The Ramsey Show - App - Reasons You Should Get a 15-Year Mortgage (Hour 2)

Episode Date: August 9, 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. You jump in. We'll talk about your life and your money. It is a free call at 888-825-5225. Some say the advice is worth exactly what you pay for it. 888-825-5225. We'll start this hour off with Jacob in Loken, Utah. Hi, Jacob. How are you? I'm doing well, sir. How are you?

Better than I deserve. What's up in your world? So, my question is regarding real estate. Me and my wife, we're both debt-free. We're both studying at the university. I'm in the Air Force ROTC, so once I graduate, we'll be moved somewhere around the country. And I'm just wondering maybe how to get into real estate, you know, if I'll be moving around the country with the military, and maybe what's a good way to start. Most other places that I've looked recommend financing, and just based off of what you recommend and kind of what we believe, that's not necessarily the way we'd like to go about it.

So I just kind of want your recommendation. Okay. Well, thank you for serving your country. We appreciate that. Here's the thing. It's very difficult to learn to be a landlord and to be an effective landlord, even if you're a good one, with long-distance landlording. A house in one town that you're managing and you live 500 miles

away because the air force has moved you from your last location where you bought your rental property and you moved away that'll cause someone to change their harley oil in your living room not being able to watch over it not being able to watch what's going on you can get in a real mess with tenants in that situation so i personally i own I own a lot of real estate, and I don't own any long-distance rental property, residential rental property. I don't own any rental property, period. I don't own any real estate long-distance, except stuff that I personally use. But, I mean, I don't have anybody renting from me, that kind of thing.

So that's going to be a challenge for you to start with. As you move around, you don't want to buy in every location. You'll end up with rental properties in 14 different cities by the time you're done with your time in the Air Force, and we don't want that. So that's thing one. Thing two is to save up and pay cash. As far as how to learn it, there's two aspects of it that you want to try to find someone in each location to mentor you and you can find people that are doing this there's the purchase part of the equation which is learning how to find good deals and actually buy good deals because in real estate the saying is your money is made at

the buy you should get a good deal at the buy never buy something hoping it's going to go up and that's the only way you make money always Always buy a deal. And then the second part of the equation is actually managing the property after you buy it and repair it and get it on the market for rental and learning to put the proper tenants in and treating a tenant screening process like a job interview because they're getting ready to move into your asset that's tens of thousands of dollars, and they're going to get to stay there for just a few hundred dollars.

But you've got tens of thousands, maybe hundreds of thousands of dollars invested in this property. And so I have an obligation and a right to make sure that you are going to take care of my stuff if you're going to move in there. So we treat it like a job interview. We're very detailed, and we're kind, but we just, you know, if you've got all kinds of issues going on in your life and your family and, you know, you're doing drugs and you can't keep a job and all this other stuff, I don't need you as a tenant

because it's not going to end well for you. I'll be in control. I'll be all right, but you're going to be homeless because we're going to set you out. And so I don't want to get into that. And so I'd rather evict my tenant before I ever let them move in, meaning just didn't let them move in in the first place. I want to do a good screening job.

And learning to do that, it takes a little time, a little bit of experience. So I would just jump in and around the rental business and start learning from people that are doing it. And then as you settle in at a location where you're going to be a while, I'd make that my first purchase. Andrew is on the line. Andrew is in Los Angeles. Hi, Andrew. How are you?

I'm doing good. How are you doing? Better than I deserve, sir. How can I help? A question. I do sales full-time, and I was thinking about starting a gardening service on saturdays 45 i'm wondering if i still have the energy to do it and uh so if you can give me some pointers on how to get started and what to do you're kind of my own business instead of just doing sales itself and eventually let go of sales and do gardening full-time okay you're how old? 45. 45?

Mm-hmm. Yeah. And you think you don't have the energy? Well, I think I do, but I guess I'm kind of scared, too, and I just wanted to get some pointers on how to start this and get going, you know, you as a businessman, I can learn from you. Well, I mean, I've done a lot of yard work in my life, enough to know I don't want to do any more. It makes you tired, and if that's what you mean, you're going to be tired.

I don't care if you're 25, 45, or 65 out there. If you're not tired at the end of the day, you didn't do anything in that world. So you can count on fatigue, physical fatigue, as a part of the equation. But, you know, if you want to build a gardening business, I don't see any problem with that at 45 years old. Okay. So, yeah, I think I would do it. And your other question was what? That's basically because I do sales and I just feel that I want to start my own thing.

As a salesperson, I do have, I work from home and I kind of do my own thing, but it's just not really my own business, if that makes sense. In a sense it is, but it's not really. And I just want to have something of my own. Yeah, so why? What is it about having something of your own that's appealing? I guess because I know so many business people and so many businessmen, I just like it. And I deal with businessmen all the time in sales.

Yeah, but I mean, what is it that you like? I don't know. I guess it's just I just like to have more control. You're not under somebody. That's a fair thing, yeah. Well, let me help you, though. I mean, you're always going to have a boss. You're just trading one boss for another.

The new boss is your customer. I understand. I got like 13 million of them on this show. Yeah, and it's kind of like that even in sales. I have to answer to my customers no matter what. Yeah, so that doesn't go away. And, you know, the difference is you don't have one person that can put their thumb on you. You can always have more.

You know, if I don't like this customer, I can get me three more, you know, or if I got a bad one, somebody's misbehaving, I can fire them as a customer, and that way they're not my boss anymore. Kind of like quitting your job, but you're not quitting your whole job. So in that sense, you do have control, and that's a good reason to go in business. I'm glad I asked you the question. I want you to know why you're doing that is I want to control some of these variables. I don't like the way I was treated by management, in quotes, in some of these other situations,

so I want to do my own thing. I've had my fill of corporate America. And, you know, being a gardener sounds like a lot of fun. The downside of, the only downside of your discussion here is that when you have a one-man operation like that, when you're sick, you're unemployed. When you're on vacation, you're unemployed. And so when you are the singular producer of revenue and you're not able or willing or whatever working for a period of time, you're unemployed. The money is tied directly to your activity.

And so that's the downside of this. It's, you know, if you built it up where you had five people working, no matter whether you go to work or not, they're working. Now you've got a business that you're working on, not just in. And that takes a little longer to build. But you definitely can do all of that at 45. This is the Dave Ramsey Show. Hey, Chris Hogan here. Retirement isn't an age, it's a financial number.

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Faith's in Washington, D.C. How are you, Faith? I'm doing well. Thank you so much for taking my call. I was just calling because my husband and I have saved up enough money to buy our first home, which is really exciting. Good. I know that you recommend a 15-year fixed-rate mortgage, but I was doing the math, and we can afford a mortgage if we do a 30-year rate. So I didn't know if we should wait to save more for a down payment

so that we can do the 15-year or if we should go ahead and do the 30-year. That way the $1,500 a month that we're spending in rent is building equity instead of going nowhere. Well, when you make good financial decisions, they are defined not as what feels good today, but what causes you to build wealth over the long term. And 30-year mortgages are a trap. They do not cause you to build wealth over the long term.

15-year mortgages will get you out of debt, which is the goal in no longer than 15 years. So it sounds like, yeah, you've either got to wait and save up some more if you're wise, or you buy in a different neighborhood than you're looking in now to where you can afford to put it on a 15-year with the price that you're buying in. And, of course, Washington, D.C. is a very expensive market that you live in, but the further you get away from the center in most cities, and it's true there as well, the less expensive the property is. And so, you know.

Right, I mean, we're looking in the far outskirts of Virginia. Yeah. And, I mean, we were approved for a $350,000 loan, which is, there's no way in this world I would ever spend that much, because it's, like like right at our limit. So I was looking at about $300,000 as our max. So you think that my husband and I should wait? I would not buy a home where the mortgage is more than a fourth of your take-home pay

on a 15-year fixed. I would never take out more than a 15-year. And the idea is to have it paid for that's the idea i know you got home fever i know you want to buy a home i want you to get a home i just don't want your home to get you and when you're just in an effort to get a house get a house get a house get a house i gotta get a house i gotta get a house and you get all hyper about it and you know you start hyperventilating and you and then you do something stupid and you lock yourself in you know to to uh i going to be in debt forever mentality.

And that's what I don't want you to do because your largest wealth-building tool is your income, and I want that house paid off someday, someday sooner than you can visualize right now. And you're not going to do that when you max out or you get close to maxing out on a 30-year. And so, you know, what can you look at where the payment on a 15-year fixed with the down payment that you have is around a fourth of your take-home pay, and that's the most I'm going to do. Rachel, I don't do that even. The most I'm going to recommend. Rachel's in Madison, Wisconsin.

Hi, Rachel. How are you? I'm good. Thank you for taking my call. Sure. What's up? I'm looking to teach your principles in my college Christian club, and I was wondering if you would recommend FPU or Foundations in Personal Finance,

and if you had any advice for motivating students to take the class and pay for the material. Well, the foundations is we have a college curriculum in foundations that you can use, and it's probably the most appropriate since you're doing it for college age. In terms of how to pay for it, you know, talk to our youth resources team. We'll see if we can find a sponsor for you to put it in there. Sometimes a local business will sponsor for a college course or a high school course to be taught. And if not, then you would just figure out what the – I don't even know what that cost on that curriculum is off the top of my head. But just check with our educational resources team. They will work with you on this.

We'll help you. And in terms of how to get somebody to pay for something, it's always just in any case, no matter what it is, it's just do they perceive the value? Do they have a need or a want that's going to be filled by this? And that value is the reason you would want to teach it is why they need it. And so you need to talk about why you're teaching this and how important it is and you can walk through all of those things with any person one-on-one and then they can decide if they want to make you know an investment in knowledge which is kind of an odd thing for a college student to do not really mark is with us in san francisco hey mark welcome to the dave ramsey show

hey dave it's a pleasure to speak with you. You too. What's up? My question for you is about rolling over a 401k from a previous employer. Give you a little bit of background about myself. I am 28 years old, completely debt-free. I recently left my employer of about six years to build my own business, and things have been going really well, but I want to deal with that old 401K from the employer. I believe it would be best to roll the 401K into a Roth IRA, and if I did that, I do have the cash available to pay the taxes that I would incur. Okay.

So my question to you is, should I go ahead with rolling over that 401K into a Roth IRA? Yep, and pay the taxes. Now, when you say you have the cash of value, cash available to pay the taxes created, that cash is, in effect, means you are debt-free. Are you? Yep. Okay, and you have your emergency fund.

Yep. And you have the cash above that. Yep. Good. Yes, I would cash above that? Yep. Good. Yes, I would roll that to an IRA. How much is in the money? I mean, how much is in the account? The 401K is about $82,000 right now.

Okay, very good. Okay, so it's like $20,000 you're coming up with, huh? Yep. Okay, very cool. Good for you. Well, I would get in touch with one of our SmartVestor pros. They can help you do that. Click SmartVestor at DaveRamsey.com.

Find the people in your area, a list of them that we recommend. You can choose from among them who you want to work with. And I invest and I recommend people invest in their long-term investing programs. My personal 401k, my personal IRAs is spread across four different types of mutual funds. Growth, growth and income, aggressive growth, and international. Michael is with us in Cincinnati. Hey, Michael, how are you? I'm blessed, Dave, but my wife and I are facing a dilemma, so I need your help.

Okay. So we have a car that is currently dead and needs either replaced or repaired um the cost of the repair was which is basically replacing the engine is going to be three thousand dollars which is what the car is worth we are in baby step number three and we have enough cash to replace the car um still have plenty left over in the emergency fund. So we need to know whether we should replace it and try to get another 100,000 miles out of it or, sorry, repair it and get 100,000 miles or replace it.

Yeah, you replace it. And here's how the formula works, okay? If what you're spending on the car to fix it doesn't raise the value by what you're spending, then you don't do it. So here's an example, okay? Let's say you had a $10,000 car, but the engine's blown. So because the engine's blown, you can only sell the car for $1,000. But you could put a $3,000 engine in it. Well, $1,000 value, not fixed, plus a $3,000 engine is only $4,000, as opposed to it being worth $10,000 after it's fixed.

That's a car you fix, okay? But if you've got a car that's worth $3,000, with the engine blown, it's worth $500, and you put $3,000 into it, $500 plus $3,000 is now $3,000. With the engine blown, it's worth $500, and you put $3,000 into it. $500 plus $3,000 is now $3,500. You've now got more in this car than it's worth. And so at that point, you don't repair it. We had a problem earlier in the year where we kind of already did that. We already replaced the transmission, and that alone was worth the value of the car as well.

Assuming you can sell the transmission, and that alone is worth the value of the car as well. Assuming you can sell the transmission. Okay. Yeah, so either sell the transmission or sell the car as salvage, including the transmission. Either way, it's $500 or $1,000 you get out of it, and you put the $3,000 you would have put in the motor with it, with that, and you get a $4,000 car. And you come out better or even some more money that you're talking about, and move up a little in car if you've got some in addition to the emergency fund and you're debt-free.

Otherwise, I'm going to break even on the transaction until I get out of debt and get my emergency fund done. It sounds like you're at the edges of baby step 3B, if I understood you right. You're out of debt, have the emergency fund, plus some money for a car. If that's so, then take that money and this money you would have spent on the motor and whatever you get out of it in the salvage and move on up. That's what I would do. This is the Dave Ramsey Show. Did you know that if you combine the data breaches that have occurred in the past 12 months,

almost every American has had their personal info compromised or hacked? Over 50% of our listeners and viewers tell us that they or someone in their family has been a victim. And 70% of those folks have had it happen more than once. See, this is unbelievable. Once thieves get your info, the risk never goes away, and they can use it whenever and however they choose. It truly has become an issue of not if, but when. That's why the only plan I've ever recommended is through Zander Insurance.

I actually sat down with them, and we put together a plan that I felt provided the best protection, but didn't waste dollars on things you could easily do yourself or were just gimmicks. The key is getting protected before you're a victim and it's too late. Go to Zander.com or call 800-356-4282. We are all at risk and it doesn't make sense to wait. Numbers don't lie. That's Zander.com or 800-356-4282. In San Francisco, Matt and Kim are on the line.

Hey, guys, how are you? Hi, Dave. So excited to talk to you today. You too, guys. I see on my screen you're debt-free. Congratulations. Thank you. How much have you paid off?

We have paid off $63,000 in four years. 25 months. 25 months. Good for you guys. Well done. 45 months, is that what you said? No, 25. 25 months.

That's not four years. No, we heard about you four years ago, though. Do what now? We heard about you four years ago, and that's what kind of started this whole process. Okay. And what was your range of income in the last 25 months? So we started at $40,000 and then bumped up to $70,000 and then back down to $60,000. Okay, cool.

What do you all do for a living? I'm a pastor. And I'm a wedding photographer. Very cool. What kind of debt was the $63,000? It was some hospital bills, credit cards, car, school loans. Okay. What happened 25 months ago that caused you guys to get on this and cause it to go away fast like this?

I mean, you got with it. Yeah. So we had read your book about four years ago and then never really did anything with it until 25 months ago when we were just looking at the money that we had. We had four kids and we just decided we needed to take care of this and do what's right for our family and get us in a better place. And also two and a half years ago, we sold our house. And so that kind of gave us a good chunk of money that propelled us forward and started our snowball going and got us on track. How much of the $63,000 did you pay off from the sale of the house? We used about $30,000 of the sale of the house to

start paying off of our debt. Good, good. So what are you living in now, rental or what? Yeah, we're renting right now and working on building up our three to six months and then hoping that we can, you know, save up for a home after that. Perfect. Very well done, you two. Very well done. Good job. So what do you tell people the key to getting out of debt is? Well, we had a really big problem with income and so so we got a second job at night. And so it was a lot of sacrifice as far as Matt working days and I was working nights. But then also just getting together on our budget and working every month to make sure we're staying on budget and using the money the way we should instead of just letting it go crazy. What were you doing at night?

What kind of job did you pick up? I was working as a server at Olive Garden. Okay, cool. What kind of job did you pick up? I was working as a server at Olive Garden. Okay, cool. What kind of mind did you make? Actually, I made about $30,000 that year, and almost all of it went to our debts. Yeah, so like $2,500 a month. Yeah, right about that, and tips were awesome. I mean, I just picked up every shift I possibly could. We didn't see each other very much that year, so it was really good, though, just being able to work really hard. I was asked to come in a lot, and I didn't say no. I just kept saying yes and kept working really hard.

And so Matt's got the four kids at night. You're doing the Olive Garden routine, and you switch during the day. Exactly. Wow. Wow. Yeah, you're glad that year's over, both of you. Absolutely. That was real.

Was it worth all that sacrifice? Oh, definitely. The day that we paid off our last debt, it's like everything, it was all worth it. It's just the weight that was lifted off our shoulders and the future that we knew we now had for our family was great. How long have you guys been married? We've been married for 12 years. Have you ever been debt-free before now oh no oh no not even close okay you're kidding so heavily in debt and he wanted to be a pastor and i was so worried because i was the one coming with the most student loan debt so it was really really stressful but

now it's amazing wow well it does it frees up things. Matt, are you seeing the spiritual implications of this yet? Oh, definitely. Just the freedom of not being bound by debt, not being bound by having to pay out money constantly for student loans and credit cards, and really just now being able to say, you know, God, whatever you want us to do, you know, debt's no longer going to hold us back. The borrower is slave to the lender, and Jesus said it's tough to serve two masters. Absolutely.

Yeah, very cool. So now you only have one. Well done. Well done, you guys. Very well done. Proud of you. We've got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story.

Go ahead and be millionaires. No shame in that. Oh, yeah. And also in the process, of course, be outrageously generous, and we know you'll do that, Pastor. So very well done. Matt and Kim, San Francisco, California, $63,000 paid off in 25 months, making $40,000 to Olive Garden, $70,000, and then back down to $60,000.

Count it down. Let's hear a debt-free scream. Ready? Three, two, one. hear a debt-free scream. 3, 2, 1, we're debt-free! I love it! Very

well done, you guys. Very, very well done. Carl is with us in Sioux City, Iowa. Hi, Carl. How are you? I'm good. How are you, Dave? Better than I deserve. What's up?

Well, I have a quick question for you. I'm on step four and step six, and I'm extremely anxious to get my house paid off. I'm down to actually only about $50,000 left on it. Cool. And about a, yeah, so it's with the finish line within reach. But about a month ago, we had a hailstorm here in town. You're breaking up. I heard hailstorm, and then I didn't hear anything.

Try again. We had a hailstorm here in town about a month ago, and I still don't think anything's wrong with my roof. But you drive down the streets here in town, and everybody's getting their roofs on their house. So finally, I called my insurance company just to have an investor come out, and I wasn't even home when they came by because I'm so confident that everything is fine with my roof. But lo and behold, a $6,000 check showed up,

and I'm kind of tempted to just put that on my mortgage balance. And, you know, I have an emergency fund in case there is something wrong with the roof, but before I make any big decisions, I'd better get your advice. Okay. How much is in your emergency fund? I've got the full six months, if not a little more. How much is in your emergency fund? $20,000.

Okay. So a $6,000 check's not going to put you on the street? No. And will $6,000 put a roof on your house? It has some depreciation figured in there and a $1,500 deductible, so it'll probably be a little bit out of pocket. Mm-hmm. Okay.

Well, all I'm doing is just doing exactly what you did already, and that's kind of assess the risk. And you say, I throw the $6,000 at the mortgage, and when I do need a roof, I'll just save up and pay for a roof. Because, by the way, roofs don't go bad suddenly. They go bad gradually, with the exception of hailstorms. I think it probably has 10 years left on it. I don't foresee it to happen.

It's not leaking or anything. It's fine, I think. It looks okay. Yeah. It looks okay, but just as you drive down the street, everybody's getting new roofs in town. It's crazy. But, you know, 7 out of 10 households aren't wealthy. Exactly. Exactly.

So what's the downside is all the way I'm thinking it through. If you put in the 6K towards the mortgage, the worst thing that could happen is you're going to need a roof and you're going to have the money to pay for it. So I don't think there's a downside. I don't think

so either, but before I made the jump, I was kind of leaning towards putting on the mortgage, but $6,000 is still a good amount of money, so I figured I'd reach out to the man and see what you thought. Yeah, I think I'd probably put it on the mortgage in your situation. But go ahead and, I don't know, I might poke around on that roof a little bit more and just make real sure you're not missing something. If you do need a roof, I don't want you to walk around without a roof. You're not broke.

Are you selling the house anytime soon? No, no, I have no plans on that. Okay. I'm putting it on the mortgage. And then I'm going to just ride this thing out and figure out someday when I need a roof, I'll write a check, put a roof on it, and you'll be in plenty of shape to do that. So, good question. Thanks for joining us. Open phone's a 888-825-5225. Joshua is on Facebook. Dave, I'm single. What percentage of my roughly $40,000 income should I budget towards dating? Joshua, I've been married 35 years.

I have no freaking idea. I'll give you an old man answer and that is if she's worried about how much you spend on her you probably got the wrong one you're probably signing up for a princess um you don't need that but you also ought to be able to take her to a nice place and pick up the dadgum bill as a gentleman should so uh somewhere in there is the balance. But, dude, I have no idea. I really don't. Just use some common sense and don't try to buy your way into a relationship. Because you really don't want to sign up with a high-maintenance princess.

You'll sign up for having to work a lot if you do that. You'll be working your whole life trying to figure out how to do that. 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 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-accredited organization,

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We're glad you're here. Open phones at 888-825-5225. Jeremy is with us in San Antonio, Texas. Hi, Jeremy. How are you? How's it going, sir? Better than I deserve. How can I help?

Good. My question was, I'm currently a student in pharmacy school with two more years to go, and all my student loans right now is the only debt that I have. And I work, but only during the summer and on breaks, just once a week during school. And I want to get started on the process to being debt free, but I didn't know how to start that currently while I'm in school. How are you paying for graduate school? Everything is via loans. Okay. So why would you pay on loans with the left hand and borrow on loans with the right hand that is i think ever since we know we started school we kind of just had that idea like you

know you should use loans as i'm an out-of-state student and so um no i'm that's not my question i didn't realize no my question is you called me and said i want to pay extra i want to start paying down my student loans. And you're continuing to take out student loans. So that's not logical. What I would do is any money you've got that you would pay extra on student loans, I would just use that to not borrow. That's the same thing.

Erica is with us. Erica's in Los Angeles. Hi, Erica. How are you? I'm good. How are you? Better than I deserve. What's up? My husband and I are on baby step number two, and our question is your thoughts to direct us on private school. We have four kids, and right now our oldest is in high school, and we would like to continue having him attend a private school, but it is extremely costly,

and obviously it really impacts our budget monthly. So we're trying to figure out what is the best solution. So all four are in private schools? No, because of the financial aspect. But right now we just have the high schooler in private school right now. Okay. And why is the high schooler there and the others aren't because of the financial aspect i mean why'd you choose that one yes it would be more than our mortgage

to have all four there yeah yeah i know that but i'm saying why did the high schooler not the first grader or the sixth grader go to private school it's just his personality it seems to fit him better being in a smaller environment. Okay, so it's more of an academic choice for you. Correct. Okay, because usually private school choice is safety, physical safety, academic excellence, or religious environment. Those are the three reasons people choose private school usually. One of those or some combination of those, and it sounds like yours is academic. Okay, so your household income is what?

It's about $225,000. Well, you've got a great household income. How much is the school a year? The school for him is $12,000 a year, and that does not include books, athletic fees, and typical school expenses. And how much debt do you have, not counting your home? We have about $65,000 in debt, and that's two vehicles, unfortunately. Okay.

I think kids' education is more important than cars. I agree. So rather than pull a kid out of private school, it's all stupid car. Now, how does that work? If it would cost me, let's say, approximately $5,000 to get out of one of the car payments and then to turn around and purchase another vehicle, how do you calculate that? Well, you would purchase another vehicle for almost nothing. Correct.

So that you end up with a small note rather than a $30,000 note. Okay. And then if you buy a car that requires work just for being a used car, you just continue to work that out. Okay. But you're not going to drive that forever you make a quarter of a million dollars so here here's the thing okay twelve thousand dollars out of a quarter million is not killing you so your kids not your problem your cars are your problem

and your lifestyle is your problem and i think you adjust those two. You might even keep the cars. Were the cars paid for? $60,000 worth of cars on a $200-something income is not out of line. Okay? People listening that make $60,000 a year are going, what? You know, but you make a quarter of a million dollars a year, you know? So it's really not out of line. So if I'm going to be you, what I personally would do is i would really look at my lifestyle and really crank down to nothing no eating out no buying stuff no travel no nothing and keep these cars and get them paid off and keep this kid in that school if that school is

important to you because none of these are out of line how fast can you pay off 60 000 make it a quarter of a million even in la you can do it real fast i mean like less than a year so i'm probably keeping all of this and chopping other crap out of my life and getting on a tight budget and quit spending money like you're in congress because you got money coming out your dead gum ears you're just not handling it well that's what this tells me there's oh there's a there's a hole in this budget you could drive a truck through no pun intended and so you know that that's that's what you're looking at here so i think you keep all of it and you adjust your lifestyle and get yourself on a regimented plan that you and the kids and the husband agree to and go look in order to keep

these cars in order to keep the senior in the school, we're going to make these other sacrifices for 12 months that are deep family sacrifices. But at the end of that 12 months, we'll have no car payments, and we will have learned to control ourselves and our money in the process. And that's going to put you in a really strong position. David's with us in Pennsylvania. Hi, David. How are are you how are you doing today dave better than i deserve sir how can i help so here's the thing i'll try me and my uh new

girlfriend are trying are thinking about buying a house i lost my wife like nine and a half years ago she had cancer and so after that i I ended up with, I don't know, $1.1 million in debt from, you know, insurances. You know, they don't cover nothing. So I ended up selling my business, my trucking business, to try to help pay the debt off, and then I sold the rental property we owned, and I actually ended up selling the house.

And in January, I was actually out of debt. I didn't owe anybody any more money again. Wow, good for you. What a freaking relief that was. What a turnaround, man. Good for you. Well, I worked my butt off. I drive over the road.

I sold the trucking company, but I've been doing this for a long time. So I make around $90,000 to $100,000 a year. Yeah. So we have an income. The new one doesn't make much money. She only works part-time, but I don't, I finally got her on board to live with this controller spending, so that's a bonus. So, we're out of debt now.

I got, I don't know, maybe $150,000 in my 401k account. What's your question? We got, we have like $30,000 in cash on hand. She wants to buy a new house because we house, because right now we just rent. And I told her I thought we should wait a couple years so we could pay in cash for the house. And she insisted it would be better if we took a note out for the house. Now, did you say you're... I thought you said this was your girlfriend.

It is. But we've been together for eight years now. Yeah, but let's just put the brakes on, okay? You don't buy a house with somebody you're not married to legally. You get yourself into a dadgum mess beyond belief. Now, if you want to shack up with her, then the deal is you buy the house, and you have a roommate, okay? But you don't put two people on a deed that aren't married,

you will never get that mess untangled. No, I already told her that. Okay, so we aren't buying a house. You are. Right. So I guess you get to make the decision. Yeah, and I still think that it's a smarter decision to wait until I can pay cash for the house. If you can do it in three years, I agree with you. Just because I don't really want to.

I finally don't have any debt. And it's kind of nice knowing that I don't have to give my paycheck away. Yeah, I agree with you. I mean, you're the guy that paid off $1.1 million, not her. It wasn't easy, too, let me tell you. Oh, I know, man. You've been scratching and clawing. And, you know, it's nice to take your girlfriend's input on whether or not you buy a house, but they don't really get a vote.

They just get an opinion. A wife gets a vote. Yeah. So, you know, I'm not trying to be mean or anything, but, you know, I think you do what you want to do with your money. Hello. That's what I would do in your shoes. Thank you for the call, sir.

Congratulations on the dramatic turnaround. That puts us out of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer. Blake Thompson, our senior executive producer. And Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host, and we'll be back. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carrying on 600 radio stations across the country. To find one near you, head to DaveRamney.com slash show.

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