The Ramsey Show - App - Should I Pay My Kids to Do Their Homework? (Hour 1)

Episode Date: February 7, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is a free place to call, and some say the advice is worth what you pay for it. The phone number is 888-825-5225. That's 888-825-5225. Kenan starts off this hour in Ames, Iowa.

Hi, Kenan. How are you? I'm doing great, Dave. How about you? Better than I deserve. How can I help? Hey, I've heard you talk multiple times about being up front about what's in your will while you're still alive. So it's not a surprise later. Right.

Most commonly when you talk about that, you're talking about, or you use an example, talking about an older person with their adult kids and all that. My wife and I are in our early thirties. We have young children under six. We just got our will set up about a year ago. And as part of that, we realized we have one side of the family with whom we're very comfortable leaving them in charge of things for our kids if we were to both die, and one side of our family in which we're not very comfortable with any of that. And I want to talk about it with the side of the family that is being cut out, per se. My wife does not, and we talked with the rest of, it's my family that we would be leaving them with.

We talked with the rest of my family, and all of them said the same thing, don't do it. I'm looking for your thoughts. Is there anything else we should be considering with this? They basically thought it would be starting a fight that doesn't need to be started there's gonna be a fight yeah might as well to do it while you're alive yeah because her family's a bunch of yahoos man and they're the ones that are going to take your family into court and try to, I'm going to get the kids. There'll be a hillbilly hoedown, man. Yeah. I'm sorry, dude, but I mean,

do you want your relatives all drug into court by her crazy family? Exactly, no. This is what's going to happen. You know, everybody else here just doesn't want to do conflict, that's all it is. But there's a conflict coming, and it's going to be a bigger one after

you're dead right and i won't and we wouldn't be there to be a part of it and help exactly hold the middle ground exactly no it's hey it's you got to remind everybody here this is my money hello this is my kids the rest of you people don't get to have an opinion or if you have one it doesn't matter you don't get a vote in this yeah and i'm being sarcastic and bombastic but you wouldn't ever talk to your family our family actually that way but you know i'm not going to be intimidated by their reaction without doing about not doing the right thing i'm just going to say hey we talked about it this is going to be handling the kiddos what about um since it's my wife's family, I would assume I should probably not be the person to break the news,

at least not the principal person to break the news, and my wife doesn't want to do it. Do we just keep talking about it between ourselves and hope we come around to that? Well, I mean, your wife has to agree to do this before you do it. You're not going to violate that. That's an argument between you and your wife. Right.

And the two of you have got to settle on that. She doesn't want to do it because she doesn't want to deal with a conflict. Yeah, and there's a whole lot of toxicity on that side already with other life decisions we're making with getting out of debt and all that kind of stuff. It's fun. Yeah. I's not unless someone's ill there's not an emergency right but it's just bad practice to allow the intimidation of the toxicity to set the tone yep and that's what's going on and so you know um so you know it may take a little while and it might be if the you know like if she just opens her mouth and her mother opens her mouth at the

same time that automatically there's a fight if that's the case maybe you're the one that leads the conversation if there's a if there's just a bad script between her and her mom and dad, for instance, okay? Siblings are even less of a concern, but it's her mom and dad. And so if there's just a bad script there, it might be that you're seen as the level-headed one from the outside. You might be the evil one from the outside. I don't know what you are. I'm the evil one.

Oh, are you? Okay. I'm the controlling husband that wants to make his wife sell everything so we can get out of debt it's like no this is okay 100 on board together with this this is okay her thing well i mean you might just play that on out going i'm also the controlling husband that's already figured out our will and the kids are going to the other side might as well just be if you're gonna be controlling you might as well do it from the grave right yeah oh this is i'm sorry this is such a hard thing i'm poking around it but we all have this stuff or most people do in their family most people have crazy right up in their face and so um it's hard but i really think that her parents, if they're that toxic, will give your parents or your brother and sister or whoever it is a hard time.

And it might cost them a lot of legal fees. Yeah, or just a whole lot of grudge that our kids would be getting a whole lot of under-the-table, under-their-breath talk type of thing. They may get that anyway. They may get that anyway. You may not be able to stop that but um but but you know the good news is is that hopefully it never happens that you guys right you know you live until your kids are not minors and those kinds of things right but um you know i i think that's just a decision you and your wife have to make together it's it's ill-advised to not bring everyone into the loop because the other person that feels uh shorted in the thing especially people that are

this toxic have a tendency to go legal on you and it just ate you could eat up everything and because they feel righteous in their fight for your kids. You know? Yeah. They write this script out where everyone else is evil and they're the righteous ones. And that's where these people go to extremes. And so I don't know. It's up to you.

The more crazy it is, though, the more I think you ought to do it. So I think you and your wife just keep talking about it, though. And if your wife doesn't want to handle it and you want to just go ahead and be the bad guy, you can just be the kind bad guy and just go, guys, I don't really want to have this conversation, but I feel like I need to. So I'm going to go ahead and tell you what's going on. And just so you know, and it's a quick thing, it's really not asking. We're not taking a vote here. I'm just kind of telling you what's going on. We've laid out our wills and everything. And should something happen to us, our wills are ironclad. Our lawyer says they cannot be broken, and here's what our wishes are, and here's what's going to happen with the kids.

Hey, we love you guys, and we hope everything gets a little better with you all and that you can quit talking trash at us all the time. But if you can't, it's going to be up to you. I mean, but I just want to let you know the whole thing. And you could just have that conversation, but you don't want to do that without your wife being on board. But if you're already in the bad guy's seat, I guess you can just take the seat and run with it. You know, it's just, man, some of these people. Some people's children. There you go.

You know, it's unbelievable. Thanks for the call. I appreciate you joining us. Pick up the book Boundaries and give it a good read. Henry Cloud's famous life lessons book. For all of you that think you're crazy because your family is, Boundaries is a great book. It's a great book. Oh my gosh. It's everywhere, y'all. I mean, if you don't think there's crazy in your family, it's probably you. Most families got a little in it, right?

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Connor is with us in Pensacola, Florida. Hi, Connor. How are you? I'm doing well. How are you, Dave? Better than I deserve. What's up? Hey, so I'm 22 years old. I graduate in May. And within the next four months, I'm going to be making $75K a year. Good for you. But I'll be living at home with minimal expenses, about $150 a month.

And right now I have around $32,000 in student loan debt. What is your degree in? Electrical engineering. Way to go. Why are you going to live at home? I got a job near my house. It's at Eglin Air Force Base in Knightsville. Yeah.

So why are you going to live at home? To save as much money as I can. Just for now, I'll live at home for maybe a year or so and then probably move out and start renting, uh, before I save up for my, uh, three to six months emergency fund and, uh, at least 10, preferably 20% down payment. Um, so right now my parents are suggesting that, well, my, my, my route is going, going $2,400 a month towards my student loan debt and getting it out of the way initially. And not investing in 401ks, not doing anything, just attacking it as hard as I can. That's what I teach.

But my parents, they said that I should at least try and get started on my 401k. I disagree. They're wrong. I understand their perspective listen i've taught more people to get out of debt than their parents have all due respect to them uh that's fine i would not do that i would completely concentrate on student loan debt you're freaking making 75 000 a year you need to pay off your student loan debt as soon as possible it is the biggest blockade between you and your future. Right, and that's what I was trying to tell them. And my friend's parents as well, they said, you should contribute your full match so you can get 5% on your 401K.

You need to grow that as soon as possible. These people are all multimillionaires, I guess. No, they're not. Okay, so why is it we're taking their financial advice? Well, I just wanted to get as many perspectives as I can. Well, you can do that if you want. You can do that if you want. But if you ask broke people how to handle your money, you're not smart.

Right. Well, I mean, both my parents are very well off, and my friend's parents are also very well off. They make over $150K a year. So I think they know how to manage their money. So I like to seek their advice. But at the same time, I've been watching your shows for a while, and initially it's counterintuitive, but in the long run it makes sense financially.

So that's why I think I should attack my debt first, first and foremost, and worry about my 401K. And I'll go a step further. You shouldn't live at home more than three months. You make $75,000 a year, young man. Go get you a rental property. Move in a rental. Get yourself on a budget.

Establish yourself as an adult. Pay off your student loan debt. Build your emergency fund. Save up a down payment for a house. And you can do all of that within about 18 months of coming out of school. You've gotten a fabulous job, great career field, and establish yourself. Don't home like a like somebody that has to you know like 75 000 a year don't live in mommy's house i mean really you can live there for a little while until you get yourself settled in a couple three months or something but go get your rental problem go get your rental

i wouldn't live there and um i think you'll i think you'll establish yourself emotionally at a much higher plane spiritually at a much higher plane, spiritually at a much higher plane if you do that, and it'll result in a better financial situation. You do whatever you want. You're gathering perspectives. Now you've gotten mine. Miranda is with us in Dallas, Texas.

Hi, Miranda. How are you? Hi, I'm good. How are you? Better than I deserve. What's up? Well, me and my husband have about $25,000 in debt with a car and his fed loan. A car and what? A fed loan.

Fed loan? Yeah. School loan. Oh, okay. All right. Sorry. It's okay. And right now I'm the only one working, and I make around $28,000 a year.

And my dad, he passed away, and he left me some money, and I have $11,000 on a CD. And we was wanting to know if we should cash that out and pay towards our student loans. Okay. How much is the student loan debt? Just the student loan is $76.93. Okay. How much is the student loan debt? Just the student loan is $76.93. Okay.

And so the car is how much owed? $13,000. Okay. All right. And why is he not working? He was going to school full-time, but he's going to be working in the next couple months. Oh, good. All right. Yeah. Good. time but um he's going to be working in the next couple months oh good all right yeah good so um yeah i mean make sure you hold a thousand dollars for your beginner starter emergency fund i'd pay

the student loan off and a portion of the car off and then let's start working very aggressively to get the car paid off as soon as possible and of course when he comes out of school and starts making some money to add to this it's going going to go much faster, and then you'll build your emergency fund and walk right up those baby steps that we talk about here every day. That's exactly what I would do. Tori is on the line in Kansas City. Hi, Tori. How are you?

Hi, I'm doing well. How are you? Better than I deserve. What's up? Great. I have a question. I've read your Smart Money, Smart Kids book, and I've gone through the class, and I was just wondering, should we pay for, like, homework and piano lessons

and, you know, doing well at sports and that kind of stuff? I don't want to make him any more entitled than he already kind of acts like he is. He's seven years old. That's why I... Okay. Is he playing sports against his will no no no why would you have to pay him that's for him to have fun well and that's true that was just an example okay a poor example so mainly i'm just trying to understand that's one i haven't

heard some people pay for grades um at school, and some don't. I don't really have a strong opinion about it one way or the other as far as that goes. The thing you want to think about here is what message are you sending? There are some things you had to do when our kids were growing up just to stay alive because Dad would take you out. Right. Okay? There's some things you just do because, okay? You know, you don't get, uh, you don't

get us, you don't get paid for not talking back to your mother. You just get to stay alive and that kind of stuff. So, you know, that, that kind of thing, right. You get, you don't get paid for helping mom with something, you know, that kind of thing. So, but, but other things I did want to create some teachable moments. So all sarcasm aside, some things we did just because they're the right thing to do. And you're part of the family. Some things we did just because they're the right thing to do and you're part of the family. Some things we did to create a teachable moment, and we called those work, and we paid commission on those. At the Ramseys, we did not pay for grades, but I don't think if someone pays so much for an A, so much for a B, that they're a bad parent or that that's necessarily a bad thing.

We just didn't do it. Neither one of us grew up doing that, and thing we just didn't do it neither one of us grew up doing that and so we just didn't do that um and i think probably i would not pay for just i'm just i don't have a big strong opinion about i'm for sure i'm not going to pay them to play sports um if piano is a push and you're trying to talk them into it maybe i don't know maybe but you're already paying for piano so that he gets the benefit of it you're trying to talk them into it, maybe. I don't know, maybe. But you're already paying for piano so that he gets the benefit of it. You're paying for the lesson. Right. So I don't think I would pay for homework.

If you're going to pay for anything, it might be the grade that the homework is a result of. But, I mean, you have to bathe. You have to brush your teeth. You have to have manners. These are not things you get paid for. You're doing them because I'm teaching you how to be an adult later and if you don't have teeth and your stink you won't be able to leave my home and i want you to leave someday so um and and you know find a pretty girl and get married or you know that kind of stuff right so that kind of it's the basic stuff

so some of it's just life skills that we're teaching. And we certainly wanted to not pay for everything because we didn't want to turn every behavior issue into a union negotiation, right? But we did want to have some things that we paid for. With our kids, it was only like five things. And you just got a commission rather than allowance. And then when you got paid for beating the dog or cleaning your room or something like that, you know, mowing the grass, whatever it is, then you had to break that money into three categories. Give some, live some, in other words, spend it and save some. Always give, save, spend. Give, save, spend. Give, save, spend.

Always, always do that. And so just, you know, you don't have to overthink it. But always do think about what message you're sending. Like, you know, what are you trying to teach here? Because it's not really about the money. It's the lesson and that kind of thing. So good question. Thanks for joining us. This is the Dave Ramsey Show. I love talking about companies that know how to do business right.

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that never fit right and created the perfect belt a high quality minimalist belt that gives the strength and support of a belt without even knowing you're wearing one. I'm really proud of these guys. Check out this month's special offers from Cheyenne, Wyoming is with us. Hey, how are you? Hey, Dave. I am truly better than I deserve. Cool. Welcome.

How can I help? Thanks. So I'm wondering, after you're completely debt-free, how do you determine what a reasonable amount of money is to spend on fun things like vacations, upgrading cars, and eating out, that kind of thing? Cool. Well, there's three things you can do with money. You can give it, you can invest it, and you can spend it. Once you're 100% debt-free and you're in baby steps 3, 4, 5, right up in there, you're investing money and you've got your emergency fund in place. Until you have your emergency fund in place and you're debt-free other than your home,

you need to really focus on those things. But once you're there, which is kind of what you're asking, then how do we balance out the investing, the giving, and the fund? And the problem is there's always a limiting factor, meaning the more you give, the less you've got to invest. The more you spend, the less you've got to give or invest, right? Anytime you take from one of these buckets, I mean you take too much from one of these buckets, it limits the other bucket. So to do zero of any of those three is a bad idea.

Zero giving, zero investing, or zero fun once you're after baby step three. So you want to have some of each. And then you just start asking yourself your question. And there's not a wrong answer, really, is which of these do I want to do more of? The more fun you have, the stuff you're talking about, the less you're going to be able to invest and the less fun you're going to be able to have later because you're not going to have as much money you know and uh so uh and the more you give the less you're going to have to invest and the more fun you have the less you have to give which is more fun really but so it's kind of but uh so i think you just do that you sit down and look at it we look at it around our house on

ratios and so we say if we've got a thousand dollars laying here how much what percentage of that do we want to live spend on fun what percentage do we want to give and what percentage do we want to invest and um you know at baby step four i got you putting 15 into investments right yes if you've heard the baby steps So that one's kind of locked in. Anything above that can go towards either paying off the house early or increased giving or increased fun and those kinds of things. But let's just say you are driving a horrible old beater that's got 500 million miles on it. You just finished your baby step three. You're probably not going to start investing for a few minutes. You're probably going to save up and get you a little better car.

It's time to do that. Or you've got a couch with a spring sticking through it, you know, that kind of thing. You probably need to stop and buy you a couch right then once you get past baby step three. But if you just keep spending everything, you're going to retire broke, and you're never going to give. So you're going to retire broke and bitter because people that don't give end up bitter so you just got to be touching all three bases over the scope of time sometimes for a period of time i'm heavy on investing or i'm heavy on fun or i'm heavy on giving and then i may come back and but i always am doing something in all three of those buckets as we go past baby

step three and you just got to gauge it and say you know i can do this this one time i'm gonna stop and get this car bought i need to buy a car or i want to buy a better car either one's fine want or need um but then next year i'm going to concentrate on investing and by the time i get to christmas i'm going to do some big giving by the time i get to christmas and you just start working that into your budget and your plan so that you keep all three things in your sights, but you kind of let one come and one go, and another one come and another one go, and just kind of keep moving them around.

But if you'll keep the investing going steady at at least 15%, you'll become a millionaire, and then that opens up the ability to live off of your investments and really, really do some very cool things with giving and fun, both. Along the path, the millionaires that we study, they have fun. They go on vacation. They buy cars. They just don't buy a brand-new $60,000 car.

They buy a used $20,000 car, you know, and they pay cash for it, and they don't run up their credit cards being irresponsible and impulsive. You know, they don't have any credit card debt and and so that gives them the room to continue to invest see what i'm saying so it's it's some of everything some of everything all the time is that logical does that what what is your particular thing you're wanting to buy um so we're wanting to go on vacation and spend about four thousand dollars later this year okay and then my husband also wants to update his truck so we want to put about an additional $20,000 on top of his $9,000. And you're at Baby Step 3 or beyond?

We're on Baby Step 6. Six. Okay, yeah. So you're putting 15% in. Yes. And above that, you've got the money to do these other things. Yes, sir, we do. Do them.

Thank you. That's exactly what I'm talking about. That fits in with the conversation we were just having. Absolutely. Okay, perfect. Well done. What do you guys do for a living? We're both active duty military.

Oh, cool. Which branch? Air Force. Oh, wow. Well, thank you for your service. Thank you, Dave. Very cool. I'm glad you're winning. Baby Step Sixer. Good for you. Awesome. Well done. Thank you for calling in. Or coming by, rather. Open phones at 888-825-5225. Tracy's in

Pennsylvania. Hi, Tracy. How are you? Hi,25. Tracy's in Pennsylvania. Hi, Tracy. How are you? Hi, Dave. I am very blessed. Thank you so much for taking my call. Certainly. How can I help?

Well, I have inherited some money from my grandfather, and my husband and I are trying to decide if we should pay off our home mortgage or pay off our three rental properties. We have no other debt other than those mortgages. And after tithing, we have about $168,000 to work with. We owe $98,000 on our home. And then we owe, let's see, about $156,000 on our three rental properties. Gotcha. And what's your household income? About $70,000. Okay. And you are debt-free other than this?

Yes. And you have your emergency fund other than this? Yep. And you're putting money away for retirement other than this? Yes, we are. Very good. Very well done. very well done love it love it love it love it so you have three rentals with 156 yes break those down for me uh we have a house that is the loan is 20 about 27 000 that we still owe a house that we owe $42,000 on, and then we have a four-unit apartment building we owe $87,000 on.

Pay off everything but the apartment. Okay. I think I did that right. I think I did that right. Let's see, 98 and 42 is 130. Yeah, I did do that right. Yeah. Okay.

Yeah, you can pay off everything but the apartment. Yeah, and then you use the increased cash flow by having no house payment and the other two properties having no debt, and you turn and point all of that cash flow at that 87 and knock it out in two years. Awesome. That sounds great. Yeah, that's what I would do. Here's the thing.

Here's what happens. There's two things running through my head, and here's how I answered that. All right? The first thing is when your home is paid off, the borrower is slave to the lender, your world changes. You feel it emotionally, spiritually, relationally. Take your shoes off, walk through the backyard, the grass feels different under your feet. It's more than just math, okay?

It's like, dadgum, nobody's taking my house. You know? Because I've done detailed research. 100% of the foreclosures occur on a home with a mortgage. Okay. You know, you're not going to get foreclosed. No matter what happens, it's mine. You know, the second thing that went through my head was,

you said your grandfather passed away, didn't you? Yes. Yeah. How long ago? A year and a half. Okay. And he obviously had done well with money. Yes.

He was wise. Yes, very. And I always ask myself with an inheritance, what is going to make him sitting up there in heaven, look down at his granddaughter Tracy and smile when she does X or does Y? When you pay off your house, your grandpa's smiling, isn't he? Yes, absolutely. More than paying off an apartment.

Right, you're right. And that's the other thing. That's the other test I use in my head because I want to honor the person who left me the inheritance by doing something they would have been happy I did, you know? Yeah. And that means, in your grandfather's case, wise. And so this is very wise.

And then thirdly, we're freeing up cash flow and we're lowering risk overall, and you're going to knock that apartment out in no time. And you guys have done so well. And this is like your extra booster here. I mean, you just got the boost into overcharge overdrive you get to go wide open now so good so good such a good job i get it all paid off and when you get it all paid off and start saving up and pay cash for all your future rentals never do any debt again once you get there you're doing great this is the dave ramsey show Great. This is The Dave Ramsey Show, Kyle. Hey, Dave. Kyle is with us in Nashville.

Welcome to the Dave Ramsey Show, Kyle. Hey, Dave. Great to talk to you. You too. Quick question. Okay. Thank you. Quick question.

So my wife and I have a 10-month-old at home, and we're looking to set up a 529 for her. And I was wondering how your investment advice when selecting the mutual funds within that 529 would compare to the advice that you give for retirement. We follow your advice of the four types of mutual funds for our retirement. So would you go about that the same way within that 529, splitting it up between growth, aggressive growth, international, et cetera? Or would you go with the more target or age-based approach that are that's out there based on her uh one-year-old age at this time i never do the target or age-based for anything because i don't want you on automatic pilot i want you looking at stuff every year and all the time

because you've got a 20-year window yes i would do the four types growth growth and income aggressive growth and international across those four that's what i did for my children as a matter of fact when they were growing up um and uh uh later on as i got closer i started moving some of that money around a little bit but not a ton i didn't get super conservative with it um but i just i started moving it as you get you know 18 17 18 years old you may want to move some of it toward cash and you can do target age-based if you want to but i would not ever put it on autopilot to do that and because i'll just tell you a hundred percent of those target-based ideas are more conservative than you should be. They're all in freak-out mode.

And it's just not necessary. It's not like we're taking big risk here. There's not some big, huge variable here. But they're all scared to death of their own shadow and scared to death of the regulators and everything else. And it's really not that big a deal. So I'm spreading it across the board like you're talking about, and that's exactly what I would do. Thanks for the call.

Mary's in Syracuse. Hi, Mary. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you so much for taking my call. Sure. What's up? My question is that I am facing a potential layoff between now and the end of the year.

And although my husband and I, I feel have a pretty good snowball effect going on. Um, I don't know, like if I lose my job, I've already done the math, like based on making minimum payments and keeping the roof over our head, um, we would technically be in the hole about $700 on just my husband's income. So then I had the thought that maybe I should take a loan from my 401k now to pay off some debt. Then, you know, should I get laid off? Oh, that's a horrible idea.

That's a horrible idea. Here's why. If you get laid off, that loan becomes called due in full instantly. If you don't pay it, you're going to get penalized and taxed as if you'd done an early withdrawal. Never, never, never borrow on a 401k. No. You can't borrow your way out of debt, kiddo. It doesn't work.

No, and I know it was like paying debt with debt. That's why I didn't think it was a good idea. It's a bad idea, a double bad idea, because borrowing a 401K is a bad idea on top of that. So anyway, what I would do is this. Okay, we've got storm clouds on the horizon. It may rain is what you're saying. And so what do we do? At the point that you think that it's 50-50, a 50% chance, realistically, it's a flip of a coin as to whether you're going to

get laid off i would just stop your debt snowball and pile up cash okay just stop it's going to be my next idea is because we do have about six thousand in savings right now well you're not doing it right then what we teach you what we teach you to do is have $1,000 in savings. How much debt do you have? Right. I just actually came across you three weeks ago. I'm still listening to all the podcasts. Okay. What we teach is baby step one is $1,000. Anything above that that is not in retirement, any kind of investments or savings above that, goes on your debts in Baby Step 2. All of your debts except your home are Baby Step 2 listed smallest to largest and attacked in that order.

Minimum payments on everything but the little one, and in this case, $5,000. Anything else you can squeeze out of your budget goes on the little one. That is if you don't think you're at 50 50 on the uh work on the work loss right now is it just a general vague fear or you think you're 50 50 um i don't i think i got a few months to go um no i wouldn't want to ask i'm asking if if there's a 50 chance at the end of the year you don't have a job yes i guess there's a 50 chance i will be without a job by the end of the year, you don't have a job. Yes, there's a 50% chance I will be without a job by the end of the year. So you're pretty sure you're not going to have a job? I'm pretty sure because I work in finance and everything is going to be outsourced.

Okay. Then you need to stop everything. Don't pay down on your debt. Don't take the $5,000 out that I was talking about. Don't start the baby steps. Stop all 401k investing. Stop any investing of any kind, and just pile up cash to get ready for the storm. After the storm passes, which means after you get your new job, and by the way, I'm

looking for that job now. If you're that sure you're going to lose your job, get a new job. Okay. Don't sit around and wait on them to shoot you in the face, you know. Dodge the bullet, right? Get out of there. Okay. They pretty much told you you're gone.

So let's just not be in denial. Go get a new job. Okay. So once this storm has passed and you've got things stable again then i would walk you up those baby steps but in the meantime i want you to have a really nice rainy day fund a really nice umbrella let's add to that six thousand let's get that six six thousand up to twenty thousand and um and but now if you get a new job and you get stabilized in that job then we start and we take any money that you've saved up and we throw it at those debts.

How much debt do you have not counting your house? Well, we rent, so we don't have a mortgage. So it's debt between me and my husband. Altogether we have $174,000 in debt, $135,000 as his student loan. Good Lord. To earn an income statement plan. What does he do? He's a teacher.

A teacher for $135,000? He's a teacher. He's got two bachelors and a master's, and he's been searching like crazy for trying to get a teaching position. And this year is the first year he hasn't had to be a substitute teacher, but the school he works for only pays $18,000 a year with no benefit. This is a series of bad choices. If you're going to spend $135,000 on your education,

you need to go find something to do to make more than $18,000. That's an unacceptable career path given the debt you've got. He gave up his rights to decide to do something that cheap. He needs to go make some more money than that. Can he teach at the collegiate level with his masters? He's looked to get into, like, teaching as an adjunct teacher at colleges. Yeah. Scooters on the side.

Like, he's, you know, searching hard. the side like he's you know searching hard is just i don't know what it is with this area in new york but schools are not replacing teachers as they retire well if you're talking about teaching in in high school or below k through 12 uh he's got too much education and too much debt to take that job. He's going to have to make more than that. No, I agree. $135,000? Oh, my gosh.

How much do you guys owe on your cars? His car is paid off, and I owe $3,000 on mine. Okay. Cars aren't your problem, then. What's the rest of that debt? We have a personal loan, and we have a couple credit cards, and then I have student loan debt. Okay. All right. Cool. All right. Yeah, you're looking for a job, he's looking for a job, and you pile up cash right now.

Stop all investing. Pile up cash. You have a mess on your hands, and you're right. You can't cut through this if you lose this job. So you need to be finding a new job given that yours is that unstable. And, of course, he's got to continue to pursue a career that makes a lot more than $18,000 a year. And if both of you are looking and there's no teaching positions in the area that pay more than $18,000, you may need to be looking in a different town, a different area. You may need to look at a move to get your guys out of this mess. I mean, you have a real serious student loan problem here,

and you have to address that with income is the only way to do it. So, hey, hang on. I'm going to send you a copy of the book, The Total Money Makeover, to help you with this process. And you call me back if I can help you some more, okay? This is The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry.

We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.