The Ramsey Show - App - Paying Down Debt? Celebrate the Little Victories! (Hour 1)

Episode Date: June 24, 2019

Get Started on Your Debt-Free Journey We’ve made it even easier to get started taking control of your money.  Learn How! How Fast Can You Be Debt-Free? You don’t have to be in debt for the rest of your life! Answer 5 simple questions and our Debt Calculator will show you how quickly you could be out debt!   Get the Complete Guide to Budgeting. Budgeting is often misunderstood and overcomplicated. It doesn't have to be! We made it simple. After 90 days of budgeting with EveryDollar, 9 out of 10 users feel more confident in their financial future. Get the Complete Guide to Budgeting.   Get the Coverage You Need. How does your coverage stack up? This Coverage Checkup will show you what you need (and don’t need), which questions to ask, and where to get the best coverage.   Find the Right Financial Advisor. Finding the right financial advisor doesn't have to be complicated. Our free guide makes it easy to know what questions to ask so you can make a confident choice. Get the guide!    Listen and Watch Anytime, Anywhere.   The Dave Ramsey Show app lets you download episodes for offline playback, customize your content, and see what’s coming up!

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 am Dave Ramsey, your host. This is your show. Thank you for being here. Open phones at 888-825-5225. Aaron is with us in Springfield, Kentucky.

Hi, Aaron. How are you? I'm doing pretty good. It's awesome to be on the phone with you. I really appreciate it. Certainly. How can we help? So my question is, I just started at a new company.

I'm a truck driver, and I started at a new company to be home more. I actually get paid more, but they do a 6% match. It's an ESOP company. And I'm just curious because we're about to start our baby steps into getting rid of our debt, and I wanted to know what is more important, putting more money into a matching 401K or taking that money and putting it into debt now and then putting it towards the match now. I'm just kind of confused on what my first step should be in terms of that. What we tell folks to do and have told them to do for 20-plus years

is to temporarily stop all investing while you attack your debt as a temporary measure. It's not mathematically correct because missing out on that match is a wonderful math thing. I mean, getting that match is a wonderful math thing. It's a great thing. But you're not going to miss it for very long because you're going to tear into this debt really, really heavily. Here's the thing. In our culture, debt has become so normal. Everybody's got it.

Everybody's in debt. And everybody's broke, and everybody doesn't have any money. But everybody's got debt. And so it's easy to wander into debt. It is very difficult to get out of debt. And you've become an incredible inspiration towards me and my wife both, and that's why we're looking forward to doing this and bringing you along on the adventure,

even if you're not personally there with us. Yeah, I appreciate that. The point, though, is that you're going to have the most progress on getting rid of the debt, which is the shortest path to wealth, not a 401k match while you've got debt, but getting the debt cleaned up so you can start putting 15% of your income into retirement, which more than gets you the match at baby step four. You'll end up with more money 10 years from now doing it that way

because you will get rid of the debt faster. There's a thing about the focus. When you focus on something exclusively that's when you win with it and that's why again debt is so insidious it's got its fingers wrapped around our throats so so hard and so tightly that to get away from the stranglehold you have got to just go all in emotionally, all in relationally, all in spiritually, all in mathematically. And so even though it's mathematically incorrect to stop your investing and stop, miss your match temporarily, it's the best way because it's all in. And that all in thing causes you to become debt free, which causes you to be able to build wealth faster. And so that's why we do it.

That's why we say stop all investing, and you would not start your 401K, and you would miss out on the match. But, man, you've got to get after it now. I mean, you've got to really get after it and get this debt cleared. I mean, beans and rice, rice and beans. And it sounds like you're ready to do that. Brandi's with us in Jacksonville, Florida. Hi, Brandi. How are you? Hi, I'm doing well. How like you're ready to do that. Brandy's with us in Jacksonville, Florida. Hi, Brandy.

How are you? Hi, I'm doing well. How are you? Better than I deserve. What's up? Well, my husband and I have gotten a little bit through baby step two. We've paid off all the onesies and twosies stuff, and now we're starting to get into the big stuff.

And we're trying to figure out what order we should do it in. The biggest portion of our debt is our boat and our newest car. We want to sell those, but we're a little underwater by a few thousand, the both of them. So I didn't know if you would recommend putting those ahead of, like, bigger credit cards and stuff like that and trying to pay off some of the principles so we can sell those items. That's $60,000 right there that week, and $700 a month we can get rid of right there. Yes, because I would treat the negative equity as an item in your debt snowball since you're going to sell it.

And so you say $2,000, when does that come up in the debt snowball? If you're $2,000 upside down, then you would stop and you would would say i'm going to get this thing paid down two thousand dollars and sell it and the uh and if you treat the negative equity as a debt the amount you're in the hole is a debt put that in the debt snowball that's when you would go ahead and do that since you're turning the car or the boat over so that's a really good that would be great because that's that would really get this ball rolling with that extra $700, $800 a month. Yeah, it's going to be huge when you do that. Very cool.

Yeah, very good. And, you know, sacrificing a car and a boat, oh, it's so hard, especially the boat. But here's the thing. You get another one. You get another one. If you live like no one else later, you get to live like no one else. If you drive like no one else later, you can drive like no one else. These days, you know what I drive?

Anything I want. But I drove a junker. I drove a beater. I drove a car that the predominant color on it was Bondo. I drove a car that you had to give it a name because it was such a hoopty. And so I make no apologies for driving nice stuff now because i paid a price to get there some people don't like it you're you're you're too successful yeah you're too successful well you're too mouthy i mean really two that's these unbelievable so yeah yeah yeah

you know you'll get you another car you'll get you another boat and do it get you do it right now go ahead and put that in your debt snowball at this point. So good question. David is with us in Sacramento, California. Hi, David. How are you? I'm great, Dave. Thanks so much.

Hey, my wife and I are talking about vehicle purchase, used vehicle we're looking at. And we just said, what would Dave Ramsey do? So I said, said well maybe i'll call him so we uh we're working through the baby steps a little bit into baby step three the three to six month emergency fund and we've got a vehicle we've had for 15 years and had two mechanics over the last year or so tell us i wouldn't put any more money into that car we're averaging we looked back at our records about 200 a month in repairs on this car. So we're thinking, and the AC compressor just went out.

We're going into the summertime, so it's expensive, and we're thinking, maybe it's time just to get a different vehicle, or should we go and put more money into this car again? What will it sell for? That's a good question, and it'll probably only bring in maybe $1,000 with the AC out. It's got a power steering pump out. Once leaking, we'll keep putting power steering fluid into it. Yeah, you're done. Got a lot of creaks and groans and other things.

What's your household income? About $70,000. Okay. And so how much money do you have saved? We've got about $7,000 saved up. Okay. So you haven't got your Baby Step 2 completed? No.

Well, no. Okay. But your car basically laid down is what we're saying. Yeah, it's got a lot of problems. Yeah, so if we want to declare this an emergency, you would take $2,000 out of that $7,000 and put it with that $1,000 and buy a $3,000 car. Then when you finish your emergency fund up later, then you save up and move up in car again next year.

That makes total sense. The one caveat we're looking at is we've got six kids and the vehicle that's breaking down is the eighth passenger at the Astrovan. Yeah, so buy another one for $3,000. You're going to sell a $1,000 one, buy a $3,000 one. You can do that. I mean, if there's a $1,000 one on the market, there's a $2,000 one,

and a $3,000 one on the market somewhere. 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 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. Our question of the day comes from Blinds.com, the number one online retailer of custom window covering. Site-wide savings are happening right now. Plus, you can take an additional 5% off at Blinds.com.

Slash Ramsey. That's Blind at blinds.com slash Ramsey. That's blinds.com slash Ramsey. Emily is in Indiana. Dave, I haven't heard you mention the LIRP, the Life Insurance Retirement Policy, in terms of retirement investing. It seems like a Roth IRA, but through an insurance company with life insurance included. I'm debt-free, and I've been super approved. Oh, wow. It's always good to get super approved as opposed to just approved for an LIRP through a company. Investing in an LIRP sounds like a good idea.

Why would you not recommend investing in it? Because it sucks. That's why. It's a horrible rate of return. Anytime you get involved with a cash value life insurance policy, you are going to get horrible terms and high expenses. And so there's just no exceptions to that. Some are slightly better than others, but one sucks and the other is just double sucks.

And you just don't, there's no point in doing this. Listen, you're much better off to do your investing in good investments. There are no good life insurance investment products. There's none there's none that can keep up with decent growth stock mutual funds invested in your 401k and in your roth ira we've just finished surveying 10 162 millionaires asking them how they got there. Do you know how many of them got to be millionaires because they bought cash value life insurance? Of the 10,000 that we interviewed, do you know how many? Zero. Out of over 10,000 millionaires,

not one said they used a cash value life insurance product to become wealthy. Not one said, I did all my investing in cash value, in LIRPs, said i did all my investing in cash value in lirps in indexed universal life policies in universal policies in variable life policies not one out of 10,000 said they built their wealth using life insurance as an investment product. Not even one. I mean, my God, you would think that a blind hog could find an acre never so often,

that at least one out of 10,000 could become millionaires. But these products suck so bad that they suck the very bone marrow out of your cash flow and they put it down a rat hole you're flushing it down the toilet and it virtually guarantees you're not going to build wealth so when you're arrogant got their glasses down on the tip of his nose, rolling his eyes about Dave Ramsey, insurance agent, says, well, all the wealthy use cash value life insurance. Let me just tell you, I have done, our company is just doing with Chris Hogan,

the largest study of millionaires in North America ever done, and not one of them. Not even one. You would think one at least. I mean, there were more people that became wealthy using CDs, making nothing on their money, than they did using insurance as an investment product. They all say, I mean, like 89%, 91% say,

I used mutual funds for my Roth IRAs and my 401ks, and I put money in there, and I paid off my house in 10.2 years. And this is almost every one of them. So the deal is this. Not one, if I made myself clear, not even one of these millionaires that we've interviewed. I cannot think of anyone I've talked to in 30 years of doing this who said, Dave, you know, I made my money. The thing that caused me to become wealthy

was i invested in life insurance i've never heard that not once now i will admit to a bias on that because i tell people it's stupid for 30 years i've told people it's stupid so i'm not likely to run into somebody that goes, hey, I'm stupid. So if they know it's me, now the survey, the research we did did not know it was me doing the research. So they were not biased in their answers. But, you know, if I'm talking to somebody here on the air, they're not likely to call up and go, you know, I got rich using whole life life insurance from Northwestern Mutual. I've never heard that.

I mean, buying whole life life insurance from Northwestern Mutual, it's kind of like buying a $100,000 boat. It's a good way to turn $100,000 into $10,000. You know, it's a good way to take a a billionaire and make them into a millionaire you know it just so let's just not be unclear about this there's no data anywhere except hypothetical examples by your whole life agent by your cash value life insurance agent that says this is a good idea it's's just not a good idea, folk. Hope I wasn't unclear. Randy is on Facebook and says, Dave, what are your thoughts on prepaying funeral expenses?

I wouldn't. I would preplan it, but I wouldn't prepay it. Because were you to take that same amount of money and invest it in decent growth stock mutual funds you'd have a lot more money than the cost of the funeral has increased when you prepay anything your rate of return on your investment is how much it goes up in cost so what's the inflation rate of funerals if the inflation rate of funerals is 12% a year, which it's not, then you'd be making 12% on your money by prepaying. Inflation rate on funerals, however, runs more like 3%,

so you're making 3% on your money if you invested the money at 10% or 12%. And when the cost of the funeral went up by 3% a year, you'd still come out like way ahead. Do you see what I'm doing? So you don't prepay anything way into the future like that i would pre-plan it and you can go down and say i want the chevrolet coffin i want the cadillac coffin i want the bentley coffin i want the thing that leaks because i never could swim or doesn't leak because i never could swim or whatever i don't know whatever it is you want with your vault and all that stuff you go down there and pick it all

out and look at the costs and then your relatives don't have to do that while they're grieving, and they don't have to make a $10,000, $15,000 worth of decisions, $5,000 worth of decisions while they're grieving because you don't make nearly as good a decision when you do that. So I do believe in pre-planning your funeral. And, you know, here's another thing. Get your will done and make sure you have life insurance in place. These are the processes that you go to.

Lance is on Facebook. What's your word on points for travel earned by credit cards? Why is it a bad decision? When you use a credit card, Lance, you spend more money than when you use a debit card. And in either case, you spend more money than when you use cash. When you lay $100 bills on the table or $20 bills on the table, you realize you spent money. It activates the pain centers of the brain, literally.

MRI studies done at MIT indicate this, that the pain centers of the brain, literally. MRI studies done at MIT indicate this. That the pain centers of the brain are activated when you spend with cash. When you spend with credit card, with plastic, you don't realize you spent money as much. And even the most disciplined that feel like, oh, I'm not really buying stuff just to get points, you are. The very fact that you ask the question tells me that you're willing to spend money just to get points. And having met with, again, thousands of millionaires, I've never met one that said, Dave, you know, I made all my money with my airline miles. The high quality of my lifestyle, Dave, is because of my airline miles. If you spend like no one else on your credit card, later you can live like no one else on your airline miles. No one ever said that saying.

If you spend $100,000 on your credit card, you can fly on a flight. It's kind of expensive. Kind of stupid. You're falling into their trap. You're not winning. This is the Dave Ramsey Show. Annie is in Bismarck, North Dakota. Hi, Annie. How are you?

I'm awesome. How are you? Better than I deserve. What's up? Oh, nothing. Just calling to let you know I paid off all my debt. Debt-free Annie. I love it.

How much have you paid off? I paid off $50,000 in three years. Good for you. And your range of income during that time? 50, or excuse me, sorry. I started at about 40 and ended at about 59. Good for you. What do you do for a living?

I do office work, and then while I was doing this journey, I had a ton of side jobs. What was the best money-making side job you had? Well, I did a lot of serving, so that was probably where I made the most. That was a lot of it. As a waitress? Yep, yep. I was a waitress. What kind of restaurant gave you the best tips?

Oh, man, i don't know usually just kind of the popular i mean i live in a smaller town so just the more popular one around town i guess so one that where there was a lot of tables where you had a good work where you were standing around yeah usually the more busy ones i worked at like a sports a sports bar for a while, and during football season it was crazy, things like that. Yeah, okay, cool. Good for you. Well done. What's your day job?

What do you do during the day? I'm an office assistant. You said that. Okay, all right, cool. What kind of debt was the $50,000? What was that? What kind of debt was the $50,000? I had $2,000 in credit card debt and then $7,000 on a car loan.

And then I had a $41,000 monster student loan debt. Wow. What's your degree in? I had two degrees. So I had a degree in communications and graphic design. And then I also had a degree in administrative assistant. Ah, which is what you're doing. Okay, very good.

Yep, exactly. Very cool. So what happened to you three years ago that put you on this journey? Well, rewind a couple years ago, my sister, she's a huge fan of you, and she suggested I should take the Financial Peace University class. So I did that after college, and that was probably about six years ago. So it took a little while for it to kick in, but I think once I started making my student loan payments,

and it started out probably under $40,000, but then after the interest it ended up, it just kept getting higher instead of smaller. So you woke up one morning a couple years after school and said, this is going the wrong way. Yeah, exactly. So I might have to get serious. Yep. Okay. Yep, and I was already living like a broke college student, so I figured now's the time to do it and just get it done.

Yeah, knock it out. Well done. Well, I guess your sister was cheering you on right she was yeah she was my big support throughout the whole journey when i'd have to work the long serving hours yeah your feet get motivated yeah your feet get tired and carrying those trays your back hurts yep yeah good for you very good well done so how old are you? Thank you. I am 29. I just turned 29. And you are debt-free. How's it feel? I am debt-free. It feels awesome. It's been so good the past couple months. It's just a weight off your shoulders. Yeah. So what do you tell people the key to getting out of debt is? I would say you just have to start. You just,

I mean, you just got to do it. I really, I'm kind of old school and I really like writing everything down. So when I started, I just jotted down everything I owed and kind of came up with a game plan, worked on my debt snowball. And I think just seeing it visually on paper or even, you know, if you have it on your computer just helps a ton. Yeah. Keep you motivated. And celebrate the little victories, too. So every about 5,000 I'd pay off, I would just give myself a little celebration and then just keep chucking away at it.

So what does an Annie little celebration look like? Usually it's just going over to my sister's house and ordering pizza okay nothing crazy maybe or if it's like i'd go shop at one of my little boutiques by myself just a little shirt and then go back at it you know so i got you okay that's cool though every every five thousand and you had ten of those to get to fifty thousand and you did that in three years and so yeah every three or four months you go and woo-hoo, and then you go back at it. Yeah, you go back at it. That's a good plan.

Then you go back at it, yep. That keeps you moving. Very well done. It does, yeah. Did you have anybody saying you were crazy? Not really. I had a lot of support system. Actually, when I paid off my last payment, I went over to my sister's house to do my little celebration with our pizza.

We were just going to have a girls' night. And I went there, and she actually threw a surprise party for me with all of my friends that were, like, supporting me throughout the whole process. So it was, like, the best way to end the journey, and everybody was rooting for me. I'm looking at our YouTube channel. I think I have a picture of that party with the little signs. Yep, yeah, and she made little signs. She went all out. Actually got a good Last Supper look to it there.

Yeah, well done. Yeah, exactly. That's what it is. That's fun. Very good. Well, congratulations, and way to go, sis, for the support. That's excellent. What's her name?

Yeah, Nicole. All right, way to go, sis, for the support. That's excellent. What's her name? Yeah, Nicole. All right, way to go, Nicole. Good job. You talked her into it. You put her in Financial Peace University. You encouraged her, and you celebrated at the end. That's a good sister. Well done.

Yeah, she's awesome. Yeah, good stuff. Good stuff. Wow, love it, love it, love it. We got a copy of Chris Hogan's book for you, number one bestseller. It's called Retire Inspired. That's the next chapter in your story, Annie. You're going to be a millionaire.

You're on your way, and you're going to be outrageously generous as you go along, and there's going to be a lot of Annie celebrations in the future. Yay! Yes, there will be. I'm excited. $50,000 paid off. Annie in Bismarck, North Dakota, took her three years making $40,000 up to $59,000. Waiting tables.

Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free! There we go. Love it! Well done. Well done. Well done.

Susie's in Austin, Texas. How are you, Susie? Hi, Dave. I'm doing good. I want to let you know that this summer I decided I wanted to get serious about our finances and not have to look paycheck to paycheck. So I read your Total Money Makeover and even got my college-age kids the book. I can't remember the name of it right now, but the one about not making certain financial mistakes.

Right. And got my husband on board. And I'm kind of wanting to figure out if we're on the right track and kind of figure out what's the best way to handle all this. I should say that I realize, after listening to your program and reading your book, that we actually make really good money, but we had the past year a lot of expenses that were sort of out of control. I had two surgeries. We also ended up having to get two cars.

We paid off the past year and a half. We didn't pay off two cars, knowing we were going to need to get a used car for my son. And then my car, the engine went out. And unfortunately, I did buy a new car, but I was able to trade in my old car. So I didn't buy a real expensive car. Okay. How much debt do you have? So we have $60,000 in debt, which is... What's your household income? Our household income is between $170,000 and $180,000 a year. Okay.

And so you realize it's ridiculous that you're in debt at all? Yes. You've been spending like you're in Congress and it's time to quit right well and we so we have started we're on baby step two um and the um we're trying to get yeah but the first the first step to getting out of debt is never borrow again for For anything, for any reason, ever again. Never borrow money again. If you're not ready to do that, I can't help you. Well, no, I agree with you.

After reading your book, I agree with you. And that's why we decided we're going to get really serious and get this. Yeah. So your son gets a $1,000 car or doesn't get a car at all until you get the $60,000 cleaned up. You make $170,000, you need to be debt-free in a year. One year. That's $5,000 a month on the debt. If you can do that, and above that, you want to save up a little bit and get him a little bit of a car,

put an engine in your car, get you a little bit of a car until we get to the other side of this. Next year, you'll be able to buy cars and pay cash for them without any trouble because you won't have any debt. And you will have learned to live on a budget sacrificially for the first time in your freaking life. Y'all been spending money, kiddo. This is the Dave Ramsey Show. Jonathan is in Colorado Springs. Hi, Jonathan. Welcome to the Dave Ramsey Show. Hey, Dave. How are you doing today? Better than I deserve. What's up?

Awesome. So I bought a house out in the mountains a year and a half ago, and the first snowstorm that hit, I almost didn't make it home. Kind of panicked after that and let the Subaru dealer talk me into a lease on a new car. Now that I'm trying to do your baby steps, I'm on baby step one right now, and that pavement is kind of looking ugly right now so i'm wondering if i should do a private sale on this and take a slight loss and get a cheaper car but i also need something that's reliable and i also work 40 miles away from home so obviously you need front wheel drive or four wheel drive anyway huh yeah okay all right and um so have you done any research on the car as it currently

sits like what is it worth today uh yeah it's 26 uh 23 000 is what kelly bubuk says possibly up to 26 based on what i'm seeing on craigslist is that a private sale private sale okay that's not a wholesale but okay and have you called subaru to ask what the early buyout on the lease is? Yeah. It's $26,000 right now is what I have. Okay. All right. And how much is your payment?

$390. Okay. And so when does the lease run out? A year and a half. Okay. Okay. I think you're driving it. Here's why okay let's say that it takes you four thousand dollars

cash to get out of this lease okay let's just pretend let's say you sold it for 23 and you owed 27 or you sold it for 22 and you owe 26 something like that okay 400 bucks a month into 4 000 is 10 months you could have driven it for 10 months right okay for that four thousand dollars you're gonna write four thousand dollars give up the car you're not gonna have the car and you're not gonna have the four thousand dollars or you can spend the four thousand dollars and have the car for that 10 months then there's only another eight months left after that. So I agree with you. It was a stupid move to buy it. But I've done dumber things.

So I can't yell at you too bad. But, I mean, you've already identified that before you came to me. You said this was a dumb thing. I got emotional, and I went and impulsed a car is what you were saying, right? I love the car, and it gets me there. Yeah, but you just don't love the deal. The deal sucked in your life because you didn't ride a check. Nothing wrong with a Subaru.

You just ride a check and pay for it if you're going to buy one, right? And so here's what the deal is. What's your household income? I bring home $5,100 a month. Okay. I'm saving like crazy so at the end of 18 months I can ride a check and buy the car you want and turn this baby in. And I'm also trying to get out of debt.

Well, this is one of the things you've got to do to get out of debt. Yeah. I mean, because otherwise you're going to try and borrow money to buy a car in 18 months, and that's kind of going backwards, isn't it? Yeah. Yeah, so part of your get-out-of-debt plan is be ready to buy a car in 18 months, and in this 18 months, drive the Subaru and write the check. Okay.

How much other debt have you got? I've got $60,000 total on half of its car. Okay. Well, you may be done in 18 months then. You could be debt-free by the time you get there. Yeah, trying for it. By my calculations, if I can get about fifteen hundred dollars a month extra to throw at this and uh yeah i'll be out not yeah not counting the car you could be debt

free in 18 months right you've got to find that extra income and if you turn and if you turn the car in in 18 months you are debt free in 18, but now we've got to buy a car. Yeah. So that's the trick. And I think you can do all of this. It's just you're not buying a $20,000 car in 18 months. I can tell you that. Yeah.

Well, in 18 months when this lease is up, I'll owe $19,000 on it. And because of how many miles I'm driving, I won't be able to trade it in, so I'll still have to buy it at the end of that. No, no, you are trading it in. Oh, so you're going to be way over the miles, too. Yeah. Oh, that changes the equation. You may need to go ahead and sell it now. Okay.

And just get rid of it, and let's get the $4,000 hit then, and then you're going to have to go buy something super, super, super cheap, like $3,000 or $4,000. And that will get me through the mountains in the winter? If it's got four-wheel drive, it will. There's no snow that says you cannot pass here because you have a cheap car. The snow says your wheels aren't all turning, and so you can't go here. That's what the snow says.

You can take a $500 four-wheel drive pickup and go up the side of Pike's Peak with it. But it's got to have the right tires and it's four-wheel drive, right? Right. And bags of sand in the bed or whatever. You know, I mean, it's just how the car is equipped and how it's geared and whether you've got the right tires and weight distribution and all that kind of stuff, whether you can drive it in the snow. It's not how expensive it is.

So, you know, you've got to make a decision. But, yeah, I'm getting out of this car, and, no, I'm not going back into another debt car. I'm going into something super, super, super cheap. And if you want to move up again in car later, sure. Absolutely I'll move up in car later. So there you go. Brad is with us in Charlotte, North Carolina. Hi, Brad.

How are you? Doing great. How are you? Doing great. How are you? Better than I deserve. What's up? Hey, so me and my wife, we've been married a year coming up in August for our first year, and we have knocked out some debt, about $15,000. We recently purchased a newer home.

It's about $160,000, and we've been shooting on that. We've been paying off on that, trying to get that knocked down as much as possible. We're on baby step number three, and we're a little confused on where we need to focus. Now I'm confused. I thought you said you were paying extra on your house. We are. Then you're not on baby step three. I got a little excited, and I skipped it.

Yes, sir. Oh, then you're not working our plan. Okay. Yeah. So you're working your plan. I am, but that's why I'm calling you. My wife said your decisions are basically right under God's decisions. They're very important.

I doubt that. But all you do is ask my wife, and she'll tell you different on that one but but uh but when it comes to this financial stuff i have helped about 30 million people with it so we do have a leg up so what i would do is stop putting extra on your house build your emergency fund and uh then start what we call baby steps four five six once your emergency funds out of place your debt in place and you're debt free everything but the house then and only then do you start building wealth and that's baby step four is 15 of your income into retirement five is kids college and six is pay extra on the house you do those three simultaneously once you get the

emergency fund in place ann's with us in Syracuse, New York. Hi, Ann. How are you? Hi, Dave. I'm better than I deserve. How are you today? Just the same. How can I help?

Good. I have a question for you about two Bible verses I've come across recently. Okay. My husband and I are FPU coordinators, and we're on Baby Step 7. Okay. So we definitely know plenty of Bible verses that are anti-debt. We're not going to change our stance on debt based on what I'm about to ask you.

So I'm not about to go back into debt. Don't worry. But I'm just hoping you can help me understand these verses because they're not negative about debt or lending. They're actually a little bit positive, which kind of confused me. Okay, do you want to hear what they are? Sure.

Matthew 5, 42, give to the one who asks you, and do not turn away from the one who wants to borrow from you. Okay. Stop just a second. Go to your Hebrew and Greek and look up the Greek on

the word lend, the borrow on that. And what you're going to find is it's another version of give okay because what it's doing is picking up the king james english and it's not it's not picking up the actual interpretation of the greek and um because it's in other words that verse if and if you go back and read a couple verses on either side of that one what you're going to see is the whole spirit of the thing in context is all about loving other people well not making it not making them your slave and so um this is not this is not like uh an excuse for the banking business to be in existence you know and you you're not yeah

you're not you're not being adversarial i understand that so but it's just certainly it's just the spirit of lending there is like you would you ever have somebody say I want to borrow a cup of sugar. Right. But they never but they never bring it back. No. Okay. It's that tissue. Yeah.

It's that kind of can I borrow a tissue. Yeah. Yeah. Yeah. Can I borrow some toilet paper. Please don't bring this back. Yeah. And so, you know, that kind of stuff.

Right. So it's that kind of a thing. It's that kind of a borrowing and lending. It's not a transaction like a bank. And I'm running out of time, but right quick, tell me what the other one is. I'm dying. Is it Genesis? No, the other one is Psalm 112.5. It's probably the exact same problem, but it's probably from the Hebrew. Good will come to those who are generous and lend freely, who conduct their affairs with justice. Again, go pull your Hebrew on that.

And what you're going to find there is that you give that cup of sugar is lending. I'm going to lend you a cup of sugar, and I don't expect it back, really. And that's where usury laws in the Old Testament come into play as well. So, hey, good question. I love having those discussions. Appreciate you calling in. And thanks for leaving the class. Hey, guys, this is James Childs, producer of The Dave Ramsey Show.

I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.