The Ramsey Show - App - Pay A Price Now to Win With Money Later (Hour 1)

Episode Date: July 16, 2018

The show about you

Live from the headquarters of Ramsey Solutions, 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. This is your show. Why? Because it's all about you. The phone numbers are 888-825-5225. That's 888-825-5225. Lawrence starts off this hour in Charleston, South Carolina.

Hey, Lawrence, how are you? Hey, Dave, pleasure to speak with you. You too. Calling in because I graduated recently from dental school in 2014, have about $309,000 in dental school debt, and I have $100,000 in savings, a monthly income between $12,000 and $16,000, fixed expenses each month around $7,000K. I'm sorry, how do you have $7,000 in fixed expenses if you

just got out of dental school? Well, that was 2014. I'm talking about my mortgage, my student loan, cars. Oh, so you went and bought a bunch of crap even though you were $300,000 in debt. Well, I had to have a car

and needed a house. So what kind of car you got? I drive a Lexus GX. Yeah, okay. And it's new? 2015. Yeah, two years ago it was new when you bought it. Okay.

Yes, sir. All right. Well, you needed a car. You need that one. Okay, I'm back with you. You got a mess on your hands. So what are you going to do about it? Don't disagree. What are you going to do about it?

What are you going to do about it? Don't disagree. Well, I was calling because, I mean, I've got a lot in savings, and I've got a lot of student debt. And at the same time, I'm trying to figure out, you know, should I spend more? Should I take what's in my student, you know, in my savings and pay towards my debt? How much should I have in my savings? Where do I go from here?

Gotcha. Okay. Well, I think it's safe to say you tried to borrow your way into prosperity, and you figured out that plan doesn't work. Yes, sir. And so the opposite direction is obviously the plan that gets you to prosperity, meaning wealth, the fastest. Yes. Because if you had your income and no payments, oh, my goodness, you'd be wealthy so fast that it'd be unbelievable, right?

Correct. Yeah. So that's where we need to get. My capacity to save each month is about $6,000 to $7,000 after I've paid all of my other expenses. Okay. And so what is your household income a year? Household income is probably about $260,000. Okay. All right.

Cool. Okay. And you have $309,000. And how much in non-student loan, non-mortgage debt? Just the cars? Just the cars. And what do you owe on them? Currently, I think the GX is about $29,000.

Each? The other car is a lease. It costs me about $400 a month. What would it take to pay it off? Probably $24,000. Yeah, okay. So $50,000, $60,000 of your $100,000

makes you car payment debt-free. Then all we have left is mortgages. I mean, then all we have left is student loans. I'm sorry, student loans. And the other thing is, here's what happens to you docs. We call it doc-itis. And you have a classic case of doc-itis. And that is that you are absolutely wonderful

at delaying pleasure to win. And so what happens is you go to school, you know, four or five years longer than everybody else, right? And you make no money. While all your buddies are out there making money, they graduate with a BA and they're going, right? Or a BS and they're going. Or they came out of high school and they started a technology company

and they're going, man. And you're looking around and these people are all making money. You're still in school. You're still in school. You're still in school. Correct. But the goal is to be a doc. The goal is to be a dentist, right? DDS, man, we've got to get that thing.

We're after it. And game on. We're out chasing the goal. And you're delaying pleasure for a greater good. If I can just get through this thing, then I'm going to make bank, and it'll all be okay. All right? Right. And you emotionally are, in that sense, you're emotionally very, very mature and far beyond the average cat walking around.

I'm bragging on you because here's what happens. It's almost as if you've been holding your breath, and as soon as you graduate and pass your boards and get your job, it's like you have this exhale of lifestyle. And even though you're $309,000 in debt, you go buy two cars and a house instantaneously. The house was in the last year. I just recently got it. Well, you're still exhaling then, okay?

Do you get my point? You've been delaying pleasure, delaying pleasure, delaying pleasure. And instead of staying with that a little bit longer and knocking off the 309, you preempted your ability, you neutered your ability to get at the 309 by adding all these other payments and lifestyle. Correct. And so if you want to get to wealth, the fastest thing you can do is go back to the pain of living like no one else so that later to the pain of living like no one else

so that later you can live and give like no one else. That wasn't the phrase you used when you were in dental school, when you were in undergrad heading towards dental school, but it's what you were thinking. I'm going to pay a price now so that I win later. Yes, sir. And you have that emotional capacity and maturity. We know that because you're a DDS. You couldn't have gotten there if you didn't have that.

I want you to tap into that and get your wife on board to tap into that. I want you all to cut your lifestyle to nothing. I don't want to hear about your $260,000 income and you going on vacation because you are a broke dentist. You have $309,000 worth of debt. on vacation because you are a broke dentist you have three hundred and nine thousand dollars worth of debt and you're either going to screw around with this debt for the next decade and be a classic broke dentist or you're going to knock it out in the next two and a half or three years pay off the cars today hold a small emergency fund very small like five thousand bucks in your case usually we say a thousand but crap you make a quarter million dollars a year so we'll make it five thousand bucks and then you guys get after that student loan debt no i mean

don't buy anything don't you don't get to go out to eat you don't have time you're paying on debt scorched earth lifestyle and if you can't do that and sell then sell your house but i don't think you got to sell your house i don't think you got to sell your cars because But I don't think you've got to sell your house. I don't think you've got to sell your cars. Because I think you have a $260,000 income. But you need to stop investing. No more investing. No more saving. We're going to beat the snot out of $309,000. If you do that, the numbers say you'll be debt-free in less than three years.

So would the best advantage at this point then be to pay off the card? Yes. And then just get that monthly cash flow up so that I can get back to paying off the debt. And get on a budget that's tighter than the one you're living on. Yes, sir. Okay, because you said $6,000 or $7,000 a month. I need you at about $9,000 a month going towards the debt. $9,000 into $300,000 gets you there in 31 months, 32 months, not counting interest,

and that puts you on a three-year schedule. That's what I want you on. That's the math I was just doing. But, dude, I mean, that's only $120,000 a year. You make $260,000. So cry me a river about your lifestyle. Do this in three years. You can do it. You can do it.

You can do it. Live like no one else. No discipline seems pleasant at the time. Oh, but it yields a harvest of righteousness. That's from the Bible, for those of you who don't know. This is the Dave Ramsey Show. Guys, let's talk about that timeshare pitch that you fell for. They promised you exclusive access to travel anywhere you want. Tropical beaches, mountain getaways, or whatever.

Oh, my gosh. They claimed it was the affordable way to travel, and then they convinced you it was a good investment. But here's the deal. Search any auction site for your exact timeshare and see what it's selling for. It's listed for a dollar with no bids. That's not a good investment. Now, I know I'm just adding salt to a very old wound, but look, if you tried calling the resort and they won't take it back, if you tried selling

it and no one will buy it, call Timeshare Exit Team. Timeshare Exit Team will get you out. You'll have to be patient. It can be a long process, and it costs money, but it works. They're so confident in their exit service that if they don't get you out, you get a 100%

refund. Call 844-999-EXIT. It's free to talk. 844-999-EXIT. TimeshareExitTeam.com. One of the guys I used to read a lot in this space has passed away many years ago, Larry Burkett, used to say that it'll take you about as long to get out of your mess as it took you to get into it. How long did it take you to make the mess? Take you about that long to get out of it.

Here's the thing. I don't find that to quite be true. Huge respect for Larry Burkett. It usually takes you about half as long to get out as it does to get in. The prerequisite of that statement, though, is that you get freaking intense. You lose your mind and your broke friends think you've joined a cult because you are dialed in baby and you don't care what broke people think about your financial plan if broke people are making

fun of your financial plan it means you are on track think about it like fat people making fun of your diet okay think about it it's like dumb people making fun of your education think about it so you you don't you know you're right on track you're right on track then so your your intensity so if if it you know you you spent the last 10 years making a huge mess it might take you five to get out most people are out of debt using this system, not counting their house, in under three years. But this system entails this unbelievable focused intensity. And the more focused you are and the more intense you are, the deeper you sacrifice and the less you care about what other people think think the faster you get out.

The math is created by the intensity of your engagement in this idea of getting out of debt. That's the thing. So when you say, well, we sort of made up our own version of your plan, which would make it your plan, not mine. Ish. We did Dave Ramsey-ish. I'm going to get T-shirts planted with ishes all over them. Yeah, you can ish your way into getting nothing done.

So here's the thing. Go wide open, man. What's the worst-case scenario? You pay off a whole bunch of debt and you hate it? Go back in debt. That's your worst-case scenario. Luke is with us. Luke's in greenville south carolina hi luke how are you good how about yourself better than i deserve what's up well i am going on my third year of college um at anderson university and um i have recently gotten engaged yay we! We met our freshman year in college.

She's from Concord, North Carolina. And she'll graduate with probably a little bit of debt. Not exactly sure how much. She'll probably have less than I will. I'm going to highball it probably. Maybe we've talked about it, probably about $15,000. I'm thinking I might owe maybe $60,000 out of the four years, which is not bad. I never actually intended on going to college.

My senior year, I had a job set up. I was going to go in and do CNC machining and things like that. Long story short, I'm very big into music. I love music. And I feel like, I mean, I know it's a calling that God has put on my life and I've decided to chase it. Doors have opened up and my SAT and ACT scores wasn't high enough to even get me into Greenville Tech, much less a four-year university, but God had opened up the doors and provided the money for me to even go to a four-year university. So I'm there.

I'm getting a music degree. And so I play gigs about every weekend, and I'm a workaholic. I mean, I do landscape-type stuff. I've been doing that ever since I was a freshman. How can I help you today? But I'm trying to figure out how we can save money. And we took your Financial Peace University class and talking about just really throwing our money on debt.

And so we're trying to figure out what is a way that we can save our money and be able to have something to maybe put down on a down payment. Get out of debt. Okay. First step is get out of debt. You went through the class, you said. Yes, sir, I did. We didn't tell you to save up and buy a house

while you had $75,000 in student loan debt, did we? No, sir. Okay, then don't. Okay, so in the next few years, we just start throwing this on all the debt that we have. Yes, sir. We graduate. Let's say we do.

I don't think it will happen, but let's say we do get it. We're debt-free in two years once we graduate. Now we need to buy a house or something. But being that we threw all our money down on debt, we are debt-free. But where do we get that $10,000 or whatever to put down on a down payment or something like that? Where do you go then? Okay, well, let's kind of think this through for a second. You said you have two years of school left? Yes, sir. And when are you planning on getting married? Oh, we'd like to get married after we graduate. Oh, in two years? Yes, sir.

Okay, so she has $15,000 in debt. You have $60,000. We don't have anything until we're married. Exactly. Okay, but let me just, let's talk about you for a second. Let's pretend that because you work like an animal, because you're a self-admitted hard-working guy, that you paid off $60,000 worth of debt in two years, which is what you just described.

Yes, sir. But you have no money. If you rented an apartment for the first year of marriage and both of you are working and you're married, by then she would be debt-free too easily. If you can pay off $60,000, she can pay off $15,000. I'm not sure that's going to happen, but let's just use that because that's the scenario you laid out.

If you can pay off 60 in two years, why couldn't you save 30 in one year? That's the same rate. Okay. So one year later, you'd have $30,000, which would be your emergency fund plus your down payment. And you would be debt-free. All right. Move into your new house. Yeah, move into your new house.

Yeah, move into your new house, and your new marriage doesn't have financial stress on it then. Okay. The number one cause of divorce in North America today is money fights and money problems. That's why I encourage young couples not to buy a home until they're debt-free. It's okay to rent for a couple years. It's not a sin.

In your case, it's probably not a couple. It might be. It might be you rent for a couple years. It's not a sin. In your case, it's probably not a couple. It might be. It might be you don't quite get all the debt paid off in college. Then you get married, you got a little bit of years left, and we got to clean that up, and then we save up our emergency fund, and then we save up our down payment. That might take two years after college. Oh, so what? So what? When you move in a house with no house payment, I mean, with no payments except the house payment, no payments in the world except that house payment and you have your emergency fund in place plus your down payment the house will be a blessing instead of a curse when you move in a house with two car payments student loan debt a master card a discover card an american express

bill you know they all move in your spare bedroom and haunt you at night. And they will screw up your life. So you're going to get a house either way, but you're either going to get it right or you're going to get it wrong. And so that's what I'm telling you. Let's just take your time and let's do this the proper way. The proper way. Open phones at 888-825-5225.

Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every month, you save even more. The promo code is Ramsey at Blinds.com. Mary's in Maine. I'd like to know if you have invested in precious metals. No, I have not. They're stupid.

My husband has been talking about this for a month now, and it is something I am not very familiar with. It is a highly volatile, highly speculative, bad track record investment. Gold and silver, the two primary precious metals, have a horrible long-term track record. When you look at the last 40 or 50 years of investing in them, you will find people that have lost their butts. It went all the way up to almost $2,000 an ounce. It's all the way down to almost $1,000 an ounce now. If the stock market had gone in half and stayed down, it would be front page news. Gold has basically about half of what it was just a few, about 12, 14 months ago.

And no one is reporting how many people lost their shirts on gold. So you do not buy long-term investing. You do not do long-term investing in precious metals. I don't buy precious metals at all because I like my money. I don't want to lose it. That simple. That simple. Thanks for joining us. This is the Dave Ramsey Show. We'll be right back. I get asked all the time, when in the baby steps is the right time to buy life insurance?

My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance, since it's the most affordable way to get the right amount of coverage and not break your budget.

Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps. That's Zander.com or call 800-356-4282 zander.com in the lobby of ramsey solutions brady and al are with us. Hey, guys, how are you? Good, how are you? Thanks for having us.

Welcome, welcome. Where do you guys live? Newton, Iowa. Cool. Welcome to Nashville. And all the way down here to do a debt-free scream. Correct. Very cool.

How much have you paid off? $58,845. All right. And how long did it take? 15 months. 50 or 15? 15. 15 months. Okay. And your range did it take? 15 months. 50 or 15? 15. 15 months.

Okay. And your range of income during that time? Started at $79,000 and finished at $82,000. Cool. What do you guys do for a living? I am a middle school social studies teacher. I'm a preschool teacher. Oh, a couple teachers.

Awesomeness. So $59,000 of what kind of debt? Student loans and car loan. Okay. How long have you guys been married? It'll be a year on Sunday. Oh, so you started this before marriage. Yes.

Okay. So pre-marriage, somehow you're looking at this, and tell me the story. You decide to start this journey. Yeah. Alicia read Rachel Cruz's book, Love Your Life, Not Theirs, and that kind of kick-started her, and we met with a financial coach, Justin Bennett, up in Iowa. And we knew we were getting married, wanted to be on the same page with our financial goals and decisions, and met with him and got really fired up and started on our own. And then the day we got married, just kind of got the ball rolling together.

All right. Very cool. Very cool. So how did you get introduced to Rachel's book? I just saw it on Facebook. I saw her trailer. So it looked really intriguing, and I got the preorder and got it in October, I think it was. Just like that. So you're sitting there talking about it going $59,000 worth of mess. Yeah. We're heading into marriage. Let's go see a financial coach.

Exactly. Wow. Wow. Were you raised with responsible financial parents? Yeah. For the most part, yeah. Okay. So it would have been shocking almost for you to not address this issue.

Yeah. To ignore it and have just gone in instead you go, wow. Yeah. I mean, before we even started, we did have some money in savings. We were natural savers. She more than I. But we did have, I think we had close to $25,000 in savings before we started it all. Well, that helps it go real fast.

Yeah, for sure. You just knock out, you know what, 40% of it just like that. And then the other 60% you're doing is 15 months. But it is the first, like this is our first goal as a married couple. Boom. Exactly. And now we knock it out. Yeah.

And now that we did this together, we can do anything together. Exactly. Absolutely. Very cool. Very cool. Very cool. You're being an inspiration to your students as well, I'm sure. So did people make fun of you as you were going along, or did they say you have more cheerleaders or more detractors?

We had quite a few cheerleaders. We had our financial coach, Justin, and then we had our FPU coordinator. We went through that this fall. Okay. Family members, friends cheering us on. Some family members have actually went through FPU as well. But there's always those people that say, that's good for you, but it's not for us. That's never going to work for us.

Which is code for, I don't think this is ever really going to happen. You're not going to be able to do it either. Right. That's what it's code for. They know it's code for that. You know it's code for that, but they don't have the guts to say it. Right. I love it.

Well, well done, you guys. Thank you. What do you tell people the key to getting out of debt is? The biggest thing, I think, is having a realistic goal and having a timeline of when you're going to achieve that goal and checking in frequently to make sure you're on the right track. I think that's one of the biggest things that we did in budgeting also, making sure you're actually not only creating a budget but checking in with it and keeping track of your spending as well. Okay. Very cool. Good, good. So what was the hard part for you? Kind of like what she said with setting the goals and it's making it to

that first goal. So once we set a milestone, I think our first milestone was, you know, separately we were working on her debt. She was working on her student loans. I was working on my car that I had purchased before we got engaged. Getting to that first milestone and maybe knocking it under $10,000 on the loan. And I mean, once you get that, from there, I just got addicted. And we kind of took off. And the more you do that, the more exciting it is. And keep it rolling.

Yeah, winning is addicting. Yes. I mean, when you win at something, you're like, yeah. Yeah, I'll bring it. Let's do it. Yeah, game on. yes i mean when you win at something you're like yeah yeah yeah i'll bring it let's do it yeah game on well congratulations you guys very very well done we've got a copy of chris hogan's retire inspired book for you that is the uh number one bestseller and we want that to be the next chapter in your story that you become not only debt-free but now millionaires and you're on the way and outrageously generous as you go along, okay? Well done, you two.

Brady and Alicia, Des Moines, Iowa. We're proud of you guys. $59,000 paid off in 15 months. They threw $25,000 out of savings at it and then got with it, making $79,000 to $82,000. Brand new married and debt-free. Count it down.

Let's hear a debt-free scream. 3, 2, 1 married, and debt-free. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free. Yeah. Love it. Love it. Well done. Man, that's as good as it gets.

Very, very cool. Well, thank you for joining us, America. We're the Dave Ramsey Show. It's common sense for your dollars and cents. And one of the things we do at this show that is very unusual, because we have the staff and the capacity to do research regularly, a lot of shows don't, is that we want to hear from you, the listener. Once a year, we do a Dave Ramsey show survey,

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And we know that about another 5 million of you roughly uh are on podcast and uh we know the numbers of you um a million of you or so on youtube watching the show live every day and so uh it's uh and people subscribe to the dave ramsey show on youtube people listen on sirius xm uh so you know all the different ways you can consume the show. We have our own channel on iHeart. We appreciate you being there. When you go to SiriusXM, just type in Dave Ramsey or The Dave Ramsey Show, and you'll find us there. And actually, later in August, well, we can't tell you yet.

There's a big announcement coming, very cool stuff happening with SiriusXM, expanding your ability to hear the Dave Ramsey show. You can't beat that, right? Can't argue with a good thing getting bigger. So lots and lots of different ways you can get to this show. We're on Spotify. We're on everything, just about any way you can get the show, and almost every one of them are free.

If you're already a subscriber to SiriusXM, it doesn't cost a thing for you to listen to the Dave Ramsey show. Yeah, you'd have to be a subscriber to have that, of course. But, yeah, very cool. So Diana's on Twitter. How does a parent of millennials encourage less online and overnight shopping on items they don't really need. Well, Diana, a parent of anyone who is a grown person doesn't get to make their decisions. So if your millennial is 25 and they don't live in your home, then you don't get to make their decisions. You assume the role of the same role I'm in now. My son is 26. My Rachel is 30, and her older sister is 32.

And I don't get to make their decisions for them or their husbands or wives. They make their decisions. The only role I can play there is that of older, wiser person who persuades and keep enough of a relationship that they actually ask my opinion about something sometimes. And if they don't, it's known as none of my business. They get to make decisions independent of me. Your millennial will make decisions independent of you. And so, you know, you can show them the wisdom of limiting your shopping if you're broke, but you don't get to tell grown people how to act.

Now, if they live under your roof, well, that's a whole other thing. You can set up a number of rules then. And if you don't like the rules, you can not be under my roof. Ha! This is the Dave Ramsey Show. That we were working on. Slow change may pull us apart. When I'm not getting into your heart, baby.

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You're living on a budget, which we teach you to do. Get your every dollar budget. You've budgeted for the amount of money. And putting it on auto draft means it is always paid earlier on time so that you get the discount and you never pay a late charge. And, of course, you never get behind on your utilities. Utilities are one of the top two things I would pay anyway. The first thing I'm going to buy is food.

If I'm broke, the second thing I'm going to buy is utilities. Because you need to be warm or cool and have lights and have food in order to be able to function to clean up a mess if you've got a mess. But even if you don't have a mess, my personal utilities are on auto-draft. Don't mind people having electronic access to my checking account at all that are of the friendly nature. Now, I never would tell you to allow a collector to have electronic access. If you're negotiating a late bill, never give them electronic access.

But I have all my utility bills, a bunch of my mutual funds, insurance, a bunch of things. Auto hits the account. So I don't have to think about it. It just makes life easier. Low maintenance. Robin is with us in Chattanooga. Hi, Robin.

How are you? Hi, Dave. Thanks for taking my call. Sure. What's up? My husband is self-employed, and I'm a stay-at-home mom. And we have always kept the family budget and the business budget separate. Good.

But the business has no emergency fund, and it also has some debt. And so I'm wondering, should we sell one of our paid-off cars to help out the business? Okay. How much debt does the business have? A total of about $13,000. And what kind of business is it? He's a handyman. Okay.

And what is his income last year, net profit that you paid taxes on? Well, he started the business partway through the year, so for nine months it was only about $17,000 that he bought. What do you think he's going to make in the next 12? I don't know. You know, you got seven in the last nine, right? Or 17 in the last nine, right? Yes. So, I mean, we would hope you would be over 35 or 40 in the last nine, right? Or 17 in the last nine. Yes.

So, I mean, we would hope you would be over 35 or 40 in the next 12. Right. At this point, though, the business is, you know, in debt, and so he's just trying to pay those bills. And if we get a paycheck, that's great, but sometimes we don't. That wasn't what I asked. Okay, I don't understand. Okay.

I'm just helping you look at the projection on your business. If he's brought in $17,000 taxable profit in nine months, it's easy to assume that he would make between $30,000 and $40,000 in the coming 12. Okay. Because the nine months that he made $17,000, he was just getting started. Nobody even knew he was in business hardly. Right. So he should be able to make more than that in a six-month period of time, and that would be $34,000 if you doubled it for six.

Does that make sense? Yes, I think so. Okay. And so I think you're going to be able to pay off the debt out of the coming income. But he's going to have to make more and more and more and more money. Profit. Profit. And so he needs to really start doing a very careful job of analyzing the accounting of what kind of business he's making the most money on for the time he puts in,

and where's the sweet spot in this business? Where can he take this business and make it really do very, very, very, very, very well? I know one guy in our area that made over $100,000 last year profit as a handyman. He has unbelievably high prices but he's unbelievably good kind dependable shows up on time is not a threatening type character and so if you need something done he comes in and spends a half a day with you and you pay him well but boy oh boy does he do a great job and is he there every time he says he's going to be and does he finish on time and is everything clean when he finishes you betcha you know so he's like he's a specialist and so you just keep dialing it in

dialing it in dialing it in and i think he can make a lot more money than he's making now if he'll continue to over deliver over perform, over-perform, and under-promise. Don't over-promise and under-deliver. Over-deliver and under-promise. And just really bring it, and then just keep cranking your prices up, cranking your prices up, and then finding those spots, the types of things he does as a handyman that makes him the most money, and continue to grow that that way. I'm going to send you a copy of my book on running a handyman that makes him the most money and continue to grow that

that way. I'm going to send you a copy of my book on running a business called Entree Leadership. It's the number one New York Times bestselling book. It's how we've grown our business from a card table in our living room to where it is today. It'll show you a lot of good ideas. I don't think you have to sell a car. I think you need to earn more money, and that'll get you out of debt. Vanessa is with us in Dallas, Texas. Hi, Vanessa. How think you need to earn more money, and that'll get him to get you out of debt. Vanessa is with us in Dallas, Texas. Hi,

Vanessa. How are you? Hi, Dave. How are you today? Better than I deserve. What's up? Hey, thanks for taking my call. I have several questions I would like to get your advice on dealing with universal life and dealing with insurance. I have a policy with a universal life. I have a term, but my husband has a term. We have accidental death, and we have disabilities for work. Okay.

My daughter just introduced me to your plan. I was listening to her takes, so we just started your plan this month, which we're at step two. Good. So we're with the Universal Life Insurance. And how old are you guys? How old are you guys? I'm 55.

Mm-hmm. He's 56. Mm-hmm. And how much debt do you have, not counting your home? Not counting the home? Mm-hmm. We're looking at $42,700. Okay. And what do you make a year, and what does your husband make a year? About $60,000 without overtime for me and $85,000 for him.

Okay. All right. Well, if he died today, you'd be sitting there with your household income more than cut in half and have $42,000 in debt. That sounds like a mess, doesn't it? Yes. So he needs to buy about a 10-year to at least 65-level term insurance policy, somewhere around 10 times his income, so somewhere around $800,000 up to a million, somewhere in there, on 15 to 20-year level term.

You will find that to be less expensive than your rip-off universal policy. It does not save money inside of it, but you pay pennies on the dollar compared to what you're paying now. You, at the same time, should have about 10 times your income, so about $600,000 on you, because if you die, he's got a mess on his hands. You only need about 10 years because you don't have any kids at home. They're grown and gone. We're going to get this debt cleaned up, and then we're going to start saving money.

And when you have a big pile of money and you don't have any debt and one of you dies, then you're fine, financially speaking. And you won't need insurance long term. But for the next 10 years or so, you need some insurance. So I would go to ZanderInsurance.com, if I were you, and shop about a 10-year policy for you 55-year-olds. Again, about $800,000 and something on him, about $600,000 and something on you for 10 years. And just cancel the accidental death, because you're not double dead if you die by accident.

You need the same amount of money if you die by accident. That's by heart attack. And so you're not double. Well, it happens less often. I know. That's why they don't charge you anymore. It's gimmick stuff, gimmick stuff. And now long-term disability insurance is completely different.

That's a different subject, and everyone, if you can afford it, needs long-term disability. And if you have that through work, that's probably the best place to get it, and that's definitely the route to go. But go to Zander, that's Z-A-N-D-E-R, insurance.com. They're an insurance broker that we endorse. They don't work for me. I don't own them, but I buy insurance from them. And the guy that owns it, Jeff Zander, has become a friend of mine. I've endorsed this

company for over 20 years. Because when you put in your information, it automatically on their website shops through a bazillion different companies and gets you the best possible quote anywhere. And you're just not going to beat the quote. And that's why we use them and why I use them personally. So just do that, get some term insurance in place, and drop the universal. If you can get other insurance, I wouldn't have cash value insurance. I wouldn't leave it in place. Now, if you're sick, you may be stuck with it. But that's what I would do if I woke up in your shoes.

Hey, thanks for being a new listener. That puts this hour of The Dave Ramsey Show in the books. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive, and it could be you this year. Keep listening for more inspiration. Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal.

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