The Ramsey Show - App - Only Sell Your House as a Last Resort! (Hour 1)

Episode Date: October 23, 2019

Retirement, Budgeting, Home Selling, Insurance, Home Buying Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

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. Thank you for joining us, America. We're glad you are here. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is Al in California. Hey, Al, welcome to the Dave Ramsey Show.

Thank you. Good afternoon, Dave. How are you? Better than I deserve, sir. What's up? I got a question for you. I am totally debt-free. I own two properties, equities, property values of about a million on both properties.

I have a friend of mine who has a business, upstart business, and I'm thinking about investing now. I was thinking if I should, what your opinion was, I was going to ask for your opinion was that if I should sell one of my condos and take the $300,000 investment that I want to do into a business, or should I do a home equity line of credit and take the money as I need it for the business? And that's the only debt that would be in my lifestyle right now. So, and my income is about 458 years so good for you wow way to go thanks yeah i don't borrow money and i don't borrow money to invest for sure um and so if i were doing this deal the only option i would have i'd have two options not

do it or if i've got to do it immediately or sell the condo. And so... Okay. And what would you do with the excess money that you're going to make out of the condo? Probably just drop it into a mutual fund until I could pile up enough to buy another condo. I got you. Okay. Well, that makes sense. Because that's generally what I have done. But when I do that kind of thing, you know what the difference is? There's something in our brains, and it's all of us.

You're very conservative, Al, and you've done a very good job with money, and you make a lot of money, so you're not a dumb guy. But all of us, regardless of how bright we are, when we use borrowed money to do something, it feels like monopoly money. When we use money out of our savings account or sell a condo that's real money on the table, it feels like monopoly money. When we use money out of our savings account or sell a condo that's real money on the table, it feels like real money. And it makes you analyze the business you're going into that much harder if you're using real money rather than borrowed money.

Your due diligence level of looking at that and making the consideration of, am I going to do this? Is it really worth this changes when you're using money that is your real money it's almost as if you had a hundred dollar bills stacked on your kitchen table and you're getting ready to hand this guy two or three hundred thousand of them you know and you're wow and uh you start to go i just spent real money it activates the pain centers of the brain in a different way, and it makes you more cautious, more careful, more deliberating when you spend real money than when you spend borrowed money. Thanks for the call. It's one of the problems with the whole student loan crisis, by the way, you.

Because you had an 18-year-old, a piece of paper, and say, sign this piece of paper, you can go to college. They don't know how much they borrowed. They don't know what the interest rate is. They don't half think about the school they're going to and what it's costing. They don't much think about what they're studying. And so we find these people with a degree in left-handed puppetry that they spent $200,000 and have it all in loans at 13%. And then they wake up at 40 years old and they go, I'm screwed because it was not real to them. It just felt like this is just like I was signing application papers to go to school.

And yet I was signing off on $100,000 or $200 thousand dollars worth of student loans as i did these series of signatures and even sometimes the parents are that way of the of the youngster and and we're finding that a lot when we're as we've done the whole borrowed future podcast series there's eight podcast series at remsey network now uh and uh the fourth episode has downloaded now you guys can get it but as we've gone through that the people were interviewing the the sad stories are almost always associated with it felt like monopoly money. It didn't feel like real money. And you think about that. When you're going to buy a $30,000 car, and if you actually take $30,000 out of your account versus you just sign a piece of paper and you start paying payments, it really does activate a different section of your brain.

That level of pain makes you go, Dad, blame. Is that car that nice? You know, do I really want that car? And instead, it's, you know, but if you're signing up for payments, you know, the friction in your brain is less. And that's what Al's looking at there. So good question. Appreciate you giving me a soapbox to stand on too. Jillian is with us in New York.

Hi, Jillian. How are you? Hi. Good, thanks. How are you? Better than I deserve. What's up? I have a question regarding retirement.

So my husband and I, we just realized that we're halfway to retirement. And I just want to make sure that we're going to be okay, ultimately. We're on baby step two. We have 43,000 left. We're planning to be done by August. We have 67,000 in my 401K. We don't have anything in his 403B. How old are you?

We're 43 and 35. And what's your household income? About $100,000. So when would you start baby step four? I don't know that, to be honest. I mean, when are you going to be out of debt, accept your house, and have your emergency fund in place? Hopefully by Christmas of next year. Okay. So 45 years old to 65 years old is 20 years and you start investing 15 000 a year which is 15 of your income that's maybe step four right

right okay and um so you'd have about $1.5 million or so. By 65? Yeah. That's if you never get a raise and you save only 15% for your entire working life, which really won't happen, okay? You'll either become complete wusses and not do this stuff and not save 15% while your income goes up and so does your consumption, or your income will go up and you will increase your percentage if you become a saver as a result of this transformation you're going through,

if you become an investor as a result of this transformation you're going through. That happened to me, by the way, because I'm a natural spender. I thought when you went to Sam's or Costco that the reason they check your receipt on the way out was it was federal law, you had to spend $200. I thought you had to spend, I mean, I can spend some money. That's why God makes me teach this every day. And yet when I went broke, what I learned was that if I had more money, I could give more. And if I had more money, I could spend more. And in order to have more money, I've got to spend less so that I can invest. And so I became an investor because it allows me to save and to spend. I mean, to give and to spend.

And so it was the transformation of me going broke 30 years ago. And that's what you're going through. Your heart's being reformed. And as long as that happens here, you're going to be just fine. I mean, if your income doesn't go in half and stay there for some bizarre reason, most people in their working lifetime, their income continually goes up over time. Sometimes a little step back, step forward, a little roller coaster. But generally, you're going to see some increase. That's the thing. And so, yeah, this is doable.

It's very doable. You're going to be alright. 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 accredited 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. Steve is in Oklahoma. Hey, Steve.

Welcome to the Dave Ramsey Show. Steve, there you are. Hey, Steve. How are you? Yes, sir. Yes, sir. Your podcast and AM 1640 is real popular here in Oklahoma. I've got a quick question.

Okay. Dave, you teach to get an apartment rent while you're saving for a house. How about if I was to take that rent, the time and the money, and to purchase a fifth wheel? That way I would at least own something in lieu of renting, and it would be in my pocket when I'm done. Are you going to pay cash for it? Well, no, sir.

No, I would not tell you to go into debt. No, not even if it's the same thing as renting. I don't tell you to go into debt. There's no not even. I never tell you to go into debt. The only thing I don't scream at people for debt on is, because here's the thing. When you rent, the money is gone each month, but you don't own anything that's going down in value. A fifth wheel will lose 80% of its value in about three years. Gotcha.

I mean, it goes down like a toilet. I mean, just like money going straight down a toilet. And so, I mean, if you bought a used fifth wheel and you paid $5,000 or $10,000 for it in cash and you wanted to live in that instead of paying rent, yeah, if you want to do that, that's fine because it's pretty well already taken the tail kicking. But if you go buy a $45,000 or an $80,000 fifth wheel, a super nice one, it's going to be worth $10,000 in 20 minutes, and you're going to have been paying payments on it all that time.

So you took a double hit. You took the hit on the payment, and you took the hit on the loss in value. So if you're going to buy a super cheap one, the idea is not a bad idea, as long as you're not married, or if you are married, your wife thinks this is an adventure. Mine would not. And so it's just a matter of, you you know it's nothing wrong with it i'm just saying mine wouldn't uh but you know you just got to talk that through and everybody's got to be

good with it but if you're a single guy and you want to do something like that that's fine i know one single guy went bought a three thousand dollar mobile wide or mobile wide double wide mobile home three thousand bucks now this is a trashy mobile home okay there ain't much to it for three grand folk i'm just saying there's not holes in the floor, but it's close, right? And he lived in the stinking thing as a single guy, paid cash for it, while he saved up and built a $250,000 house by the time he was 27 years old. Now, that's what's known as a stud right there, if you can pull that off. But, again, I'm not too snobby to do that if you can pull that off but again i'm not too snobby to do that my wife's

not too snobby uh but she's just not likely to do that maybe we are too snobby maybe that's what maybe that's the truth maybe i just need to i don't know i don't know what you call it you're too good that's where i i mean i hillbillies were just you're you know you forgot your raisin no i'm a grape now so shut. I didn't forget my raisin. So it's just unbelievable. So you've got to just think it through. But anyway, bottom line is you're buying something if you bought an expensive one that's going down very, very rapidly, and you're going to lose a lot of money, and you're paying payments on it.

So, no, I'm not going to tell you to borrow money to do that, but if you wanted to go like that other kid's way or something and you pay cash, I'd be okay with that. All right, Austin's with us in florida hey austin welcome to the dave ramsey show hey dave thanks for taking my call it's great to speak with you you too i have a question for you real quick i'm on baby step two um i owe 30k on my car, and I'm about $10,000 in negative equity on it. I'm getting ready to get my bonus from the last position I have. After taxes, it should be about $4,000. Now, should I take that $4,000, take out a $6,000 loan to cover that negative equity, and then just buy a car in cash or what are you going to use to buy the car oh just uh well that's not a good question because my emergency fund i was going to use

about a grand for it you're going to use your emergency fund and then you have zero yes correct okay all right so uh once I say it out loud again. No, it's okay. It's okay. Let's just back off on it and say instead of putting $4,000 on the car, we would put $3,000 on the car. Instead of borrowing $6,000, we'd borrow $7,000 and keep your $1,000 in place. And you still got rid of the $30,000 car, which apparently you do want to do. Is that correct?

Yeah, I really do want to get rid of that card but the other thing that i've been asking people about with my phone is is i have about 3 800 credit card debt and if i paid that off with the four that would then clear up about 337 a month to put towards the car so what's your income what's your what's your household income 70 7070,000. $70,000. Okay. And you have the credit card debt and the car debt and what else not counting your house? That's it. Okay. All right.

No, I think I would pay off the credit cards. Make sure they're cut up and closed, are they? No, they stay in my house, though. I don't bring them with me anymore. Well, the problem with having them in your house is they have a tendency to get loose so um you need to get them out and kill them cut them up yeah you need to kill them up they need to be sacrificed tonight at a plastic surgery party okay so um yeah and close the account and pay them all off with the bonus now we're 100 debt free except the car now let's keep the car a little while and really heavily chunk down on that $7,000. How fast could you pay off $7,000?

No, no, no, no. You need $10,000. How fast can you pay off $10,000 if you don't have any credit card debt? Making $70,000. Six months? Yeah, about six. Instead of borrowing money, let's drive the car and pay it down to $20,000 and then sell it. Okay.

And pay off the credit cards to help you do that. Yes, sir. And you're on a tight budget, right? You're doing your every dollar budget? I am. I'm on the cash diet and everything. Good, man. Good.

You're winning. I love it. Congratulations. Call me if I can help. Love it. Very good job. Whitney is with us. Whitney's in Connecticut.

Hey, Whitney, how are you? Hey us Whitney's in Connecticut hey Whitney how are you hey Dave I'm good how are you better than I deserve what's up so I just wanted your opinion on if my husband and I should sell our house or if we should try to pay it off um do you like your house um it's all right I think down the line we plan to sell at some point. Right now we don't have plans to sell. Why would you sell it? So when I called to try to get PMI removed, we realized that PMI is on for the term of the loan.

This was before we found you, that we signed our loan agreement and everything. You got an FHA loan? Yes. Yeah, all right. So you don't hate your house, you hate your loan. Yeah, and I mean, our house is, I know at some point we're going to outgrow it. We have two young boys who at some point

we're probably going to need more space for them. How many square feet is it? About 1,500 to 1,600. Okay, what's your house payment about 15 almost 1600 a month how much is your mortgage 161 000 okay and what is your household take-home pay in a month your take-home pay after taxes, not counting retirement, not counting insurance? About $5,000.

Okay. You're not house poor. Okay. You're a little bit higher than I would like for you to be. I tell people to not sign up for more than 25% of their take-home pay, which would be $1,250 in your case, and you're at $1,500. Okay, so you're not that much over, and it's not killing you. So, no, I would sit there until you're ready to move for other reasons. I probably, you know, if you're going to move in the next three years,

probably refinancing is not going to be worth it to get rid of the PMI. But I'd sit there and get your other stuff straightened around, get yourself out of debt, get your emergency fund in place, you know, get the family on the rhythm of living on a written budget, a plan to where we're heading towards and hitting our financial goals. And then when you get ready to move, again, when you do make the move, even if it's a bigger house, 25% of your take-home pay is your maximum payment on a 15-year fixed. So unless your income goes up, you're not moving up in-house. Not if you're smart. This is the Dave Ramsey Show. We'll be right back. Christy Wright's event, Business Boutique, is coming up this coming weekend, Thursday, Friday, Saturday.

I'll be speaking over there on Friday. It is a complete sellout, thank you. Over 3,000 ladies in attendance, primarily ladies. It's equipping women to make money doing what they love. The Business Boutique Workshop, an event. It is packed with world-class speakers, teachers, and, of course, Christy, which is who they all actually come to see because she is incredible. And she'll be coming back from maternity leave for those three days

and then going back on maternity leave after that. But when the baby was announced that it was coming, she said, we're doing Business Boutique anyway, so we are. And I'm excited to get to be with 3,000 ladies on this coming Friday, Thursday, Friday, and Saturday here in Nashville. This event always sells out. It's a huge, huge event. And one of the things we'll be talking about during this is we do anytime we're talking with leadership or business people, ladies or gentlemen, is that you got to have goals and you got to put your goals on paper. And Christy developed the Business Boutique

Planner, which is a two and a half inch thick ringed binder full of activation processes to help you actually get your goals on paper, be inspired, be lifted, be encouraged to make them actually happen and track them all the way through. It's a goal planner. It isn't just a calendar. It's a tool to help you grow in your business and in your personal life. We did this for the first time last year and they sold out so quickly up next to christmas that we got in trouble with inventory and had to quick order a bunch in this year we did a little better planning because we didn't we know how popular they're going to be they're very very popular big seller and so if you have an interest in the business boutique planner it's on sale now for 2020 it's 49.99 at daveramsey.com or BusinessBoutique.com

or call the Ramsey Concierge team at 888-22-PIECE, 888-227-3223 and give your goals the focus that they deserve, and they will then give you your dreams. Live in the dream, baby. Will is with us in Indiana. Hey, Will, welcome to the Dave Ramsey Show. Hey, Dave, thanks for having me. Sure, what's up?

I had a quick question about life insurance. Recently got married. I'm 30, she's 28, and just wasn't sure how much we needed. Ten times seemed a little more than will be required. Okay. Well, ten times, if it's invested at 10%, gives you your income to be replaced to her. That's the formula. That's why we use 10 to 12 times. Do you have a bunch of money piled up or something?

I mean, we have our emergency fund and then some. I mean, we're just combining finances right now. Yeah. So what do you make? One year's salary. What do you make? Right around 100. Okay. All right.

And so if you had a million dollars in the bank, you wouldn't need any life insurance? Yep. And if you had $300,000, then you'd only need $700,000. Here's the thing. Go price it at Zander Insurance if you haven't. At 30 years old, if you're healthy and you don't smoke, you're not overweight, it's just the price of a freaking pizza. It's really not that much money and so and so you know if you take twenty dollars and you cut it in half it's only ten dollars you

know i mean it's really not going to be a big discussion once you realize what that it doesn't cost much and um do you need to leave her a hundred thousand dollar income if you died today she's 28 she was living on her own just fine before she got married to you she'd probably be okay living on her own if something happened to you without your income right correct so that's kind of your idea or that's what's bouncing around in your head if i'm you anyway um but the thing is once you discover how cheap it is you're probably just gonna go well whatever because you're probably gonna start a family in a few years possibly uh and then you're gonna want to be having it. And, you know, again, I would just buy a 20-year million-dollar policy on you, and I wouldn't think twice about it.

Because with you making $100,000, the few coins that that's actually going to cost you, it's negligible. So thanks for the call, man. All right, Tony is with us in Ohio. Hey, Tony, what's up? Hi. We are currently taking the class FPU, and we have paid off all of our debt, and we're looking at our retirement funds now. And I have two previous 403B accounts and two former employers,

and I'm now working for a local government so i now have a state pension that i'm putting into do i need to take this for those 403bs and move them somewhere i would or are they okay okay they're okay there there's nothing to panic about i always take an old 403b or old 401k with me when i leave and roll it with a direct transfer rollover into an IRA. There's no taxes when you do that. And the reason is real simple. You've just got a lot more access to it. You know, the updates are better because it's coming straight to your inbox.

It's not coming through your old HR. And you have more options in the open market. There's about 8, 000 mutual funds you can choose from to put into an ira uh and you know with euro 403b there might be 20 or 5 or 7 or whatever and so you've got more options more accessibility and better communication because you're still because because it's you and you're not connecting through a um you're used to be hr department to get your 401 403B statements in this case. So I always roll them for those reasons.

It's flexibility. You're probably going to make more on the mutual funds because you get better ones because you've got a wider selection. That's simple. Hey, thanks for the call. Lisa is next, and Lisa's in Arizona. Hi, Lisa. How are you?

I'm great, Dave. How are you doing? Better than I deserve. What's up? Fantastic. So I was looking at your mortgage payoff calculator online. We're looking to get pretty aggressive with paying off our mortgage. Great. And I wanted to know if we could put our current savings for retirement on hiatus and throw all of that money as extra payments to the mortgage, which would have it paid off in two years. And if you don't, it pays off in three years.

If I pay what we're doing now, I've still got nine more years. No. Fifteen percent of your income did not alleviate seven years. Your math's bad. Okay, I'm just looking at what the app has had. Okay, now what I'm saying is, okay, what is your household income? It's $225,000. Okay, and so 15% of your income is $32,000, right?

Right, and our retirement is after tax. And your balance on your account is after tax? We own a business, a software business, and so we don't qualify. We make too much for Roth. So all of our retirement goes into Betterment after taxes. Okay, you don't need to be using Betterment because they don't know what the crap they're doing apparently. All right, you've got available to you SEPs. You've got available to you simple 401Ks.

You've got available to you backdoor Roths. So you need to get with a SmartVestor Pro and get this stuff going into Roth stuff and into good mutual funds instead of after-tax. That's the problem with it. At your level, you don't need to be using a robo. So anyway, all right, now, so what's the balance with it. At your level, you don't need to be using a robo. So anyway, all right. Now, so what's the balance on your home? $69,000.

Okay. And you make $225,000. And you can pay it off in two years if we don't put $30,000. So your only calculation there was you took your entire retirement amount and put it on the mortgage and it pays it off in two years. Correct. That's an incorrect calculation because you would be paying extra on the mortgage anyway out of your $225,000, wouldn't you? We haven't been. Okay.

So why don't you just pay it off and put the 15% in? It's only $60,000. Right. Okay, let's just say, let's put $30,000 away and put $20,000 a year on the mortgage for three years in addition to the $30,000 you're putting away. That's $50,000 out of your $225,000. You've got to live on $175,000. Which is easy.

Yeah. I mean, and we have a substantial retirement and college savings already so that's why i didn't know if if that was a possibility or not it's a possibility you can i mean obviously you're you make a lot of money you can do a lot of stuff and it and nothing under this column is dumb okay i mean it's not like oh that was really stupid you should never do that that's not what i'm saying i'm just saying i wouldn't i i would just keep investing i'd get with the smart investor pro get your investments going much more properly hidden under retirement good retirement vehicles and then let's um let's just kind of crank it up and go a couple

grand a month on this mortgage until it's gone and it'll be gone in about two and a half years if you do that, three years, and keep doing your 15. That's what I would do, because the more you save, the more you pay off debt, the wealthier you are. It's a pretty simple equation. Hey, thanks for the call. David is joining us from Tennessee. Hey, David, welcome to The Dave Ramsey Show. Thank you. How can I help you?

So I'm thinking of refinancing my mortgage. It would take me from a $290,000 to a $300,000 mortgage, and it would give me $2,000 cash. It would give me possibly two skipped months of payments and would drop me from a 5.25% to a 3.99% on a 30-year mortgage. And overall, it would save me $160 a month on the mortgage alone. And if I take that cash and the skipped payments and put that onto a credit card that I have, I could get rid of that debt and end up saving another $100 a month. So it's basically

$260 a month for increasing my total debt in that regard by $10,000. And I'm not sure if that's a good idea or not. Okay. So how much of the $10,000 is closing costs? $6,900, they said. Okay. And what is your loan balance? Currently, I have $290,000 left on my current loan. Oh, you said that. I'm sorry. Yeah. Okay. And it takes it up to $300,000 by doing this. Okay. All right. And so you're going to save $1.25 approximately per year percent. You're going from $129,000 to from 129 to 399 didn't you say uh 5.25 to 399 yeah yeah so you're saving one a quarter approximately just a little bit more than

one a quarter okay right so one and a quarter percent of 290 is 363,625 you're saving per year. What you save per month doesn't matter because you need to change your – are you on a 15 now and you're going to go to a 15? No, I'm on a 30-year now and I'll go to another 30-year. No, we're not doing that. Okay. I couldn't afford to do a 15-year. Then don't do it. Okay. I wouldn't afford to do a 15-year. Then don't do it. Okay.

I wouldn't screw with it. If you're not going to get out of debt on your mortgage, then you're not heading towards the data points we found from the millionaires, and you're going to keep a stinking mortgage forever. So that's problem number one. You're making enough savings to justify this refinance because the only way you analyze the refinance is not the monthly change in payment, the cash flow change. The way you justify the refinance is do you save enough in interest

to recoup your closing costs? And so, you know, 1.25 times 290 is $3,625, and then you've got a $6,900 closing cost, and so you've got about a two-year break-even. You see what I'm doing? Yeah. And after that, if you're going to keep the house longer than two years or the mortgage longer than two years,

it's going to be a gravy on the biscuit after that. But it takes two years to completely break even. That's thing number one. So I probably would do it on that that basis but only if you go to a 15 and i i do not want you or anyone else because it doesn't work to get into the idea that somehow you can borrow your way out of debt and so consolidating your debts into your mortgages is not a good plan just working your way through is a good plan. Now, if, you know, this is... Right, it wouldn't actually put any of my debt, my other debt, into...

Yeah, it did. You borrowed $2,000 extra, and you paid off a credit card with it. Right. They said that that $2,000 cash was something to do with Fannie Mae and whatnot, where it didn't have anything to do with, like, the mortgage. I'll be honest, I didn't quite understand it completely. Okay. It could be the recoup of your escrow account.

That's what it could be, that your old escrow account's being shut down and the new one's being set up out of the proceeds. That's possible. Sometimes that'll create a little cash. The skipping two payments thing is, that's just the nature of starting a new mortgage. That's not something you're doing to create it. But those are not the motivations on this. The motivation would be the $3,600 savings per year. The other stuff works itself out.

But I wouldn't go through a refinance if you're not going to be on a 15-year. I wouldn't bother. Because you're if you're not going to be on a 15-year. I wouldn't bother. Because you're going to need to do it later. You're going to need to get to a 15-year quickly. And if you can't do that, you may have too much house. Frank is with us. Frank's in Massachusetts. Hi, Frank. Welcome

to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? I'm calling. I kind of feel like I've gotten late in the game like a lot of people have. And I have one kid in college, one going to college. I've learned so much from you in the last two months listening to you three hours a day that you definitely saved me on a bunch of stuff. So I actually just called the college and canceled student loans from this point forward for my daughter.

I'm 49. My question is, I'm 49. I've paid off my mortgage. I have about $20,000 in debt. I'm on step two. And I'm trying to figure out once I get through this, I should be paid off in probably three months. Yay. Yeah. And I'm not sure I have money taken out of my check on a deferred comp,

and I have about $100,000 in there. But I'm trying to figure out, once I have my emergency fund saved, should I just have extra money taken out on my deferred comp, or should I put it into a Roth IRA ira or a traditional well what we're teaching with the baby steps is that you stop all investing until you get through baby step three and you're debt free other than the house you have your emergency fund in place and then you would restart investing 15 of your income into retirement now the best place to put it in a retirement we always call it rock paper scissors is wherever there's a match.

Do you have anything with a match? No, I'm actually, I'll be on a pension system when I leave. All right, so you don't have a match. The next best thing is a Roth. Okay. And the next best thing is basic traditional tax deferred, which is what your deferred comp is. So I'd be doing a Roth before I did deferred comp. And you've got a couple of colleges you've got to fund, I heard, right?

Well, I thought I was doing it right. I went against what my parents taught me about the 30-year mortgage and did a 15-year mortgage. I was off by a year, you know, for my daughter. She's going to be a senior next year, and he's going to be a freshman in college. Okay, so you've got the house paid. When you get this $20,000 paid off, get the emergency fund paid off, you're 100% debt-free, and you're probably going to lean in out of your cash flow and fund these two colleges with cash, right?

That's what I'm doing right now between me and my wife. Good. We're cash-flowing. I thought I was doing the right thing by taking a little bit of the loan out through the FAFSA, but, you know, even the parents, including myself, you really don't know what you're getting into. No, you don't. It's a mess. So you're smart to stop it and, you know, quit taking the poison and you won't die.

Yeah. And so, you know, you were very smart to cut that off. And so, yeah, you're going to, smart to cut that off and so yeah you're going to in the next three or four months you're going to have things changed around and uh um absolutely incredible you're going to be in great shape so hey thanks for the call open phones at 888-825-5225 open phones at 888-825-5225 ricardo's on twitter we We owe $140,000 on our home, which is worth $250,000. We also owe a total of $60,000 on our student loans. Would it be a good idea to sell our home, pay off our student loan debt, buy a different house?

Only is a worst-case scenario unless you already hate your house. But selling the house is almost, it's always the last resort. It's very expensive to sell a house financially it's emotionally and physically expensive to sell a house because you have to go through the emotions of packing and moving and lifting the boxes and dealing with all the garbage it distracts your whole family turns everything upside down it's expensive it takes it shoots a hole in your ear to move. And so I don't recommend moving except as a last resort unless you're going to move anyway. If you're going to move anyway because you hate the place, then that's something to think about and talk through.

But normally when I'm talking to people, their home mortgage is not their problem. And, you know, how weird this is you know anthony and we're talking about this on the show uh earlier in the week that we said you know 25 of the student loans are in default or in delinquency 1.3 of the mortgages are well why you actually have to have a job to get a mortgage they actually qualify you for the stinking loan. You're not like 18 years old and fogged up a mirror, which is what you have to do to get a student loan. And so it's a whole different lending procedure. And so, again, for that reason, I don't run into mortgages usually being the problem.

Now, I wouldn't do that except as a worst-case scenario. This is the Dave Ramsey Show. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Rams, debt-free screams, and the very popular Everyday Millionaire segment. Go to The Dave Ramsey Show YouTube channel and click subscribe.