The Ramsey Show - App - Should I Pay Off My House Right Now? (Hour 1)

Episode Date: December 30, 2022

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving and storage studios. This is the Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, joined today by bestselling author and fellow Ramsey personality, Christina Ellis. And we are taking your calls about life, money, budgeting, debt, credit scores, credit cards, how to get out of them, what to do. Instead, we are here for you, America.

The number to call is 888-825-5225. That's 888-825-5225. You know, Christine, I get a lot of questions via Instagram, and they're usually like, it starts like, hey, I got a question, and it's 17 paragraphs. So I want to let all of those people know, call into the show, because it's really hard. It's like having a full-on conversation via text. It just takes too long. So call us up instead, and we can help you that way. It's a good call. Yes, and Gia has done that. We appreciate that. In Lincoln, Nebraska, starting us off. Welcome to the show, Gia.

Thanks so much, guys. How can we help today? So my husband and I are trying to find out. We are 25 and 30 years old. We don't have any debt besides our house. We have about $30,700 less. And currently in the bank, we have somewhere around $28,000 to $29,000 in savings all combined. All of that's just liquid cash. So we're trying to

decide after our paychecks next month, we would have more than the 30, like we would have enough to pay off our house. So we're trying to decide, should we just go ahead and pay it off and be done and basically just put that extra money that we've been putting towards our house, basically just paying ourselves back and replenishing that savings? Or should we just keep plugging away on the current plan that we have? Is the 30,000 that you have in the bank, is that your emergency fund or is that money separate from your emergency fund? That is emergency fund included. So we have the $1,000 emergency fund and then we have $18,000 for the three to six month. Okay. So my short answer is no. And the longer answer is no. And here's why. Murphy is going to be knocking at your door as soon as you pay that house off,

and the HVAC is going to go out, and then you're going to be broke and have to go into debt to fix it. And so I don't like the idea of you guys draining your emergency fund in order to pay the house off. Now, I know where it's coming from. You guys are so excited, and you see the numbers, and you go, oh my gosh, you see the light at the end of the tunnel. Is that what you're feeling? It's a little bit of that. And it's also just a little bit like I looked at the insurance, like not the insurance, the interest that we're paying every month on the house. And I'm like, well, we could just knock it off. And then instead of putting that, like the extra money that we were putting towards the house and all of that,

we basically would give ourselves like a $2,300 pay raise in a sense, because instead of that extra $2,300 just going to the principal every month, it would just go back in our bank account without the interest payment on top of that. Well, I love that you're seeing that interest and you're going, man, I want to knock that out because a lot of people, you know, they go, that's not a whole lot, like let's just keep pushing off the mortgage. But the fact that you're seeing that and going, nah, I want to knock that out. Because a lot of people, they go, that's not a whole lot. Let's just keep pushing off the mortgage. But the fact that you're seeing that and going, nah, we want to pay this off, that is great motivation. But as somebody who has had an HVAC and a transmission go out in the same month, I would definitely want to keep that emergency fund. Because like George said, Murphy will hit when you least expect him. And if you

only have that $1,000 in your emergency fund, that's great when you're in baby step two. But when you can have that flexibility to have that emergency fund for those type of major issues, it's definitely a lot more comforting and keeps you a lot safer. Yeah. Gia, are you both working outside of the home? Is there two incomes? Yes. And are they stable? We have a double. Yes. They are both stable. I'm a registered nurse and then my husband works for a furniture company and then actually within the next the next year starting in september we're looking to actually send him back for hvac and palming awesome to go back to school well we can split the difference here what you could do is go down to a three month level emergency fund

and use the rest to pay off the house sooner but that is as low as I would go since you both have stable incomes. So I would do the math on that and go, okay, what's three months of expenses to cover everything that we have on our budget? And whatever's left, we can use that plus our future income and savings to pay off the house in the next few months instead of six months or whatever it would have been. So how much faster would that get you guys completely debt-free if you went down debt-free?

If you went down to three months. So 18, so it'd be 18,000 added. So that'd probably take us like the next, we would be debt-free probably in the next six months. But my job, I'm actually going from part-time to full-time and I'm not a hundred percent% sure what my paychecks are going to be completely because I get paid hourly and not salary. So probably more like four or five months. I know I'll be going, yeah, so probably something more like that. I just don't know for sure. I haven't been able to get the numbers concrete yet because I haven't gotten that first paycheck yet. Yeah.

Well, just listen to that. You're 25 and 30 years old, and in four months, you have a fully paid for house. So you guys are just so driven. And I love that. But sometimes with people who are driven, like Christina and I are the same way. And we're like, we just want to see it gone. We'll do whatever it takes. That can cause us to make some poor decisions along the way. And so just have your eye on the prize four or five months from now, that mortgage is going to be gone and we're still going to have a fully funded emergency fund and have that financial piece. That's good stuff. That's going to feel so good. And I hope you all come to Nashville and see us. I want to hear you on the stage. I'm excited to hear more about your journey because the way

you're motivated, the way you all have fought through this and the fact that you only have $30,000 left and you're 25 and 30, that's so exciting. So I want to hear more about this story and how you got there because that's just awesome. And Christina, we've been seeing an awesome trend where we have people in their 20s and early 30s doing debt-free scrims saying we paid off our house. Yes. And a lot of those are what we call financial peace babies, meaning their parents went through financial peace and they raised their kids in such a way to give them good money principles. And they latch onto to this stuff so much earlier. And so we see people graduating college debt free.

I hear so many people that come visit us on the stage and they whisper, yeah, we actually sent all four kids to college debt free because of you guys. And we're like, we did nothing. Yeah. Or they're kids who went through foundations, our personal finance curriculum for high school students. I see a lot of students who, you know, they went through it in high school. They learned all the things that we wished we would have learned in high school. You know, when I talk to adults, they're constantly like, why didn't we learn about basic budgeting when we were in high school? Well, these kids are doing that. And then they're getting out of high school and they're starting out the right way. They're getting that debt-free

degree and they're immediately putting together an emergency fund and paying off houses at like 21 and 22, which is incredible. And we also hear people who are in their 40s, 50s, 60s going, gosh, I wish I knew this stuff 20, 30 years ago. And the beautiful thing is, parents, you can give that to your children. And it is your responsibility to teach them these money principles. Because guess what? Culture is not. Social media is not. And what happens is, they end up going hundreds of thousands of dollars into debt because we've taught these kids from a young age, get good grades, so you can go to this college of your dreams no matter the cost. And by the way, we haven't saved a penny for it because we're broke as parents.

And then they walk out of college with hundreds of thousands in debt going, we were lied to. You guys said this was the path to the best life. Yeah. And here we are feeling screwed. It's painful to see that, but we see that every day. And so even if you're not a parent, if you're just a mentor, if you're somebody in a church who works with young people, have those money conversations.

I know they can be kind of awkward, but invest in young people and have those. Have it early and often and make them listen to The Ramsey Show at 13, and they will hate you now and they will love you later. And that's parenting, isn't it? Hey, more of your calls coming up. Give us a call, 888-825-5225. This is The Ramsey Show. The I'm George Campbell joined by Christina Ellis today. This is The Ramsey Show.

Give us a call, 888-825-5225. Cody joins us up next in Denver. Cody, welcome to The Ramsey Show. Hey, George and Christina. Thank you for taking my call. Appreciate it. Absolutely. How can we help? employer provides, it comes with the option of investing it in various funds, just like a retirement, a 401k. Included in those are mutual funds. And I was just wondering, would that be wise to do, or should I just treat the HSA as a savings account? It is absolutely wise to do. I love that. Now, it depends on where you're at in your financial journey. So do you know the baby steps? Where are you at in that? Do you have

debt? I guess I'm on baby step seven. Oh, awesome. You got a paid for house. I do. As of last week. That's awesome, man. How old are you? 32. And what's your house worth? $350, $400. You are a rock star, man. Way to go. Thank you. So as far as the HSA, yes. So once you're past a certain threshold in that account, for ours here at Ramsey, I have an HSA with a high deductible health care plan. So my threshold is once you have over $1,000, you can invest money beyond that. And so do you have that already in your HSA? How much is in there? Yeah, there's just over 1,000. And I think 1,000 is the threshold as well in that plan. Perfect. Yes, you can go in there and select investments.

If you need help with that, of course, you can reach out to a SmartVestor Pro. And depending on what's in there, you can match what you're investing in your 401k and do those same mutual funds and just make sure they're diversified across the four types that we teach. Okay. So use the same exact investing principles. Yes. And something Dave Ramsey does himself is he invests in his HSA, but he uses his own money to cover his health expenses and just lets that money grow. And so it becomes a second kind of retirement and investing vehicle that you can use later in life. Because as we know, your health expenses go way up later in life. Sounds great. Well, thank you very much. Yeah. And you're just a rock star. I love that. Are you coming in to do your debt-free scream?

I would love to, but I actually just moved away from Tennessee so that I could kind of get into this situation. Well, hey, we are cheering you on from here. That's amazing. Yes, way to go, Cody. Christina, this is only perpetuating this beautiful theme of young people doing amazing things with money. Right, 32, paid off house, that is incredible. Live in the dream, Cody. Yeah. Love to see that.

And the HSA, it's a great point for all of our listeners out there that it is a great investment vehicle. So not only can you put in money tax-free, it grows tax-free, you can withdraw it tax-free for qualified medical expenses, but there's also the investment side of it too. And I love the strategy you were saying with Dave, where he will pay for the expenses separately to let that build up. This is my first year at Ramsey and getting to do the HSA, which that's such a great strategy because I've had, I've looked at it and been like, man, I want this to pile up so that when I'm older, it's a lot bigger of an investment, but that's a great strategy. I love that. It's something you can do. Once you get to that baby step seven side, you can really go hog wild. Otherwise it's good to have up to your deductible

in the HSA, your out of pocket maximum. Yep. So that way you have, if it's 7,500 bucks, it's good to have that level in there. Once you're past, you know, your baby step three and you want to start really covering your family and protecting yourselves, that's a great thing to do. So look into that. I know it's not fun digging into your like health insurance fine print, but it's super helpful to know that you're covered. Yeah, it is super helpful. And it just, it's good to just be on top of it. It's been interesting. I was sick recently and having a high deductible plan,

it really makes you evaluate your expenses a lot more. It makes you go, hmm, do I want that extra test? Do I want that extra thing? We had a call just the other day with someone going, I got billed for all these tests. And so I asked for an itemized and now he's fighting it. So always make sure you know the healthcare services you're getting and verify them. Because when you ask for the itemized bill, all of a sudden it's a lot lower because they went, oh gosh, this person

is paying attention to the $90 Advil we gave them. Right. Well, and medical debt, that's one of the top debts in America. So it is important to be really on top of what you're being charged for and being proactive and looking at those line items because a lot of times they do just assume you're going to pay for everything. Or if you have a really great insurance plan, maybe they do pay for everything. But if you're somebody with an HSA, with a high deductible plan, you really want to pay attention to those line items. Oh, yeah. And medical debt is one of the most frustrating because it's the only debt you don't really choose to go in. Right. There's not like a glamorous, cool thing you get to hold at the end of it. Yes. So I have a lot more empathy for that side. And the good thing is a lot of the times you

can negotiate medical bills if they've been sitting out for a while, especially if they're in collections, which I don't recommend you send them to collections, just negotiate them. Pay them, but you can also negotiate with billing and get on payment plans if you're struggling. And so there's a lot of financial aid in that healthcare space, but it is a screwed up system. We can all agree on that. Well, and it's important to just to have an advocate with you when you are going through something major and medical, you're overwhelmed. Like that's a lot. And when you're feeling like your health is struggling, the last thing you're really thinking about is how much am I going to be charged for this? Or I got to call billing and be on the phone tree for the next 28 minutes.

Right, exactly. So if you're going through something, it is really helpful to have somebody in your corner who's willing to advocate to have those conversations and kind of stay on top of the money side of things so you don't get through that major health episode and go, oh man, what is all this? I didn't see it coming. And you're paying for it for months and months. All right, let's go back to the phones. John joins us in Anaheim, California.

John, welcome to the show. Hello, how's it going? Great, how are you? Pretty good. So I'm kind of like confused in the situation I'm in, so I'm going to go back six months. Six months ago, me and my girlfriend are living at my parents' house, and the plan is to stay there and start a family there

since my parents are in their late 60s. My mom doesn't work. She gets Social Security. And my dad doesn't work because he's disabled. So the plan is for us to start a life there and help out dad in case he needs help for anything. Four months ago, my father actually passed away. Sorry.

Thank you. I'm getting ahead of myself. I'm living there with my parents. I have a brother and a sister. They both live outside of the city. In the future, the plan is for us three to split the house like an inheritance. Now, my

father passed away. My mom cannot afford the mortgage, so I'm going to take over the mortgage. So I want to know what's the best way, I guess, to handle things in the end, to be fair with, I guess, me, because I'm taking over the mortgage, and also fair to my brother and sisters, since they were also going to get that inheritance. What's left on the mortgage? $250,000. What's your relationship like with your brother and sister? Is it pretty...

It's a good relationship. That's why I want something to be fair, you know, because in the way I was, like, me and my mom were thinking, well, what if in the end you guys just split what the house is worth, like, what you need to pay right now? Like, instead of what the house is worth at the end, you guys do end up selling it, let's say in 40 years, I take 50% and then they split the other 50%? What is the house worth right now? The house right now is worth, I believe, $850,000. Okay. So there's about $600,000 in equity if you owe $250,000.

Right. So here's one way to do it, and this all involves a conversation and everyone agreeing, but what you could do is say, hey, there's $250 left on the mortgage. So when we do sell this thing and it becomes all of ours, you would owe your portion of that $250. So you'd subtract that from whatever the profits of the home were. Does that make sense? Yes. So $250,000, you said there's two other siblings? Right, right, right.

So it's three of us. Okay, so let's say the home, you sell the home years from now, and it's worth $900,000. Right. And you split it three ways. That would be $300,000 each if it's paid for, right? Right.

But since you paid that mortgage over those years, and hopefully paid it off early, they would subtract 83 because that's their portion of the mortgage that was left. Okay. It's one option. And you may want to get with an estate attorney just to talk this through to make sure everything is clear

because it can get a little bit sticky, especially in the future when your mom does pass. You just want to make sure that everything is really clearly lined out, especially if you're paying for that mortgage for the next several years. You just want to make sure that everything is really clearly lined out, especially if you're paying for that mortgage for the next several years. You just want to make sure that everything is on paper, even though it's family, even though handshake agreements here, right? Because we don't want these to turn into broken relationships because of this inheritance, which we see all too often. So have the conversation, do what's fair that you all agree on and deal with that when the time comes, But talk about it now and have a game plan.

Thanks so much for calling in. This is The Ramsey Show. I'm George Camel, host of the Fine Print Podcast and the Entree Leadership Podcast, joined today by Christina Ellis, bestselling author and Ramsey personality. If you want to check out any of the shows I mentioned, including this one, which you're listening to, you can find them all on the Ramsey Network or wherever you listen to podcasts. Open phones, 888-825-5225. Julia joins us up next in Hartford, Connecticut. Julia, welcome to the show. Hi, thanks guys for taking my call. My question is, I work in a college and don't get paid a lot and money is very tight. And my children are 14, 15. And one of the benefits is that they

get free college tuition. So I'm trying to decide, do I stay there for the next eight years or so to get that benefit or do I leave somewhere and make more money? That is quite the dilemma. So what does the school cost? Tuitional loan is $40,000 a semester. Today's rates for both of them to go four years each and commute, it will be $20,000 total. I'm divorced, so my half would be $10,000. Hmm. What is your current pay at this college? it will be $20,000 total. I'm divorced, so my half would be $10,000. What is your current pay at this college? It's $40,000.

And how much do you think you could earn if you worked somewhere else? I'm going to say $50,000 to $60,000. Okay. What kind of work are you doing? I do paperwork in one of the departments. I'm not a teacher. Okay. So what, are you saying you'd go work at another university that would definitely pay more? Are you sure of this? Maybe not necessarily a university, but just another, something else in my field. You said you do paperwork. Is that something you could do in the private sector, maybe within a corporation that paid a little bit higher? Yeah. Okay. So the 50 and 60 is also based on that estimate as well. Yes. Yes. Because I left a higher paying job for this job for the purpose of the education. But

now after the divorce, money is very tight. And with my oldest being 15, the other concern is the child support will get split in half, and then a year and a half later, it'll be zero. Now, this college benefit where they get, you said it's free tuition. Is that one of the benefits where they're eligible to go anywhere in the state, or is it just at this specific college? This college, and then they can go to other colleges and I believe it would be the same tuition amount that's credited. So if tuition's $30,000, we get $20,000 credit. Okay. And then tell us more about your kids. What are they kind of thinking about for the future?

Are they for sure going to college? At least in their minds? I mean, it changes daily. It could be an astronaut or a librarian or a bank robber. Great career choice. Yeah, they do want to go. My worry is you sacrifice your career, and then they go, No, Mom, I want to go way over here across the universe. I don't want to go to that school. Right. I'll be very unhappy.

And do they have to apply and get in still? They're pretty much guaranteed in at my college. If they go somewhere else, it's a normal process. And I'm wondering, could you leave and then come back the year before they go to school? Or does it not work like that? What is the time you have to be there? You have to be full-time for five years. at that point I will have been in a full-time position there for five years and I've been there coming up to seven.

Okay. Have you talked to any leadership about the possibility of moving up within the college? Are there any growth opportunities with where you're at now? It wouldn't be advancement. It would be horizontal. And this is actually after a pay raise that I just got. Okay. Do you love what you do? I do. But the money is so tight right now, and you're saying the child support would run out how soon?

Yes. My oldest is 15, almost 16, so a couple more years. And then what happens if you're still making the same salary? So my ex-husband is set to retire about the same time that the kids will be 18, and hopefully he will retire on time, and then I will collect on his pension. If not, I definitely need a second job or a different career. Have you had a conversation with your ex-husband about paying for college? Would he have money to pay for them if you ended up switching careers? He would not. The money that we did have saved was used up by him. So there's zero on

zero in savings on my end. Did he drain the college savings for the kids? Yes. Oh my goodness. He used it on his self for school, which would have covered all their costs. That's brutal. Well, here's my thing.

I don't want you to suffer for eight years in order to make this happen because the truth is they have options and they have time to work. They can cash flow flow they can do scholarships and Christina can talk your head off all day about all the ways they can do that and so I think I don't want you to get so you know tunnel vision on this is the only way and this is where they're going to go to school and have that plan fall apart I'd rather you go work somewhere else love it and then we figure out a new plan for how we're going to pay for college right Right. That's exactly what I was thinking. I don't want to diminish the $40,000 a year

because that is significant. However, I do feel confident you can figure out other strategies to graduate debt free. Obviously, yeah, that's where my area is. And I just love talking people through it because there are so many options, especially nowadays. And you have 14 and 15 year olds. So if you were talking, you know, your kids were in their senior year, and it's next year that we're talking about, I'd be a little bit more nervous for you. I'd be like, let's get going now. But at 14 and 15, I mean, that's when my mom talked to me about going debt free. And that gives them time to really put together a strategy to start building up their resume throughout high school, to work jobs when they're in high school, to start really thinking about how they can stand out in the scholarship application process. And I think if

you're less stressed, if you're not feeling that weight of money worries, you're going to have a lot more time to pour into their lives and to help them figure out how they can go to college debt free. I think that's going to be a win kind of in both directions. They're going to learn a lot through the process of figuring out how to pay for their own education. And you're going to feel a lot better being able to provide for yourself and your family and not feeling that weight and financial stress. Well, Julie, I want to gift you two things before we go here. One is Ken Coleman's book, From Paycheck to Purpose. That's for you to advance in your career, get paid more, do what you love. So hang on the line. Austin will send you that. And we're

also going to gift you a code to watch Borrowed Future, our documentary on the student loan crisis with the kids, and then start a game plan, start a conversation for how we're going to do this thing. So hang on the line. Austin will pick up. We'll get you both of those. David joins us up next in Pinehurst, North Carolina. David, welcome to the show. Hey, Jordan and Christina. How are you guys? Doing great. How are you? Good. Good. Living the dream. Your phone sounds like you're a robot. Can you fix that for us? That's a little better. What's going on?

So a question for you guys. I got a little bit of context first. My wife and I recently became debt-free. We're actually coming on the show, not tomorrow, but the following Tuesday to do our debt-free stream. Oh, awesome. Congratulations. So hopefully we'll get to meet you guys next week. But currently we're sort of working on funding up our life insurance. We both have insurance through our employers.

Okay. Term insurance. We both work outside the home. We have pretty fairly equal incomes. We have one child. We don't own a home. We're debt-free now. Like I said, we both have term policies. You're breaking up on us here, David. So what is your, what's your income and what's her income?

Uh, we're both making about a hundred now. Each? Yes. Awesome. Okay. And how much is offered through work? Um, so we both have about a half a million dollar policy now. Okay. So that's a great start, but we also but we always say you don't want to rely on that because if you switch jobs, that's over, and you've got to restart,

and now you're paying a whole lot more to sign up for term life later in life. So you want 10 to 12 times your income, which for you guys, you're looking at, you know, a million dollar, $1.2 million policy each. And I would just tack that onto the 500 you already have. It's not going to cost that much. How old are you two? We're both in our mid-30s. Mid-30s and both healthy? Yes, very healthy. Go jump onto our website, ramseysolutions.com and click on Trusted Pros,

get connected with Xander. And you can actually play around with those term life quotes online. And they're surprisingly affordable for young people who are super healthy. I'd go ahead and lock that in now before you come here for your debt-free scream. That's a huge step you guys are taking. So, George, we did go through Xander, and I guess the question is for us is that my salary projected to be probably 5 to 10 fold over what it was in the next 10 years or 15 years. So what would you look out? Would you increase the power amount since we're locking in rates now? And would you decrease the length of the term based on, you know, our screen financially stable now?

I would still do a longer term since you guys are younger, and you can always add more later. What we did was I got my new one in place that was cheaper, and I got rid of the old one. Sometimes it makes sense to just add another one on top of that, and you can kind of ladder it. So you can go either way. You can do the math and see what's more affordable.

But as long as you've got that in place, you're going to be debt-free soon, man. That's awesome. Way to go. I'm George Campbell. She's Christina Ellis. This is The Ramsey Show. Our question of the day comes from Blinds.com. Their 100% satisfaction guarantee means even if you mismeasure or pick the wrong color, they will remake your blinds for free.

You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use promo code Ramsey to get the best deal. Today's question comes from Rhonda in Ohio. I was wondering how you feel about applying for FAFSA. Is it worth the time if you think your income is too much and you won't take out student loans? I absolutely think that you should apply for the FAFSA. The fact that you're even asking this question means that your income is

probably on the line where it's close enough that you likely could qualify. And it's worth the shot of at least checking to see. There are no income limits, so you can apply for the FAFSA no matter who you are. And it literally takes less than an hour. I think a lot of people feel really intimidated by it. They think that it's going to be, you know, hours and hours and hours of work, but they continually simplify it. So it's getting a lot easier to do and it's worth checking. Plus, even if you don't get a lot of financial aid, you don't get a lot of need-based aid at your school, some scholarships actually require the FAFSA even if you have a high income. So, for example, the Tennessee Promise, they require you to submit the FAFSA. It's a two-year scholarship for students in Tennessee, and everybody is eligible for the Tennessee Promise

with certain parameters, but financially everybody's eligible, but you still have to fill out the FAFSA. So you might as well apply. Plus the sooner you apply to when the FAFSA opens up, the more likely you're going to receive aid. So you don't want to wait until April and go, oh man, I just found a scholarship that requires me to apply for the FAFSA. Then you apply then and realize, oh wow, I could have had so much aid if I would have applied back in October. So give it a shot. It doesn't take a lot of time. Plus, they're making some changes on it in the 24, 25 school year that'll make it even quicker. You're going to be able to sync with the IRS website and just transfer your tax information over even quicker than what they allow right now. Right now, you have to go out into a data retrieval tool and then come

back. Soon, it's just going to be synced together, which is pretty awesome. Makes it just a lot easier and less intimidating for people. Wow, the government is like a Baptist church. They eventually get on the trends. It just takes them a little longer. It just takes a bit. That's great. Well, look at it this way. If it takes an hour to fill out the FAFSA,

then you make $100 in scholarships even. That's $100 an hour you just made. Right? So don't poo-poo this. Don't put it aside. I'm reading a stat here. 57% of high school graduates from the class of 21 completed the FAFSA. So those that did not, they missed out on this. $3.75 billion in Pell Grants went unclaimed in 21. Ouch. Money just sitting out there. Money just sitting out there. And some people might say,

oh, my family didn't qualify for a lot of need. We only got a thousand bucks in financial need. And it's like, that's a thousand dollars for one hour of work. Yes. Yeah. This is big. And I remember when we did this, we were gifted so graciously inside of the FAFSA with loans. And so do not fall for this. Part of this is they say, hey, part of this financial aid package is a bunch of these unsubsidized loans, subsidized loans, plus loans.

If it has the word loan on it, it's not a gift. You have to pay that back. So I'm only taking the financial aid that is actually free money. One hundred percent. That's such an important point. I was actually just at a college counselor's conference last week and they were saying that around 50% of families couldn't identify the difference between a loan and gift aid in the financial aid package when they were reading the award letters. And it's like, yeah, that's a lot of people looking at those loans and thinking, ooh, I got gifted money and it's not free money. So it is important to be able to distinguish the difference. And that's part of the reason I had $36,000 of student loan debt when I graduated. And I didn't really understand at 18.

I just thought my parents are loaded because they're just going, yeah, well, we got this. Don't worry about it, buddy. And I realized, oh, they just like co-signed a bunch of loans for me. Yeah. I got to pay these back now. And so you are the opposite side of that, getting half a million dollars in scholarships

because you were very intentional and strategic and had the conversation early with your mom. And so this is what to do and what not to do with me and Christine on the air today. But man, I have so many friends in that situation. That's why I wanted to dive into this space is because I've had so many friends that went, you know, I had responsible adults telling me it's okay to take out $50,000 in loans or $100,000 in loans. Why didn't somebody stop me and say, hey, there's a different way. You don't have to go into debt. This is what it will mean in the long run. And so I just think it's so important to have those conversations.

And I'm so passionate about this space because we have to create this conversation with young people and help them avoid it. Yes. And it starts with you parents. And an easy way to do this, because I know it's awkward to talk to your kids about this because you have your own shame and baggage when it comes to your money mistakes. And so you feel uncomfortable talking to your kid about this. A really easy way to start the conversation is to just sit down with them and watch Borrowed Future. This is our

feature film documentary. It's 88 minutes long. It's entertaining. So if you're a teenager, you are going to be hooked and your eyes are going to be like popping out of your head going, wait, what now? I had no idea. Sally Mae was in it with the government. And this is how this thing got out of control. And I had no idea that this is how much people actually make when they get out of college versus how much loans they have. So it's a great way to spark a conversation. Yeah, it's such a good way. It's one thing to like just talk at kids and say numbers and they're like, blah, boring. But to have like a visual, to see a doctor in tears in the documentary because, you know, he took out a million dollars in loans. That moment is seared in my memory.

It is worth watching just for the orthodontist. Wow. So it's inspiring. It's heartbreaking. Christina's story is woven in there. So go to BorrowedFuture.com. You can watch it this weekend with the kiddos. Yeah.

And maybe you incentivize them. Say, hey, we'll go to your favorite restaurant if you're willing to watch this with me. Because I know as a teenager, like, what are you doing, mom? I don't want to watch anything you want to watch. You're lame. But it's good stuff. All right. Logan joins us up next in Asheville. Logan, welcome to the show. Hey, guys. Thanks for connecting with me today. Sure. What's up? Yeah. So quick question for you. So I'm in baby step two, should be done by the end of the year, all that's left is student loans. And so I'm a hustler by nature. So I've got a full-time day job. I work in full-time ministry, but I'm also renting my vehicle out on Toro, which is basically Airbnb for your car. And so with that, my car has been just rented out all the

time. And so I had a friend sell me a really old forerunner, um, that I really liked personally. I like driving that more. And so I'm considering now selling the vehicle that I have put on Toro. Now keep in mind, all of these cars are paid off. Uh, I don't owe anything on them. Uh, but I just feel like right now, I could probably get more. So the car that I'm renting out is a 2015 Crosstrek, about just north of 100,000 miles on it. Kelley Blue Book has it at roughly 15,000 right now, which is private sale. And so in my head, the value for this vehicle on the app will only start to tick downwards as the car gets older, as the miles add up. And so I'm just considering selling it now, getting out of Toro and just driving that 99 4Runner and then having my wife's car and just going about that.

So I'm just looking for some advice. Yeah. How much debt do you have left? I have about $30,000. We've paid off just about $60,000 at this point, and all that's left is student loans. Way to go. So this is going to cut your debt in half and speed up the process by half. So how much further? Let's say you sell the car.

How many more months to pay off the rest of the $15,000? I could probably do that within three to four months. Just again, trying to sell stuff, working odd jobs. You're talking five grand a month just at the debt, even without doing Turo. Right. Well, we've also had a child, so I still have that flush phone. We press pause on baby step two while my wife was pregnant and I gave her to our kiddo. And now she's healthy. She's good. So we have extra to take it down. So how much do you have in the bank? Just about 15.

Oh, wow. So you could almost be completely debt free tomorrow. Right. I like that plan. Now also, so I'm making roughly a thousand to000 to $1,200 a month with Turo. And so I do like the idea of keeping it going, but I also see just the quicker play of getting rid of the car, making that money now, finishing Baby Step 2, maybe somewhat into Baby Step 3.

Yeah, if I'm you, I want freedom faster. And if you want to get back into Turo and buy a cheap car just to do that with, that's on you if you want to do that. But I like the idea of in the next 30 days, you got a new baby, let's be completely debt-free. Let's then stock up that three to six months emergency fund in the next three or four or five months. And now we're in a really different place financially.

Yeah, and you said you're a hustler. So it's like, I think you're going to get there quick with knocking this debt out. You're going to be able to get that emergency fund built out and just be in such a comfortable spot. Yeah. And you're willing to drive the beater forerunner versus the sweet cross Trek. I'm doing it, man. Anytime someone's willing to sell the car, even though you're not in debt on it, this is going to speed up the financial process for you through the baby steps. Just make sure you keep a, on the horizon that it is a 99 forerunner. You may have some- You're going to have to upgrade.

Right. Expenses on that. Good call. That puts this hour of the Ramsey Show in the books. Have you been inspired to make a change with your money? Want to know where to start? Take our three-minute money quiz to get a plan you can follow. Go to RamseySolutions.com and search for Get Started to get a plan for your money.