The Ramsey Show - App - Should Coronavirus Delay My Student Loan Payments? (Hour 3)

Episode Date: March 25, 2020

Chris Hogan, Savings, Home Buying, Debt, Retirement Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Music Music 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Ramsey Personality, number one best-selling author multiple times. Chris Hogan is with me this hour as we answer your questions about your life and your money. Because we've been saying this for years, where debt is dumb. Doesn't it feel really dumb right now? Cash is king from a financial perspective, not a spiritual perspective. Right now, cash is really king. And a paid-off home mortgage? Oh, we'd rather have that than a BMW in America, wouldn't we, right now?

So suddenly, I've been opening the show with that for 30 years. That has not changed except the part about the dollar car rental studio, but the rest of it's been the same. And, you know, it's funny about the truth. It doesn't need to change. Still works after all these years, you know? Yeah. No. still works after all these years you know yeah no and you know in looking at that day through the millions of peoples whose lives have been changed as they started to hear it not just the play on words or the metaphor but the meaning behind it and really starting to take that to

heart to understand i do want something different for myself i i do want to make sure i'm making some changes this stove turns out to be hot and i'm tired of being burned yeah i don't want to lay my hand on it that's right i won't be burned anymore tired of that it doesn't it doesn't take doesn't you for most people it doesn't take five times of doing it no sometimes you got to do it twice yeah but but uh i'm kind of thick sometimes you have to hit me a couple times on stuff but uh this is a great time in some of your lives because it's your wake-up call and it's it's going to be the last time you're ever in debt it's going to be the last time you go without emergency fund it's going to be the last time you go without a budget

it's going to be the last time you don't communicate with your spouse about money it's going to be the last time for a lot of things in your life because the way you've been living in some cases hasn't brought you what you wanted. And we want to help you. We want to help. It's what we do. So by the way, we're doing something we've never done in 30 years. We're giving you a 14 day, 100% free trial to Financial Peace University, a 14-day free trial. A lot of you are home for 14 days, give or take, and that means that you're in your homes with quarantine or you're in your homes with a state or a city mandated stay-at-home order

and whatever it is. And so this is a way you can utilize that time. And a 14-day free trial to Financial Peace University. Go to DaveRamsey.com slash hope. And there's a whole bunch of free things there. I think the most expensive thing there is the online curriculum for the high schoolers, which is usually over $100. And so you've got high schoolers, you're homeschooling right now,

mandatory because they're all from school, right? You've got to give those critters something to do. And so we got that down to $19.99. I think it's the most expensive thing on that site. Everything in there is like $2, $5 free, that kind of stuff, because we've got it just where there's virtually no profit in it, but we're trying to help you guys while you're at home and financial peace university 14 day free trial tomorrow night thursday night we're going to be doing a message of hope from rachel cruz ken

coleman and me live on our front page of our website at davramsey.com and i'll let people know about that i will be talking to you for about 45 minutes. It's completely free and it's completely live. And so tune in. Let your friends and neighbors know to tune in. And if you would like to get a reminder with the link and so forth, you can text the word HOPE to 33-789. Text the word HOPE to 33 33789. Okay, Dave. Now, you just walked through two things, and I'm sitting here going, wow. Number one, to get a 14-day free trial of Financial Peace

University, which is the gateway to game change. Let me tell you, it's the gateway to life change. And you have an opportunity to get that for free. The next thing is, is the message of hope tomorrow night. Another thing, an opportunity for free. If you're somebody out there that it says, I wish somebody would do something. I wish someone would do something to help me, or I'm ready to change some things. You have two tools sitting in front of you that will do it. But it's not going to work if you don't work it. And so please hear this.

Please don't let this slide by. Because I'm going to tell you something. The government is doing government things. Lack of counting and just being busy. Right? They're in meetings and they can't agree on things. Bipartisanism. It's about time for us to vote for ourselves.

And that means getting serious about using this information. and they can't agree on things, bipartisanism. It's about time for us to vote for ourselves, and that means getting serious about using this information. This is an absolute great opportunity for you to decide, and you don't have any other excuse right now. Open phones this hour with Chris Hogan, the phone number 888-825-5225. Ronnie's in Minnesota. Hey, Ronnie, welcome to The Dave Ramsey Show. Hi, thank you so much for taking my call.

Sure. I just started recently listening to you, and I have a couple of quick questions. Okay. So I want to know what a money market account is specifically, I guess. Okay. Typically what a money market account is is a branding thing at your local bank. It's a savings account that pays more than a typical savings account the actual money market account is an account where you're actually buying into the currency money market and you can't get that through a bank or a credit

union but you'll hear every bank and credit union has a money market account and all that means is it's tied to the interest rate is similar to what you would get if you went to a mutual fund company like Fidelity or American or you went to Vanguard. You can get a real money market account where you're actually buying into the money markets in those through those mutual fund companies. But it's irrelevant whether you do that or whether you do the bank. The bank actually got a fdic guarantee on it mutual fund don't uh but it doesn't matter it's going to pay a little bit more about it's going to pay about what cd rate is if it's a decent one a little bit more than uh and so you know instead of a half a percent you might get one one and a quarter right or they offer you some introductory instead of a half a percent, you might get one, one and a quarter. Right. Or they offer you some introductory rate. Yeah, like a 3% introductory rate.

But for two months. That's just a bait and switch. But, yeah, that's all a money market is. When you hear money market, if it's at a bank, it's an account that actually simulates or mirrors what the real money markets are doing. But there's no difference. It might be an eighth of a percent difference or something. It's not relevant. The interest rate sucks on all of this.

None of this you use to get rich. You don't use suitees to get rich. You don't use money markets to get rich. And you sure as crud don't use a savings account to get rich. This is a place you're parking money while you're saving it for Christmas. That's right. You're parking money for your emergency fund. And that's a great, Dave, I like that.

It's a parking spot. That's it. It is. And it's still liquid, though, so you can get to it, Ronnie. So if you have an emergency, you get into it. But guess what? You want to replace that money so you always have it at all times. Yeah.

And it's just a higher interest rate savings account is the way I would look at it from a practical standpoint. And obviously there's technical details to the definition other than that. That's the gist. That's the way I'd look at it. Yeah, Dave, we're country folk. That's the gist. The gist.

We just told you. It's a Kentucky, Tennessee thing. That's exactly right. Just what? 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

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Open phones at 888-825-5225. Olivia is in California. Hi, Olivia. How are you? Hi, Dave. Hi, Chris. Such an honor speaking with you today. I'm good, thank you.

Good. How can we help? I have a question. My husband and I are currently in escrow with a home that we're purchasing in Texas. And I wanted your input. I unfortunately lost my job due to the coronavirus. And we're in escrow, and we're not sure if we should move forward in this process with the loss of an income.

But at the same time, we kind of find it hard to walk away from the house because we'll be losing our earnest deposit. No, you won't. So, yeah. Do you still,

do you still qualify? Without the income, won't the mortgage company not qualify you that's what i tried um explaining to them i've been writing with them tooth and nail trying to get a lawyer's input who letting them know the current state um the the builders no did you talk to the mortgage company um i've i've notified the lender i've notified my real estate agent did the lender say you're no longer qualified as a result of losing your job no they didn't okay then you are held to the contract and you would lose your earnest money okay so your husband's

income is enough now you guys were moving to texas from california so weren't you changing jobs anyway exactly but we weren't planning on me moving out there for another like four or five months so what do you do you weren't i'm a waitress and my husband's a police officer okay so he has a job in texas waiting and you need to move and get a job waitressing. He was going to apply to a position, but they were going to open up hiring for that department at the end of May. So he was going to stay here in California until he got hired on, and they postponed the hiring process. Wait a minute. So now you have no income.

My husband still is working. He did not quit his job. He was not going to. In California. Yes. Then you don't qualify for a mortgage if you move to Texas and you're unemployed, both of you. Well, my husband still has his job here in California. Honey, he can't have a job in California if you're living in a house in Texas.

So what I'm telling you is you don't qualify for the mortgage because when you both move to Texas next week, you have zero jobs. Right. So you have no possible way to qualify for this mortgage. You are out of this deal. Olivia, what Dave is – hold on, honey. Listen to us. I hear you, but Dave's painting the picture for you right if you all birth were to go to texas you don't have a job right now

which thus means you can't qualify to buy a home you're out of this deal you're out of this deal so what would you suggest me saying to the... Tell the mortgage company that if we move there, we both are unemployed. And if we're both unemployed, are you going to qualify us? No. We need a letter from you stating that you, because we are both unemployed upon moving to Texas, that you are turning us down for this mortgage. He lost his job, too.

Yeah, moving there, he wouldn't have a job that's right exactly he had a job lined up and he lost it right right you both lost your jobs he lost his texas job and then you just sit tight in california no you don't close on this deal and yes you do get your earnest money back and you just have to convince the lender make the lender understand that if I move to Texas, his job is gone that we were coming to get. So the job that you used to qualify us for this mortgage doesn't exist anymore, Mr. Lender. You really don't want to loan me money. We're both unemployed, do you? Right.

And I have another question so because we the home we were going to be purchasing from is a builder contract it's under a builder's contract and i know that they made a covid19 addendum for people who are in a situation like my husband and i but it applies to texas real estate only not builder contracts i don't know none of that of that matters. All that matters is you have a contract that's contingent upon you qualifying for the mortgage. You no longer qualify for the mortgage because neither one of you have jobs if you move to Texas. And the lender needs to turn you down because your situation has changed. Okay. Let me give you another example, okay?

Back when I was selling real estate 1,000 years ago, I sold this little couple of house. They barely could qualify, and before we could get the loan closed, the moron went and bought a truck. Now they've got too much debt and no longer qualify. They informed the lender that they had bought this truck, and so the lender rescinded the approval, backed up on the approval, and therefore they were out of the contract and got their earnest

money back. Same kind of thing you're facing here. The lender will rescind their approval when they realize that neither of you have jobs in Texas where this freaking house is that is an owner-occupied loan that they have approved. The owner cannot occupy it if the owner has no jobs and cannot pay the mortgage. You get your money back, and you stay in California until this stuff lines up again, and in a few weeks, you'll be able to wait tables again in California. Dave, you just saved a bankruptcy from happening.

Well, not really. I mean, seriously, they get there with no income right because this idiot mortgage lender isn't thinking can't count well they're not everybody's trying to keep the deal together for the builder right they're all working for the builder they're not working for this guy this couple and the mortgage company's gonna make a bad loan yep and they're gonna be you know and there's no income so no you you listen even if you walk away from your earnest money, you walk away. But I'm saying you get your earnest money back. I've been in the real estate business my whole freaking life.

You simply no longer qualify. If you call the mortgage company up and say, neither one of both of us have lost our jobs. Now, we don't qualify anymore, do we? And just make sure they understand. And get it in writing from them that based on the job losses his job was rescinded his offer from that company or from the sheriff's department was rescinded they pushed it out and of course you hadn't they weren't counting on your job

anyway because you were leaving texas hoping to get a job leaving california hoping to get a job waiting tables in texas it's probably not hard to do actually but uh just like it won't be to get a new job in california when things start back up. Well, is this the time to be buying and selling? Yeah, if you're healthy financially. Okay. All right. Well, let's say you had two steady jobs, or the job was lined up and he's going to make

$100,000 a year. Absolutely. Well, I would close on the deal. Yeah. There's no reason not to close on it. Okay. So you don't think with the coronavirus going on that that's a- The coronavirus.

The only thing the coronavirus caused here was it pushed his job out. Right. That delayed, the sheriff's department said, for right now we're not hiring. Right. They pushed it out 30, 60 days, and it ruined his deal. Right, but I mean for someone, just the general public out there. It depends on how steady your income is. Okay.

The more steady your income is, the more you continue life the way you have been. If you're working the baby steps, keep working them if you've got a stable income. But if one of you is getting ready to get laid off, you're in one of these service industries that's getting hammered. Oh, man. If you work at Amazon, you're not getting laid off. That's right. Unless you're just doing something they fire you for. But, I mean, Amazon's booming.

They're hiring 100,000 people. Target's booming. So is Dollar General. And Dollar General's booming. Walmart's booming. Right. Aldi's booming they're hiring 100 000 people target's booming so is dollar general dollar general's booming uh walmart's booming right aldi's boom and publix is booming you know and so they're all desperate to hire people fedex desperate right now uh ups desperate for people so there's jobs to be had they may not be the job you want that's right so you can get money to eat with right now that's a big thing you want to get a hold of. But that's not to say, okay, if you're in your baby steps and you have a storm cloud

that is real, that is particular to your situation, like we always have told you, stop your baby steps, pile up cash. Right. And so if the coronavirus is bringing a storm cloud that's real, not just a general cultural malaise, not just everybody's afraid and I'm freaked out about the virus. That's not what I'm talking about. I'm talking about are you going to lose your job because of this? Maybe, probably.

If so, stop. But if everything's, I mean, let's say he's a teacher and she works for FedEx or vice versa, you're not going to lose those two jobs. That's right. You keep working your baby steps. Stay focused. This is the Dave Ramsey Show. joining me today on the show has been chris hogan number one best-selling author the book everyday millionaires and the book Retire Inspired. We're answering your financial questions during these wild and crazy times.

Up next is going to be Chris in North Carolina. Hey, Chris, welcome to The Dave Ramsey Show. Hey, gentlemen, how are y'all? Awesome. How can we help? My wife is pregnant. She is due in September. We have paused Baby Step No. two in order to pile up cash good um should should we pause paying on my student loans which is at the end of our baby

step two since it won't be accruing interest with president trump waiving interest during this pandemic yes okay yeah i would pay what we tell people when you say pause is you pay minimum payments on everything and if they're allowing i i haven't looked at the details on the uh trump uh edict on this but uh if they are saying you don't have any have to make payments on your student loans then don't make payments on them the last time i checked it said that um that we may not have interest well then you're going to have some kind of payment well i did hear i haven't seen anything that he was talking about suspending payment all the way up to september they've talked about windmills i mean they've talked about everything so uh you can't go by what they're talking about.

All you can go by is what they actually do, and that's both of them, the House and the Senate, approving it and the president signing it. Then we have what's called a law. The rest of it's called politics and BS. That's exactly right, Chris. What I would do is reach out. Call your loan servicer, wherever you send your payment in to. Call them. Talk with them to find out exactly where they are and where they stand.

Just because they are talking about it, as Dave mentions, not all of those student loan providers have to sign on or may agree to that. So I want you to reach out to your service or find out directly for yourself. If they mandate it and it's a federally insured, they will have to go along with it. But I don't think it's law yet, and I doubt it's gotten down to their service centers yet. I'll make my payments for right now. Okay. If you can find out, if it becomes a solid piece of information that is the truth, that is law, it's probably going to be 30 to 60 days before you actually can get that in print,

and then you get on the phone with a servicer and you cut off making payments if you can legally stop making payments or interest rate without causing yourself a problem right yes i would do that and just have that much more cash you're going to turn right around and plow it back into debt after she comes home when the baby comes home and everybody's fine in september so it's just between now and september that matters anyway because you're going to keep you're going to get back in gear and get everything paid as fast as you can get it paid. That's right. Now, let me also tell everybody, there is no student loan fairy and there is no mortgage

fairy. So when you hear the government talking about doing this, all they're doing is extending the period of indebtedness, right? So they're just going to add that payment to the end of the loan. So it's not like you've gotten anything free. I had to say that, Dave, because everybody's thinking that it's just this free pass So it's not like you've gotten anything free. I had to say that, Dave, because everybody's thinking that it's just this free pass, and it's not. I mean, one thing that they proposed, I don't know if it went through, was to forgive $10,000.

But I don't know if it went through. The thing is, you better not bank your deal on Washington fixing your life ever, even in a crisis. That's right. I mean, let's just say you got $40,000 in student loan debt, and they send you, you're married, so they send you a $1,200 check each. So you got $2,400, and they forgive $10,000 of your student loan debt. Okay. So now I've got $30,000 in student loan debt. And do you have a job?

Okay. I don't know. I may not. You may. You may not. I don't know. If you have a job and you were making $60,000 or $80,000 before, you still do. Right.

So you have a $12,000 swing in your entire situation. Is that helpful? Yes. If you send me $12,000, I i'll take it but it doesn't fix your life that's right it's it's a it's a it's a five or a ten percent move in your net worth and you've still got to deal with the other 95 percent of crap that's in your life and so that's what i mean when i say it's more psychology and politics than it is arithmetic and so it's a you know if a thousand dollars changes your life by definition you didn't have much of a life by definition that's not being snobby no no no that's just saying you really were pretty freaking broke right i mean like poverty level already. You already had bigger problems than the coronavirus. If $1,000 changes your life.

And so that's what I mean. To me, it's just BS. It's peeing on a forest fire. It really is. That's all it is. And I know for the people that are out there, if Dave just raised the lampshade for you or the shade on the window and you're seeing it clear, that's a good thing. What happens at your house is more important than what happens in the White House. That's right except if the white house will tell us all we can go back to work

so that you can pay the bills at your house i mean that that's a big deal right there it is i'm not trying to kill your grandmother don't don't get mad at me i'm not trying to be socially irresponsible i know you want to flatten the curve send me the hashtag i mean i get all that i understand all that i'm not trying to kill a soul. But the cure has become much more of a problem than the virus. And it's really hurting people's lives. Because we deal with these people that are hurting. And we're dealing with you guys and you're hurting. And we don't want anybody to be sick.

No. And if you say that about me, then you're just being irrational and you're just being fear-based and mean. Okay? That's just not true. But it's just a matter of, I have, you know, I have an honest intellectual disagreement with you on which is worse, the cure or the virus. And I've got responsibility to a thousand people here that eat out of this place. And we don't have a money printer in at

ramsey solutions we don't have a machine down here we can just print up money pay all these people so uh we're like any other business that's a thousand families that get paid here and lots of businesses are facing the exact same thing and they're all at home right now working from home because that's what the governor and the mayor and the president asked us to do. And we did that last week. And, you know, they're all working from home and it's not good, y'all. It's not good. So anyway, that's what we're facing and we're going to walk through this together. So I think that's what you look at here is on the stimulus thing is does the stimulus really does it really stimulate you um art laffer proposed one that was interesting which was uh

forgiving it was more substantial than this um in actual math uh it was forgiving uh the payroll tax until the end of the year zero payroll tax which would give every worker a seven and a half percent pay raise and every employer a seven and a half percent uh seven seven six five on every employee that they pay and so it would uh stabilize the businesses that create the jobs that people eat with yes it would and it would help the people eat because they would immediately get the equivalent of a seven percent pay raise um just through the end of the year that's that was an interesting one to think about but that's a whole lot more money oh than than a thousand dollars yeah oh absolutely it's a whole lot more money or even it's probably more

than twelve thousand dollars per person but you talk about something that would impact not only a team member but also the business and allowed you know and it's not of course the people on the left are going to be all your supporting businesses they understand businesses are where you eat from this is where you get your money for your toilet paper because you cashed a check because you worked there and we want to make sure that you are still able to cash your check to buy your toilet paper. And if you don't have a check to buy your toilet paper, things get messy. And so that's what we're dealing with here. And it's a problem. It's just a problem.

And so it's not, you know, this pro-business means you're pro-people. And you're pro-people, you have to say, I want those precious little people to have a job. That's right. Those people that work at restaurants that don't work at restaurants right now, that used to work at restaurants, and that used to work at a hotel, they would like for that business to be stimulated. Yeah, it would. To be able to bring them back.

To bring them back. That's right. And so who are you helping? Are you helping the Marriott if you give the Marriott money? If it causes all the people that used to work there to be able to come back? No, you're helping the people that used to work there. That's who you're helping. And so I don't like trickle-down economics.

I know. You don't like logic. I get it. I understand. But that's how this stuff works, boys and girls, out here in the real world where the rest of us live, other than Washington freaking D.C. or in the mind of some liberal. And so I'm sorry, y'all.

This is just what's really going on. You can be mad at me if you want to be mad at me. Y'all are all mad at me about something anyway. So deal with it. But, you know, we're here to help real human beings get their lives straightened out. That's a big deal. This is The Dave Ramsey Show Our scripture of the day, Romans 4 through 5. Romans 5, 4 and 5, I and five i'm sorry rejoice in your suffering

because suffering produces hope and hope our suffering produces i screwed it up all right produces character character hope and hope does not put us to shame because god's love has been poured into our hearts through the holy Spirit who's been given to us. Newt Gingrich says, Perseverance is the hard work you do after you get tired of doing the hard work you already did. That's the truth. That's the truth. Yeah, I remember the month before I filed bankruptcy,

I was sitting in my recliner at 4.30 in the morning because I couldn't sleep, and I had my Bible open and i was just reading somewhat randomly i thought through it there's never in a random act especially in situations like that and i hit that romans 5 rejoice in your suffering and i looked up and i said right i don't think so because suffering produces perseverance, and perseverance, character. And character, hope, in my version I read says, and hope is the gift of the Holy Spirit. And so the progression there, suffering produces perseverance,

perseverance, character, character, hope, and hope is a gift of the Holy Spirit. Here's the interesting thing. When you study successful people, their intellect almost is never the reason they're successful. Their location of their college is almost never the reason they're successful. Their good looks is almost never the reason that they are successful. When you study successful people, you almost always find two character traits that are a choice. The character trait of integrity and the character trait of perseverance.

It's very unusual to find someone who's uber successful. And I mean, by successful, I mean in all areas of their life. Right. Their family is successful. Their career is successful. They have quality relationships with friends, they are healthy by choosing. And not perfect by any means, that's not the point, but they have extreme levels of integrity and they just don't quit. That perseverance is a big deal. And don't let your strength be small in a time like this.

Be a person of big strength. Take a deep breath. Throw your shoulders back and step into it. You can do this. And we're going to be right there with you. Now, reminder of a couple of things. Tomorrow night, 7 o'clock Central Time, Thursday night, the 26th, we will be doing a Ramsey Message of Hope.

Me, Ken Coleman, and Rachel Cruz, two of the Ramsey personalities, will be talking to you for about 30 or 40 minutes of the Message of Hope. 7 o'clock from our website at DaveRamsey.com. We'll broadcast it on all mediums. Some of the radio stations are even picking it up. Um, XM radio is going to pick it up. Uh,

other people are picking it up too, but you can get it at our website. It's the easiest way. It's completely free wherever you are. And, um, but we're putting it out all over the place, free to anyone who wants to broadcast it or rebroadcast it.

Any of you affiliates listening, uh, there's 605 radio stations out there. You're more than welcome to connect with us, and we'll make it available to you to play tomorrow night. I'm not sure exactly how the technical works on that. I just made that up while I was talking. But I know we've got four or five already wanting to do it, so I know we must have it figured out.

So anyway, let your friends and relatives know. It's's free tomorrow night and we want you to join us and um then the other thing is we've put up a web page yesterday and we keep adding stuff to it every day so be sure you keep looking um dave ramsey.com slash hope for those of you that are at home we're trying to get stuff to you so that you can be helped while you're trapped there or quarantined there or whatever word you want to use, right? And so we're doing something we've never done in 30 years. We're giving you a 14-day free trial to anyone for Financial Peace University online. It's all online anyway now. So 14-day free trial. We've got virtual University online. It's all online anyway now. So 14-day free trial.

We've got virtual classes online. You can binge watch through the whole video series. It's nine lessons of me, Chris Hogan, Anthony O'Neill, Rachel Cruz, teaching it for purposes of Financial Peace University. You get all of that. We would love to have you do that. Check it out everywhere. There's all kinds of other things on that page at Great Deals, helping your kids, teaching your kids while they're at home, inexpensive ways to

help other people. We're selling this stuff at little to no profit, everything on this page to help you guys out. And so Dave Ramsey dot com slash hope. There's a special 14-day period of time at this moment that this country is in, and more than maybe any other particular 14-day period that I remember, because we've gone hopefully to the bottom of this and then back out after this 14 days. And so people will be coming out of their caves and seeing the sun again. And, you know, I want you to come out more equipped and ready to go and helping you any way we can. Again, the free, the whole thing,

this is the crown jewel. 10 million people almost have been through this class. Financial Peace University for a 14-day free trial. I just, I can't fathom why you would not do that at this stage of the game. All right, Kate is with us in Wisconsin. Hi, Kate, your question for Chris and me. Hey, guys, thanks so much for taking my call. Sure, what's up?

I am about to break up with Sally Mae. Good! I'm on baby step to pause because we just welcomed our second child. So you recognize a toxic relationship when you see one. Yeah, I mean, she was honestly costing me too much money. I'm telling you, she's a hard woman. So because I saved up so much during my pause time, I'm actually going through baby step two and three at the same time.

Done! So I have an investing question. My husband and I, we both have Roth 401k options at our work. But even if we fully invest the full, like whatever, 18, five or whatever it is, both of our Roth 401ks, it doesn't even get us up to 10% of our income. Nice income. Yeah. So my question is, is whether or not, I feel like the way you've been teaching,

it feels a little strange to invest in, like, non-tax deferred mutual funds or cash real estate when we still owe on our home. No. What I would do is this, before we finish. I mean, yeah, you max out. Regardless of match, you max out both those 18s. What's your household income, 300? Last year we made a little little under 500 way to go kiddo you're killing it what do y'all do for a living i actually

call um my husband's a computer engineer and i'm a um a physician i actually called you three years ago really uh five hundred thousand dollars student loans five hundred thousand you paid off yeah i'm so proud of you wow yeah you you didn't really yell at me dave but you kind of gave me a dad voice good and it worked it worked i love you you're awesome wow i saved over a hundred thousand dollars just fall pregnant i am so proud of you seriously well done well done i've been going to work dave like you know you've been after it yeah you don't want to hear that dad voice again yeah i love you you're awesome i'm so proud of you great job okay so you're not gonna you're not gonna get to 50 you're not you're not gonna get to 15 uh this is not gonna help you but you

don't you technically don't qualify for roths which you've already discovered but you can still do backdoor roths i do them you can go ahead and do them and that's just opening up an after tax uh traditional and not a before tax and after tax traditional and then 30 seconds later rolling into roths i do them every year so you can do twelve thousand dollars or if you're i think you're young so you can do twelve thousand dollars doing that. That's still not going to even get you close with your wonderful income. I would probably pick, get with your SmartVestor Pro and try to do some more in a low turnover mutual fund. Okay.

Now that's a mutual fund that doesn't sell its stocks very often. So the gains are at capital gains rate of 15%, which is wonderful, when you do cash them out someday. And if the only, I mean, the little bit that turns over is taxable, but a low turnover is like a 95% no turn, and that means there's no taxes today on 95% of the growth. And so it has the effect of being in a traditional. An after-tax traditional is what it has an effect of. And I would look into some of that, and then

I'd work on paying off the house. You've got a wonderful income. Now that you've got control of your money, you're going to do just fine. Paid off a half million in student loan? Oh, baby! Love it! Get out of here, Sally. Well done. Wow, what an ugly woman that woman was. She was a big one. That was great. She was round. She was round.

She was round. Puts us out in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. I'm James Childs, producer of The Dave Ramsey Show. You can listen to Dave anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show, browse by topic, or send clips to your friends. Head to the App Store and download the Dave Ramsey Show app on your smartphone. Catch the full show, browse by topic, or send clips to your friends.

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