The Ramsey Show - App - Should I Pull Money From My 401(k) & Start a Roth? (Hour 1)

Episode Date: September 5, 2022

Dave Ramsey & George Kamel discuss: Committing to contract work, Dealing with debt collectors, Pulling money from a 401(k) to a Roth. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's the 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. We help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey Personality, host of the Fine Print Podcast on Ramsey Networks, is my co-host today as we take your calls about your life and your money. Open

phones, 888-825-5225. That's 888-825-5225. Mary starts off this hour in New York City. Hi, Mary. How are you? Hi, Dave. Hi, George. Thanks for taking my call. Sure.

What's up? So my boyfriend and I have been dating about a year and a half now, and we obviously keep budgeting and financial separate and everything, but I've learned that we have definitely very different backgrounds when it comes to money. He has grown up where he doesn't really think about money. Things are just kind of paid. He spends what he wants. He doesn't really think about it. And I am the exact opposite. Um, and as we're looking into the future and, you know, what that means for our relationship, I would like us to get on the same page. So I've started talking to him

about that because I know he has a little bit of credit card debt, but he doesn't really know. And he doesn't really pay attention because it's never really, he's never thought about it. He's really, really open to learning. So I started actually playing your show for him, but I'm realizing very quickly that there's a lot of information that I have learned from listening to your show that I'm just not really good. It's just so much information. I don't know how to teach it to him without getting overwhelmed. I'm just wondering where we should start as we look to the future and what that means for us and how I can help him get us get on the same page. Wow.

That's awesome. Well, you sound very mature. How old are you? I'm 28. And how old is he? 27. Okay, very cool. Well, you know, trying to teach him all the stuff and go,

well, here's what you need to be doing, I don't know that that's going to work in the long term. What I would do is start to create a vision for the future. And then these principles become a part of how you get there. It becomes the game plan. That would get me more excited if I'm in his shoes personally. Yeah. Rather than, um, you, you, and you don't want to become his mom. You didn't sign up for that. And he doesn't want you to become his mom. You don't, you really don't want to be that. And he doesn't want you to become his mom. You really don't want to be that. And so George is right.

Let's pull him in instead of push him in that sense. So it might sound something like this, Mary. Here's some actual things you could say, okay? The number one cause of divorce in North America today is money fights and money problems. So if we are going to be married someday, and it seems like we're moving in a positive direction with this relationship, then we, at some point before we're married, need to address the number one cause of marriage problems.

To ignore that would be like stupid, right? Right. to ignore that would be like stupid right right and so i mean if the number one cause of death of male four-year-olds is bear attacks well you keep male four-year-olds away from freaking bears i mean this is not hard right you know i mean what i made that up but i mean you know what i'm saying right so whatever it is this is the number one cause and so it's not number three it's number one so i mean if we can protect our marriage and i love you and if we can protect our future relationship and i love you against the number one problem we should really get the the antidote ahead of time we ought to drink a bottle of the antidote right and so we got to begin to talk about that. How's that sound to you?

And he's going to go, well, yeah, that makes sense because it does make sense. Well, and here's the thing. I grew up one way. You grew up another way. I'm a lot more of a tightwad, a lot more administrative minded. I'm kind of the nerd of the two. You're kind of the free spirit of the two. So it's not as natural for you to freak out about this stuff.

And I stay freaked out about it all the time. so you need to tighten up a little i need to loosen up a little and we need to learn to work together and be grown-ups together on our future goals and you know here's a format we could do this in like we could take financial peace university as a relationship building class although it happens to be a money class right yeah he's very open to that he really wants to learn that i one positive thing is that he definitely does not want me to just tell him what to do yeah um he wants to learn he knows how important this is to me and good then you're marrying a man and not a little boy yeah that's good yeah he wants to learn i just i don't know how to teach

him i guess i don't want you to teach him i don't want you to teach him i want him to want to learn and he'll find it if you put our stuff in front of him he'll learn it he just needs to reason he needs a reason to go do it you know and the reason is is that it's not my nature to go do this is this is him talking to himself but uh this woman mary is worth it and she's telling me this is kind of you know it's kind of permission to play here you know if we're gonna be in this i'm gonna have to deal with this and so i you know this ain't going away i gotta deal with it so i'm gonna go in here and learn this stuff and get good enough at it so that i get married. Right. Mary, have you been through Financial Peace University? No, no, I haven't. Okay. Well, let me make that our gift to you guys. If you're willing,

if he's willing to go through it, obviously you are. So that's one year of Ramsey Plus. It includes all the videos in Financial Peace University and Every Dollar Premium. And if you guys start to lay this out and start to have that vision, I think it'll get him excited about doing the plan instead of being forced into it. It's the best pre-marriage counseling there is because it addresses the number one thing. I'll give you the next three if you can be in agreement on money, religion, kids, whether to have them and how to treat them, are the inmates going to run the asylum or are you, and in-laws, the crazy people in each of your family,

how are you going to keep them at bay? If you can deal with the in-laws and the outlaws and the kids and the religion and the money, and you get on the same page of that and you've had deep, good, rich discussions in your pre-marriage counseling process, you have like a 90% probability of having a successful marriage. Those are the big four that break the four horsemen of the apocalypse that break up more marriages than anything else. And that's what all the data from the marriage people tell us and we found all of that because we discovered we had the number one it's pretty amazing though if you know that going in you go well yeah let's do everything we can to be aligned in all those areas i hate god i love god they're gonna be troublesome not

gonna work out i'll be troublesome you know, I don't want kids at all. I don't even like them. I don't want to be near them. I want 17. There's going to be a problem here. Let's talk about that beforehand. Yeah, we need to know these things. Don't wake up later and go, I don't know.

You know, you need to know. You need to talk about it ahead of time. And, you know, and go ahead and just identify Aunt Sally Mae over there. She's the crazy one. And she's not living here. She's been homeless. She's lived with every other cousin, and she's not living with this cousin. I'm just telling you.

Because she's drunk all the time, and she's not living here. Let's go ahead and get this out. Let's go ahead and get this out in the open. All right? And just go ahead and deal with it now, because it's going to come up. Yes. It's going to come up. Can't avoid it. Never happened in my it now because it's going to come up. Yes. It's going to come up. Can't avoid it.

Never happened in my house, but it's going to come up. Sharon just says what we're going to do, and then it's over. That's a good man. There you go. Happy wife, happy life. This is The Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី George Campbell Ramsey personality is my co-host today open phones at 888-825-5225 guys we get it when you're worried moneyconsuming. You can wonder if you've got enough to pay your bills or even afford to fill up at the gas station. It's always on your mind,

but you work too hard to live like that. You shouldn't have to be stressed out. You should have peace, and when you have a proven, detailed plan that millions of people have used to not only get out of debt, but to become millionaires. Well, it gives you a lot of peace. That's why we named it Financial Peace University. Almost 10 million families, people have gone through this class now to learn how to budget, to save, to spend, to invest, to become debt-free, free to be outrageously generous and now is a great time to take the course we just updated all of almost every single video and includes george camel dr john deloney now and you don't want to miss it so it's rachel cruz dave ramsey dr john deloney

george camel and uh it's quite a lineup you're going to love the new lessons. Decide today that you're done letting money stress rule your life. You can do this. Get started with Financial Peace University by visiting RamseySolutions.com slash FPU. That's RamseySolutions.com slash FPU. Our question of the day comes from Blinds.com. Find out for yourself why they're the number one online retailer of custom window coverings with free samples, free shipping, and new promos every month. You'll save even more. Always use the promo code Ramsey to get the best deal. Today's question comes from Sean in

Mississippi. He says, my wife and I have been tackling our $200,000 of debt for the past three years, and we have about $55 55k left. We've continued to tithe and contribute to various Christian organizations. This has caused some debate between us. I'm more aligned with taking a step back from tithing and paying off our debt. However, my wife remains steadfast in our need to continue to tithe at least 10% of our income. I know the Baby Steps say that we need to complete Baby Step 2 before starting Baby Step 7. However, our charitable contributions are very important to us. If we had not donated over the past three years, we would be debt-free now.

Do you have any recommendations on how to persuade my wife to concentrate solely on paying down debt? Wow. Well, that's assuming that we agree with you, Sean, isn't it? That's a problem. Yeah, I think the problem is we're probably not going to agree with either one of you here. Yeah, Sean is looking at the math and going, well, if we stop tithing, we could pay off debt faster. Doesn't that make sense, Dave? That's the whole point of the process. But it's not.

There is a heavy spiritual component, if you're a person of faith, that you should tithe 10%, and that's the baseline. Yeah, and Scripture is pretty clear that it's firstfruits. The tithe, the 10% to your local church, is firstfruits. It comes off the top before you do anything else. Now, we're not legalistic about it. That's just what the Bible says. And so if you want to do something else, God's not going to be mad at you but his instruction manual is very clear that a tenth of your income goes to your local church uh this is what evangelicals have taught and believed for years now lots of people have different you know viewpoints or whatever within

different denominational movements but evangelicals across the board this is what we teach what we believe and there's a lot of scriptural basis for it, obviously. But again, nothing has to do with your salvation. God doesn't need your money. The church doesn't really need your money. If they do, they've got other issues. But really, this is about you having a rhythm of giving in your life and that God wants you to have giving at the top of your list always.

Now, where I would disagree with your wife is the other things that are not a tenth of your list always. So now where I would disagree with your wife is the other things that are not a tenth of your income going to your local church are not tithing. The extra to the charitable organizations. Those are called offerings. And there is no scriptural indication that offerings come from anything but surplus. And while you have debt, you don't have surplus.

So offerings should come from surplus so i personally did and would recommend that while you're getting out of debt you tithe and nothing more and so i did not give to any other ministries any other parachurch organizations or anything else while i was getting out of debt except my local church my 10th you'll have plenty of time to do that later once you're out of debt. But you're taking care of your own household first. You don't have surplus, and offerings come from surplus. And so even extra things that the church is asking for.

We're in a building program. We're trying to raise money for whatever cause that the church is doing. They're going to have to take it out of my tithe check. And that's what I did while I was doing it. Again, none of this, though, is a salvation issue. None of this makes God love you more or less. None of this falls in that bucket. But these are just the, if you do a detailed, in-depth Bible study,

this is where it will lead you. And that's why it's what we've done and what we've told you to do. Now, where would you say to bring those back in the offerings the charitable contributions would that come after baby step three yes because we're kind of done with the gazelle intensity we're moving to intentional because baby step three as far as i'm concerned is taking care of your own household if you don't have an emergency fund and you're not debt free you haven't taken care of your rocky foundation and you know scripture says take care of your own household first or you're worse than an unbeliever okay so take care of your own household first and that doesn't mean be selfish

as a course of your life or as a character quality it just means that you've got to you know you got to feed your kids before you feed hungry kids because yours are hungry too okay and so that that's all that means you pay your light bill before you pay the light bill at the homeless shelter and so and you can let that fuel you i mean if you're on the debt-free journey absolutely it should fuel you they're passionate if you have a desire about giving it means you're going to that's high correlation between that and people that build wealth let's get out of debt faster so that we can do what we really want to do exactly just give outrageously and the most fun you'll ever have with money we teach on generosity a lot we believe in generosity but uh but that's

the nuanced detail of how to flesh out your generosity so your wife is trying to do too much you all have been doing too much and you're trying to do too little so you both are wrong split the difference that's according to what we teach and according to what I believe. So there we go. Open phones at 888-825-5225. Carla is in Las Vegas. Hey, Carla, how are you? Good, Dave. Hi, George. Hey.

How can we help? So I have a question. We have a home. We have our house that we paid off, and we are currently in the process of purchasing a new home. Great. Yeah. So my husband and I initially thought about putting the house for sale,

using the funds from our current home into the new home but we're kind of unsure if we should do that or just keep it as a rental property you have the money to pay for the new home in cash if you don't sell yours no we don't i'd probably sell it then. I'm going to sell it and use the proceeds on the new one. What's the new one going to cost? So the new one is right under $600,000. And what's the mortgage you'd need to take out on that?

It's about anywhere from $300,000 to $3,400 a month. But are you taking out all $600,000? Do you have a down payment on this new one? Because all your money is tied up in the old house. Right. So we do have savings, and we are putting, I mean, the minimum that we should put is about $50,000. No, here's the thing.

I would not do this. I just wouldn't do it. You need to sell your current house. Here's why, okay? Let's say that you keep the current house it's paid for and you have a debt on your home. Effectively, it wasn't directly, but effectively it's the same thing as having borrowed on a paid-for home

to buy a rental property. And we would never tell you to do that but you see how that's exactly what you've ended up doing yeah yeah so you're going to take this money and any money you've got in savings and you're going to either pay cash for or almost pay cash for the new property get it paid off and then you should start saving in cash to buy your next rental in cash but i'm not going to lead you to borrow money on your residence to go buy rentals and effectively that's what's happening here you're not quite at a place to be a real estate investor yeah you need to get rid of it and i know it sounds fancy or it sounds sophisticated and i've always made a rental

property yeah that's great but you don't do it this way this is this is you're going to get yourself in a crack here kiddo don't do it don't do it this way. You're going to get yourself in a crack here, kiddo. Don't do it. Don't do it. Get in your residence, get your residence paid off, and then start saving up and buying rentals with cash. It's what I did years ago, and I've got several hundred million dollars worth of real estate.

This is the Ramsey Show. The George Campbell Ramsey personality is my co-host in the lobby of Ramsey personality, is my co-host. In the lobby of Ramsey Solutions on the Dead Free Stage, Brandon and Katie are with us. Hey, guys, how are you? Hi. Hey, Dave. Welcome, welcome. Good to have you guys.

Where do you all live? This is right up the road, Bowling Green, Kentucky. All right. Home of the Corvette. That's right. Very good. I picked one up up there one time. Oh, good for you.

I was actually at the museum two weeks before it fell in. Oh, yes. That was scary. Really, that was a while back. But yeah, welcome to Nashville. How much debt did you pay off? $105,000. All right. How long did this take? Six and a half years. Wow. Okay. And your range of income during that time? About $62,000 to $78,000. Cool. And what kind of debt was the 105? It was our house. Yay! Look at it, weird people! Baby step seven! What's this house worth? Today, 220 maybe.

All right. Very cool. Good for y'all. Not a payment in the world, baby. That's good. I love it. I love it. So tell us about your journey.

How'd you decide to do this and get connected to the Ramsey stuff? So it started back in 2012. Katie's mom actually introduced us to Financial Peace University, but we did it on CD. And so we went through it. And so we started following the baby steps, made a lot of sense. We paid off car debt. Fortunately, we didn't have a lot of college debt. I had an RTC scholarship and Katie's family was very generous.

So we were already on a good path, but still needed a lot of direction. And that's where the baby steps really helped but um it wasn't till um 2020 we did the actual financial peace university class and that's when things got real um we just I was calculating the numbers and I was like we can pay this house off we can do it kept running the numbers again and again and um yeah. Cut up our credit cards. Cut up our credit cards. We were all in at that point. And so that was a big change there. Very good, guys.

Way to go, you guys. Fun, fun. So you started this six and a half years ago, but just two years ago, you kind of got amped up to go just full throttle towards the finish line here. What was like the first four years? Were you seeing some progress, but you went, we could do better than this? Come on. Yeah, I think so. I mean, you know, that initial kind of introduction to the baby steps and

everything was good for helping us to pay off that smaller debt. But then it almost seemed not hopeless in its entirety, but just didn't seem as hopeful when we bought our house which you know we we put more than 20 down and everything and did the did a 15-year mortgage it the right way so to speak but um it just didn't seem very feasible but then when Brandon sat down and we went through the class and everything we're like oh it just it just kind of clicked and we were like oh I bet we can do this and it just seemed more feasible and we just kept um I think it helped that he just automatically just took out a little bit of extra money each month. And we essentially, I mean, we obviously budgeted around that. And so we just

kept chipping away at it. What do y'all do for a living? I work up at Western Kentucky University. I'm a federal employee, but I work in the Army RTC department. And so I help high school, college students if they want to become an Army officer and help them with scholarships, enrollment. That's very cool. And I homeschool our children. She's got the harder job.

That's a party. Yeah. Very good. Good for you guys. That's fun. Okay. So the pandemic is around the time you kicked it in too so that kind of gave

you a little wake-up call you're like oh we need to get this done that's right yeah we started the class yeah january 2020 so right and we finished the last one and as the pandemic starting and so everything was shut down credit cards were done because that was always a budget buster yeah we could pay them off every month um but at the end of the month, I'm like, all right, we got some money left over. And then it'd be like, oh, now we got to pay off the credit card bill. So that was freeing, just getting rid of that. And then, yeah, anything extra, we were just tossing at the house.

And yeah, I just kept going through the numbers, even though they didn't change. I'm just watching it and like, we can do this, we can do this. Good for you guys. Way to go, y' go y'all proud of you what do you tell people the key to getting out of debt is now that you've done it i mean i think for me it was um just being content and a lot of it and just um anytime well not any every time but sometimes when we would see people like you know they, they bought a house or they, you know, before we bought our home or they bought a car. And our mentality was there's two ways to go about it.

You either paid cash for it or you're in debt. We obviously had no interest in being in debt. And if they paid cash for it, that's wonderful and good for them. And so that just kind of helped our mentality, I think. Just, you know, continuing on with it for sure. That helped you curb all the comparisons. it, for sure, for me. That'll help you curb all the comparisons. Yes, exactly.

Wow, that's powerful. Good for you guys. Well done. Well done. Well, we've got a copy of Baby Steps Millionaires for you. That's the next chapter in your story. You're definitely going to be there, a number one bestseller. And we'll also give you another number one bestseller,

The Total Money Makeover. You can give that away to somebody and get them started. And we'll give you a one-year subscription to Ramsey Plus to Financial Peace University, which is good for you guys on DVD. But you can give this to somebody and let them get started on their journey. You brought the kiddos with you. Let's bring them up. What are their names and ages?

Joseph is about to turn seven, and then Juniper is three and a half. All right. Cute. Beautiful. Cute, cute, cute. Good stuff. All right. Cute. Beautiful. Cute, cute, cute. Good stuff. All right. Brandon and Katie, Joseph and Jennifer. $105,000 paid off in six and a half years.

House and everything. Looking at weird people. Making 62 to 78. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free scream. Three, two, one. We're debt-free. That is how it's done, ladies and gentlemen.

Joseph is jumping for joy on the debt-free stage. We love to see it. Beautiful, beautiful. Well done, well done. Those kids don't even know what just happened. Gotta love it, gotta love it. Nicole is with us in Detroit. Hi, beautiful. Well done. Well done. Those kids don't even know what just happened. Gotta love it. Gotta love it. Nicole is with us in Detroit.

Hi, Nicole. Welcome to the Ramsey Show. Hi, Dave. I appreciate you for taking my call. Sure. What's up? Well, I'm calling today because we bought a new home two years ago, and we are using our old home as an income property.

We don't owe anything on either of our houses. And we are considering taking advantage of the market and selling the rental property. So wondering your thoughts on that. Our only holdup is we just don't know what to do with the gains. We've lost some money over the course of the last six months with the stock market being so volatile, and it's got us a little nervous.

You haven't lost anything if you didn't sell it. Did you sell it? No, we didn't sell it. Okay, it's just your value is down, but you haven't lost any money. I haven't lost any money because I didn't sell it. Okay, it's just your value is down, but you haven't lost any money. I haven't lost any money because I didn't sell it. You're right. You're right. I've got to flip my thinking on that.

But so what are your thoughts on selling the house? Why would you sell it? Well, we would like to pay off our debt that we have. Oh, I thought you had no debt. Well, we don't have house debt, but we have a truck and we have a fifth wheel that we have loans on. Oh, crap. What do you owe on that junk? We have $88,000 in the truck and the fifth wheel.

And you owe $88,000 on the fifth wheel? No, on both. Oh, the000 in the truck in the fifth wheel. And you want to keep the fifth wheel? You owe $88,000 on the fifth wheel? No, on both. Oh, the pay between the truck. I have a truck in the fifth wheel. That's some expensive camping. God, you could have stayed at the Four Seasons a lot. It's glamping, but we enjoy it. No, it's more than glamping.

What's your income? What's your household income? My husband works. He is at $88,000. I'm on disability, and it's a total of $107,000. You're not going to like me. Okay. Give it to me.

Okay. You should not invest in $88,000 worth of things that go down in value when you only make $100,000. Okay. So you're selling the wrong thing. Selling the wrong thing. You need to sell the junk. I'd sell the fifth wheel before I sell the rental. And the truck.

And I'd keep the house that goes up in value instead of having a camper sit in the backyard rotting while you sleep in it six nights a year. That's some nice camp. You can afford that if you make $300,000 a year, but you cannot afford that if you make $100,000 a year. It's too much loss because that camper is going to be worth nothing in six years. Nothing. Nada. Something goes down in value. Those puppies. those puppies George Camel Ramsey personality is my co-host today here on the Ramsey Show. David is with us in Rock Springs, Wyoming.

Hi, David. How are you? Doing well. How about yourself? Better than I deserve. What's up? So I'm about $40,000 in debt. I was on Baby Step 2.

I have about 15 of that in collections between credit cards and medical bills. I own a truck. I own a motorcycle. I'm wondering if I should attack the stuff in collections first or the stuff that I got current first. Are you paying payments on the things in collections? I am not. I just recently started the job uh i put about nine grand towards getting current on things that things that didn't go in collections yet yeah good um i'm smart i've been asking i've been asking for proof of debt uh you know these things in writing, but waiting to hear back. Yeah.

What kind of debt is the $15,000 worth that is in collections? It's about five different credit cards, ranging from $1,000 to $5,000, and then a medical bill at about $2,500. And how long has it been since you paid on them? It's been a year. Okay. I was out of work for over a year. All right.

What we usually recommend is that you do two debt snowballs. Debt snowball number one is the things you are making payments on, not the $15,000. Okay. So you list those things, the car, the motorcycle, whatever, smallest to largest, and you're telling me you've got about $25,000 of that. Yes. What's your income? New job, but it's going to be probably about $90,000 to $100,000.

Okay, and you're single? Yes, sir. Okay. All right, so making $100,000, how fast do you pay off $25,000? Oh, six months is what I'm hoping. There you go. I was hoping to have this whole. There you go.

I started at 50. I was hoping for one year. Yep. Had a couple of wrenches thrown in. It had a truck stolen and found out I have to move for this new job. Okay. and it had a truck stolen and found out I have to move for this new job. Okay, but so six months from now, six or seven months from now, you will have plowed through your baby step one. And you do that smallest to largest, right, George?

Yes. And the motorcycle, could you sell that? Is it worth anything? Man, it's going to hurt me. I can can't do that for my sanity i can't what kind of bike is it uh harley ultra classic okay and uh what's it worth it is worth probably 12 000 okay uh i owe about I think I owe about $9,000 on it. All right. Well, I would start without selling it then, but I'm with George.

You could step up and do that at some point. You may choose to do that later. We'll leave that up to you, okay? Now, once your debt snowball, the first $25,000, smallest to largest, is cleared, you're starting to see the point now you don't have any payments. Yep. smallest to largest is cleared you're starting to see the point now you don't have any payments yep okay now when you don't have any payments then we're going to take big chunks of money and start saving now we're going to list the 15 000 and you said it's like five or six different debts right yes sir i'm going to list those smallest to largest i'm going to call the small one what is the smallest one uh it's probably five six hundred dollars okay i'm going to call them anything under a thousand

i'm just going to get verification of the amount in writing and send them a check okay and so if you call them up and they say it's five hundred five hundred four dollars say send me an email for that as a final payment and i will pay it this week okay no electronic access to your checking account now if you if you think it's five or six hundred dollars and you call them up and it's fifteen hundred dollars because they've added a bunch of collections fees and late charges and other stuff then you go uh we want to settle this for 500 what you originally owed. Right.

And you begin a negotiation and argument with brain-damaged people, which will take a while. Okay? Yep. Because when you're dealing with credit card collectors, you're dealing with people who couldn't get a good job. So you're stuck with them. All right? But you've got to work your way through it because you owe the money. So we're going gonna keep arguing with it until we get it settled down to close to the original amount owed or a little less uh they will negotiate down on a year old debt believe me especially that medical debt

too yeah when you should be able to negotiate down and if they go hey is that 2500 but we're willing to take 1200 do it right but it going to be a part-time job. In every case. What are we doing? No access to the checking account, of course, and get everything in writing. That's the key here. But this is going to be a part-time job for you. I mean, this is going to be a little fight to the finish.

But once you're done with that, man, you're never going to look back. You're never going to touch debt again. And the reason we pay off the other $25,000 first is it gives you more money since you don't have any payments after that to be able to attack the stuff that's in collections the stuff that's in collections feels like it's more urgent because it's behind but you're not paying payments on it so you get no cash flow benefit when you clear it you just cleared it but when you pay off the motorcycle you get a cash flow benefit because you don't have the payment anymore. Yeah.

And it helps you move forward in the thing. So we knock out the things with payments first, and then we go do the ones that are in collections. And the good news is you're going to be done with all of it within a year. You'll be done in a year. But you're going to live on beans and rice, rice and beans, and that's if you keep the motorcycle. That's right. I just like accelerating any plan that is painful.

But clearly that motorcycle is going to cause him more pain to get rid of than the debt payoff. So that's your choice. Yep. Danny's with us in New York. Hi, Danny. Welcome to the Ramsey Show. Hi, Dave. How are you doing?

Thanks for taking my call. I appreciate it. Sure. How can we help? I've been watching lots of your videos. And I have a high school senior who's looking to go to a school for physical therapy. And I've watched a lot of your videos about the student debt crisis and all that. Um, my wife and I have saved up enough to send him to his undergrad.

Um, he's looking to go to this private university for his physical therapy doctorate program. That's a six year program. Um, what me and my wife feel is that this entire process has been very rushed for him. It was a very last-minute decision to attend this university and has left him kind of with no other choices. How could I, in your opinion, how could I explain it to him in a way that he understands how it will affect his future, having to take out student loans for his doctorate degree,

which could probably amass to around 130 to 140,000. Yeah. Without him resenting me, without him resenting me saying that you couldn't go away or I didn't let him go. It's not that I want him to go away cause he's a great student, great kid, no issues.

I believe he'll probably be very successful at it um but there are cheaper alternatives yeah where i listen to pay for his entire let me tell you how many people ask where your physical therapist went to school none yeah i've heard you say that too nobody why does he want to do the doctorate program you want to be a pt you have to get a doctorate now okay yeah so the particular university he's been accepted to offer him basically like a 40 scholarship 40 of too much is still too much no i agree with that yeah so here's the thing i'm gonna look i'm gonna put my arm around him i'll say look here's the thing where you go to school to be a pt and live your dream doesn't

matter overpaying for your dream is going to turn it into a nightmare going into debt for your dream is going to turn your dream into a nightmare paying double or triple to become a pt at one place versus paying one third to be at another place is asinine it's ridiculous why because where you went to school 99.9 of the jobs don't give a rip the only people that care are the snobby people that went to those schools that you play golf with they're the only ones that care where you went to school and they don't pay you any money right they're not a customer and they're not a boss it's a flex that's what it is at that point so i'm not doing that what i would do is sit down with them and we'll gift you a promo code to watch borrowed future because i know you're in on

this but it doesn't sound like he's aware and so we got to make him aware of what the whole reality of the situation is so 88 minutes of your time, Kelly will pick up. We'll get you a promo code for that. Sit down and watch that with him. Have a discussion. Here's the thing. There's three things you get when you go to school. An education, an experience, and the prestige of where you went to school.

The experience and the prestige are worth zero. Don't pay $200,000 a year to play beer pong. That's a dumb butt move. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.