The Ramsey Show - App - Should I Buy a House From My Ex-Wife? (Hour 2)

Episode Date: December 19, 2019

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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. You jump in. We'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Orlando is on the line in Florida. Hi, Orlando.

Merry Christmas to you. Hey, Dave. Merry Christmas, and thank you for taking my call. My pleasure. How can I help? So, let me see. I'm getting married in three months. Yay! I'm excited, to be excited to be honestly i'm very excited um i thought that my fiance is pregnant cool um yep i'm a bit scared

and excited of course but the only problem is that she is in debt around 45k i-hmm I'm finally free I got that free around two months ago so hooray four months ago I got unfortunately I got a house loan well I bought a house but as they say about 3.5 percent down I haven't officially read it out of $600 per month and she is gonna I want her to be a stay-at-home mom and I don't know if my income is gonna be enough for all of this what do you make i may i take home around 30 30 700 i'm considering about doing a airbnb business in my backyard or tiny home airbnb business that pretty i think that could bring me back around $1,500 per month so I could pay the mortgage or that.

And, you know, I just don't know where to start. Like, should I start paying off her loan? Should I start paying off her car? I just have no idea. So what kind of debt is her $45,000? She has $15,000 in car loan. She has approximately $17,000 in student loan and $7,000 in credit cards. Okay.

All right. So I have around $15,000 in the bank right now. I thought about just getting those $15,000 and just put it into her car and pay off the car, but then I won't have an emergency fund at all. Okay. All right. Let me walk you through exactly what I do if I woke up in your shoes, okay? Okay.

Just this morning, I just woke up and I was in this situation. I would go get married this weekend. I would move everybody into the house. The new family is on the way um now we have forty thousand dollars in debt and we have fifteen thousand dollars in our bank account and now we have a thirty seven hundred dollar take-home pay or about fifty thousand dollars in income okay okay and um we have a car that's pretty expensive, probably out of line, so we would probably sell her car. And then we would take the $15,000 and work six extra jobs and no, Airbnb-ing many houses in your backyard is not an extra job.

I would just go get a job delivering pizzas or whatever, and let's get the rest of this debt cleaned up, and you can probably do that in just a few months once the two of you are on a budget. By the way, she's three months pregnant. She's not a stay-at-home mom right now. She's working. No, no, no. She's working right now, yeah.

Okay, so that income, we're going to use all of her income and any income you can generate from anything, and you go crazy before this baby gets here, you're debt-free. And all you have is your house payment, and you're debt-free, and she's driving not as nice a car, but it's paid for, and you're driving a paid-for car. And now we're in pretty good shape to start to build our emergency fund and then save some money for a little better cars and then long term what are we going to do with our career and get our income up right yeah of course what do you do for a living i'm a poker dealer part-time poker dealer okay

and uh i only do that part-time yeah and how old are you i am 25 years old and why are you part-time uh they're not offering full-time at the moment i've And why are you part-time? They're not offering full-time at the moment. I've been wanting to get full-time, but I think if I get full-time, I could definitely put on my income like 70K. Okay, so what do you want to be doing when you're 35 years old that makes $100,000 a year for your family that has three kids by then? Yeah. It's not a poker dealer.

No, definitely not. No, of course not. Yeah, of course and then you start saying okay well what have i got to do to be one of those things whatever it is i don't care if you want to be a rocket scientist that's fine you're going to take some rocket science classes if you want to be a marketer you're probably going to take some marketing classes if you want to be in it you're probably going to get some certifications in it if you're going to be in real estate sales you're going to get your license and get in get in the business. I don't care what you do, but let's aim at something you've got a baby you're responsible for now.

And that's why you call me, because you're the guy that is a good guy who knows that and is planning to take care of his family. And everything you asked me and the way you asked me indicated you've got good character in the regard of your honor and your integrity of taking care of his family. And everything you asked me and the way you asked me indicated you've got good character in the regard of your honor and your integrity of taking care of your family. So I don't know if you'll do it the way I outline, but the way I answer questions here is exactly what I would do if I woke up in your shoes. And I'm not, my name's not Orlando. My name's Dave.

So you get to decide what you're going to do. That's how I would do it. Open phones at 888-825-5225. And, of course, Dave is with us in South Carolina. Hi, Dave. Merry Christmas. Cool. Merry Christmas.

How can I help, sir? Well, here's the question. Okay, so I'm basically debt-free. You're going to have to speak directly into your phone. I can't hear you. Okay, I'm speaking directly into it. Okay, there we go. Okay, cool.

Anyway, so I'm basically debt-free. I had to buy a car. The ex-father-in-law died. The family kind of, we'll say politely, made me leave a very well-paying job. But he left me debt-free. So I had to buy a car for this new insurance-selling job. I'm 100% military disabled, so I get $3,200 a month from that. They say the first year you make about $ grand in the insurance selling job well the ex-wife

wants me to purchase her house um so we can keep our daughter in that school district and her new daughter because they're going to build a house on the piece of property out of that farm no so i'm No. So, I'm... You what? No, I wouldn't do that. Well, I could rent my house out and then pay that payment of renting my house. Yeah, and then the renter doesn't pay, and your insurance doesn't make $50,000. It makes $15,000, and now you're in bankruptcy court. I live in a pretty good neighborhood. You know, there's a half-million-dollar home. Okay, you do what you want to do, dude.

You're making this up as you go. You really cannot do this. It's a bad idea. Okay? The job that you've taken has overpromised you. You're not going to make $50,000 the first year. You just left the job. You're buying a house you don't need to make your ex-wife happy.

There is nothing in this equation that makes any sense. No, you don't need to be buying a house right now. You're broke and you're in a new job, and you're going to get yourself in a pinch, dude. Don't do it. This is The Dave Ramsey Show. How often can you get the best of both worlds? Not very often, right? Well, with the rate secured program at Churchill Mortgage, it's possible. You can secure a low rate now to nail down your budget, and if rates drop while you're shopping for a home, they'll give you the lower rate. That's right. They take on the risk of fluctuating interest rates, not you. Who does that? Well, you should fall in love with the numbers before you fall in love with the house.

This program lets you do just that. So if you're buying a home this year, you'd be crazy not to call Churchill and get your rate secured now. Call Churchill Mortgage today and have the best of both worlds. Go to churchillmortgage.com or call 888-LOAN-200. That's churchillmortgage.com this is a paid advertisement nmls id 1591 nmls consumeraccess.org equal housing lender 761 old hickory boulevard brinkwood tennessee 37027 Merry Christmas, America. We're glad you're here. Open phones at 888-825-5225. Dustin is in South Carolina. Hi, Dustin.

Merry Christmas. Hey, Dave. Merry Christmas to you. Thanks for taking my call. Sure. What's up? So I'm currently a graduate student, and I have already taken out a little bit of student debt to pay for my program, but I also recently started listening to your podcast.

And so my wife and I are looking at ways to prevent going further into debt. And we do have a little bit of money that my wife had saved up prior to us getting together, but we're totally in it together at this point. And we're looking at at tapping into that money um originally she was actually hoping to save it for a down payment on a house uh after i graduate but now that i've kind of been listening to you i know that the house would be kind of down down the road a little bit so we're looking at using that money more wisely currently what are you studying um uh nurse anesthesia oh very good ding ding yeah definitely yeah so when do you graduate when do you graduate i graduate in may of 2021 18 months and um how much more is it going to cost you to finish it's gonna it's gonna cost me about thirty thousand dollars more from right now and

how much is in savings about fifteen thousand15,000. Okay. How are you going to cover the other $15,000? I was planning on taking out student loans for that. Okay. Does she work? Because she does work, and she makes a decent income. We live off her income, and there isn't much left over after that. Okay. Do you have any breaks? Do you have a summer off or anything? No, I don't get any breaks, unfortunately. I do what I can. I do a little bit of Lyft driving when and where I can, but my particular program is very involved.

The vast majority of students don't work at all, so I don't really have too much opportunity to make money myself. The vast majority of students have $225,000 in student loan debt. This is not an option. We're not measuring against that. Yeah, that's true. But the, yeah. Well, I'm definitely using this savings to finish and I'm going to scratch and claw

and get every nickel out of the corner of the couch and see if I can't finish this with no more debt. What you said earlier in the conversation, I completely agree with. But dude, you're going to be making serious bank as soon as you pass those boards this is a great career field you're going to be ding ding now how much student loan debt do you already how much student loan debt do you already have right now i'm at about 42 000 oh good okay not much at all you're gonna pay that off in 20 minutes as soon as you get out and get rolling.

But I guess that's kind of what leads me to my question for you is I also very recently found out that in order to invest in a Roth IRA, there's actually a cap on your household income in order to be able to invest directly in that. And so my question was being that when I graduate, I'm under the impression that's about $200,000 jointly for household income, and I would expect our joint income to be above that once I graduate and start working. I would expect your income would be above that, yeah. Exactly. Hopefully. Maybe. And so in that case, would it be smart to take that savings and put it in a Roth while we still can, so to speak?

No. Because, in effect, what you've done is you've borrowed student loan money to put into a Roth. Right. True. And I wouldn't do that. No, I'd never do that. Now, here's the other thing. Number one, you likely will be working with an organization that has a 401k, and you can load that thing full. And it might even be a Roth 401K. So you've got other options to save. In addition to that, yes, you cannot do a Roth IRA when you make over $200,000,

but you can do a Roth IRA when you make over $200,000 by using what's called the backdoor Roth IRA technique. I do it every year. My wife does it every year. And all that is is you open an after-tax traditional IRA and 30 seconds later roll it into a Roth. And there is no income limit on that. And so it's just an extra step to get you into a Roth. But even if you couldn't do that, we would never tell you to borrow student loan money to fund a Roth.

And by borrowing extra to pay for your school because you used your savings for a Roth, it has the exact same effect. And no, I would never do that. So, man, I'm so proud of you. You've got a great career field. You're going to make a lot of money. Be very focused, very careful, and you're going to do really great. I would love for you to finish this with no additional debt. Jim is in Louisiana.

Hi, Jim. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? We're kind of in crisis mode. I mean, we're just living paycheck to paycheck, and we make way too much money to do that.

How much do you make just don't i probably i drive a truck for a living so i probably make 50 000 or better a year and my wife makes 75 000 a year yeah you do make too much money to be broke so why are you broke yeah i don't know um yeah you you do. We talk about it. Well, we have, well, $40,000 in credit card debt, $75,000 in student loans, two cars that we can't afford. Yep. What are you owing the cars?

2016 Jeep Compass, $18,000, $19,000. Right before we were married, she came home with a brand-new Mustang, so I don't know what she owes on that, $20,000, $25,000. How long have you been married? We've been married about a year. We just celebrated our one-year anniversary. Okay. Well, you know, if it were my house, I would sit down with her and just say,

this is not working. We're both working our butts off. We make a lot of money and we're completely broke. The plan that we are using sucks beyond belief. Agreed? Yeah, and I've done that and I've suggested several times that we try to work your plan, and she says to me that she makes too much money to live like she's broke. Oh, so she's a princess. But we are broke. Yeah, by the way, you are broke. And by the way, the number one cause of divorce in North America today is money fights and money problems, princess.

Right. I make too much money to live like I'm broke and yet you keep buying crap and spending money like you're in congress how old is this girl uh we're both i'm 44 she's 45 wow too old to be acting that way um well i don't know i mean uh if she can% of solving a problem is realizing there is one. And if we can't agree that the process that you all have used to get here and where you are today sucks, then I don't know where to start from there. She has agreed.

I bought her Total Money Makeover, and she's agreed to read that this weekend. Okay. Well, that's a good start. I mean, you know, you cannot continue to do what you're doing. Would you agree with that? Oh, I totally agree. And if she can agree to that, then you say, okay, what are we going to do? Because what we're doing now, we can't keep doing.

And her answer to that is, well, I'm good at making a budget. No, I'm saying she should answer that. Right. Well, that's her answer. Oh, I'm good at making a budget? Yeah. When? That's what she told me last night.

When? Yeah. I don't know. She never has been yet. She bought a Mustang she couldn't afford that doesn't indicate she's good at making a budget that's delusional no she's not good at making a budget you all suck at handling money and i'm not mad at you and i'm trying to shame you i'm just agreeing with you and i'm sorry you're in this pain so what you guys have got to do is establish that there is a legitimate problem here and what is our best source of information and our best plan

to change our behavior so we get a different result the 12 steppers say continuing to do the same thing over and over again and expecting a different result is the definition of insanity which is what y' have done to date. But I think you're on the right track, and I think you need to quit proposing what we need to do. Let's start first talking about that there is a problem. There's a problem. There's a problem. There's a problem.

Did you notice we're broke? Did you notice we work like animals and we have no money? Did you notice that? I think you need to let the problem settle in on everybody because everybody's been walking around in denial this is the dave ramsey show In a season of giving, what better gift can you give someone in the coming year than a new job? Business leaders, if you're looking to add to your team in 2020, get started now with LinkedIn Jobs. At Ramsey Solutions, we post on LinkedIn Jobs because we know the right person will have an impact on our company for years to come. And LinkedIn Jobs matches the right person with the right job.

It's no wonder a hire is made every eight seconds on LinkedIn. And over 600 million members visit LinkedIn to make connections, learn and grow as professionals, and discover new job opportunities. So find the right person for your team and give the gift of a rewarding new career. Get started today and get $50 off your first job post. Visit linkedin.com slash Ramsey. That's linkedin.com slash Ramsey. Terms and conditions apply. In the lobby of Ramsey Solutions on the debt-free stage, Brian and Ashley are here. Hey, guys. How are you? Hey, Dave.

Fantastically weird. I love it. Welcome. Where do you guys live? We live in Central California in Fresno. Oh, fun. Great town. Cool.

And I love the t-shirts. We are the definition of weird people. We paid off our house and everything. Woo! I love it. So how much debt have you paid total? We've paid off $260,000. Awesomeness.

And how long did this take you? Eight years. All right. And your range of income during that time? $71,000 to $150,000. Wow. Now, how much of the $260,000 was your home? $150,000. Okay. Wow. So you had another $100,000 or so in consumer debt, and this all started eight years ago. Tell me this story. Well, about three months after we got married, he had to have a back surgery, actually

his first one. And so we ended up spending all of our savings that we had saved up. And while we were going through that, we were six months on disability because of wonderful government. They had messed up our paperwork. So we were living off my income and I was working part-time. And so I was telling my coworker at work, Corrine, who's a huge supporter of us, and she told us about you. And so I went home and told him and he's like, it doesn't work. No, I'm not going to do it. And then August, our well went dry. So we had to dig a new well, which is another $20,000. Oh, that's helpful. And then he ended up having to switch jobs and got a new job and became a business owner with a guy who...

Yeah, ended up leaving us with quite a bit of debt. So we found ourselves in a big hole. But what... Catastrophe after catastrophe after catastrophe. So we got... I tell people God wiped us out financially. Somehow he let us keep our house. But when she said, hey, let's try this Dave Ramsey thing, I said, well, I'll do it.

But I actually don't think his system works. I actually went into this to prove Dave wrong. But I said, if I'm going to do this, I'm going to do it 100%. That way, if it works, it works. If it doesn't work, he can't say I didn't do it. So we did it. And after a year, we paid off almost $40,000. And I mean, we went envelopes.

We went everything. And after we paid off $40,000, I'm like, I can't go back. That's the only way to go. So how far into the year before you started going, okay, Dave wins? You know, it wasn't as much as Dave wins as much as it was like, wow, this works. Uncle. This works. It's like I thought we were successful before. It was just life. And then we got into it, and I was like wow this works uncle this works like i thought we were successful before

it was just life and then we got into it and i was like oh yeah no we could actually get out of debt and this this could work and we throttled our budget way back that was that was the big part and we called in a couple times and you answered some questions and we were helpful but i really i went in initially with this kind of my arms folded like yeah like like all the guys are doing when we we help with fpu they're like sure yeah right and then after a while i'm like wow this works and i won't ever go back amen so very fun well congratulations all the way till eight years later you don't even have a house payment it's a neat season to be in wow yeah baby step seven's incredible yeah it is it is a misconception too people people don't get that Have a house payment. It's a neat season to be in. Wow. Yeah. Baby Step 7 is incredible. Yeah.

It is a misconception, too. People don't get that. The goal isn't just to be able to have a lot of money in the bank. The goal is to be able to help people out. Yeah. Yeah. Well, and the peace you have. You don't have a house payment.

You live in Fresno, California, and you don't have a house payment. My God. What's this house worth? About $360,000. And it's yours. It's all right. I love it. Woo-hoo!

Way to go, you guys. Very cool. So what do you tell people the key to getting out of debt is? You're weird people. How'd you do it? Well, I want to say, first and foremost, it was my coworker, Karen, that I had mentioned. Yeah. She's just a huge accountability well as well as a cheerleader. Every time we made huge progress, I'd send her a picture of our mortgage and she would always just be a super support.

But also every single person that calls into your show, whether it's a debt free scream or someone who is just struggling, it just shows like it can be done and that everyone needs hope and everyone needs help. So I just believe that everyone is doing great. Yeah. The other thing we got to do that was the key was we got together on our budget meeting. It was constantly moving. That's fine. We learned that we had to adjust it. We had to adjust it.

But once we got the consumer debt paid off, we got to take timeouts. And you know one of those timeouts is like hey we want to put some money aside to do a study trip to the middle east or we want to do this or we had a family member that we wanted to help and after we finished our consumer debt a about a year later my sister's husband passed away and left her and five kids. And so that year that he was diagnosed and then after he passed away, we were able to take a ton of trips back to Arkansas to visit family. And to me, that has been the biggest blessing to be able to do that. And then six months after he passed away was going to be their 20th wedding anniversary so we ended up putting pause on paying off the house to pay for her to go on a trip with us on a study tour to turkey and greece and went with us and it was just so neat to let her take a break from life and just be able to

come and uh enjoy something yeah so that's such a healing that comes from something like that having gone through tough times like that that's's amazing. Wow. Very cool, you guys. Very fun. Well, congratulations. So who were your biggest cheerleaders? Corinne. Corinne. And who else?

We had family members that were part of it. I think it was a lot of the talking the story and telling people about it. For me, it was I tell people at work about dave ramsey and they're like oh i've i've kind of heard that and this and that but most of it comes to oh yeah by the way we've we're gonna have our house paid off next year and that's when people start going huh and then they they kind of go really you guys are doing that and that kind of encouraged and motivated me and i think it did with her too is every time we got closer to a new goal we got to tell people and you may or may not like what Dave Ramsey teaches but oh by the way my house is paid off

right you can't really argue with that part of the story I love it well done you guys we're so proud of you thank you congratulations very very well done well we've got a copy of chris hogan's book for you everyday millionaires it's the next chapter in your story if you're not there now you will be soon you're on your way so i'm very very well done very proud of you all right brian and ashley fresno california they're weird people they paid off their house and everything, $260,000, all over eight years, making $71,000 to $150,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Love it! Woo! Man. love it man have you ever been in a time in your life like they had early in that story man i've been there where like everything that can go wrong does i mean i mean how it's like a metaphor the well ran dry i mean who has that part of their story even the well messed up i mean it's like you know lassie timmy's in the well i mean everything that can go wrong will i mean and you know what i've found was that most of the time when i go through a when i used to go through

stuff like that i still have things happen to us in our lives but when you go through a when I used to go through stuff like that I still have things happen to us in our lives but when you go through a period of time where every single time you open an email every single time you have something happen it's something bad you know a real like your life looks like a country song you know I mean it's like bad you know what I figured out is a lot of times that has to do with being broke and when i was not broke anymore i still had dramatic traumatic events happen but they seldom happened in the same in a continuous cycle and they seldom happened one right after another there's something about it's not money's magic or something, but there's just something about having a little margin in your life

that it just quits coming at you quite as hard. And if it does come at you, you've got a little money to catch it with. You know, well runs dry. Okay, we'll just ride check and fix the well, you know. The well ran dry. You ever been there? They've been there. And you know what?

Eight years later, they're 100% debt free. So what are you going to do? I'm talking to you. It's your turn. What are you going to do? New Year's coming. What are you going to do? It's your turn.

Ready, set, go! Mike is with us in Vermont. Hey, Mike, welcome to the Dave Ramsey Show. Hey, Dave, Merry Christmas. Merry Christmas to you. What's up? I have a question for you. I work for USPS, basically the post office. Got it. I have two TSPs within the post office.

They do a 5% match. They have a regular, which I do 18%, and I also do a Roth at 3%. I do know in the TSP, they do have G fund, F fund, C fund. I'm new when it comes to this kind of stuff, so I'm a little lost. Okay.

And how old are you uh 47 okay and um okay i probably would do all roth from this point forward because the growth on it is tax free from this point forward now the, the 5% match cannot be Roth. They don't allow that, but the portion you put in can be growing tax-free, and I would do that. Now, let's walk through these options. The G is a guaranteed fund. It's much like a CD. It doesn't pay hardly anything. Did you notice?

Honestly, like I said, this is new to me. I haven't even really looked into it. I do know I do want to invest a little bit. Yep. Okay. So here's what we teach people to do. We teach them to put 80% into the C. The C stands for a common stock,

and it is the best performing of all the options. And basically what it is is it's what's called an index fund. It works like an S&P 500 index fund. And what that means is it mirrors or is very similar to whatever the stock market does, good or bad, up or down. You're not going to really be better than the market, but you're not really going to be much worse than the market. And the C, if you look back at the track record of your C plan over the last 20 or 30 years, you would see that it has by far the best performance of any of the options available to you. Okay?

Okay. So I put 80% there because it's just kind of like a growth stock mutual fund is the way it is, an S&P 500 index fund. Now, the S plan stands for small company stocks. And what small company stocks always means when you're buying in a retirement plan and a mutual fund is it always means that they're very crazy, very volatile. If you were to look at the chart, the roller coaster ride on the chart is really sharp up and really sharp down. Shoots way up, like, woo-hoo! And then it shoots down, like, oh, God!

Right? Okay? Okay. And that's because these smaller companies are more volatile. They make a lot of money. They make a lot of money. They lose a lot of money. They go broke. They take off, and they're superstars, or they're the worst thing since ever.

They're not as stable as the big companies. And so there's some money to be made there, but there's some risk there, too. And it is the second best performing, but you've got to ride the roller coaster to get the performance. Okay? So I'll only put 10% in that. But it's kind of like putting some hot sauce on your taco, right? Right. You don't want to drink hot sauce out of the bottle, but you want a little spice on the taco.

Okay. That's all we're doing. Okay? Then the third one is the i plan and that stands for international so guess where those companies are across the ocean there you go and so now you're buying stock and through that uh you're buying into a mutual fund and so if you were to look at the list it would have stuff like uh bmw or mercedes or uh the company that makes q-tips is a foreign company uh you know you can go all over all the car companies a lot of them obviously would be in

there uh some of the computer companies or the chip microchip processors are are foreign companies so there's a lot of companies that do very well foreign, but it is the worst of these three in its performance, because even though you want to have some international in your mix just for the spice of it, it's not performed as well as the U.S. economy has in general. And so I put 10% in there. But those last 10% are more for flavoring, and the meat, the steak, is the C. That's why I do 80-10-10. You see how I'm doing that? Yeah, so basically you're saying for the regular TSP, do I still do the 5% match? Yes.

Okay, and then just take the rest of it. Instead of doing 18% for a Roth, should I just knock that down to, you know, so it totals 15%? I would put 15% of your income into the TSP Roth, let them match five, I'd do 80-10-10, and beyond that, then I would get your house paid off. When your house is paid off i would max out everything if you could put more in the tsp i would or if you want to do roths on the side you could do roth iras on the side matter of fact i probably would do some roth iras on the side at that point you do um at your age you can do seven thousand dollars if you're married you can do another seven thousand for your spouse.

But I want to get your house paid off beyond 15%. So 15% of your income going to the Roth TSP. Take the 5% match. Do it at 80-10-10. And then beyond that, get the house paid off. When the house is paid off, that puts you at what we call Baby Step 7, which is the last of our baby steps, where when you're 100% debt-free, you max out all your investing and retirement and your generosity, and everything just starts to really go crazy. It'll be wonderful, and you're going to retire a multimillionaire when you do all that. So very well done, sir. Thank you for the call. Matthew is in Indiana. Matthew, welcome to the Dave Ramsey Show.

Hello? I really resonate with your... I'm sorry, sir. I can't hear you. Your phone's caught up. We're going to put you on hold. Kelly's going to get back to you, and we'll work it out. Debra's with us in Mississippi. Hi, Debra.

Welcome to the Dave Ramsey Show. Hi. How are you doing? Better than I deserve. What's up? I have a question. We just bought a $3,000 car, and we paid cash for it, but the problem is now it's breaking down like every day.

What's wrong with it? And we don't know the heat's not working and that it will not start almost every other um okay it's a bmw x5 so i'm not sure what to do about it if we should get another car or because we just spent all of our cash on that car. You bought a $3,000 Beamer? BMW. Yeah, I know. Yeah, which is very expensive to work on. Yes.

Okay, wrong purchase. When you buy a $3,000 car, you're trying to buy a car that is ugly and cheap to work on, but that is reliable. Instead, you bought a cool car that is worn out. Unfortunately. Yeah. So you're probably selling this one. So I'm just wondering what you would recommend, because we don't want to have to have a car payment, but we just spent all of our cash on that car. Yeah, I would sell this car and buy a $3,000 used Honda that are inexpensive to work on and much more reliable. A Beamer is a great car if you can buy a new one or a slightly used one, but they are a horrible hoopty.

A Mercedes is a horrible hoopty because they're very expensive to work on. And so if you're buying your $1,000 and your $2,000 car to get by with no car payment, you buy something that's boring and inexpensive to work on and that has a tremendous reliability to it. You don't buy a high-performance, sexy car. You get that later when you've got some money. But you don't do that with – so $3,000 Beamers are never a good idea, unless you are a Beamer mechanic. $3,000 Mercedes and Audis are not good ideas.

They're too expensive to work on. So a Chevy, a Ford, a Honda, you know, something that's got some size to it and got some life to it is what you buy. And you don't care if it's ugly. All we care is it's reliable. Low miles. I don't care if it's a car you have to give a name to. That's okay.

Like big blue. Old red. This kind of stuff. That's what you want when you're buying a hoopty. Not something that people are sort of impressed with. We're not doing this for other people. We're doing this to get out of debt. I would sell it and get me a reliable $3,000 car for cash.

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