The Ramsey Show - App - Rule 1 For Getting Out of Debt - Don't Take Out More! (Hour 2)

Episode Date: November 4, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Anthony O'Neill, Ramsey Personality, is my co-host today here on the air. Open phones at 888-825-5225. That's 888-825-5225. Sean is in Fairfield, Connecticut.

Hey, Sean, what's up? Hey, Dave. Hey, Anthony. How are you guys? Doing well, man. How are you? Good. Thanks.

I was looking to get your guys' advice on something. I graduated college back in 2019. And back then, I was a little bit ignorant about student loans, and I had about $150,000. I was lucky to get a job and be employed before the pandemic struck, and unfortunately, I have an income of around $75,000. I've been living with family rent-free for now, but as I approach the end of my second year living with them, I'm looking forward to moving out and getting out on my own. Financially, however, doing out my budget, I feel stretched thin and I feel like I'm unable to afford a rent payment along with everything else. After student loans, 401k contributions, some savings, my car payment, insurance, and food costs,

I'm left with around $12,000 a month, which in my area is sometimes not enough, sometimes just enough for a rent payment. So my question to you guys is, what can I do in order to move myself into a better financial position where I can afford to pay rent and continue to stay within the bounds of my wage? Or do you guys think I need to consider making a professional movement in order to get a wage boost? Well, here's the very first thing I want to tell you is that you said something about your student loans, 401k contributions. I want you to pause all that. I want you to just focus on baby step number two. So we're not going to make any contributions. And you sound like a very smart young man.

So now you're probably thinking, well, wait, I'm missing out on a compound interest. Well, no, you're not. You technically are. But then you're going to make that up in a loan term after you pay off all your debt. So what I want you to do is to do to just pause everything else and focus on just your student loan debt and all of your debt now cost of living i think we do need to look at that to see where where else can you move into i'm not even opposed to you having roommates which are in your age bracket right now to kind of lower your expense a little bit on your living expenses i do like the fact if you're moving out of your parents' house to start your adult manhood, but maybe you can find you a roommate to kind of help with that rent as we're going

along this Baby Step 2 journey. What do you owe on your car? I owe probably about $12,000 on the car. When did you buy that? I bought that August of last year. Okay. All right. Well, rule number one for getting out of debt is don't take on more.

Yeah, it was sort of required for my work. My 98 Jeep was getting a bit unreliable, so I needed something that could match my commute. No, it would. Your 98 Jeep was getting you there, and it wasn't required. You just got to commute. You're just driving to work. Nobody requires you to get a car to drive to work. You just had to have something reliable. Now, if your 98 Jeep wasn't working, you can move up.

But you're not going to get rid of the student loan debt until you take debt off the table. You cannot solve your problems with debt. They make your problems bigger. And that's what the car purchase did. So, you know, if you didn't have a car payment, there'd be a lot more room in your budget. There'd be a lot more things to talk about here. You didn't buy a super expensive car, so it's not something we have to sell today to get rid of it. But that decision-making paradigm has got to shift. If you want to get ahead with money, you want to get rid of the $150,000 in student loan debt,

you're going to have to live on nothing, take on roommates, get rid of this car payment as soon as you can. That's the first thing. And then begin to pay on the student loans as hard as you can. Now, if you can make a move in your field and be in a less expensive area and make more money, obviously those two things are going to combine to get you out of debt even faster. And so we want to do that. We want to get rid of the car payment.

But you cannot be borrowing any more money. Yeah. You've got to stop. The only way out is to stop. Yeah. It's rule number one. And you can't come up with any rationalizations or justifications for any reason you have to stop cold and that's your only shot

on that changes everything when you just take it off the table it really does dave when you take that off of the table you start seeing more creative things and how you can really go about attacking debt not just attacking debt, but even going after all of your dreams. But if you keep racking up debt, saying, I want to get out of debt, but then you're racking up debt, you're just playing that circle circle. And it's just it's not going to go anywhere. So, Sean, hang on.

I'm going to send you a copy of our book, The Total Money Makeover, which eight million people have read. And it will show you step by step exactly what to do and and how to lay these baby steps out that we're talking about. Baby step one is you save $1,000. Two is we're going to list these two debts, smallest to largest, car, then student loan, and we're going to attack with a vengeance, and we're not doing anything except getting out of debt. We're taking extra jobs.

We're changing jobs. We're taking on roommates. We're doing everything. And you're going to be in this a while. And so, yeah, I am moving out while you're doing this. Now, Dave, let me ask you this question as a father. Your son has $150,000 in debt. He's living at home with you. Are you still asking him to leave after a year of being out of school or would you allow him to stay in say all right if i see a clear game plan where you can get this off within two three years are you okay with that as a father no gotcha no i'm you don't hit the road yeah um because something happens when you move out of the house right and you start to handle

this situation now again you're always welcome if you're wounded, if there's a horrible life event and you need a safe place. I'm not a hard butt in that regard. But $150,000 making $75,000, you're not going to do this quick. You're right. And so you need to get out there and start shoveling. Yeah. And, you know, figuring out what you're going to do from that. That's not being abusive it's just when you when he starts owning this all the different parts of it emotionally

spiritually and everything else uh his tactics will change and then he'll be a debt-free screamer on the stage yes sir and that's what will happen and i was i was asking that question because i'm pretty sure some parents are listening and saying well how come he just can't stay at home yeah you know he has all this debt you know if he could do it for four months, yeah. Right. But, you know, if that did it, but four months or even a year doesn't make any difference here. Right. It does not change the math that substantially.

Exactly. And so, you know, young couple, same age bracket, on the debt-free age, last hour, you know what they did? Yep. Lots and lots of overtime. Lots of it. Raised their income $40,000 in the household within six months. And I think that's what happens when you got, okay, I've got to do this. Yes.

And your brain starts going, I've got to work someplace more or different, or I've got to work more, or I've I got to sell this thing or whatever it is. You start laying it all out. Yeah. And it just, it's a, it's a, it's a, uh, the weight of being on that, the extra weight of being on that Island and saying, Oh, wait a minute, this is real. And it's all on me. Long Ranger's not coming.

I got to do this. Yes, sir. And then you get, then you get going. That's what happens. I got to do this. Yes, sir. And then you get going. That's what happens. Yeah. This is the Dave Ramsey Show. you've worked hard to make your business successful blood sweat tears and prayers because as a business owner you are the secret. And your company is only as strong as you are. So what happens if a key ingredient is missing?

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chministries.org slash budget. That's chministries.org slash budget. Anthony O'Neill, Ramsey Personality, is my co-host today here on the Dave Ramsey Show. Open phones at 888-825-5225. Knoxville is calling. Kenny is on the line. Hi, Kenny. How are you? I'm doing well.

How are you? Great. How can we help? Well, my question is, my wife and I are trying to decide whether we pay our house off and send our kids to private school, or we buy a more expensive house in a different area and send them to a better public school. Okay. There's no wrong answer yeah i mean either one's okay whichever one you want to do uh what sharon and i chose to do was the second one we moved uh to a more expensive area where uh we live in the same neighborhood to this day or the same community. And pulled the kids from the private school that was killing us and put them in the public schools.

Now, again, the public schools that our kids went to in the county that we're in are ridiculously good. And I mean, I know Knoxville and there's some really good schools around knoxville yeah so uh and some bad ones so uh uh you know how much are we talking about difference in house well uh we paid 239 um for this house we owe 140 on it um and we paid that in two two and a half years um we could have that paid for by the time they start middle school which which is when we were going to start private school the newer house is um for a decent house you're going to pay 400 in in farragut if you know where that's at. Yeah, I know it well. My aunt teaches there at Farragut High School.

Well, it's a really good school, but it's... Well, West Knoxville's an expensive end of town. Yeah, it just is. Right, exactly. And so I think your numbers aren't far off. I don't disagree with them. The good news about the house is obviously a better house and a better area is going to go up. A more expensive home is going to go up more in value.

And so that is going to be an investment as well as a place to live. And, you know, the money you're spending on the private school here is, it is a type of investment, but it's not going to pay you money. Yeah. Unless your kids give you money back later. I'm not in the home of it. Yeah, I'm not either. So I'm probably doing the other thing and just say, all right, we're going to get in there,

but we're still going to still have a goal of paying it off. Now, you're not going to do it in two and a half years, but if you can pay off the one you're in in two and a half years, you can pay off the other one in five, ten, between five and ten. Right. Okay. Anthony, what are you thinking? No, I'm right there with you, Dave. You know, I'm probably a little differently from a lot of people,

but I'm a huge fan of public schools. I just love it. My mom is in the public school section so i just i just love public school so i will go with the second one as well yeah i mean admittedly uh some of them aren't up to par right but there are plenty of them that are yes uh and you know uh so it's exactly what we did we sold sold our house in the Nashville area in a school system that wasn't good and had our kids. Rachel was in kindergarten at the time, and Denise, I think, had gotten to second grade,

and we made the move to public and, truthfully, never looked back. Absolutely. It was a great experience overall. My only advice is to Kenny, and it's just to make sure when you do make that move, just make sure you get on a strict budget. Just know exactly, okay, we're moving here so our kids can go to a better school, but we want to pay off a house, and like Dave said, five to ten years. What does that look like over the next five to ten years? And just stick to that plan. Yeah, absolutely. Hey, good question, man. Interesting discussion.

Open phones at 888-825-5225. Troy's in Indianapolis. Hey, Troy, welcome to the Dave Ramsey Show. What's up? Hey, Dave. Thank you for taking my call today. Sure. So to recap real quick, back in December, just about a year ago, is whenever I kind of discovered you or rediscovered you guys

and um needless to say I've drank the Kool-Aid and I listen to you every day read the book and we're on the plane we've started our debt-free journey my wife and I and our three little girls good yeah and during the COVID I kind of lost my position and the job I had for three years while I was contemplating looking for other employment. And so I lost my position. So now I'm kind of down in pay a little bit. When I was making about $80,000 at the end of 2019, I went to making about $45,000. But regardless, we were able to not borrow anything. We cash flowed everything, cut up the credit cards, been making payments and been successful in that means.

Great. And two and a half months ago, I was blessed with a new job opportunity. And it's a great job, great benefits, good money. The only downfall is it's currently one hour away from our current house. So the wife and I have been talking that possibly 10 months, 12 months from now that we might try to relocate in 2021 closer. So my question is that when I looked the other day, I noticed during the pandemic and trying to make ends meet without borrowing any money that I was late on some payments with the credit card companies and stuff like that.

And it's really affected my credit score. Now I could really care less what my credit score is, but I'm thinking proactively, if we do decide to go shopping for a new home, and I know they look at that a lot is that something i need to be worried about now yeah yeah to try to absolutely okay yeah what's the score uh when i looked two days ago i think it fell to like 580 absolutely yeah yeah you didn't miss one or two payments you missed a bunch no no no it was we were we were just getting by because at the same time, a year ago, I had a medical procedure, and out of pocket, I went from an $80,000 income to down to about $45,000, $50,000. So what's the new income? During my probationary right now, just salaried, I'm at 65, but it's a salary that pays me time and a half when I go into overtime.

So I'm fortunate on that here in about three, four more months, it'll take me up to 75. Um, and then it will just go up, uh, two, three, 4,000 every year after that. And how much debt do you have now? Uh, right now when I did my debt snowball, I think it's calculated around 85,000. Yeah. So you're not ready to buy in a year troy yeah he's right i just keep making the drives yeah well or sell it and rent yeah but you've got you're not going to be out of debt in a year no no no no yeah i figured that but we were lucky enough when we bought our home we got a really great price on it and when i talked to my realtor recently just i got a curiosity to see

what it would go for right now in today's market. I'm calculating I have anywhere from $40,000 to $50,000 in equity in it now. Okay. You may want to go ahead and sell now. Yeah. Go ahead and sell now. And rent. Yep.

And that gets rid of the commute and those $40,000 at your $85,000. And then let's clean up the other debt. And, by the way, as you're doing all of this it's going to clean up your credit yes because as you pay all i mean you know as there's two things that heal that number one is obviously paying current bills on time three things number two is you start paying off the debts uh and then uh number three distance between the bad behavior and the day you're trying to do something yeah so the older the bad behavior and the day you're trying to do something. Yeah.

So the older the bad behavior is, the less it counts against you. It's still fairly fresh. Yeah. But when I looked at the report, I only had two or three months in this year on two different accounts. So I think one account I was late twice on another one was like once on but what i looked was is that five or six years ago there's a series where i was late at one point and now it all looks like in a total of seven years i've been late nine or ten times and i had five years of on-time payments and it was i think at one point at 720 720 yeah and that's that's exactly what so you pay

what you got on time uh You continue to reduce the debt. I personally hate a long commute, so I would go in the cell now, advance the get-out-of-debt plan, and rent. And then once you're out of debt and have your emergency fund, then you start talking about buying still longer than a year. This is the Dave Ramsey Show. Anthony O'Neill Ramsey personality is my co-host today here on the air. Open phones at 888-825-5225. In the lobby of Ramsey Solutions on the debt-free stage, Michael joins us.

Hey, Michael, how are you? Good, how are you? Better than I deserve, brother. Where do you live? New Orleans, Louisiana. Oh, wow. Well, welcome all the way up to Nashville. Yep. My goodness. And here to do a debt-free scream, how much have you paid off? $45,000 in 16 months.

Good for you. What was your range of... Oh, I'm sorry, $25,000? $45,000 in 16 months. Good for you. What was your range? Oh, I'm sorry, $25,000. $25,000. $25,000. Okay. What was your range of income during that time? It started off at $12,000, and I got up to $45,000.

Whoa. It started off at $12,000 a year? Yes. Okay. Tell us that story. What happened with your income? Well, I was in college, and I was working minimum wage jobs and trying to get my degree, and then I wound up dropping out, and that's when I got the $12,000 job and was looking for something better, and then by God's grace, I found something better and was able to make

more, and then with COVID, I was able to get a lot of overtime. Yeah. Okay. What do you do for a living? I work as a sales merchandiser. Okay very good. In what industry? I'm sorry? In what industry? What do you sell? I sell like I stock sales for stores and grocery. Grocery okay oh good. So what kind of debt was the $25,000? A medical debt, student loans, a car, and credit cards. Oh, wow. So you're kind of normal. Yeah.

A little bit of everything. Yep. So what got you to start and decide you were going to get out of debt 16 months ago? How did you get on this plan? So in 2018, I started researching how to get out of debt because while I was in school, I didn't like having debt and everyone else was telling me, oh, don't worry about it. It's fine. And I said, no, I want to figure out how to get out of this. So that's when I started the job searching and getting the income up. And then I was able to stop going.

I dropped out of school and made – I'm sorry, what did you say? That's okay. How did you find us to get this journey started? How did I find y'all? Through YouTube. Okay. And shout out to the YouTube chat for helping me. Okay.

Wow, all right. Very good. Good. Well, congratulations. Absolutely. So what did you do to get out of debt? You started watching us on YouTube and you learned some stuff. What did you learn that you said, okay, these are the things, when you're talking to your

buddies, this is what you got to do to get out of debt. The baby steps. And I know Anthony is O'Neill, debt-free degree. And so trying to get rid of that student loan debt. Chris Hogan with the Millionaire Theme Hour. That's where I want to be one day. So learning all those principles and the baby steps helped a lot. The EveryDollar app with budgeting.

Yeah, that's really good. How old are you, man? 22 today. 22 today. Today's your birthday. Oh, man. Happy birthday. That's fun.

What a great way to celebrate your birthday yep in this journey making 45 000 paying off 25 000 in 16 months you were living on beans and rice rice and beans yes what was the hardest thing during the last 16 months that you had to endure while you was going through this process um the hardest things were with COVID losing three people and trying to like stay on the plan while, you know, having a mental illness and then loss of family and friends. It was a real struggle to fight to each day and day to day and and still make that money but um with counseling and help and then following the baby step plans and the uh every dollar app i was able to come up with a system to still be able to attack the debt during all this and that was a real blessing amen 22 years old man that's very impressive very impressive you fought your way through

a whole bunch of things yeah to get here but you got to feel good you got to feel proud of yourself now like accomplished like you did something yep and lighter too oh yeah carrying around all this stuff huh and um i did lose 60 pounds but i wound up getting 30 back okay well net 30 i'm going with that that's good yep well done brother you paid off all that debt you you okay getting 30 pounds back yeah you know good job what's next man i mean you're debt free um i think i met you know one of your friends i don't know a marriage in the future or something yep that is uh my girlfriend sophia of five years okay so that is the next steps and um looking to saving up for house after i get my emergency fund with 3b yep so and then work the way to the millionaire there

you go you're on your way we got a copy of chris's book for you everyday millionaires for sure that is the next chapter uh you're an impressive 22. Yes. You've endured a lot of hardship, and you've persevered. You've pushed your way through. Very, very well done, Michael. Very well done. All right, it's Michael from New Orleans. $25,000 paid off in 16 months, making $12,000 up to $45,000. Count it down.

Let's hear a debt-free scream. Three, two, one. I'm debt-free! Yeah! This is how it's done. Yes. Man, that's fabulous. Very well done, sir.

Very well done. All right, Renee is in Toledo, Ohio. Hi, Renee. Welcome to the Dave Ramsey Show. How can we help? Hi, Dave. Long-time listener, first-time caller. I'd like your advice on purchasing or funding the purchase of our first house. We have a couple of options. I'm not sure which one is the best, including an inherited IRA,

proceeds from the sale of a house that we also inherited that, unfortunately, was quick claim deeded. We have money in our 401K and a little bit in our personal, and we are in escrow. So getting down to the wire and just wondering which is the best way to, where should we pull the money for the down payment? Okay, so you sold a house that you inherited. We are actually closing on that house on Friday. My husband's mother passed away in March, and unfortunately, none of her assets were in an estate. There was no will, but the house that she owned outright, no mortgage, she had quit clean deeded it to my husband and his brother who lives in California in 2017. No one knew about this.

So through the whole summer and unfortunately COVID and everything that's happened, it finally went on the market. And we had an interested buyer at cash sale. And they've offered us $185, which we will then net about $170,000. And then that will be split between my husband and his brother. So about $75,000 each of them. That was currently our intention to put that money towards the down payment of our new house. But then we also have an inherited IRA. There's $110,000 in that inherited IRA. So that is also an option that we could pull. Um, we're putting $47,000 down on the new house that includes

all closing costs. So we could also pull that 47 out of the inherited IRA. We also have money in our 401k, which we actually made the offer on the house we're buying last November because of COVID, it got pushed out. The owners decided to stay. We let them stay. We're renting. So they're very flexible. So our original intention before we inherited anything was to use our personal savings and our 401k to fund the down payment. So we've got a couple of options and I think my biggest fear right now is if we pulled the money from the wrong place, how does that affect us long term? For example, if we were to pull the money from the IRA, does that have any tax implications at the end of the year for us?

And you know we wouldn't tell you to pull the money from the 401K. Your original plan was a bad plan if you're a longtime listener. You knew I wasn't going to tell you that. It was. It was? Yeah, it was. Yeah. And so that's behind us.

If you pull the money from the inherited IRA, you have to pay taxes on it. And so I'm using the money from the sale of the house. Yeah. Why would you want to pay taxes on it when you have the money cashed right now? Yeah. Yeah. From my understanding, we're still going to be paying taxes on the inherited value of the house. Unfortunately, because she quick claim deeded it to us, they go all the way back to when she purchased it, which was in 94. Yep. And you've got a gain on that difference.

That's right. That's why it's stupid to quick-claim something as you lose what's called a stepped-up basis. So you're right about that. But anyway, yeah, you need to figure out your tax bill and use the rest of the money to put down on the house as much as you possibly can. And leave the inherited IRA and for sure leave the 401k alone. This is the Dave Ramsey personality is my co-host today here on the air this is the Dave Ramsey show where we talk about your life and your money common sense for your dollars and cents teaching you to live on less than you make a a concept Congress can't grasp. Open phones at 888-825-5225. That's 888-825-5225. One of the most fun things that Anthony and I and the rest of the Ramsey personalities

get to do is that we started this smart conference several years ago the smart conference is the premier lineup of people thought leaders in every area of your life so you just plain old get smarter and it started off with me just thinking okay who are my friends that i read and i love what they say people like meg me, I love what she has to say about parenting. Well, I guess I could call Meg and see if she wanted to do a thing with us. And, you know, marriage is, you know, marriage issues, being better at marriage is a full-time job for all of us that are married. And so, you know, who can I get?

Oh, my friend Les Parrott, one of the best on the planet. He sure is. And then over the years we've added, and the Ramsey personalities have grown and done their particular area that they're speaking on. Dr. John Deloney speaking with us this year, Ken Coleman on careers. Dr. Deloney will be talking about anxiety. Christy Wright about life balance. Anthony O'Neill, what are you going to be talking about?

Dave, I'm actually going to be talking about something new. I'm excited about this one, but how to have the mindset to gain success. Oh, there you go. It's going to be fun. Rachel Cruz will be speaking from her new book, Know Yourself, Know Your Money. And Chris Hogan, I think he might talk about millionaires. I think so. And I'll wrap the day up.

We're going to have a full day event. These events are usually 8,000 to 10,000 people in an arena. Well, guess what? That's not happening. Yeah. And so, but we still have the same content, the same all-day event, the same experience. Yes. We won't have 8,000 or 10,000.

We'll have 200. Yeah, yeah. And it's going to be live streamed. But it is an all-day event. Tickets are only $29. You would pay $290 to see any one of these speakers to do just the talk that they're going to do. This is a full lineup. It is unbelievable.

And I've got to tell you, the people that speak are so impressive. They're our friends, but they're so impressive, I end up sitting in the audience and taking notes. You really do, Dave. You do that all the time. So do I. And here's why I'm really excited You really do, Dave. You do that all the time. So do I. And here's why I'm really excited about this one, Dave, is it's not just speakers speaking back and forth. We're going to have some, I don't want to say too much,

but it's not just going to be straight up speaking. You'll see some panels. You'll see some Q and A's. There's going to be a lot of engaging content online this year. So I'm really excited about that. Well, with the format being live streamed, we had to change up. It's not just yakking at the camera the whole time we don't want to do that yeah so uh it's mixed up and and very very engaging the way we've designed it it's going to be amazing again it's only 29 it is this saturday yeah this coming saturday and you can

still get tickets because we're not going to run out of seats. It's live stream. We're using your living room as one of our seats. So there is no scarcity. We can have all of you join us. And, by the way, if you're a Ramsey Plus member, a lot of our live streams are free, including this one. So you get the entire smart conference, and there's already several thousand ramsey plus members that have signed up for the free live stream that they are due as a ramsey plus member if you're a member you get privileges and that's one of them is our live streams so make sure you get signed up and make sure you make plans to join us this coming saturday november the 7th and uh davramsey.com

slash events for the SMART Conference. Marriage, parenting, career, personal development, money. We're going to be talking about all of it. The SMART Conference, this coming Saturday, November the 7th. Go to DaveRamsey.com slash events. Get signed up. Again, it's only $29, or you might want to use that $29 towards your Ramsey Plus membership, and then you get to watch for free when you're a Ramsey Plus member and that's a big deal.

Good stuff. It's an incredible lineup. It really is, Dave. We enjoy doing it. Oh, we have a blast doing it. And we actually learn from each other. I think that's the key thing that I really look forward to, learning from you, learning from Hogan, learning from Ken. And I'm honestly looking forward to hearing from John Deloney this year.

He's been killing it since he's joined our team. His wisdom is so good in his area. So I'm looking forward to really watching him talk and learning. Absolutely. James is with us in San Diego. Hi, James. Welcome to the Dave Ramsey show. What's up? Hey, thank you so much for taking my call, guys. Sure. How can we help? Cool. Yeah, so I'm pretty new at Ramsey with you guys. Okay.

But I've just loved your guys' stuff. I've been watching as many videos as I can on YouTube. Most of the stuff you guys talk about is stuff that I already do, which I'm glad my parents taught me right. But the one thing that I could use clarification or get your thought, I'd love to hear your guys' thoughts on was saving. Cause I always hear you tell people now, are you saving for your kids college or, you know, blah, blah, blah. And, um, I was always taught not like my dad always told me, if you want to go to college, you'd go to college. That's your business, but it's not,

you know, it's not my business. So I kind of had that way. I paid for my own school. I paid for my wife's school. But it's never been on my to-do list to pay for my kids' school. But I don't want to be, you know, if I'm wrong, I'm wrong. I hear you saying it all the time. You're not wrong. It's not a moral obligation to pay for your kids school it's you're not a bad parent

if you choose to say i want the kid to have the work ethic right so you're not you're not wrong a lot of parents want to support and pay because they want the kid to avoid student loan debt right okay anthony what do you mean you yeah and i want to hear what james saying because james i feel like you're feeling like you just want to send your did you borrow money to go to school or did you cash flow your school i well i've never worked for somebody who didn't pay for my school um i either worked through a scholarship even when when I was a kid, I remember doing a paper and having them advertise scholarships. Cool. Great. Yeah, I always did that, but this day,

it feels like everybody's telling me to do that, and I don't know. I'm conflicted because I respected my school. You know, I worked hard to get there. Hey, man. There you go. Me too. My wives and the people I see coming out that had it paid for. So it's a mixed batch.

Sometimes we do and sometimes we don't. So here's what I do, man. I have the opportunity to speak to young people pretty much 80 percent of my time. And I'm always telling young people that you want to have sweat equity in your school experience. I do not believe that a parent should pay 100 percent of their school. The kids should have some type of sweat equity in the game. Now, if the parent is in a good financial place, debt free, fully funded emergency fund, investing into their retirement and they can invest into their college experience without impacting their retirement and racking up debt. Then, yes, I do believe that is a good option to do if you can.

But if you cannot, there is nothing wrong with you telling your child, hey, your mom and I, we cannot pay for your school. So you're going to have to figure this out through scholarships, get your grades up, go to community college, go into military. You figure this out and we'll support you as much as we can. So your confliction is not a bad confliction. But here's where I will challenge you. If you have the financial means to help your son or daughter get a head start a little bit and you refuse to do that because you want them to feel all of the weight, I would challenge that a little bit. I would say give them a little head start, but make sure that they feel the weight by they got to come to the table with something as well because you're right if they come to the table with 25 of their school experience they're going to treat that like it's you know like it's

it's gold to them because they have a sweat equity in the game so if you choose to stay on the path you're on there's nothing wrong with that yeah they where i where i agree with your sentiment jake is that it's as if in the culture that you're a child abuser if you don't pay for their college or something that's ridiculous it's ridiculous okay but now your job if you're going to require them to carry the weight 100 by themselves then your job as a dad is to coach them as to how they do that. There you go. Help them get the scholarship.

Show them how to work. Show them how to live on a budget. Show them how to select a school they can freaking afford. So walk with them. Don't just toss them out into the cold and expect them to suddenly grow a brain on how to do this. So your job is to walk them through that if you're going to go this direction. There is nothing wrong with either end of the spectrum right we paid for a hundred percent of our kids school uh but uh we had heavy requirements on them throughout their lives we were pretty strict

parents on their work ethic and on the way they behaved and on their value system and they're hard workers to this day all three of them so it didn't damage them but they were hard workers to this day, all three of them. So it didn't damage them, but they were not allowed to feel or be entitled. And they aren't now. This is The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section

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