The Ramsey Show - App - Should I Buy a House When I Have $202,000 in Debt? (Hour 3)

Episode Date: September 3, 2020

Home Buying, Investing, Business, Insurance, Home Selling 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 

Live from the headquarters of Ramsey Solutions and broadcasting from the Dollar Car Rental Studio, this is The Dave Ramsey Show. It's where America hangs out to have a conversation about life and money. I'm Ken Coleman, host of The Ken Coleman Show, a part of The Ramsey Network, an author of the best-selling Proximity Principle book, and I'm joined by my good friend, my co-host, Ramsey personality, Chris Hogan, host of The Chris Hogan Show, also a part of The Ramsey Network, and he is the best-selling author of Retire Inspired and Everyday Millionaire.

I have to remember. Sometimes I just go right to Everyday Millionaire. It's fine. I've got to remember Retire Inspired. You've got two. Yeah. I have to remember. Sometimes I just go right to Everyday Millionaire. It's fine. I've got to remember. Retire Inspired. You've got two. Yeah. You've got two.

Yeah. And, you know, I'm just trying to help the people call me. That's all I'm trying to do. Yes, you are. Yes. And we are having fun. Speaking of helping people, so Chris and I are here for you. The only people we're thinking about are you.

Yep. And you're one phone call away from some hope, from some clarity. 888-825-5225. 888-825-5225. All right, let's go to Atlanta, Georgia, where Matt joins us. Matt, how can we help? How you doing, Chris and Ken? Man, we are living the dream.

How are you, sir? I'm finally living the dream, brother. But I'm going to make this real quick. But I have to go real quick. In 2012, I was making $400,000 a year. Wow. I'm in the oil business, blowing it on women. And when the oil market crashed, I ended up sleeping in a 1982 car. I lost all my Mercedes.

I was paying $3,500 a month for a condo. And I went and got an RV. And I slept in it for three years. Now I'm back to $300,000 again, and I don't want to buy a house. Everything I bought is cash. My truck's paid for in cash. I pay child support. I paid $80,000 worth of child support off of two mothers.

Debt-free, my credit score is like 800, and I don't want to buy a house because I'm so afraid of what I've been through. So do you want us to talk you out of that decision, or is there a question? It's just like, well, I want to go get an apartment, but I'm like, okay, that's a waste of money. I was going to buy a house yesterday on auction.com for $80,000. But I said, okay, I could go buy another truck and make more money with that. I make more money with myself than anybody can ever pay me in interest. But you've got to get to my point.

When do you pull yourself out of this RV and go back into living? Yeah. And I'm not sure when you do that. Do you like living in the RV? I did for three years, but it's getting old now. You know you've got money in the bank. Yeah. People look at me like, you know, I've got a brand-new Audi.

It's not brand-new, but it's a couple years old. It's probably worth $20,000. I caught a guy who nearly needed it, and I paid him $13,000 in cash for it. So you have no debt. Is that right, Matt? I have absolutely no debt whatsoever. How much do you have in the bank account, Matt? $180,000.

And I got some from my reserves, so I would probably say $225,000. Okay. And as you look at this, do you have any money toward retirement or anything at all? Hey, see, that's what my problem is. I don't have any money toward retirement. Okay. But I feel like this is what I really feel. I probably got almost $300,000 of equipment.

I can sell that when I finally close my business, but you can't guarantee that. No. But I feel like it'd be worth a hell of a lot more. What kind of business? Hey, what do you do for a living, Matt? I do chemical spills and cleanup. Okay. All right.

Okay. I would say, listen, are you going to be in the Atlanta area for the next three years? Definitely. Are you going to stay in that business? Yes. I'm trying to go into other things because what happened the last time I was just in the oil business, and I never want to get caught in one business again like that. Okay, and here's the thing.

You got PTSD, all right, from what happened in the past, and here's what I want to warn you from. I love the mindset of having the cash mentality. What I don't want you to do is don't try to make up for what happened to you by going back to it. And that's over leveraging yourself. I don't think there's anything wrong with you buying a modest home. You can put 20% down. You can go into that knowing exactly where you are.

You always want to keep that three to six month emergency fund. But inside of your business, you also want to operate to where you have what's called reserves. And so, Matt, you also want to operate to where you have what's called reserves. And so, Matt, you need to get out of the RV, okay? You need to get out of the RV. All right, hold on a second. Hold on, hold on, Chris. Because my friends are beginning to laugh at me about like, what do you do?

I'm not worried about them. I'm not worried about them. I'm just talking about for you to be able to put down some roots. So, Matt, I'm going to ask Chris a question on your behalf. Uh-oh. Yeah. All right. I'm trying to help him here. Come on. All all right you've been giving good advice i got questions all right

are you a sole proprietor matt yes okay doesn't he need to set up like a sep or something in his business and then also personally he can i guess what i'm what's the advice uh for him to get caught up and not completely caught up but the guy's got a lot of money in the bank. He's got a lot of money sitting there. And he's making good money. How does he get the retirement going? Yeah, so it's not growing for him. So for him, he's got an opportunity to be able, as a self-employed person, he can do

a SEP, he can do a solo 401K, he can invest in growth stock mutual funds. So him starting to put some money aside so that it grows for him is going to be huge. What he said was is that at the end of the day, he knows he could sell his equipment, maybe, and get X, Y, and Z. Well, that's the exit strategy. That's not a retirement strategy. So it's important for him as this money is coming in that he's got roots, but he can start to invest money each and every month. So Matt, listen, you're making really good money. So Chris, does he set up a SEP? And then also when he pays himself, so the SEP is what his company will put into retirement for him. That's him doing it. He's going to be doing this himself.

So he can additionally make up some more ground. Yep. You can put aside, listen, with the income you have coming in, you can start to really make some strides, my friend, you know, remaining allergic. Now, listen. Watch this, Ken. Matt, how many vehicles do you own right now outside of the business? I just have my car. I have two work trucks and one car. Okay. All right.

I was going to say, I felt like you were going to tell me you had a truck, a car, maybe a motorcycle. No, I felt like, you know, that 82, it broke my heart to get rid of it. I know. I had a 2013 Mercedes paid for and have to have a car that's worth $900. Matt, how much is your RV worth if you sell it today? Eight grand, maybe ten. Okay. But I want you to do this. I want you to, again, make a decision. Either A, get an apartment, right, or a townhouse or somewhere to live.

Or if you're serious about a house, go ahead and do that. But I want you to get connected with the SmartVestor Pros so you start to lay out an investing plan for you in the future. Glance back, brother, but focus forward. And I mean glance back and look at what happened. And, yeah, the Mercedes, you can get you another one of those, right? And I don't ever want another one. That's good. I don't blame want another one. That's good. I don't blame you.

They're expensive to keep. You can burn one time, brother. You don't have to get burned for once. That's why I love you and Dave, man, because before I even heard of Dave, I was going through this. And then to hear you all telling other people exactly what I'm going through myself, you all are helping a lot of people. Well, I'm going to tell you, you calling in and talking about what you've lived through is also going to help some people. Because we all have to grow forward, my friend, and that's exactly what you've done. And, Matt, listen, be encouraged, man.

What you have come through and you have fixed it and you're back on your way. I mean, he has done a tremendous job. I think, Matt, what you need to hear from Chris is Chris is saying, look, you're not going to do that again. You've experienced that. You've experienced the pain, and you're worried about causing pain for yourself that you know you're never going to do again. So get going forward here. Your best days are still ahead. And hang on the line.

Kelly, let's give him a copy of Chris's book, the number one bestselling book, Everyday Millionaires. There's so much good stuff in there that will just encourage you, because that's where you're heading next, Matt. You are on your way. All right, folks. There's still more of the Dave Ramsey Show coming. Don't move. families all over the country are discovering a faith-based and budget-friendly way of meeting health care costs whether they're anticipated or completely unexpected. For

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visit chministries.org. That's chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. Welcome back to the Dave Ramsey Show. I'm Ken Coleman, joined by Chris Hogan. We are Ramsey Personalities, and we host our own shows on the Ramsey Network. And we're excited to be hosting the Dave Ramsey Show this hour. 888-825-5225 is the phone number. 888-825-5225. Folks, if you're like most of America, you've been driving a lot less this year, and it's probably not by choice. So if you followed the stay-at-home orders earlier this year

and you're still working from home now, obviously you're part of the fact that there are fewer cars on the road. That means there's less risk for your insurance company, which means you might pay a lower premium this month. Some car insurance companies have already started giving credits for about 15% of your premium. Now, if you're confident that you are already paying the lowest price for your coverage, go ahead and take that credit. But if you're not, don't settle for a skimpy $70 of savings. You may be able to save way more by shopping rates. So if you want to see if you can save more, connect with an endorsed local provider or ELP. It's something

that you go, excuse me, the endorsed local provider, our ELPs. And this is something you can do from wherever you are. Shop rates by having the agents, our endorsed local providers, shop for you. Now, most people who work with one of our ELPs save around $700. And after the coronavirus, every penny counts. So if you want someone to shop for you to get you the best rates and save you money, go to DaveRamsey.com slash ELP. That's DaveRamsey.com slash ELP and click on insurance to get started. That's DaveRamsey.com slash ELP. Click on insurance. That's a real chunk right there. Yeah, it really is. Yeah, I mean, it's really important to, again, have the right guidance,

have the right people on your side, so you can start to have a conversation and make the right decisions for yourself and your family. Absolutely. All right, 888-825-5225 is the number. Kate joins us in Breckenridge, Colorado. Kate, how can we help? Hi, Ken and Chris. I just lost my mother a month ago to Alzheimer's. It was a long 10 years. I had to do a lot of caretaking, and I've had to put my career on the side. I'm asking about long-term care insurance after seeing what it does for people.

I'm in my early 50s, and I'm wondering when is a good time to start paying that monthly payment for a long-term care insurance? Yes, ma'am. Kate, first of all, my heart goes out to you and your family for your loss. It sounds like that was a long 10-year period of you, you know, but I want to commend you for serving your mom in the way that you did. Long-term care insurance is something that a lot of people overlook or don't think about. And long-term care can be used for nursing homes, assisted living facilities, adult daycare services, in-home care, even home modifications if you

need to add a ramp or something, railing, as well as care coordination. And so we advise for people to have it in place before your 60th birthday. Okay, that's the time frame. And so, you know, I would advise you, you could reach out and start to get some information now from one of our insurance ELPs. But it's too soon for you to get that in place. I know right now you're shaken from what you've seen. But by age 60 is the time frame we recommend.

Okay. Yeah. And again, you can hear it in your voice. And, you know, it's just a matter of walking through, talking through, and they'll guide you. These are people, these insurance ELPs, Kate, are not people that are salespeople. They have the heart of a teacher. So they're going to talk with you. They're going to guide you.

And you'll be able to look at this. And I hear the motivation in your heart because you don't want your kids to deal with what you just dealt with. Right? And that's called love. And so getting that information, you and your husband can make the decisions for yourself. But 860 is the time frame, young lady. Thank you for calling in. Yeah, and we are hoping for healing there, Kate.

Yeah. And we know that restoration is coming, so sorry that you had to deal with that. But you have done well, and you're in good shape. 888-825-5225. Now we go to the Big Apple, where Joy is on the line. Joy, how can we help? Well, hello. Thank you for taking my call.

Sure. I have a money question. My husband and I are on baby step three of the Dave Ramsey step. And before that, we cleared out some debt. And now we were saving, you know, the emergency fund. We were kind of looking to buy a house in connecticut or pennsylvania probably connecticut because his job has a branch out there out here it's very quite expensive for income we currently make after tithing uh 62

000 uh recently we had took a hit for income recently had a baby, and due to medical emergencies during my pregnancy, we then had to pay about $7,000 of medical bills. So we had to take that out of the emergency fund. So my question is, we are very strict with the 20% of our income to the living expenses, which is why we were looking at Connecticut in the first place. We just found out that in December, our rent is going to go up to $22,000, which is like closer to almost 40%. It was already starting to pinch a little bit.

We do have a one-bedroom. The mortgages we were looking at was $800 to $1,200. We can stay with a one-bedroom. That's fine. We don't mind sharing with our son. But my question is, should we save the money for the down payment now and resume baby step three once we're, you know, in a more cheaper place? Or stay here even though it will be, you know, quite high? Yeah.

I'm going to tell you, Joy, and I want you to take a deep breath, young lady. I know you're nervous and you've got a lot of information you're processing. But here's the deal. I always want to have the long term in mind, meaning I think it's imperative to have that emergency fund in place. If COVID has taught us anything, it's that right now we don't know what's coming. We don't know how long it'll last or how long it'll take to get through it. So having that emergency fund is going to be first and foremost. I think when you guys do get ready, after you get that baby step three in place and you start to move to 3B, you're not living in cheap areas.

So you're talking about Connecticut and New York. You're talking about significant money to get to 10% to 20%. What is your household income right now? After typing a $62,000, we don't mind moving to a deeper area. Right. It's just that the income is going to go up. So Joy, quick question. Joy, when will you get Baby Step 3 fully finished? What's the date? Yeah, so it took a big hit.

We are back down to $1,400. We could probably get there by February. But I'm working from home right now with the baby. My husband is taking on quite different things to supplement our income. However, the lease is up in December. That was my next question. So December of this year is when you're going to be faced with an increase in rent? Yes.

Gotcha. Gotcha. And you said your rent's going to go from how much is it now? So right now it's $1,950. It was under the 30%. We do like to stay at $20, but it was like $25. It's just our income did take a hit. So we had no choice. And then we had a baby.

But now we do have a choice. What will the rent jump to? What will the rent jump to? $2,200. $2,200. Okay. All right. I'm going to tell you.

I mean, you've got a couple of options. The one is looking for cheaper places to live, which might mean going a little bit further out. And then you obviously have to do the math on the cost of the move, right, of that. But again, it's just mindset of doing something. I tell you to make a two-year decision. Make a decision now that you're going to look back on in two years and you're proud that you made it. You know, to move in New York or moving, you know, it's going to be expensive. And I don't like the idea of you guys trying to press forward without having that safety net under you as far as the emergency fund. I mean, that's just the reality, Ken. Yeah, that's right. And, you know, I'll tell people, listen people listen looking to move out further it might be a little bit more of a commute but how much can

you save remember we got to get rid of this and mentality where we want this and that no you got to pick something sometimes yeah and it's going to cost something it could cost time could cost sleep or money pick your cost do it yep moving, by the way, saves money and makes that emergency fund get full quicker. It sure does, buddy. So, I mean, we're winning two ways there. In the monthly budget and we're getting to the baby step three faster. That's the move. And that's a win.

Yep. I like that. Well, listen, Joy, we appreciate the call. And, hey, get your chin up. You've got this. You know what to do. The good questions. And you've got answers. So now you've just. The good questions, and you've got answers.

So now you've just got to do it, and you'll get there. All right, more Dave Ramsey Show. I'm Ken Coleman, joined by Chris Hogan. We are Ramsey Personalities. We both host the very creatively named shows, the Chris Hogan Show and the Ken Coleman Show, as a part of the Ramsey Network, and we are with you this hour on the Dave Ramsey Show.

So excited that you're with us. 888-825-5225. We're talking life. We'll talk money. We'll talk your job. We'll talk career. We'll talk... We might talk football. I don't know. I don't know. I don't know. It might happen.

It would have to make sense in the context of those other things. We would have to work it in very creatively. But I can just say this. We're both a little excited. Yes. It's right around the corner. It is. Boy, listen.

We've got all kinds of football happening. Yep. And coming at us fast and furious. And it might last a week or two yeah but we better take it in i just want to make sure you don't hit me in the hallways i would not get a little amp because i people are watching on youtube they can see body mass index here i'm not gonna win that deal you know what i'm saying all right it's slightly weighted in my direction yeah just a little just a little bit all right let's go to Austin, who joins us in Quincy, Illinois. Austin, how can we help? Hey, guys. How are you doing? Thanks for taking my call, and thanks for

all your work you're doing out there. Well, thank you. What's up? Well, I was hoping to get a little bit of guidance or advice on whether to either invest in some rental properties or just in growth stock mutual funds once we finish up baby step six. So my wife, my wife and I were, uh, we should be done with baby step six by the end of this calendar year. And at that point I'd like to, you know, think about either investing in rental properties or just growth stock mutual funds. Now, personally, I'm in more interested in the rental properties and my wife, she's, she's a little skeptical about it, which I can understand. But I've heard Dave mention on the show that real estate can outperform growth stock mutual funds, but I did not know if that included the time and the hassle and the maintenance that's going to be coming along with

the rental properties. Yeah, that's definitely an additional some factors to take in, right? And, you know, depending upon how many properties or whether you're utilizing a property management company that typically can charge 7% to 10%, it depends. But let me ask you this, Austin. You say invest in. In your real estate scenario, are you getting a mortgage and then finding a renter to pay the mortgage or are you talking about saving up cash

and buying the real estate you know the answer to that well I gotta check Austin don't you get testy with me Austin I'm gonna slow clap for Austin Austin way to throw it back at him. Austin's not playing.

He's on baby step six, man. Well, I know. Austin, all right. He knows the answer. You get the point for that one, all right? But Austin, I asked that, buddy. I asked that because you're absolutely right. Saving up going cash is the way to go.

And here's a thought. You know, you thinking about that, talking about the type and the dollar amount, I think it would be a great opportunity to talk to your wife to help her start to see the options. And here's the thing. Diversify, brother. Save up, pay cash for the real estate, but also do some growth stock mutual funds. And you guys have a great opportunity to be able to look at that. And maybe she's team growth stock mutual fund and you're team real estate.

Either way, you guys are all together, but taking a look to see which one grows which one is outperforming the other but i think you can't go wrong uh either way and i like you being diversified instead of being all in with one all right so austin i'm a man of the people so i'm going to ask a question on your behalf to chris all right so i gotta ask austin a question then i got a question so austin here we go. How long before you're able to, so you get through baby step six, when you get there, I think you said end of the calendar year, how long before you save up enough money to buy that first real estate property in cash? Well, obviously kind of depends on the property I'd be looking at, but I'd probably be looking at the $75,000 range. I think I could have that saved up in four to five years.

Okay. So that's why I asked that question, Chris, because he's looking at a four- to five-year process of saving. Right. And so that's why you gave him the advice. He needs to be doing both. Yeah, absolutely. And so going the route, even though you're at maybe step six, investing that 15% is the thing that you are doing from henceforth and forevermore. Oh, that's right.

And so the saving up for real estate, Austin is going to do that over and above his 15. So a lot of people think, well, once I get to six, I can pull that 15 and start. No, no, no, no, no. Both hands. No, you're still doing the 15%. That's forevermore. Then you start to save and work and get up extra money to save toward real estate for cash. Yeah.

All right. I like it. So, Austin, there you go. The answer is both and. And you're going to save up. It's going to take you four to five years. And now you're rocking. You've been putting your money away in the growth stock mutual funds the entire time.

And you're saving up to buy the house. That's right. Love it. Thank you, Austin. Yeah, thanks for the call. Austin got testy with me. Well, he got testy with me. I feel like you weren't listening to him. He said, I'm almost done with Baby Step 6. And you think, well, he's using Dave's language, and then you're

going to ask him a question like that? First of all, I mean, you deserved it. Here's why I said what I said. A lot of people say investing in real estate, they're talking about taking out a mortgage, Coleman. They're taking out a mortgage and then they have a renter and then the renter doesn't pay, then they've got a situation. I think you're the one

that's testy. I am. I think Austin was just giving it to him. I like Austin. Stop. He's a good guy. You know what? Send Austin my book. Send him a copy of Everyday Millionaire. I'm not mad at him. I respect Austin's feisty.'s a good guy. You know what? Send Austin my book. Send him a copy of Every Day Millionaire. I'm not mad at him. I respect Austin's feisty. So now we're going to give Austin a book.

I like him. He's my friend. There it is. All right, Mary is up next, and she is joining us in Bismarck, North Dakota. Mary, how can we help? Hello, thanks for taking my call. I am just wondering about if I would refinance and rebuy. I'm not really particularly caring for the area that we're living in anymore with just drugs and stuff going on.

We owe $60,000, $696,000 on our home. I have a $7,200 car note and $9,150 for credit cards and a loan. Okay. And what do you think that house is worth right now, Mary? We met with a realtor, and he said $187 to $21000, but there is work that does have to be done. Siding, we've got some cement work that's settling. And he just suggested carpet in our basement because we don't have any carpet down there. Let me ask you this. With the stuff that they suggested that needed to be done before the sale,

give me a dollar range of what you think that might cost. Of what? I'm sorry. Say it again. Deciding the improvements they said needed to be made before you could sell it. How much do you think it would cost based on what the real estate agent told you? I would say, I know the signing is going to be probably about $12,000 to $13,000. I'll put $11,000.

Good. And carpeting, I don't know. I have no idea. I'm just now checking on that type of stuff, and I didn't check anything on the cement. On the cement. So let's say, push come to shove, you may be looking at $20,000 to $22,000. Okay, you still have significant equity. Here's my question. Are you looking to move because you don't like the area, or are you looking to sell to pay off your debt?

No, I don't like the area. Okay, so now what you would do, the next step, because you had the real estate agent come in, the next step is to look in the areas that you think you would move, okay, to find out what are the costs of the homes there. So you've got some equity. I'm looking here. I mean, it could be anywhere from, you know, $120 up to $150 or so in equity. But it's about where are you going to move to, right, that's next.

And so that's what I would do. I like that you've already had the real estate agent come in, give you some ideas. But where are you going to move to? What's the cost of living there, right? And so you can start to look and say, okay, does this make sense for us to do? However, do not do a consolidation. I don't want you to do that using your home. This is just, you would move and then you would attack the debt.

Yeah. Yeah. And you're in a really good situation. I'm sorry. And if I would, I was thinking about refinancing and then doing the improvements and possibly moving in five years? Are you talking about refinancing and getting cash out to do the improvements? Yeah, no. Not to get cash out.

You could refinance just the straight term refinance because you're going to improve your rate. You've been in the home a while. But don't do cash out. Don't get the cash out to do the improvements. That's not good that's what she's talking about no no no no i think you got so much equity you can you can they clear pay your debt off and move to different locations so you've got this mary you can do this thank you so much for the call all right stay with us more of your calls next this is is The Dave Ramsey Show. Welcome back to The dave ramsey show ramsey personalities ken coleman and chris hogan with you this hour 888-825-5225 is the number today's scripture isaiah 40 29 he gives power to the faint

and to him who has no might, he increases strength. Our quote today from Oren Woodward, average leaders raise the bar on themselves. Good leaders raise the bar for others. Great leaders inspire others to raise their own bar. 888-825-5225. Let's go to Brooklyn, New York. Leon joins us there. Leon, how can we help? Yes, good afternoon, Ken

Chris. First of all, my wife loves your show, and I've learned a lot, so thank you for the work that you're doing. Thank you. I need some help here. I need some guidance. I want to buy a home to take advantage of the low interest rates. I need some guidance. I want to buy a home to take advantage of the low interest rates.

I just graduated with my MBA. I've accumulated $202,000 of debt. Wow. Not only that, but I'm married. I have three children, all under five. I recently lost my job. So my wife is the only one that is working right now. And so we're trying to figure out options and just looking for a little guidance here. Well, so guidance specifically what? On how to get out of debt? Because we have Dave Ramsey's baby steps. I mean, what specifically are you looking guidance for? So, sure, sure, Kent.

So I want to find out, should I try to get a home now? No. No. No, not at all. No. No. It shouldn't even be in your mind. Yeah, not at this point.

And here's the reason, Leon. You know how you feel when you did the math and you figured out how much you owed in student loan debt? You remember when you looked at that total number? I did. Okay. What you don't want to do is compound that by adding now the stress of a mortgage. Okay. I've been to Brooklyn several times and you know, the home price is up in that area. So what you guys want to do first and foremost is you've got to get some income coming back in ASAP. And you guys need to map out a plan, a three year plan, uh, maybe three and a half on how you're going to chop this debt and get it out of your life. And I wouldn't even think of home until this was gone. And I know you well chris hold on man i want to i understand but i'm just telling you so you don't become like people i've talked to that have had student loans

hanging around for 15 to 20 years you want to get intentional right now you've got your three kids you said they're all under three under five all under five hey can you imagine that's right and it's okay because there's no law that says kids need to live in a home, right? By the way, they don't care. They want you. And you've got an opportunity in three years to get this out of your life and evict it. How much is the payment on that $202,000? Well, I haven't started to pay it yet just because of the act that recently occurred.

But if I did decide when I do have to start paying, it will be about $1,500 a month. Okay. So imagine you freeing up $1,500 a month. You pay off the student loans. You start to get intentional, get that out of your life, then redirect that $1,500 toward the down payment. My friend, in about four years, you can have a remarkable turnaround and be in a home. What does your wife make right now? What's she bringing home?

Excuse me. Just give me the gross. Sure. $87,000. She's making $87,000. What were you making? I was making $134,000. Okay.

$134,000. I got to tell you, the number one focus right now is if you've got the $1,000 emergency fund, we're going to walk the baby steps out. And if you don't have any other debt, do you have any other debt besides the student loan? No, just a car lease payment that I have. Okay, well, we need to get rid of that, too. What's that cost you? That's about $615 a month. Okay, Leon, listen to me get rid of that, too. What's that cost you? That's about $615 a month. Okay, Leon, listen to me.

Watch out. All right, I'm going to send you Dave's Total Money Makeover book. Now, you need to read it twice. And I want you to look at this thing and go, all right, hold on. I'm going to take control of my future. You know why? You've got three little kids counting on you. Okay. Three

of them. And so we're not going to get caught up with what the Joneses think. We're not worrying about what the neighbors think. I want you all to get very intentional about what it is you're doing and why you got these kids waiting and you've got an incredible opportunity to take them on a journey and that you can have this stuff paid off and they'll never know. You can have it out of your life but leases credit cards one clicks boxes showing up we got to all put that on lock buddy yeah we got to start to tighten the belt and get intentional leon listen i want we're not getting on you but we're trying to be the wake up call okay now listen um you don't need a car in brooklyn you just don't so you got to get out of that lease. You got to figure

out how to get out of that lease. So your focus is you've got to get as close as you can to that $134,000 in income. I understand that COVID is here, your wife's still working, but this is you working as hard as you can, and you're going to have to give up a little bit of time with those kiddos maybe. You're going to have to get after it. Because that lease, we've got to get out of the lease first. That's $600 and some dollars a month that you need that can help really pay down and go towards this gazelle intensity that Chris is talking about. But, man, this is all in right now. You do not need a car in Brooklyn, New York.

Not in 2020, Chris. Yeah, no. You can get anywhere you need to go. Yeah, he's got to get fired up. Right now, he's curious about getting out of debt. And what I was wanting to do was I want him to look at this and really see it and go, no, no, no, I've got to be committed to getting out of debt. And you're right.

That lease, that $615 that could be going toward the student loan. I mean, he could be throwing $2,100 at the student loan. But we've got to change our thinking, guys and gals. And, again, you're going to have to give up something to get something better. You just are. It's true in sports. It's true in life. It's true with money.

And we just have to decide, is it really worth it? Yeah. And while we're at it, you know, when you're looking at a situation like this, Leon and anybody else, you know what? If your wife is working in Brooklyn or in Manhattan, then we took a caller earlier in the show. Got to move. Got to get out of the city where we can lower our cost. That's found money. No, it is, and that's an option, but people don't like to think of that, Ken.

Well, but I don't care. You tell me. I'm feisty. Well, I'm just saying you've got to think about every area of your life where you sacrifice. It's not just income. It's also cutting stuff so that you go, all right, we're going to sacrifice now. These little kids, they just love mom and dad. That's right.

They don't care. They don't know how. I used to think my first house was monstrous. I went back and saw it when I was in my early 30s, and I was like, we lived in that? This is the same house you're telling me that we got pictures. It was like a postage stamp on cinder blocks. Not to you in the day. But I thought it was huge. And those little ones, they don't care. And so, Leon, I know as a husband and a father, you want to provide, and I know you want to be further along, and

that's what you're trying. You're trying to figure out, how do I provide this nice house while I dig myself out? Well, guess what? You're trying. You're trying to figure out, how do I provide this nice house while I dig myself out? Well, guess what? You can't. You just can't. You can't do the house and dig yourself out. And that doesn't make you less of a man, Elon. Not at all.

It doesn't make you less of a husband, and it doesn't make you less of a father. Let me tell you what makes you a great man and a great husband and a great father, is leading your wife through this storm, this debt, and you can get out of it. So hang on the line. Kelly, Chris gave him a total money makeover. I'd really like to put him in Ramsey Plus, since we're giving stuff away. This is our subscription program where he's going to get FPU, Financial Peace University,

all of the classes. You're going to get our world-class budgeting app, EveryDollar, which is a game changer, Leon. And then you're going to get the tracking device. Really, it's an app, and it's called the Baby Step Tracker. And so it's going to really give you a scoreboard. And here's what I love most for him, Ken. It's going to give him community. He's going to get plugged in there and he's going to be able to get connected. He can go get connected in the Baby Steps community, Facebook group right now, or hop over to my Everyday Millionaire Facebook group. They're in there 18 to 80. Love to connect with you and have fun. Yeah, good stuff. And he can do it. And folks, if there's many of you right now

that are listening, you're going, man, I feel like i'm in the same situation the details are different that's right but i'm in the same situation and you know this is not your sentence this is your situation there's a big difference oh i like that get out of this yes you've got to believe that there's a way and we've given you away so hey chris hogart thanks man dude it was a pleasure hanging out always fun yes being with you here on the Dave Ramsey Show. I want to thank our producer, James Childs, our associate producer, Kelly Daniel. But most importantly, I want to thank you, America. This is the Dave Ramsey Show.

Once again, you made The Dave Ramsey Show one of the top four most popular podcasts last year. To get your daily dose of motivation and inspiration from the Ramsey Network, subscribe or follow today wherever you listen to podcasts.