The Ramsey Show - App - Overcome the Debt Struggle by Budgeting Every Dollar (Hour 3)

Episode Date: May 3, 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. We're glad you're here. Open phones at 888-825-5225. Daniel starts off in South Bend, Indiana this hour. Hey, Daniel, welcome to the Dave Ramsey Show. Thank you, Mr. Ramsey. How are you today?

Better than I deserve. What's up? So, I am 18 years old. I am moving out of my parents' house to go to boot camp for the United States Marine Corps. I'm a certified welder, and I will be a certified data administrator by the time I'm done. I move out June 18th, and I'm not sure how to best set my life up so I can be financially successful, because my parents have had a rough past. Well, very good. Good question, and thank you for serving. Thank you. Well, you're in boot camp for, what, 90 days?

Yes, sir. Or around there, yes, sir. Yeah. And so you'll be paid, obviously, while you're there, but also you'll be provided housing and food while you're there, correct? Yes, sir. All right. So you don't have much need for money during that time. Well, I am currently in the reserves, so I will be in there for 90 days, but I will also be coming back to my reserve station,

and I will not be able to come back to my parents' house because my dad is a pastor right now, and the house is kind of getting full. Gotcha. Okay. But my point being that during the 90 days you don't have a lot of need for money but you obviously have a goal at the end of that 90 days you're going to need some money yes sir so how much are they paying you during this time well right now i am looking at a monthly salary of about 1793 dollars okay and so we basically got 5 000 bucks to work with during this 90 days to get you ready to start life.

Yes, sir. Okay. And if I'm in your shoes, I'm going to spend as little of that as I can during that 90 days, like almost none of it. Only major, major necessities. Because when you come out, you're going to be renting an apartment, finding roommates, getting a job, because I assume reserves is not a full-time gig, right? No, sir. Okay.

So you're coming out. Do you have a job lined up when you come out? That is one thing I was going to ask you about. Being a certified welder, and also by the end of it, I will be a certified data administrator, one obviously pays a lot higher than the other, being the fact that data is such a highly sought-after job. But I'm not sure which one I want to pick because, obviously, I went to school for welding. I enjoy it very much. Okay.

Well, for right now, for at least the short term, I'll go ahead and pick the data one. It pays higher, and you can do welding and stuff on the side as a side gig. You can also do it just for fun and so forth later on in addition to your main gig. If you want to make a career transition a few years from now and move back towards welding and abandon the data administration track, that's fine. But for right now, you're coming out cold with only $5,000 to your name, give or take. I'm liking just piling up some money right now. Okay.

Do you have any debt? I do not have any debt. Rather than about $150, I owe to a friend I took out to buy a new set of tires because I very desperately needed them for my car, which I'm giving to my dad to pay all my debts back. You pay all your debts back. You owe money to your dad? He has helped me put new parts on the car, so I'm going to give it to him as basically a sign of goodwill. And after that, I was looking at before you

said don't spend the money to buying a motorcycle um being young and dumb and whatever well it's cheaper than a car and for right now it'll get you around uh if you want to do that that's fine but uh again every dime you spend on a motorcycle makes your getting started tougher so let's let's just the basic basic transportation is all we want here But, again, every dime you spend on a motorcycle makes your getting started tougher. So let's just, the basic transportation is all we want here. We're not trying to make a statement. We're just trying to get from here to there. You can upgrade to a better motorcycle or even a nice car a few months from now when you've gotten everything stabilized and you don't have any payments anywhere

and you just pile up cash, right? Okay. So, yeah, get the job lined up as soon as you can for following boot camp and use all the boot camp money to get yourself established and get going. And if you want to work two jobs, if you want to do welding on the weekends and evenings or something and do your data stuff another time, I mean, in your regular full-time career, it doesn't hurt anything right now because, I mean, just pile up a big pile of cash.

Get your emergency fund in place and start thinking about buying a house later and investing and all that kind of stuff, buying, you know, furniture, cars, all that stuff. And we're not trying to just spend money like crazy, but we're trying to have the money to pay cash for whatever it is you want to do as you move forward. So I think you got a good start. And again, thanks for serving your country. Randy's with us in Phoenix. Hey, Randy, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? Well, I have a question for you. I'm 62. My wife is 61. And back in 1985, I purchased a variable life policy for myself. And then in 1990, I purchased one for my wife. They were very small policies, but I recently checked and the cash

value, the surrender value on my policy is now $32,000. And on my wife's, it's $18,000. We have no children. And our concern now is kind of shifting from the life insurance over to protecting our assets should one of us end up in an extended care facility. So my question is, should I cash these policies out and use that money to invest, purchase an extended care policy, or should I just keep it where it's at? Well, I would definitely cash them out. They're not a very good investment, and I would definitely use some of the money to make sure you have long-term care insurance in place immediately.

Everyone that's 60 years old or older should get long-term care, which takes care of a nursing home need, and start to look into that and start to understand that product line and what it covers and what it doesn't cover. How much savings have you all built? Right now we are debt-free, and we have a net worth of approximately $1.2 million. Way to go. Congratulations. Thank you. Well done. Well done.

Did you start out with money? No. Okay. How much did you inherit? My wife inherited $100,000 several years ago. Okay. All right. So that helped.

Okay. It did help. But most of this you've done on your own. We followed your principles and kind of held off on making some of those purchases that we really wanted to purchase until we were in a situation where we could pay cash for them. So now we are living life like no one else. I love it. Well, congratulations. Very well done.

Thank you. That's an American dream. Way to do it. Way to do it. Yeah, you're in good shape, but the average nursing home stay is going to be like $300,000, and I want to cover that. Very, very, very few few a very small percentage of nursing home stays go over three years but as you probably heard me say um you know the typical

scenario is uh 75 of the ladies outlive their husbands so papa goes in the nursing home uses up a big chunk of the nest egg cracks and scrambles some of the nest egg, and leaves mama with what's left when he passes. And many times it's nothing. So we strongly recommend long-term care insurance in situations like yours or any situation just about when you're 60 years old or older. 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. Chris is on Facebook. Sometimes I think people ask these questions with a hint of sarcasm in their voice. I have to read that into some of these questions. Chris says, should I buy a $9,300 Tempur-Pedic mattress with interest-free financing. I have to think you're being sarcastic. Otherwise, I think you're stupid beyond words.

And so I have to go with sarcastic. Tongue-in-cheek question, right? This is the stir-up Dave Ramsey question, right? See if we can get Dave ranting. So, I mean, what else is Facebook for? I mean, really, seriously. So, we'll answer it as if it were a serious question by a stupid person. So, oh, God, really, seriously.

If you want to pay $10,000 for your bed, you should first have a lot of money, which would thereby mean that you were not even asking this question. So I'll just go ahead and start with, you can't afford this mattress. And otherwise, if you could afford this mattress, you would have never asked this question. But no, we don't buy anything on debt ever in any circumstance, interest-free or otherwise. If you cannot pay cash for it, don't buy it.

Well, Dave, that's a little extravagant of me to get you to take that $10,000 invested. And listen, if you need to worry about investing $10,000, you don't need to be buying a $10,000 invested. And listen, if you need to worry about investing $10,000, you don't need to be buying a $10,000 mattress. If investing $10,000 is going to change your life, then you don't need to be buying a $10,000 mattress. Meaning, if you got a million dollars invested, $10,000 doesn't change your life much. And you could probably afford to write a check and buy a $10,000 mattress, right?

And not think anything about it if you want to do that. But if $10,000 is such a big freaking deal that you have to do an analysis on it mathematically, then that by definition means you don't need to be spending it on a mattress under any circumstances, financed or otherwise. If you have to have this discussion, it's kind of like if you have to have this discussion, it's kind of like if you have to ask the price, you can't afford it. You ever heard that? That's kind of where this falls into that category.

This is like an Uber luxury item. $10,000 for a mattress is an Uber luxury item. This is the freaking Bentley of mattresses. And you don't need to drive a Bentley when you're broke, even if it's interest-free. And so here's the thing. As we've studied millionaires, people who actually have money, not people who have a theory about money, but people who actually have money, we have found that there are two primary things that they do. They invest consistently because, number two, they don't borrow money.

They don't have any payments. They do not borrow money. And therefore, they have money to invest consistently, and therefore they became wealthy. It really is a fairly simple formula. But we complicate it because we have this little child down inside of us, the one that throws a temper tantrum on the cereal aisle. You ever seen that kid? He lives inside of every one of us.

His name is Immaturity. His name is I Want It and I can't afford it. Big hat, no cattle. B-H-N-C. Big hat, no cattle. B-H-N-C. Hashtag B-H-N-C, right? Big hat, no cattle.

These are a bunch of immature children walking around inside of every one of us. One definition of maturity is learning to delay pleasure. Adults devise a plan and follow it. Children do what feels good. So, no, Chris. You should not buy a $9,300 Tempur-Pedic bed with interest-free financing. You can't afford it. By virtue of this simple fact, you ask this question,

tells us you actually cannot afford it. Nick is in Atlanta. Hi, Nick. How are you? Good, Mr. David. How are you? Better than I deserve, sir. What's up in your life?

We got a lot of stuff going on. I'm a 30-year-old male. My wife and I just have an eight-month baby at home, our firstborn. And we're in about 43 in student loans, just about 12 in a car. And we're trying to decide. So I guess in total about, what is that, 54,000, 55,000? Yeah. 60,000, 65,000.

65,000. No, no, no, no, I'm sorry. It's 55,000. You're right, 55,000. I apologize. Okay. Your phone is cutting in and out. What the crap is going on with your phone? No, I'm sorry about that.

Maybe I'm just too excited. Okay. I don't know how that causes the phone to operate, but anyway. But in any case, we're in a home right now that we are very quickly outgrowing. We own the home. Today we are estimating to be right around $60,000 worth of equity. My question to you is, you know, we did the zero-based budgeting, and we're on track to pay off all the debt in about 34 months.

What's your household income? Household income is $85,000. Why is it taking you three years then? Just based on our monthly expenses, our debt expenses, and then kind of our leftover, we're thinking around $1,700 as leftover. You haven't cut your budget enough yet. Okay. Because basically 55 divided by 2 is $27,000 a year. Out of 85 should be doable in two years.

In two years? 27 a year out of85 sounds doable to me. That's more like $2,300 a month. Okay. Yeah, my calculations. Maybe I'll go back and I'll rebudget everything. But my question is, we're outgrowing our homes. So, you know, we understood that we needed to do a life change,

and, you know, we're on that road. We're on that path. We're a couple months into this now. My question is, do you advise us, you know, putting the house up on the market and potentially using the equity that we get and pay off that debt immediately and then save up for the next three years in order to... Okay, so one way you do this is you bolt down and you pay it off in two years like I'm talking about, and you keep your house, and then you sell the house and move up because you're

outgrowing the house. How many kids have you got? We've only got one. So how small is this house? The house is only realistically about 1,500 square feet, but it's just for, you know, our plans in the near future will be. You want to have more children? Yes, sir.

Okay. And how many bedrooms is the house? Right now it's three. Three very, very small bedrooms, may I add. Okay. Well, I grew up in a house that was 1,020 square feet, and I had a sister. There were two children and two adults living in 1,020 square feet until I was 14 years old from age three. So far, it has not led to tremendous dysfunction in my life.

I see that. So, you know, I think you moving up in-house is a serious want here. What I would do if I were in your shoes is I would bolt down and save like crazy. I mean, pay like crazy. Let's get this debt paid off in two years and then build your emergency fund. And then if you want to move up in-house, I would move up in-house at that point by selling the house that you have, taking that equity and using it to move up. At that point, buying no more than a 15-year fixed rate mortgage.

We're really only talking about three years here before you move up in house, and I think you guys can probably survive that if the only problem is 1,500 square feet is cramping your style, because that's a want versus a need. Shelter is a need. Increased square footage for luxury purposes is a want, which is fine. There's nothing wrong with spending money on a want once you've got yourself cleared up. So let's get out of debt. This is the cheapest place to live while you're getting out of debt.

And then let's move up in-house after you have your emergency fund in place where your payment's no more than a fourth of your take-home pay on a 15-year fixed. Thank you, sir. We'll be right back. In the lobby of Ramsey Solutions, Adam and Danielle are with us. Hey, guys, how are you? Hi, Dave. Good, Dave. Welcome, welcome. Where are you guys from?

Bentonville, Arkansas. All right. Love it. Welcome to Nashville. And all the way over here to do a debt-free scream. Yes, sir. How much have you paid off? We've paid off $85,000 in just under three years.

Good for you. We also cash flowed about $30,000 extra during that time. Including a wedding, a honeymoon, and Danielle's new car. Oh, there's all that. Yes. Okay. And your range of income during that three years? We started at about $60,000, and now we're at about $120,000.

Excellent. What do you guys do for a living? I'm a construction manager. And I'm an assistant manager at a coffee shop right now. Good. Fun. Well, I may have been in there. Is it on the square?

It's right down the street. So they moved it down this past summer. I was over doing some speaking at one of Walmart's leadership things and wandered over there and went through the Sam Walton Museum on the square and wandered up and down this, man, it's a great square. It's a beautiful little town. Yes, it is. Really pretty.

Very cool. All right, fun. So what kind of debt was the $85,000? It was a lot of student loans. Danielle had about $40,000 in student loans. I had about $30,000, a few thousand on a truck, motorcycle, and then a little bit on a credit card. Okay, cool.

So how long have you been married? Just under two years. Okay, so one year of this you did as singles. Two years of this you did after you're married. That's right. Okay, very cool. Good. So tell me how it all started.

What got you going on this, I want to get out of debt before and while I'm getting married plan? So it all started, actually, my dad's watching on the live stream right now. He introduced me to you many years ago, listening to the show on the radio and kind of listened to the principles at that point. Went to college and was using the envelope system for two or three years or so. Danielle and I were dating at the time, and she saw it but didn't really know what it was or how to use it the guy she's dating is weird yeah pretty much yeah okay and uh so then we ended up uh she uh still had two years of college left i moved down to missouri and um we were separated for um about two years about 600 miles or so and then um ultimately uh she

ended up moving down. We got engaged, and we looked down and said, holy cow, we've got a whole bunch of debt. We want to get married. We don't know how we're going to pay for the wedding. And that's pretty much what sparked it all. Okay, so then you jumped back to your financial peace roots. Pretty much.

Because you're kind of a financial peace baby and jumped back onto it. So, Danielle, he's got this family tradition of weird stuff, like envelopes and financial peace principles. So what did you say? Good because we need to get out of debt, or did you say, oh, my gosh, this is weird? So I grew up in a really frugal. My mom was very frugal. So I was pretty frugal, but in college I was like, well, I have money to pay my bills,

but it's a little tight. I had no idea of budgeting and all that so I saw the envelopes through college with Adam and I was just like well I don't know why do you pull money out of this and put it in here or why can't we spend more than what's in the envelope or let's take a little bit out of this envelope and put it in here but then when he sat me down and we looked at all of our loans and that I just had 35 $35,000 and then $10,000. And it was just overwhelming with just, oh, my gosh. Oh, and we need to do a wedding.

Right. And how are we going to pay for the wedding we want? And there was lots of just struggle and just trying to figure it all out. Okay, so you had another $30,000 that you cash flowed, car and wedding. Break that down for me. How much of that was wedding? How much was car? We saved up about $15,000 for the wedding.

I think all said and done, we ended up paying about $10,000 to $12,000. And then we had family gifts, of course. And then the car was, what, about $4,000, $5,000 car, somewhere in that range. She was still driving her high school clunker at the time. So it was time for at least a little bit of an upgrade. So $4,000 is a major upgrade, yeah? Yes, it was. Okay. Very cool, you guys well done thank you great accomplishment as newlyweds you knock it out

how's it feel to be out of debt absolutely wonderful it's very surreal though uh i've had lots of people at work ask me how it feels and just our friends from church and all that and it's just like well you know it's a different feeling of now all that money is coming into our bank account and we're becoming wealthier before the next. And that's a totally different challenge as well just to get into a different mindset of... Not be sloppy now.

Yes, yes. It felt like the debt went really fast and it felt even maybe a little easier. I don't know. it's just a different period of our life right now because we've been so focused on the debt and hating it yeah for real so do you have people cheering you on or telling you you're crazy a little both so there was a lot of awkward situations at work where you know i just say i don't believe in car payments and then it was a lot of challenging conversations. And so we had those.

And then we also had people cheering us on and inspiring people. I know that for sure. Yeah, very cool. Congrats, you guys. Thanks. Proud of you. Well done. So I'm sure your dad, King of the Envelopes, is proud watching, right?

Yes. It's good stuff. Well, he should be. He should be. Sharp young couple. You guys are on fire. You're making good money. You don't have any debt. Man, it's good stuff. Well, he should be. He should be. Sharp young couple. You guys are on fire. You're making good money. You don't have any debt.

Man, it's really awesome. What do you tell people the key to getting out of debt is? So I think the biggest thing for me was that we had a goal. Ultimately, the goal was to be debt-free and then just focus on that. And then let's move to the next challenge. Let's move to the next goal. But I think one priority was the biggest thing for me. I think it was the budget and sticking to the budget and knowing how much.

And I think Rachel says all the time, just you feel free when you have a budget and you're sticking to it. And I know I have this much money to go and spend at the store or for pet food. Right. So it just, I don't know. It just gives us a little freedom. When you buy something, you'll feel guilty. Exactly. Because it's labeled for that. The money's labeled, yeah.

Right. So we actually delayed our honeymoon. So we didn't go on our honeymoon until this past February. Oh, wow. Yeah, so we wanted to save up cash and do it right and go big. Yeah. So we went to Jamaica and started a sandals and did it big. Yes.

So that was great. That was probably one of the hardest things is that you do this wedding, you put a whole bunch of work into it, and then everybody says, well, let's go on a honeymoon. Well, we said, no, not yet. Right now we're not, but hey, you know what? You'll be fine. You'll be fine.

So you're following Rachel on Instagram or YouTube or what? Yes, she's hilarious. I love her. I read her book, and she's great. Well, thank you. Very good. Very cool. Well, we've got a copy of Chris Hogan's book for you, Retire Inspired.

That is the next chapter in your story for you guys to continue managing money, making it behave, becoming millionaires, and outrageously generous. Proud of you guys. Well done. Thank you. Thank you. Love it, love it. Adam and Danielle, Bentonville, Arkansas, $85,000 paid off, plus a wedding, plus a car,

all in less than three years, making $60,000 to $120,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! Love it, love it. it well done you guys man that's how you do it right there well we get debt-free screams of all kinds from all parts of the country from all incomes we have people from 38 000 income all the way up to $135,000 income in the three-hour show today.

That's kind of amazing if you think about it. $24,000 in debt all the way to $90,000. If you count their 30 on top, $115,000 there total paid off amazing numbers today also was young person's day apparently everybody today was like 30 years old or under single ladies married newlyweds you can do it when you're 56 you can do it when you're 26 but from where you are today the shortest point between or the shortest distance between two points is a straight line from where you are today this quickest point the quickest distance the shortest distance to wealth from where you are today is get out of debt. Just think about it.

Can you imagine this? If you're not driving, close your eyes. What would it feel like to have no payments? No payments. Can you see the math of that, what it would do? You'd have so much money to give and live if you live like no one else later you can live and give like no one else no one wins by accident though people it's time for you to get after it ready set go this is the Dave Ramsey Show. our scripture of the day proverbs 10 for a slack hand causes poverty, but the hand of the diligent makes rich. Booker T. Washington says, dignify and glorify common labor.

It is the bottom of life that we must begin, not at the top. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. It means even if you mess up, if you mismeasure or you pick the wrong color, they're going to remake your window blind for free. With Blinds.com, you also get free samples, free shipping, and with the new promos they run every month, you're going to save money. Check out the promo code RAMSEY at Blinds.com.

Our question is from Anthony in Florida. I'm trying to figure out what the best option for saving for college for our three kids. Should we open 529s for each or go with the Florida prepaid option? I never do prepaid college. I always do 529s and always invest them in good growth stock mutual fund or an ESA, an educational savings account, either one. But I don't do prepaid. Anytime you prepay anything, you prepay your funeral, you prepay college, you prepay anything, the only thing you make on that money that you gave them is how much it goes up

between the time you prepay it and the time you actually use it. So if you prepay your funeral and 20 years later you actually die, then what did you make on that $10,000 or that $4,000 or whatever it is? Well, you made whatever funeral inflation rate is. And by the way, that's about 4%. well, you made whatever funeral inflation rate is. And by the way, that's about 4%. So you're making about 4% on your money when you prepay a funeral. So you don't prepay a funeral. You invest the money, and out of the investments, pay for your funeral.

Same amount of money, by the way. Same thing for college. What is college tuition? Oh, college tuition is just going up and up and up. It just goes up all the time. Yeah, I know, but what are the real facts? Okay, let's just get away from all your feelings. The facts are that college tuition has gone up an average of 7% a year for the last 52 years.

7% a year. That's your inflation rate. So you're making 7% on your money when you do prepaid college tuition. It's not bad. It's better than putting it in a CD at 1%, right? But you could have put it in a mutual fund and made 10 or 12. So put it in a mutual fund inside of a 529 or an ESA, make 10 or 12. While it goes up 7, you're making more than it's going up.

You're actually making ground on the college experience. Hello. See what I'm doing? That's how it works, folks. David's in Seattle. Hey, David, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call.

Sure. What's up? So my wife and I were wondering what we should do with our extra money. We just finished saving up our emergency fund and enough money to purchase our next car when we have our next kid. Good. We're getting about $500 to $1,000 a month of savings. We don't know if we should put it more in our retirement account or pay down our mortgage faster or put some more money into stocks. What do you think?

Well, I don't buy single stocks, so that one's easy. What we do tell people to do once they're debt-free, other than their home, and then you have your emergency fund in place, that's Baby Step 3, we call it, then that takes you to what we call Baby Steps 4, 5, and 6, which we do simultaneously. Baby Step 4 is 15% of your income going into retirement. Are you doing that much yet? Right now we contribute 5% and the company match is 5. Okay, then I would raise that.

That would be my first goal. I want to get you to 15% of your household income that you are putting, not counting the match, into retirement. And 401Ks, Roth IRAs, Roth 401Ks, whatever you've got available to you in good growth stock mutual funds, I spread my 401K, personal 401K investing, and I've always recommended across four types of mutual funds. Growth, growth and income, aggressive growth, and international. I spread it across those four. Once you're doing 15% into that, then I start working on kids' college.

You got kids? I have two kids. You have two kids. What are you doing for college? Nothing yet. Okay. Then we start a little college fund like we were just talking about a minute ago with that question of the day, and you can open an ESA.

It's the first $2,000 a year per kid if you wanted to do that. That's $166.67 a month coming out of your checking account. It's $2,000 a year. If you've got young kids, that's a really, really good start on college. Like, that's going to take care of most of it, in other words. And, you know, when you have a baby, you just add another one, and you just keep doing that. And then anything above as we address college anything above that we throw at the house so in your case right now i'm our first

goal is to get you up to 15 of your income going into retirement at what we call baby step four so if you'll hold on i'll have kelly pick up and we will send you a copy of the book, The Total Money Makeover. It outlines these baby steps of exactly what to do, when to do it, how to do it, when not to do something, when to do what, and it walks you through a basic, really straightforward, clear plan for your financial planning. It's going to take you right where you need to go. So hold on. Kelly will pick up, and it's the baby steps on steroids. It's called The Total Money Makeover, and it'll help you get this done.

Aaron is with us in Kansas City. Hi, Aaron. How are you? Hey, Dave. I'm doing all right. Good. How can I help? Hey, my wife and I are basically on Baby Step 4, so we've got about $20,000 in the bank,

and it turns out that we're pregnant with triplets. So that's exciting. However, we just moved into our house, and we're going to have to do some remodeling. So would you recommend taking that $20,000 to do the remodeling, or is it better to do a home equity line credit? Better not to do the remodeling. Well, we're at 10 kids now so 10 kids wow you are blessed unbelievable we are blessed wow okay uh so the twenty thousand dollars is

your emergency fund right uh-huh okay in order use that money, you have to declare this to be an emergency. Well, my wife and I definitely feel that it's an emergency with the kids coming and just not having enough space for them. Okay. What is your household income? Well, right now it's about $12,000 a month, but my wife will have to be dropping out of the workforce, so it's going to go down to about $8,000 a month. Okay. And what is the extent of the renovations? What is it going to cost you?

Well, we haven't gotten the final price back, but it will be really close to that $20,000. Okay. So you're willing to have 10 kids and no money in a renovated house? Wow. That's a big emergency so what i'm probably doing if i'm in your shoes is i'm going to cash flow this renovation during this pregnancy out of this wonderful household income and leave my emergency fund alone okay like i don't know uh three thousand dollars four thousand dollars a month you're gonna have no life but you you gotta get the renovation done i just it scared me to death to have 10 kids and zero money yeah and it scared me to death to have 10 kids and a home equity loan too yeah because you can't run to dad every time you have a problem dude if you do you're gonna be

broke your whole life. Yeah, because my wife's going to have to go out of the workforce for probably a year. Yeah. And then when she gets back, then we'll get our income back up. Yeah, but that's $4,000 of the $12,000, right? Yeah. You've got $8,000 income. You've got a lot of mouths to feed, but you've got a good income.

And you've got no debt, right, except the house. Right. And how much is your house payment? $2,200 a month. Okay. Well, if you guys get on a really tight written budget where every dollar has an assignment every month, I'm going to squeeze that budget real tight because this is important to do this renovation apparently um i don't i mean you're the one saying it is i'm not there i can't even imagine triplets or 10 kids either one um but um

wow wow so uh but i gotta tell you this i The idea of being at zero money, even with $100,000 a year income, scares me to death. And I can't tell you to go into debt. I think that's suicide. So, I think you got some bad choices here to make. And I'm going to do my best to cash flow it to avoid the bad choices. 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. 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.