The Ramsey Show - App - No One Accidentally Wins the Super Bowl (Hour 1)

Episode Date: August 9, 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'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money. We're here for you. The phone number is 888-825-5225. That's 888-825-5225. John's with us in Salt Lake City to start off this hour. Hey, John,

how are you? Great, Dave, How are you? Better than I deserve. What's up? So about five years ago, I started a full commission sales job. And at the beginning, it was pretty rough. There were a few hundred dollar paychecks here and there. Fortunately, I was single at the time. But as things started to build up and things started getting better, I got some good paychecks and I decided to take advantage of my company's holding account, where they would save some and pay me more on the next check if I asked them to.

And over the last five years, it's kind of gotten out of hand. I've been very blessed and fortunate, and that holding account's now up to about $125,000. I'm just seeing, should I take that all out at once? I want to get that down. I just don't know if I should do that over time. We just have $50,000 left on the house. Everything else is paid off. That's good. Okay. Well, I'd definitely pay off the house tomorrow, wouldn't you?

I have enough in savings I could do that as well. Yeah, good for you. You've done very well. Congratulations. I would become my own holding account. Okay. All they're doing is holding money for you out of your check. Obviously, you are good at handling money.

You've had a level of discipline. You've had a level of control because of the other things you told me. And so why not just take your whole check and set some of it back? We used to, when I was in the real estate business, we had a dumb name for it. Holding accounts is so much more sophisticated. We called it the hill and valley account. When we were up on the hill and things were good, we put some aside for the valleys. And we kept a separate account just to cover because I was in the real estate business.

And some months I made zero. Some months I made 20 grand, you know. And so it was it was feast or famine and so we set money back it wasn't the emergency fund it was separate from that and this was just the hill and valley account and again that's a holding account it's a much more sophisticated name we didn't come up with a good name but that's all it is you could do this for yourself and of course earn interest on it while it's sitting there and you know what i would look at is realistically what is the volatility that actually needs to be covered in your income

obviously you're over holding right i think we can all agree on that so what even if you were doing it on your own behalf you wouldn't set as much back as you've been setting back because the average of your income has been much, much higher than the holding. So what is your worst month in the coming 12 months, realistically? December I made a grand, $1,000, but January I made $30,000. Okay. What's your household income? What's your income in a year?

Over the last four years it's probably averaged about $250,000. Okay. What's your household income? What's your income in a year? Over the last four years, it's probably averaged about $250,000. Way to go. Good for you. Well done. Good, good, good. Okay. So it goes all the way down to a grand. So it is very volatile then.

Correct. I mean, yeah, it's definitely been, fortunately, more hills than valleys. But I think I'm super averse to risk. I'm just worried. Like, I never know. I'm in tech sales. If the economy goes bad, I hills than valleys. I think I'm super averse to risk. I'm just worried. I never know. I'm in tech sales. If the economy goes bad, I don't know. Well, that's the emergency fund.

That's different than the holding account. And so I would have an emergency fund on the six-month side of the three to six months of savings, of expenses, three to six months of expenses. I'd go on the six-month side because your income is so volatile. But in addition to that, I'd create my own holding account, and I would stop doing it with the company and just set some aside. Just look at the formula you've been using. Dial that back a little because it's too aggressive. Thus, you've got all this surplus.

We know it's too aggressive because that's where the surplus came from. So would you just take it all out on the very next paycheck? Yeah, I'd take it home. It's your money. Are they paying you interest on it? Nope. You have $120,000 of zero interest? Yes, I would take that out tomorrow. Yeah, and just set up...

Even if you put it in a 1.5% money market, right, that's attached, you know, you can have web access to it and move it into your savings account, I mean, into your checking account whenever you need to, right? You can have web access to it and move it into your checking account whenever you need to, right? And just set yourself up a little spreadsheet and do your own holding account with the exact same formula we're using before, but a little less aggressive, because we know that you've been too aggressive, thus you have $120,000. Yes, I would take it all out immediately, up out of my house immediately, and then I would set my own holding account up to cover the volatility in your income.

Really cool question. Good for you, man. You're doing great. Nick's with us in Seattle. Hi, Nick. How are you? Hi, Dave. I'm doing great.

Thanks so much for taking my call. Sure. What's up? So I'm a young guy. I'm 23, and I've been living here platform for most of my life. And I'm trying to get into buying a house with a no credit check. But the problem is I've lived, I think, a little too debt free. There's no such thing.

You have zero credit score. I have zero credit score. I have lived with my parents up until the last couple of months. Okay, now that can be a problem. You don't have a track record of paying a landlord. You usually have to pay your landlord earlier on time for two years, have a strong down payment and be steady on your job for two years, and then with no credit score you can get the same mortgage you could get with a credit score.

Right. And so I'm just wondering what should be my step? I've got a good solid down payment saved up, and so I just need to know. I don't necessarily think I have the time to wait, you know, six to 24 months with paying rent. Why? Because I'm getting married in a couple of months, and we'll be having a baby, and rent is really expensive in my area here. Rent's not as expensive as home ownership. That's true, but rent is extremely high in the Seattle market, and I'm worried about losing too much of the down payment and then not having enough to be... If you have to use the down payment to pay the rent, then you can't afford to buy a house because you can't pay the payment.

If you can't pay a rent payment, you can't pay a house payment, dude. Baby's on the way? No. Oh. Okay. Well, okay, I'm sorry. I could pay the rent. I just...

Yeah. That's the only thing... I'm very frugal. I'm very, you know, afraid of... Not afraid, but concerned of wasting the money in my mind. It is a waste if you live a life of doing this for a decade. I'm suggesting patience. The first thing you need to do is get married, set up your house,

spend a year getting to know each other. You'll make a much wiser decision buying a house after you've been married a year. It takes a year of being married to know how close to your mother-in-law to buy. That was a joke, dude. Okay. I get it. You got to get to know each other. You got to hang some curtain rods together, man.

I mean, it's just what would cause a divorce in some households. So, you know, you just have to work through some stuff, and you're better off to just take your time. When you're 30, you're going to be glad you were patient. Not five years of rent, but one year. And you've already paid a little bit of rent. Now it sounds like get with Churchill Mortgage and they'll lay out for you exactly what you've got to do to qualify for a mortgage with no credit score. Don't go get into debt. And don't go buy a house right now.

Just take your time. Get married. Be married a year. Then go buy a house. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives. Think about it. LinkedIn has more than 600 million active members.

I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities. In fact, 90% of LinkedIn users are open to new opportunities, but not actively scanning job boards. This means LinkedIn Jobs gives you access to an entirely different demographic. Don't wait. One hire can change the direction of your company. Post a job today at linkedin.com slash Ramsey and get $50 off your first job post. That's linkedin.com slash Ramsey. Terms and conditions apply. ¶¶ Stacey is with us in Atlanta, Georgia. Welcome to the Dave Ramsey Show.

Stacey. Hey, Dave. I'm a super big fan of yours. I was hoping that I could get through, and thank God I did. Well, I'm honored. How can I help, sir? I have three quick questions for you. My wife and I, we sold our home last October, and our home sold within three weeks.

We had to move into an apartment, so we signed a 10-month lease with hopes of finding another home within those 10 months. Our lease has since expired because we didn't find a home. But my three questions for you is, should we renew our lease for another 11 months, try to find a home with today's low interest rates, or pay off our existing debt of $18,000? And why did you sell the home originally? We sold the home originally because there was a ton of foreclosures in our subdivision. Okay. And we had a bad, we had one of those interest-only loans, and we needed to get out of that loan because... Okay, so there's a whole bunch of reasons to get out of there, and, you know, bad situation.

I got you. Okay. And what's your household income? My household income, I'm in sales. So my household income, my wife is a stay-at-home mom, so I average between 85. This past year, I made, thank God, about 140. Wow. And this year, I'm on track to make about 115 to 120.

Good for you. You're killing it, man. Good job. Okay. Well, killing it, man. Good job. Okay. Well, here's the thing. If you call me up and you said, we're renting an apartment with $18,000 in debt, should we buy a house?

And that was the only part of the story you told me, okay? Then I would say, don't buy a house until you're debt-free and you have your emergency fund in place, and then you save your down payment, working right through the baby steps. And, you know, I kind of think that's the smart thing to do here, even though the way you got here is you're not like a first-time home buyer and your young couple just got married in an apartment

and you're dying to buy a house, you know. In that case, I always tell you, wait until you're debt-free because you're going to make a better home decision when you have your emergency fund in place plus a down payment and you have no debt. You're going to feel different better home decision when you have your emergency fund in place, plus a down payment, and you have no debt. You're going to feel different when you buy the house. The house has a higher likelihood of being a blessing rather than being a curse. And so I think I'm going to do that if I'm in your shoes. Sharon and I actually moved out of our house after we went broke, sold it.

Not because we went broke, but because the kids were in a school system and we were paying private school fees while we're broke, which is just really stupid. I mean, we were just unbelievable. So we had to get them into a different school system and moved, and we still had a little bit of debt to clean up, so we sold the house and we rented. We ended up renting two years, which is what you're going to end up doing which was very very hard for me emotionally because i've been in

real estate since i turned 18 years old my parents were in the real estate business for goodness sakes i've always owned real estate as an adult and to not own any real estate and be a renter was it was devastating emotionally i mean i was I was just scratching and clawing and fighting to where I was never going back there again. I did not like it. And my wife hated the rental house too, which made it even worse. So the only thing was we got into a good area and into a good school system. And the story ended fabulously as we moved out of that property

into the first real house that we ever owned and paid cash for in our lives. And so it changed the whole direction. It was the beginning of our financial peace walk, our total money makeover walk. So I can relate to you. It's been a while since I've been there, but I can relate to you. But I think I would stay there and run another year. Let's get that debt paid off. You're making good money.

You're doing a good job with your sales. Get that emergency fund in place. Get you a good, big, fat, juicy down payment. And I think you can do all of that in this 11 months with the kind of money you're making. Get yourself on a really tight rice and beans, beans and rice budget. We're saving up to buy a house. We're going to get out of debt. We're going to buy a house, and we're going to build our emergency fund,

and we're going to buy a house, and, you know, all of that. We're going to buy a house, and that's our mantra. And put pictures of houses on the refrigerator door so the family knows that's why we don't have a life this year, because all we're doing is renting and getting ready to buy a house, and we're leaning in, and that's what I would do. Open phones at 888-825-5225. You can join us on facebook.com slash Dave Ramsey.

Morgan is on Facebook and says, Dave, if you really believe people shouldn't use credit cards, why does your website take credit cards? Morgan, obviously you're an idiot because there's a couple of things you underestimated by trolling my Facebook page with your hypocritical innuendo. The thing you didn't understand about me is I am not your typical person that's on the air. I'm a hillbilly. And when you insult a hillbilly's honor and integrity, we get pissed off. And hillbillies don't do drive-by shootings. We buy the house next door to you and lay siege. So you need to understand you little twit with your digital courage

and your you know obvious slight of my integrity that number one you're an idiot number two you don't know what you're talking about my website does not take credit cards. We very clearly take debit cards. It would be hypocritical for us to take credit cards. Now, can you run a credit card through our website system? Possibly. It could probably happen with the software. I don't know. But we have clear signage up that says, don't do that, you fool, and that we're not hypocrites. So if you really want to find some excuse to not do the stuff we're talking about, Morgan,

there's lots of excuses. But my lack of integrity is not on the list because we are exactly who we say we are. I'm worth tens of millions of dollars because i do the stuff we talk about my wife still has a freaking envelope system in her purse we do not take credit cards we do not borrow money i had a guy ask me this morning i was in a meeting he goes hey my wife's a teacher up in gallatin tennessee she heard you leased your truck. And I'm like, oh, geez. What kind of idiot would I be to go lease a truck? And what kind of moron at a car dealership actually tells somebody that Dave Ramsey leased his car?

I mean, you have to be beyond stupid to think that I would lease a car. I mean, seriously. But everybody, you know, here's what it is. You don't want to grow up. You don't want to live on less than you make. You don't want to get on a budget. You don't want to agree on your spending with your spouse. You don't want to stop spending like you're in Congress.

You don't want to quit being a little twit, and so you try to find something inconsistent about me. Listen, if you don't want to do the a little twit, and so you try to find something inconsistent about me. Listen, if you don't want to do the stuff we teach, I'm okay. I still got financial peace. You just go on your merry stupid little way. I'm fine if you don't want to do the stuff we teach, whoever you are. If you're insulted or you don't like my politics or I don't have enough hair or you got a face for radio or whatever,

you can find a reason to not follow Dave Ramsey. There's lots of them. You're too angry. You're not mean enough. You're too Christian. You're not Christian enough. There's always a reason to not do this stuff if you want an excuse to not fix your life. But that's all it is, darling.

You're just being a little twit. And you're this generation that has what we call digital courage. You no more would walk into the lobby of this building and say something stupid butt like that to my face than fly to the moon. And if you did, then we would help you leave the building quicker than your feet might carry you. So unbelievable. But you don't have that kind of courage.

You're just a little spineless little boy living in his mother's basement. And so, go on social media with your little opinion. But no, darling, we don't take credit cards. We're not inconsistent. And I don't lease my truck. I don't have a mortgage on my house.

Oh, Lord. And I don't have secret investments in double-secret, double-backflip family partnerships that only the rich use. There's no such thing, by the way, you stupid people. Seriously. Just do the stuff, man. Just do the stuff. This is the news, guys.

You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands, or better yet, reduce the time until you're debt-free.

Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace, knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. In the lobby of Ramsey Solutions, Doug and Sally are with us. Hey, guys, how are you? Hi, Dave.

We're awesome. Humbled to be here. Thank you. We're honored to have you. Where do you guys live? Parker, Colorado, a suburb southeast of Denver. Oh, yeah. Well, welcome to Nashville.

It's good to be here. And all the way over here to do a debt-free scream. Yes, sir. Amen. Cool. How much have you paid off? $503,000. Oh!

And how long did this take? Two and a half years. Okay. There's a story here. And your range of income during this time? We started at $240,000 and finished at $550,000. My goodness gracious. What do you guys do for a living?

We're airline pilots. Okay. And so you just stayed in the air, huh? Well, some way. Well, one of us did for a short period of time. Wow. 550. I mean, man.

Oh, man. You got the old contracts. This is great. Very well done. Oh, man. So 503,000 in two and a half years. What kind of debt was that? Was that your house?

That was included. And we had a timeshare. The timeshare exit team took care of it. $6,000. We had two other nasty 401K loans. $62,000. And a home equity loan for $82,500. And a visa for $52,400.

Whoa. And that was a total of $3 and 300 on the house. So two and a half years ago, something lit you on fire. What was that? What happened? Well, it started before that. And we had had FPU. And we had tried the budget and tried the envelope system.

And we were not successful with that at that point in time. And we were having a lot of family struggles. We had an older child who was having a lot of difficulties through schooling. And so we fast forward to 2000 and July 2015, you had just come out with the every dollar budgeting tool, which I latched onto. And we had just cash flowed two and a half years of military boarding school for this youth. And that was cash flowed. And then that didn't work out real well. And so we went to a more aggressive step, which was basically crisis management, if you will, very expensive.

And at that point, we were beyond all funding that we could get our hands on. We had 529s, we had 401ks, but we didn't have the cash. So we took out all these loans, and when we did that, we basically both decided that when we were finished with that, we had to aggressively pay it off. So July 2015 was when he graduated out of the program and high school, and this is our younger son, so not the one I'm referencing. But at any rate, so that at the same time that July 15th, Doug had already been on long-term disability for one year. We didn't know what the end time was for that. And so that actually wound up to be 20 months. And for...

So all this stress piled up and the debt piled up with it. Big time. And then you just said, okay, now I bet I can make this envelope system work. Now I bet I can make this budget work. And the every dollar tool was a godsend. So... You were ready, though. I was more...

Y'all reached the point, it's whatever we need to do, because we can't... This isn't working. Absolutely. Yeah. It wasn't wasn't working and how the story turned out with your son ah awesome he turned out he's fabulous he's in the navy he's married he's doing wonderful he thank you lord yes absolutely it worth the investment worth the investment completely very cool good for you guys very well done so what do you tell people? Since you kind of started it but didn't do it, and then you did it, what's the difference? What's the key to getting out of debt? Getting serious about it. Yeah.

Having that goal and being on the same page and understanding that we have to take responsibility and we need to be good stewards. It just is so important, I think, that you have the plan and you follow the plan. So, Doug, you came off a long-term disability back into the air. That's correct. I was one of the fortunate few because a lot of times you go on disability, it's very, very hard to come back. Yeah, pilot stuff is pretty serious, particularly commercial pilot. Yeah.

As it should be, but still, it's a pretty fine comb. We didn't get serious about the financial debt in your program until I was on disability. And, of course, we had a mountain of debt, and now one of us is working, or one of us can't work. So that was an eye-opener. Wow. Wow. Way to go, you guys you guys i mean you did it how's it feel amazing for me because i'm the one that that was dealing at the time he was on

long-term disability especially with the budget and the job and and the whole works while he was trying to recover so uh it's it's a great place to be. I highly encourage it. Amen. Debt-free for everybody. And your younger son's with you. What's his name and age? He's Noah, and he's 16. Okay.

And is that NASA I see on the shirt? Yeah. Okay. So he's going to be a rocket scientist. Yes, sir. That's his hope. That's good. Following the aerodynamic path of his parents then.

I love it. Good deal. Congratulations, you guys. I'm proud of you. Thank you so much. Appreciate that. Are people cheering you on or people saying you were crazy? Both.

The ones that thought we were crazy probably didn't say it out loud too much. Because we weren't going to listen anyway. Yeah, you reach a point you don't care what they think. And honestly, we didn't. So there was a lot of encouragers, though. There was a lot of people that, though they thought they might not be able to do it, it was good that we were trying to do it. So you said years ago you went through Financial Peace University.

Did you go back through then when you started getting serious? Yes. I went three times, didn't I? Maybe three times. I know the second time, but we were already pretty much gung-ho. You knew what to do from before. Right. You just got back into the group to get the encouragement and the right culture around you.

And we've gone to see you live all over the country, basically. Well, you do it for airline miles. Sometimes. I don't think so. Well, congratulations, you guys. Very, very well done. Proud of you. Thank you.

Again, we've got Chris Hogan's book, Retire Inspired, for you. That is the next chapter in your story to not only be debt-free but now be millionaires and outrageously generous along the way. And you've already proven that you know how to do that, investing into your son the way you did. So very, very well done. Like any good parent would do, but you guys did it on steroids. Well done. Doug, Sally, and Noah from Denver, $503,000 paid off in two and a half years, making $240,000 to $550,000. Count it down.

Let's hear a debt-free scream. All the glory to God. Three, two, one. We're debt-free scream. All the glory to God. Three, two, one. We're debt-free! Wow. Wow. You know, sometimes I hear somebody's paid off $50,000 that makes $50,000. But sometimes we have people that pay off $500,000 that make $500,000.

That's a lot of money. It's a lot of debt, a lot of income both, isn't it? I don't make $500,000. Yeah, you probably don't have $500,000 in debt either. I hope. I mean, we hear all kinds of numbers on this show, but you know what's interesting? Chris Hogan says it well. The numbers change when people do. You get to make a decision right now.

Today. What are you going to do? You have the power, the freedom, and the obligation to intentionally make a decision about what you're going to do with your life. People don't lose at life.

People aren't unsuccessful because they set out for that to be their goal. People are unsuccessful because they don't have intentionality. No one accidentally wins the Super Bowl. It was an act of intention. Practice and work and practice and work and practice and work and practice and work and practice and work and practice and work and practice and work and practice and work. You hustle and you grind. You hustle and you grind. You hustle and you grind. You hustle and you grind. You hustle and you grind.

And then you're not surprised when you're successful because you know how you got there. Financially successful. Successful in raising your kids. Successful in your marriage. Successful in your career. Successful in running a marathon. It's never a shock. It was an act of intentionality. A choice. So choose. Open phones this hour. Dave, I was listening to your show. I was surprised that you said there are very few times where you felt prompted by the holy spirit to give i do agree with your

overall framework for giving uh i either misstated that or you misunderstood it i was talking about the tithe i think yesterday maybe and i was talking to a guy about tithing. He was asking about that. And what I said was, in that context, was that to give over and above the tithe, to give offerings, Scripture only indicates that that is done from surplus, extra money. And the only time I would give while I was getting out of debt above the tithe would be if the Holy Spirit prompted, and that would be a very unusual, very unusual situation. It's not just, oh, I want to give to dot, dot, dot. No, that's not the Holy Spirit. That's just you want to do something. But if God is telling you to give, and you're sure it's him, then do that. Now, as far as overall giving, Holy Spirit prompting,

almost every day for me to give. And it's different situations. Sometimes it's just increase a tip. Sometimes it's random stuff, usually is. And it's usually not huge amounts in those cases. The larger the amount, the more I slow down because I want to use wisdom, and I want to make sure that that's really the Holy Spirit, that that's really God, that it's not just my impulse, you know, my natural generosity bone

that has been developed over the years. But no, I mean, the vast majority of my giving, I hope, is Holy Spirit-prompted overall. But my point in the other conversation was that when you're in debt, when you're trying to clean up your financial messes, to be crazy generous above that, above the tithe, it's not indicated in Scripture. And so it would have to be— it supersedes common sense at that point, and so it would have to be God's voice in your ear, the Holy Spirit prompting you. And that would be unusual.

It doesn't happen very much. So what I tell people to stop all giving except their tithe while they're getting out of debt. And the tithe being for evangelical Christians, Orthodox, Jewish families, so on, which is a tenth of our income going to our local church. And lots of scripture indicating that. Shantae is with us in Santa Barbara, California. Hi, Shantae. How are you? Hi, Dave. Thank you for taking my call. How are you today?

Better than I deserve. What's up? Okay. I've taken your Peace University class at our church, so I'm so grateful and thankful that my husband and I have done that. It was fantastic. Good. He is retiring this year, at the end of this year, and he's getting a payout of $130,000. Mm-hmm. thousand dollars and the tax accountant has told us to in order for us to shelter his money we'd have to put it in a i think it is a 957 something similar to that so my husband was thinking should

we pay off our house with that money and be taxed on that or shelter the money okay the lump sum the lump sum that's coming is it coming out of a retirement plan or just a bonus, a retirement buyout? A bonus. I think he had so much time on the books that they had to pay him that. Okay, so this is just compensation. It's taxable. And what your accountant's talking about is a 457. A 457 is called deferred comp.

And you can put it in a 457 and not take the money, in other words, and you would not pay taxes on it until you did take the money because you're putting off, delaying your compensation, deferring your compensation, deferred comp, and that's what the 457 is. Your accountant is right. That's a good way to avoid the taxes, but if I were in your shoes, I would take the tax. There's no penalty on this.

I would pay the taxes and pay my house off. Okay. Okay, because we owe $157,000 on our home. Our home is valued about $800,000. Wow. We've had the house for 16 years, so we just started paying extra on our house every month. So how much is this retirement buyout? It's $130,000, but we do have a savings of about $40,000,

so we can make the difference up if we did that. That's not in retirement, the $40,000? Exactly. It's in our savings account. Okay, and you have an emergency fund on top of that? That's not in retirement, the $40,000? Exactly. It's in our savings account. Okay. And you have an emergency fund on top of that? That is part of the emergency fund. Okay. All right.

And what's your household income? What we're paying out every month is about... Your household income. Oh, income. He's bringing in... It's about $10,000 a month right now. Okay. All right. income with he's bringing in it's about ten thousand a month right now okay all right well your your one hundred and thirty thousand dollar check is going to look a lot like a hundred when

it gets home after taxes yes and um if you put 30 with that you're going to have ten thousand dollars in your emergency fund that's pretty slim i don't want you going below ten thousand dollars on your emergency fund okay so if you come up a little bit short, then go ahead and pay it all on the house and then pay off the little bit as quick as you can. But keep at least $10,000 for your emergency fund. Okay. Because you're in baby steps four, five, six at this stage of the game. Right.

Yeah. We don't want to go backward and do away with baby step three. Paying off your home is a great thing. It's one of my favorite things to hear people doing. But paying it off and having no emergency fund is not what we teach people to do. It's not an emergency. So I don't want you to drain your emergency fund. But if you take some out of it and then rebuild it, take it down to about ten and then rebuild it, that's okay.

That doesn't scare me. But I don't want you to pay off your house and three weeks later have an emergency. You'd be digging up bushes in the front yard selling them trying to make something happen here. Jennifer's with us in Minneapolis. Hi, Jennifer. Welcome to the Dave Ramsey Show. Hi, Dave. I will say from the year 2008 until April 2017, you were a cuss word for me. However, my husband, I had a moment where I was fed up,

and I realized that what this man's speaking, the Lord speaking to him is the truth, so I want to thank you for being that instrument. Well, thank you. I go from cuss word to instrument. Look at that. My husband and I will be debt-free in two weeks. Yay! And I'm really excited about that.

My question is, I have a chronic illness and I'm working from home. My husband and I have been having one car for the past two years. So we've been sharing that. So what I was concerning about, and I was talking to my husband to think about this, is for the emergency fund, should we save up three months and save up $5,000 for him to have a car? Yes. Because his work commute is not very far. Yes.

Or save up all six months. Okay. Get your three months in place and then get the car added the car being added is a real need but at this stage it's not an emergency you've been living without it for two years so you can live without it for a few more months but then it's one of the very first things after you get a basic emergency fund in place that i would do if i were in your shoes because it's really, really, really inconvenient. Yeah, it is.

And the power steering in my car is out, so he's like, I just, you know, it's one of those things that he's looking forward to over debt, you know, coming debt-free. Yeah, yeah, get debt-free and then put three months of expenses away so you've got a good solid rainy day fund and then save up and buy a car. I'm with you. I definitely would do that as soon as I got my emergency fund in place but it's not an emergency and so we're not going to do it before the emergency fund we're going to do it after so get your three months in place and then get her done way to go jennifer proud of you very very well done open phones at 888-825-5225 dan is on twitter day what do you think about REITs, Real Estate Investment Trusts, as a diversified way to invest in real estate?

Well, basically, from a function standpoint, a REIT, a Real Estate Investment Trust, is a mutual fund that buys real estate. You know, mutual funds that buys growth stock, that's a growth stock mutual fund. This is like a real estate mutual fund. In the sense that you are investing in real estate, yeah, yeah, sort of, sort of. It's a lot different than actually owning real estate, though, because you have absolutely no control over it, number one, or over the tenants or over the maintenance of the property

or the purchase of the property or any of that. So what you're looking for, you're buying a mutual fund that buys real estate, and you look for one that has a good, long track record. There are some of them out there that have done very, very well, that have actually outperformed the S&P. And you'd want one that has outperformed the Standard & Poor Index, the Standard & Poor 500. If you've got that, then that's a REIT I might invest in. Long track record, outperforming the S&P. I don't do that because I buy real estate straight up and pay cash.

But it's not a bad thing if you pick the right one. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.