The Ramsey Show - App - Radical Sacrifice Brings Radical Results (Hour 1)

Episode Date: April 3, 2019

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Live from the headquarters of Ramsey Solutions Broad 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. Open phones this hour as we talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225. Sophia starts off this hour in Tampa, Florida. Hi, Sophia.

How are you? Good. How are you? Better than I deserve. What's up? Fantastic. First time caller. Been thinking about this for a while, so I wanted to get a little advice from you.

My husband is coming into a little bit of money. He's kind of changed. We own our own business. He's changed his business. He's gotten a couple good deals. So by June, he'll come home with about $200,000. Wow. Wonderful. Yeah. We don't have a lot of debt. I mean, we do, we don't. So we took a HELOC out to start our business a few years ago. I only have like $50,000 left in that. And then I have another HELOC I took out to do some other things and we have like $60,000 left to pay off. I own four properties. My question is, this $200,000 that's coming in should i pay off those helocs yes and then have no debt because we just built our house and we pay cash for our house so there's

no mortgage on our house there's a mortgage on your house you have two helocs on your house those are mortgages those are mortgages right but it's a house that we left it's the the two other rental houses so the the rental income is... You don't have a HELOC on your personal residence. Correct. We built that cash. Okay. Right.

So what is your household income in a typical year? See, that's the thing. It fluctuates. It could be anything. Some years are good. Some years are bad. And what I asked, I said, in in a typical year what do you think you're going to make in a given 12 months going forward not counting you know big deals that come out of

the sky 80 to 90 okay and so 200 is a big jump right yeah okay well yeah you use it to clean up your mess for sure we knock out the two hel HELOCs. That still leaves us $90,000 to do something with. You have no other debt except real estate. Correct. None at all. None at all. No, no, because I make sure if my credit card bill is $500 or $5,000 a month, I pay that off. Like, I don't, the only debt we have, you know, we have cars that we lease, but they're like $300 a month.

It's not a big deal. Honey, the only debt we have, you know, we have cars that we lease, but they're like 300 bucks a month. It's not a big deal. Honey, that's debt. Okay. You have car debt. Yes. How much do you owe on these stupid cars? Both of them together. All right, let me stop.

Let me stop just a second. Okay. The advice I'm giving you is wrong based on the conversation I'm having with you. Okay. Because the advice I give you is to clean up debt, never use debt again, think debt sucks, debt is a bad idea, and you're having a love affair with debt. You've got credit cards coming in and out. You've got cars leased.

You've got HELOCs, and it's very nonchalant to you so when i tell you to clean up this debt and then you go back into debt that would have been bad advice so the advice i give you is based on what i would do which is to get out of debt completely as soon as possible because that is the shortest path to not only financial peace but to wealth building because your most powerful wealth building tool is your income and you're giving it to credit card companies car loans and helox and i want you to stop doing that forever okay so i would use this money i would cut up your credit cards. I would get a debit card. I would try this thing out called a budget where you live on less than you make

so you're not running up debt on stuff every time you get ready to buy something. And I would never have a car payment again. I would never have a HELOC again. And then I would begin to work on those other issues. So I'm going to send you a copy of the book, The Total Money Makeover. You need one, not only the book but the makeover. And I'm going to give you the step-by-step plan on where to go, exactly how to get there.

But I would not take this $200,000 and pay off the debt unless you're committed to a permanent change away from debt because there might be, if you're going to live a different way, there might be a better use of that money you know living the way you're living now but i'm my advice is predicated on the idea that i'm always trying to get you towards wealth as fast as i can and the shortest path there is debt free and stay debt free but. But you've not reached a point where you think debt is bad yet. But you called the guy who hates debt more than anybody on the freaking planet. So you walked into the bear cage. So the bear is here.

And so hold on. I'll send you a copy of the Total Money Makeover because I want to help you and not just fuss at you. And that will show you exactly what to do and how to do it. Lee is with us in Chicago. Hi, Lee. How are you? I'm wonderful.

Thank you for taking my call, baby. Sure. How can I help? Okay, so I first want to say thank you. In August, you blessed my family with the curriculum for FPU. And since then, we've paid off all of our credit cards, one car loan, and a personal loan. Wow, look at you.

So, who to that? Go, go, go. I love it. And so now, we have one more car loan left, and then we have our student loan. Now, we want to get a position, and it's going to be in a couple of years because we have a lot of student loans. Now, we want to get a position, and it's going to be in a couple of years because we have a lot of student loans, but we want to get a position to look good on paper for a home. So,

my question is, with the student loans, I'm hearing a couple of things. My husband has his student loans. I have my student loans. They're all divvied up by individual. Some people are saying combine it and make it one student loan for me and one student loan for him, or combine both of ours. I would not combine both of yours. There may be a slight interest rate advantage to combining yours, but probably not. But keep them as individuals.

Do not. Because if he dies or becomes disabled, his student loans, his federal student loans are forgiven. But if you've got both your names on them that doesn't happen oh so do not combine them as a couple but if you wanted to consolidate yours and him consolidate his we're still treating it as a whole from a family perspective from a relationship perspective we're managing it as one but we're going to keep it legally separate. And if you consolidate, the only reason you would do that is in order to save on the interest rate. And so you'd look at your total interest rates across yours and go, well, all of mine are at 11%, and I can get a 6% if I consolidate.

Well, you'd do that, right? But if all of mine are at 5% and I consolidate and I get a 6%, well, that'd be bad. Okay. You went up in interest rates. So they're able to tell me that when I ask about... Well, you need to know the interest rates on your existing loans, and then when you talk about consolidating it, they can tell you the consolidation. And do not do a variable rate if you consolidate where they vary the rate back and forth only do a fixed because if it goes up later and it takes away all the advantage okay yeah so

if you you know if you take all your sevens and you move them up to a five but it's variable and it goes up later to an eight because it's variable that wouldn't work so that's why you always do a fixed you want it to always be locked in at the better rate where you're going so hey good question you got it on the run kiddo well done well done this is the day ramsey shot You know, I still get lots of questions about ID theft, and now is a good time to delve into this a little deeper. ID theft has become a huge problem, and most people think it's all about financial fraud. But there are so many other areas where people are being victimized. Tax refund fraud, for example, is out of control. Last year, the IRS paid out over $3 billion in fraudulent refunds.

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This is the smartest, most affordable way to protect yourself and your family. That's ZanderInsurance.com. Thanks for being with us, America. Lizeth is with us in Dallas, Texas. Hi, Lizeth. How are you? Hi, doing good. Good. How can I help? I'm so excited. So a couple weeks ago, my husband found you on YouTube,

and he's been listening to you religiously and doing everything you say. And I'm pretty excited because we're in a lot of debt. We're only 24 years old, and we make pretty good money. He makes the mechanics. I make the flag hours. But it's a pretty decent amount to be in the debt that we're in right now. So what's your household income? His is about $70 to $80, but it's not steady because it's flag hours and mine is

about 30 to 40 okay so you're making like one to 110 all right and how much debt do you have so we had a lot of credit cards so i just like because we got a house we couldn't afford and we put it on on like letting people borrow borrowing money from other people and then getting credit cards and then getting credit cards. And I know credit cards are bad, so we stopped. How much debt do you have? $20,000. $20,000?

Yes. And is it all on credit cards? No, we got a loan. No, we got a loan that was a lower interest rate to pay all the credit cards off. How much do you owe on your cars? $11,000 on my car. Is that in the $20,000? What? Is that part of the $20 no no no it's 20 000 plus plus the 11 on your car that's 31 and how much student loans no student loans um i paid all school off and how much is your

how much is your house payment? $1,300. Okay. That's doable once we get you on a budget. Yeah. All right. So how can I help? So we kind of try to figure it out. We put our lowest, like the lowest thing that we have to pay off first and the highest thing. And then we got my husband on the budget because he was spending $1,000 on like airsofting,

going out with his friends. And then another $1,000 on like airsoft and going out with his friends. And then another $1,000 on like lunch money and stuff like that. And another $1,000 on us going out to movies and stuff like that. So it was about $3,000 of extra stuff, not including any pills or anything. And now we went down and I'm getting him $200 a week for food. Not just food because I'm making his lunch, just for extra stuff or whatever he needs to get. What can I help you with today? So he doesn't want to spend any money, not go to anywhere, not do anything

because we were trying to get out of debt, which is understandable. But I don't think he'll be able to do that for very long. Why? I say maybe one day a week going one why to one restaurant why because we've gone out everything like wait a minute stop stop so it you may you make a hundred and two hundred and ten thousand you owe 20 you owe thirty one thousand dollars you could if you lived on beans and rice and stayed out of a restaurant you could be debt free in a year and some change maybe 14 months and so i've known a lot of people over 30 years

that have worked on this idea and none of them died from not going to a restaurant oh i understand and i know it's doable but i just think going from such extremes, maybe going to the movies for $6 one day a week instead of never going again, because if we never go again, I feel like after a month we're just going to give up on it. I don't think anybody said never. I think we said for 14 whole months. A long time. And we're just used to going out every weekend, Friday, Saturday, Sunday, Mondays,

and then you go to Olive Garden on a Tuesday. And you're broke. Yeah, because of that. Yeah, I know. How's that working for you? Not very well. Okay, so it's time to change. Yeah.

And so the whole idea, Liz, if you're kind of new to this, and he's jumped in and he's gone whole hog, I can tell, and he's driving you nuts. Okay? So, but he's jumped in, and he's gone whole hog, I can tell, and he's driving you nuts. Okay? So, but here's the thing. Why don't you guys try something that's radical for 30 days? Hold your nose. And see how you do. See how you feel about it.

Because here's the thing. The more radical your sacrifices, the more radical your results. And what we teach folks is if you'll live like no one else, later you can live and give like no one else. Now, you are an adult. You make $110,000 a year. You can go out to eat or go to a movie. You have the right to make that decision. But you're calling me and asking me how to best win with money.

And what I've is is that if i will just say i'm gonna do something completely different and kind of shock the system shock my emotional system my spiritual system my family system by completely changing directions for a short period of time if you get out of a bunch of debt and you hate it, you can go right back in debt. It's okay. I mean, you'll be able to do it. They'll let you get right back in. So the thing is, what you've been doing, the way you've been living,

has caused you to be where you are. The more you approximate that, the closer you continue to live like you used to live, the less, the more you're going to look like you look right now financially. And so you've got to change. Now, does that mean you're going to do that the rest of your life? No. But what this amounts to is you guys have been acting like little children. You've just been doing what feels good.

And adults devise a plan and follow it. Children do what feels good. And adults devise a plan and follow it. Children do what feels good. And it's a maturity thing. Whether you're 54, 24, 14, 84, it's a maturity thing. The ability to delay pleasure for a greater result is an indication of emotional and spiritual maturity. Living like no one else so later you can live and give like no one else is hard, but it's worth it. Now then, you've got to decide what you guys are going to do.

But the thing you've got to do is look past the momentary pain to the greater gain. You've got to look past and say, why am I doing this? Because that baby I'm hearing in the background wants a better life. I want to change my family tree. Why am i doing this because that baby i'm hearing in the background wants a better life i want to change my family tree why are you doing this because i'm sick and tired to make 110 000 of your work busting my hump doing side work and being broke so something's got to give and that's why your husband he said you know he works on cars i mean he knows if you do one thing to a car car's not going to run if you you do another thing to the car, the car's going to run. You're going to create the result you want. You control the controllables.

And then you decide what you want to do. So that's how you do it. That's exactly how you do it. So I'm going to put you two through Financial Peace University. And if you'll go to the class and through the class together, I'm going to pay for it. If you'll hold on, Kelly's going to pick up. Then you'll start to get your hands around what I'm talking about,

and it stops being an argument about going to a freaking movie and starts being a decision to change my life. And then you can decide what of that you want to do. People do all kinds of different things things but this is what we're teaching and and if your husband is going completely overboard then you know if you're in that group and financial peace some of the people in there will talk to him about that i mean if he's starving his children or something or he's not willing to buy clothes for his own children then that's a problem that's not what we're talking about. But, yeah, stopping things that are entertainment, which going out to eat is entertainment,

going to a movie is entertainment, in order, for a short period of time, in order to hit a bigger goal for a noble reason, yeah, it's worth it. And I do recommend that. Living like no one else. So later you can live and give like no one else. Larissa is in Nashville.

Hi, Larissa. How are you? I'm well. How are you doing, Dave? Better than I deserve. What's up? Very good. Thank you for taking my call.

Sure. I am calling because I am wondering if you could help me and my husband prioritize. I have sort of a two-part thing going on. One has to do with our careers, following our chosen careers rather than the jobs that we're working. And the other one is we are trying to get out of debt. And we're in the middle of Financial Peace University, and we're getting a lot out of it, but we are having a hard time with budgeting because we have more going out than we have coming in. So what do you need to amputate?

So that's the question. We make about $58,000 a year. I'm a stay-at-home mom. I am a writer as well, but I'm not getting paid for that, a songwriter. And I have run an Airbnb business out of our home. And my husband works as a real estate appraiser assistant during the day, and he works at a restaurant at night. Now, after working as an assistant for three years, he's realized he does not want to do this job.

He's hardly getting paid any money, which is five for waiting tables at night. Tell you what, hold on. I'll come back from the break. I'll get the rest of your story and see if I can help you. This is The Dave Ramsey Show. One Dental is a company I've been telling my listeners about because I know these guys will save you money at the dentist. One Dental is a dental savings program that allows you to go to one of over 158,000 dental practice locations nationwide and save on things like cleanings, dentures, root canals, crowns, and even orthodontics.

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Folks, this is a no-brainer. Join today at OneDental.com. That's OneDental.com. All right, we're talking with Larissa in Nashville, and they got a lot of bills. She's writing, but not for any money yet, her song. Her husband is making $58,000, and they're trying to figure out how to reverse the idea of too much going out. And so I asked the question, Larissa, what is it you need to amputate? So the question has been whether or not we should sell our home and we owe about 189 000 on it and i think the house has appreciated quite a bit since we bought it five years ago what is your house payment my house

payment is 16 20 a month okay and your take-home pay on 58 000 is what a month a month um that's like about 5 000 no no 5 000 a month is 60 000 a year that would not be your take-home pay on 58 000 yeah so i think so it's it's 44,800 or $5,000. It varies a little bit, Dave, because coal works. So you're saying the $58,000 is not your income. That is your take-home pay. That's our take-home, yes. Okay, all right, all right. And so one-fourth of that would be somewhere around $1,250.

So you have a house payment that's a little bit high. What do you owe on your cars? We don't have any payments on our cars. What other debts do you have? Well, we have about $50,000 in student loan debt. We owe about $15,000 to the IRS because of waiting tables and not cutting taxes and getting behind on payments. And then we, in the past three years since we've had our son, have racked up about $35,000 in credit card debt. Since we've had our what? Son. Son.

Yeah, my husband was out of work for a little while. Okay, and so $35,000 in credit card debt? Yes. Okay, so what we have is an income problem. Your house payment's not out of control. It's all the other debts that are riding you down. You could sell your house, and if you've got enough equity, equity would clean up a bunch of this debt uh that's a short way out i probably would rather see you guys do some things to increase your income i would try

that for a year uh and you know take extra jobs and different jobs and uh that kind of thing your songwriting unless it's going to produce revenue may need to sit on the shelf a little bit while you go make some money. But let's get your income up for a year and see if we can make a turn on this. All right, in the lobby of Ramsey Solutions, Matt and Mandy are with us. Hey, guys, welcome to the Ramsey Solutions lobby. Thanks, Dave. Hi, thank you. Where do you guys live?

We're from Sunfield, Michigan. Very cool. Good for you. And here to do a debt-free scream. Yes, sir. How much do you guys live? We're from Sunfield, Michigan. Very cool. Good for you. And here to do a debt-free scream. Yes, sir. How much have you paid off? $39,654.17. I love it.

How long did this take? Ten months. Good for you. And your range of income during that time? We were from 95 to 105. Okay. What kind of debt was this? It was my temper tantrum debt.

Your temper tantrum debt? We had done Dave-ish for a while, and I really wanted to have the house remodeled. It's a very small house. It's not huge, and I was just sick and tired of it and decided that I wanted it done. So it was a camper to live in while we were doing it and our home remodel. Okay. And then you decided in 10 months to go in reverse and have a temper tantrum about that. Yeah, I was really mad at myself right after it was done. I loved having the house done, but I was furious because I knew better. And yeah, so we just decided to get gazelle intense and be done.

Cool. And we joined our brother and sister-in-law after we had talked them into doing it before. Ah, okay. So they were already on the path, which further shamed you. So, Matt, where were you during this ride? Working. Okay, cool.

Very cool. So what do you tell people the key to getting out of debt is? Stick to it. Stick to it, diligence, make a meal plan, and shop at Aldi. Okay. All during the 10 months? Yes. Okay.

Cool. So who were your biggest cheerleaders? Our brother and sister-in-law. Okay. Family. Yeah. And what got you started on this originally? Originally, I was a single mom before I had met him, and I had student loans, and I just wasn't sure how I was going to get through it, so someone had introduced me to you.

And so then I had talked to him about it, and we really wanted to make a better path, and we just kind of got off from time to time and finally decided it was just time to get it out and get it done. Okay. Tired of giving our money to the banks? Yeah. Yeah, I hear you. We're really sick of paying interest and stuff. How does it feel now that you're free?

It feels great. It feels amazing. This trip has been great. Cool. Very cool. So when you said $40,000, there was emotion in your voice. What's that from um it was a lot of uh there was some some struggles um i lost my brother in september and uh i had never wanted to be more debt-free than at that moment.

So I could pay for his funeral, and I couldn't do it. Oh, my gosh. That does change your why, doesn't it? It really does, yeah. That's living like no one else, so later you can live like no one else and give like no one else. Yeah. Wow. I didn't want my mom to have to carry that burden, and she did.

But never again. Never again. You've changed your family tree. Yeah. When you have a moment like that, that's the I've had it forever moment. I mean, that one sears deep on the heart, and you'll never go back. No. You'll never go back.

It's not a Dave Ramsey thing anymore. At that point, it is a Mandy and Matt thing. Yep. We are not doing this anymore because you can you can tell you can teach your grandbabies that same lesson you know that's the kind of those are milestones or markers where there's a tipping point in your life so i'm proud of y'all well done thank you well done you've gone through some roller coasters and some ish to not to temper fits to temper fits i like it it. That's good. It's a good way to get there because it's permanent.

It is permanent. Sometimes if it's too intellectual and there's not enough emotion, not enough spiritual in your transformation, then it doesn't stick. Yeah. And you fall off the wagon. You won't fall off. No. You're done.

And we do have to give Jesus a lot of the credit because he was walking right alongside us the entire time. Amen. Amen. Amen. That's exactly right. Well, well done, guys. Thank you. Very well done.

We got a copy of Chris Hogan's book for you, Everyday Millionaires. You're on your way. That's the next chapter. We're hoping. Chapter 2 is closed, and we're moving on to Chapter 3. Yes. There we go. And we'll show you how to do that, signed by Chris himself.

It's the number one bestseller. And it's how all the millionaires got to be there. And they did the stuff like you're doing. And, you know, a lot of them that we interviewed had that kind of a moment of some kind where it's emotional. Where you just say, uh-uh. I am never going to be here again. I'm never going to be here again. I remember one of mine.

I had several. But, I mean, American Express called my house and asked my wife why she would stay with a man that wouldn't pay his bills. The collector was trying to be nasty to get our attention, and she called me crying at the office agreeing with him. And I was so pissed I was ready to go to Florida and whip a collector. And so, yeah, but I'll never forget that. that i mean that was 30 years ago and i've never done business with american express since but i paid that bill he did he did win that part of the argument because it made me so mad i paid it but i i thought you know what i'm never gonna be here

again if american express calls my house now it's a wrong number you know and you have to have those things those those deep anger hurt type emotional things where a joy it's some kind of an emotional thing where you just go we're never going back and you guys have had it so yes i'm sorry about your brother thank you well done you guys matt and mandy and the three kids names and ages ages? We have Gavin. He's nine. This is Austin and Faith. They're both 17. Awesome. Very good. So, Faith, Austin, Gavin, Matt, and Mandy from Lansing, Michigan. $40,000 paid off in 10 months, making $95,000 to $105,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free scream three two one we're dead free touchdown baby this is how it is done well played very well played so you need to get yourself in a position. You. I'm talking to you. You need to get yourself in a position that you can impact those kinds of situations because you're not broke.

Money's evil. Money's not evil if you want to pay for your brother's funeral. This is the Dave Ramsey Show. Thanks for joining us, America. Well, when you reach baby step three, that means you're debt free, everything but the house, and you have your emergency fund in place. Until you do that, you are gazelle intense, beans and rice, rice and beans, meaning that you're going to go scorched earth on the lifestyle in order to clear the debt. That intense focus is what gets you out of debt. And then when you're in baby steps four, which is 15% of your income going into retirement, five kids college and six pay off the house, you're doing those simultaneously.

And that's when you start to save up, buy things and go. You can go on vacation. You can buy a couch. You can upgrade your car and pay cash for all of the above. So we are doing something we've never done before, and we launched it about a month ago, not quite, about three weeks ago, I guess, and the Live Like No One Else Cruise. It's going to be next March of 2020, and it is almost sold out. 25% of the cabins remain. We is um almost sold out uh there's only 25 of the cabins remain we're 75 sold out if you want to join us now is the time to book your trip if you're in baby steps four

through seven this vacation is for you now we're not hypocrites we don't want you to go into debt to do this we don't want you to do this while you're in debt we're not going to check but we're not hypocrites we're not inviting you we want you to win with while you're in debt. We're not going to check, but we're not hypocrites. We're not inviting you. We want you to win with money, and that means delaying vacations. We'll probably do another one of these. This one sold out so fast. So you can plan on, in another year, you celebrate reaching those baby steps

by joining us on one of these cruises. And so what's happening is the Ramsey personalities are all going to be there me rachel cruz chris hogan anthony o'neill ken coleman christy wright will all be doing sessions uh my friend jeff foxworthy is going to join us and uh you know world-class talent obviously in comedy uh stephen curtis chapman world-class talent, Christian music icon, Grammy Award winner is going to join us. Manette Chauhan is going to be with us from the Food Network. She's a star chef, world-class, and owns several restaurants here in Nashville. She's become a friend and be doing stuff there.

It's going to be absolutely incredible. We're going to leave from Fort Lauderdale, and we'll go to Turks and Caicos, the Bahamas, Puerto Rico, St. Thomas. It's a seven-day cruise, a high-end cruise. This is a nice cruise. This is not a bargain cruise. It's on the Holland America. It's on a brand-new ship, and Holland is one of the top lines. It's not one of the cheap ones.

And, you know, they brought me one of those cheesy ones to look at and i'm just like no i'm not doing that i don't want to go and on this one i want to go so we're going to hang out with you it's going to be a blast we look forward to it's 250 deposit per person again it's 75 sold out and from now until april 15, that's when the early bird special ends. It's $100 cheaper off each guest's reservation. So if you're booking for a couple, it's $200 cheaper between now and April 15th. So you've just got, what, 14 days, two weeks to do that. And my guess is it'll probably sell out during early bird pricing at its current rate of sale. So if you want to go, we'd love to have you.

The RamseyCruise.com is where you can get information. RamseyCru to have you the ramseycruise.com is where you can get information ramseycruise.com ramseycruise.com and it's the live like no one else cruise nick is with us in austin texas hi nick welcome to the dave ramsey show hey dave how's wednesday treating you better than I deserve. How can I help? Hey, so I have a question about retirement, 401K. A quick back story is I work in a tech startup in Austin, Texas. Our 401K is set up with Betterment. Not sure if you're familiar with that platform or not. But we don't have a match currently.

The reason why is because they give a lot of the employee shares to companies, so I have a decent amount of shares hoping to go IPO next year. But I'm really trying to find out if I should be putting money into this 401k with Betterment when I don't have a match, or if I should be investing my money elsewhere, say, in like a Roth IRA, doing, you know, investing in mutual funds. It's kind of a rock, paper, scissors thing, okay? Match beats Roth beats traditional so when you're putting 15 of your income because you're debt free and you have your emergency fund in place

and you're putting 15 of your income into retirement you first put it in the match and you don't have one then you would put it in a roth and so that's where you need to go and once you max that out if you're still not 15%, then you would go back to your Betterment, do your traditional 401K. Bottom line is you're a little tech startup, and they did a cheapo 401K is what they've done, the cheapest possible way to put it together, because they're not really using that as a benefit. They're hoping that your IPO is your big benefit.

And so they cheaped out. That's what they did. And so that's okay you probably could still get some good options through your betterment program it's just a robo investor is all it is and um they're not bad they're just not great and it's an inexpensive low fee way to put something in place and um doesn't necessarily mean it's horrible but it doesn't necessarily mean it's great i don't know what kind of options they provided to you. But either way, the Roth is going to be better, and you've got 8,000 options in the marketplace.

So just go to DaveRamsey.com, click SmartVestor, open you up a Roth IRA. If you're married, open one on your wife. You can do $6,000 a year each. That's $12,000. I don't know what your household income is, but if that's approaching 15% of your income, then you've got your baby step four. If it's not, if you're making $200,000 a year, you need to do more. Then you'd go back to that betterment, put some more into that 401k, even though it's not the first choice.

So match is best. Match beats Roth beats traditional. None of them are bad, but match is best because you got 100% on your money before you do anything. Roth grows tax free, so it beats traditional do anything roth grows tax free so it beats traditional and then traditional grows tax deferred all of those are better than just straight investing omar is with us in boston mass hey omar how are you i'm doing good day thanks for having me sure what's up well um i'm kind of lost on what to do next. I've paid down my loan. I've had $50,000. I'm at $36,000.

I'm making $67,000 a year, and I'm now just collecting money in my bank, and I don't know what to do with it. I'm getting a lot of advice, a lot of people telling me what they want me to do, but I'm getting a little lost. Gotcha. Are you 100% debt-free? No. I have $36,000 less in my debt.

Oh, and how much is in the bank? I want to say about $20,000. Okay, throw that at the debt. I want to, but I feel like I should be doing more of my money right now, trying to invest it somewhere, or some people are even telling me to buy equity, which I'm not sure about. No, that's a bunch of crap listen you're broke you're in debt and you're broke and the shortest path from where

you are to wealth is to become debt free so that you free up your most powerful wealth building tool which is your income would you borrow money on a student loan to invest in mutual funds no that's what you've done if you keep that money and put it into a mutual fund. Effectively, because you didn't pay off the student loan. From a balance sheet perspective, that's what you did. So what we teach folks to do, the shortest path to wealth, the straightest line, shortest distance between two points, right, is to become debt-free, and then that frees you up to build your emergency fund of three to six months of expenses,

and then you start your investing process, and you're able to do it with muscle then because you've got some muscle. Right now, you're just broke. You owe $36,000. You have $20,000 in the bank. That means you have a negative net worth. That's the definition of a broke person, okay? So it feels like you've got money because you're making some money and you've set some money aside but don't let the feels fool you you're broke you have a negative

net worth so let's throw them throw everything at that and i'm gonna leave a thousand dollars in there for your starter emergency fund work like crazy get the rest of that debt knocked off you only got 16 left to go and you make good money you can do that when you focus um the bad news as a single person is you got no one to hold you accountable the good news is you don't have to hold anyone accountable so you just got to get after it and so uh tear into that 16 000 knock it out when that's done you build your emergency fund of three to six months of expenses, when you're sitting on $15,000 cash and no debt at all, now you're not broke anymore. Now you start investing.

But broke people shouldn't put money in equities. As a matter of fact, a good financial advisor that's following the law should tell you that. And so everybody's got an opinion about money, but most of them are broke. So that's what I would do, and that's what we teach, Omar. Hope that helps you. Thanks for calling in. Open phones at 888-825-5225.

That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey, your host, and we will be back. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.