm in has some extra stuff going on in the next couple of years. So in the next two years, I expect to have about 40 or 50% of my time have some sort of military commitment. And that's spread out to like a weekend here a month here a couple months here it's kind of intermittent i think that will kind of hinder my ability to get a job yeah i'd like to hear your advice well because you'd be it would be hard for you to add value to an organization when you're just there half the time exactly and it's not that they are mad at the military and wouldn't support the military. We've got folks here that are National Guard, and when they go out, we salute them and honor them and pay them and love them and all that kind of stuff. So you've kind of got job just for money that has no demands on it.

So you're Ubering, you're delivering pizza, you're doing that kind of thing, because you can turn that on, turn it off at any time, right, and then meet the obligation that you've got. And so what rank are you in the Guard? I'm an infantry officer, so second lieutenant. Okay. So what is this paying, taking up 50% of your time? So when I'm just doing the one week in a month, it's $550 a month.

No, that's not right. One week in a month is not your problem. I mean, 40% of your time is your problem. Yeah, so it's 40% spread over the next two years. But over the next two years, what will you make a year in the guard? With BAH, about maybe $40,000 to $45,000, maybe $50,000. Okay, cool. And so if you supplement that with another $30,000 with a side gig

that's not necessarily your life's goal uh that's not a bad thing okay that's one option so uh let me back up a second what is your long-term goal where do you want to be in 10 years military or what uh probably millionaire uh no i don't plan on staying in for um for a career um i'd like to have some sort of business that I run myself. I'd like to be able to do that on the side, but have income in short-term support myself so I can kind of do my side gig on the side, if that makes any sense. Absolutely, yeah.

So I think that was my second thing, and your answer leads me straight into it, was instead of just doing the Uber or the pizza delivery thing with 40 of your time that's a lot of time or 60 of your time 40 in the next two years devoted to the guard uh what i would use that time for is to start my dream business and begin to grow it now obviously you have to grow it in such a way that uh you have some help or the service that you're providing can be turned on or turned off when you're gone. Because the weekends aren't a problem.

A weekend here or there, you can run a business and be gone a couple weekends. I have no problem doing that once the commitment kind of dials down a little bit. Yeah, but if you're going to be gone for four weeks and customers are looking for you, that's a problem in your new business. Absolutely. So you've either got to staff to cover when you're gone in your business model in your new business, or the business model is simply something that you're kind of doing, a freelance thing, a consulting thing, something like that,

as your first step of opening your business for this two-year period of time. And so you're just simply not available on those days. And you can't do consulting or you can't do freelancing or whatever it is on those days. I mean, you could, I'll just make up something. Let's say you did catering. You wanted to go in the food business, okay? You would just not take any parties to cater during those four weeks it's not a big deal and they go well we need you well i'm sorry i'm not available that i mean what if you had another client you couldn't do it right

so you do have another client in this case it's the guard and you're not cooking there but okay but you see my point you just tell them no i can't do that four weeks but it doesn't destroy your business you can still begin your catering business. I'm making that up. I'm not saying that's it. But whatever it is, it can be either structured in such a way that you're just not available. You're not available for freelance consulting, catering, whatever it is during that time, or you staff in your business model to cover the gap that is there.

Malisha is with us in Maryland. Yeah, probably. I can't get it to turn off, so my bad. I hit the wrong one. All right, Malisha is here in Maryland. Hi, Malisha. How are you? Good afternoon.

I am great. Nice to talk with you, Dave. Sure. How can I help? My question is, my son is 16 in the 10th grade, hopefully going to the 11th. Is it too late to invest in the 529 here in the state of Maryland? Well, you could, but it's not going to do much. Right.

Because the point of the 529 is it grows tax-free. Your son is how old again? 16. He just turned 16. Okay, so we got two years, all right? And so if you put $10,000 in and it grows 10%, it made $1,000, and the $1,000 is not taxable. So this is a $150 discussion, $200 discussion. It's not – see, it doesn't really break the bank that you're taxed for this two-year period of time.

So you can do it. It won't hurt anything unless you didn't use the money for education, and then you've gotten yourself set up into a penalty. But the growth is not going to be substantial, so the tax savings due to the 529 is not going to be substantial. Does that make sense? Yeah, that makes sense, and I kind of figured it was too late. It's not too late to save money for college. It's just the 529 doesn't give you any big tax benefit because it's too you're not going to have a lot of growth it's too late to have a lot of growth on the account but it's not too late to

throw a bunch of money aside for college and get the kid into school and get him into something he could afford that you pay cash for right well i have a backup plan and i don't make a lot of money i'm 45 i'm trying i'm trying to purchase my first home and i I only gross about $52,000 a year, and I do have debt. So I have money set aside for a home, but I'm hoping that I can apply for as many grants as I can get in Baltimore City. I have about $5,000 set aside. I have just about $3,000 in my son's savings account that I put aside myself, which was very difficult, but I did. And like a lot of other folks, I do live paycheck to paycheck, but I'm okay. There is no complaining.

How much debt do you have? About $14,000. You don't need to buy a house to get rid of that. I heard you say that. Yeah, you knew I was going to say that. a house to get rid of that i heard you say that yeah you knew i was going to say it so let's get rid of the debt let's get the emergency fund bill let's get you on a tight budget so you're not living paycheck to paycheck to accomplish some of these goals we'll look for extra income and begin to clear your debts out of there and then we can be in a position to maybe just some cash out of the budget help him as he goes along

okay now let's switch gears and i've done some let's switch gears and talk about him okay he's your single mom yes you make fifty thousand dollars in baltimore he's going to qualify for a lot of different kinds of scholarships even some need-based stuff. So he is now, and you are now, in the get him some scholarships business. Like I want you to apply, I want him to apply for 1,000 scholarships between now and the time he graduates. I'm not exaggerating, 1,000 of them. He'll get turned down for most of them. He'll get a bunch of free money.

He also needs to get his butt out there and get a job, and he's going to be working the whole time he's in school. He also needs to pick a school that he can afford, which is the cheapest school out there because he's broke. There's nothing wrong with that. It's exactly what I did when I went to school. A lot of people did that. Hold on. I'm going to send you Anthony O'Neill's book to show you exactly how to do this without any student loan debt as a broke

single mom. It's called Debt-Free Degree. I'll show you how to do it. He doesn't have to have debt. He can go to school. This is the Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money. And the perfect place to do that is on board our first ever live like no one else cruise in March. That's right, just a couple of months away. But get this, it's not too late to book your cabin, so don't miss your chance. This Caribbean cruise

is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to RamseyCruise.com today to reserve your room. our scripture of the day proverbs 9 9 give instruction to a wise man and he will be still A distinction between righteous and wise. Very interesting. Give instruction to a wise man, and he will be still wiser.

Teach a righteous man, and he will increase in learning. There's some nuance there. Benjamin Franklin says, Tell me and I forget. Teach me and I remember. Involve me and I learn. Stephanie is on the line. Stephanie's in Georgia.

Hi, Stephanie. Welcome to the Dave Ramsey Show. Hi, Mr. Amity. Thank you so much for taking my call. My honor. How can I help? Yes, so I am a medical doctor. My total debt adds up to, get ready, $540,000.

Woo-hoo! That includes undergraduate and medical school. And I did take two years off where I was not paying. So that continued to accumulate. So I have no other debt besides my school loans, my car is paid off, I don't own a home, I don't have any credit card debt. I do have that divided up into $50,000 of one provider, and I plan to have that paid off by the end of the year.

So the rest of that $470,000, that will probably take about 10 years. Please tell me you have a high-paying specialization. So I gross $180, but I take home about $108 a year. That's not right. I take home about $108. That's not right. I know. Yeah, it's really odd.

No, it's not right. It's mathematically incorrect. It wasn't a philosophical statement. Yeah, you do not have $80,000, you do not have a 50% tax rate. My contract says 180, and when I add up what's in my bank account, it adds up to $108,000. And how long have you been doing that? Since April last year. Okay, you need to sit down with a tax professional.

You should be getting an outrageous tax refund. So far't. So far it's only $6,000. I'm sorry? So far it's only $6,000. Okay. Are you putting money in your 401k? No. Are you having other things come out of your check other than taxes? No. Okay. Okay. You need to sit down with TaxPro because there's something not adding up here. All right. So what field are you in in medicine? Primary care. Good. Okay. All right. Do you have the capacity or the logistical ability to pick up some ER or pick up some extra hours at the primary care practice that results in extra income? I am looking into my issue that I took two years off for burnout. So I'm being very careful about how much I work. Honey, you just got out of school.

You don't even burn out. You got $500,000 dollars in debt we don't even be worrying about you burning out you're flaming out yeah you're dying here you need to be working like a hundred hours a week i don't talk about burnout you need to get your butt in gear you need to be making 300 grand and clean this mess up in about three years and then you can talk about burnout and back in your hours back down to 40 hours a week and make 180 if you want but i want you to double your income for three years and be out of debt and get your tax thing straightened out because listen if you make 150 000 and you live on nothing if you'll go back to living like a college student and you start chunking money towards a 540 000 problem uh let's pretend you put and you do what i'm talking about. You increase your income because you increase your,

you increase your income because you increase your hours and all this other stuff temporarily, and you're going into crazy land. You're just going nuts for a short period of time because you need to be in panic mode. Someone just walked into your office, walked into my office that has stage four cancer and is questioning the intensity of chemo. That's what just happened in my office.

Okay? Yeah, you got cancer. Stage four. This requires a radical treatment plan. $540,000. Otherwise, you're going to have it the rest of your life. I don't want this the rest of my life. This isn't a pet. This a curse so all right we're gonna

live on nothing you put a hundred thousand dollars a year towards it it's done in five years you put 150 000 towards it it's done in three and a half years uh you put 200 000 towards it it's done in three years that's simple and you live on 30 or 40 or 50,000 bucks live on nothing and uh you don't buy stuff like a doctor because you're a broke doctor you're a bankrupt broke doctor so you don't be buying houses you'll be buying cars you'll be investing in stuff you are a broke doctor 540,000 in debt and you need to act like your hair is on fire and completely focus. And the faster you do that, the faster you're going to get out of debt. And then the faster you're going to live the life you dreamed of when you paid this huge price personally and financially to become an MD.

The horrible news is you have an unbelievable mess. The bad news is you're deep in debt. The great news is you have a huge shovel and a fabulously bright future. Your future is so bright it's on fire if you don't screw around with this. But pop it in the mouth. Hit it hard. Aggressive treatment plan. The patient is dying. And that's the metaphor for you. Get after it. Get after it. So, all right, you can do this, but you're going to have to adjust some things. You can't just go with the flow. Going with the flow got you here. You have to come against the flow. You have to come against the way people think in your world. In your world, people think this is okay. It's not okay. It's stupid. Clean it up. Gosh, I hope I wasn't unclear. All right. Marion is with us in Michigan. Hi, Marion. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. How can I help? I am 58 years old. I am a realtor, so I'm commission only. Divorced six years, left my marriage with zero. I have some debt and I am getting an inheritance that I'm trying to figure out if I should pay off my debt or invest the inheritance. So my debt is, um, when I divorced,

I had to remortgage my house and put it in my name and my ex-husband had two HELOCs. So those got rolled into it. Um, so I owe on my house with those 350,000, my house with those $350,000. My house is probably worth $550,000. I have student loans from two of my children for $67,000. And then that HELOC, one of them is for $38,000. How much was the inheritance? I have around $200,000. And I have saved $130,000 since the divorce. So that's just sitting in the bank. I have no investments. I have no IRA. I have nothing else. And I have one more child through college that I am paying cash for as I go along. Good, good. And what are you making? What kind of money are you making?

I net after taxes and expenses to run my business around $175 a year. Good. You're killing it. Well done. You're a rock star real estate. I'm getting ready to hire, too, to grow the business, so I know I'm going to need money for that as well. Okay. So the way I answer questions here, Marion, is if I woke up in your shoes, what would I do? And it's really easy because we're about the same age. Okay. And I love real estate. I grew up in real estate business, so I kind of know how your brain works.

Mom and Daddy owned a company when I was growing up. I got my license when I turned 18, so I kind of come out of your world. Um, um, and, and so what I'm telling you is going to kind of run contrary to the way, the, the way your brain functions normally in your world, because you're a great salesperson and you have a great ability to create income. Uh, but then you're not always sure exactly what you want to do with it. Right, or what the year is going to bring. That's kind of normal in your world. The way I always said it was I always tried to out-earn my stupidity. So what I would do if I were in your shoes is I would pay off these two little debts immediately,

67 and 38 today. I'd begin to work on paying off my home as quickly as I could above an emergency fund because I want you completely debt-free house and everything before you're 60. And then you can start piling money in mutual funds or buying some paid-for rentals to get yourself out of the mess. So I mean, to get yourself into a big pile of money so that you can retire with a paid-for house and a big pile of money. 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. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.