The Ramsey Show - App - Should I Take Time Off School To Pay Down Debt? (Hour 2)

Episode Date: March 4, 2022

Dr. John Delony & George Kamel discuss: When it makes sense to leave a job, Should you sell the car? What to do with your 401k when you leave a job. 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

I'm out. What is going on? We are live from the headquarters of Ramsey Solutions. This is the Ramsey Show where America hangs out to have a conversation about your money and your life and your relationships and your mental health, whatever's going on in your life. I'm John Deloney, joined here by my good friend George Camel, and we are taking your calls on anything, everything. 888-825-5225. It's 888-825-5225. Let's go out to Mara in Buffalo, New York.

What is up, Mara? Hi, guys. Thanks for taking my call. Thank you for trusting us with your time. What is up, Mara? Hi, guys. Thanks for taking my call. Thank you for trusting us with your time. What's up? Okay, I'll make it as quick as I can. No, take your time. You're good. You're good. What's up? Okay. I've been a police officer the last 10 years, and in 2009, I switched to teaching full-time, so I went down to part-time. We recently found you guys, and we've been hammering these baby steps, and we're on number two. I've been struggling with keeping the law enforcement job mentally for years.

And I guess I'm just wondering, I waitress part-time. I have four jobs, and I make about $300 a shift waitressing in a day, between $200 to $300. And as a police officer, I only take home about $60. And mentally, I'm kind of done with it, but I have about $5,000 in my deferred comp there. I can't touch it until I leave. Another positive is that my time will transfer into the state retirement as a teacher, but I don't know if I'm ready to pull the plug and I don't know what to do. I make about $5,000 a year now. Like like I said I do about one shift a week as a police officer but waitressing I can make about fifteen to twenty thousand so I just I guess I don't know

if I'm making the right move to finally close that chapter or do I hold on to it? So why'd you become a police officer? Um, I became a police officer because I love my community. My brother actually does it full time. I pretty much wanted to do everything like him. I work in the hometown where I grew up. I also teach here too. So I'm with the same community. Um, but it's just, it's not what it was when i first started i also have three children now so it's not you know what i mean i'm not young anymore um i worry about coming home to my babies um what i do i primarily dispatch now so i don't even like to go out on the road anymore just because there's no if i get hurt um i'm not covered like i was when i was full time you know what i mean i feel like there's too much risk now than there was but mara let's be honest um and most people won't know this from externally but dispatch will take your soul

because those are your boys it's horrible those are your boys right and every time you put somebody in danger you sit there and you don't breathe until they radio back that they're out, right? Absolutely. And so most people don't understand the depths of hell that being a dispatcher is. Some of the most egregious trauma I've ever been around was walking alongside dispatchers when they lose somebody or somebody gets yelled at or screamed at or hurt or something. The dispatchers that I've known in my life are deeply invested in this. And so it's one thing to say, yeah, I'm not actively being shot at, but to say you're not being affected like isn't accurate.

You're being deeply affected every day, right? And then you don't breathe for your whole 10-hour shift or 12-hour shift, and then you go home and you have to exhale, and you've got three little babies who are using you like a jungle gym right and now we're in it again um so let's reverse that question you told me that you wanted to serve and you want to be like your big brother both noble things let's a picture a world where you're not a police officer at all anymore you're just done you say you hang it up you say say high five, everybody, you get your donuts or your, your cookies or whatever. And they tell you, you hug everybody and then y'all go to

the bar and then it's over. Take me there. Is that a joyful moment? Is that a sad moment? I think it's old. I think that, um, mentally, uh, I haven't walked the road since about, um, 2018, I had a couple of close calls, so I switched it inside. And then I knew when I went off on maternity, I had my son and I wasn't going back. I found a teaching job and I've now almost done with two masters. So I think mentally I've been working towards it. And I think that I would still have that brotherhood because I've done this for 10 years. But I just, I think I just need the push.

Like I said, I only bring home about 60 a day after a shift there and it's not. And you're leaving 250 a day of your soul, right? So I'm going to give you, I'm going to give you a quote and I want you to tattoo it on your heart. Okay. Just because it's hard and just because it hurts doesn't mean it's wrong. Okay. hard and just because it hurts doesn't mean it's wrong okay so when you say goodbye to the one of the most unique and deeply intertwined fraternities on the planet which is a police officer brotherhood brother and sisterhood when you say goodbye to that you're leaving a part of yourself there you

know that they know that because y'all have literally stood in harm's way for one another that's what you do there yeah and you've stood in harm's way of your community hours and hours and the community didn't even know you were there and sometimes it's time to go and you're a person of service you found another avenue to serve your community through teaching and here's if you go if you quit teaching you're going to find another way to serve you probably serve your people as a waitress by smiling at them. And you're somebody who says, hey, how's it going? And you ask them that one other question that can make their day better in just a few minutes. Right?

So you're a person of service. That's who you are. You're going to find avenues to serve. But just because it hurts doesn't mean it's not the right thing to do. And so spend a minute thinking, all right, I'm not going back there anymore. I'm going to leave it all. I'm done.

Imagine that. Is that a smile that comes to you? Maybe it's not even a smile. It's a lifted way. See, you can hear. You can feel it. So I think you've answered your own question. And I love this.

I tell parents, when we're talking about parenting questions, I always tell them, when they ask me about their kids i always say hey behavior is a language so if i was to apply that algorithm to you and say behavior is a language here's what i've seen over the last few years you started becoming a teacher you got one two master's degree to make yourself a better teacher you started getting other jobs like waitressing just to balance the gap of the police officer shifts you're not taking. And now you've got one tiny pinky toe still in the precinct. Every other part of your body's left. And so if I look at behavior as a language, I would tell you, you've already left.

Yeah, I can guess there. You just haven't said goodbye yet. Yeah. So maybe it's time to say yeah I think that's fair you just haven't said goodbye yet yeah so maybe it's time to say goodbye and know this your community is going to miss you they're going to miss the crap out of you they're going to miss you and it might be the right time it might be the right time

I've got a quick question for you do you want to be a full time waitress what do you really want to do if the money was no object I love teaching. I love it. The waitressing, that's just to, it's my family's restaurant, so it's extra income. It helps them because we're short staffed, and I'm hammering out baby step two with our family. We're going gazelle, and like I said, it's almost triple the income a shift. So it sounds like the long term is I want to be a teacher full-time

and I'm doing the waitressing stuff to help my family and to pay off debt. But long-term, I want to be a teacher. Yes. Awesome. So go back and listen to this call. You've answered your own question. I'm not going to be the guy that tells you to pull the trigger and tells you to leave, but it'll be all right if you do.

We're so grateful for your service, Mara. So grateful for the person you are and the community member you are. Your community's lucky to have you. Buffalo, shout her out. We need more Maras in the world. We want to serve their communities. Way more. Awesome.

We'll be right back. Today we have the most tech-advanced society in history, but people have never been more stressed, medicated, or lonely. You know, life isn't supposed to be this way. You're carrying the weight of your past stories, and it's holding you back. Ramsey Personality Dr. John Deloney has been there. He's felt the anxiety. He's felt lonely, overwhelmed, and disconnected, but he decided he deserved to be well, and so do you. And now he is launching his new book, Own Your Past, Change Your Future, to walk you through a not-so-complicated approach to relationships, mental health, and wellness. This book provides a clear five-step path to becoming mentally healthy by getting connected,

mastering your thoughts, and controlling your actions. Dr. John Deloney wants to help you leave the past where it belongs and get you on the plan to healing. So pre-order your copy today for only $20 and get free bonus items, including a month of one-on-one therapy. This is the Ramsey Show. 888-825-5225. This is the Ramsey Show. Let's go to Casey out in Dallas, Texas. What's up, Casey? Hey, how's it going, brother?

We are rocking on to the break of dawn, my man. What's up? Oh, nothing much. Out here trying to make some money. I had a question. Got real intense about getting out of bed. Hey, real quick. Hey, Casey.

Talking to your phone there, man. Yeah, it is. It's in my phone. Okay. Okay, can you hear me now? You good? A little bit better. Go for it.

Sounds like you're on the road or something. Yeah. Anyway, I was calling to see what I should do with my car. Okay. I got it on a six-year loan, 14% interest. I owe 19 on it. The car is worth 15.6 from the offer from CarMax. I don't know if I should just pay the difference and to get out from the car

because I have to pay for a truck already. It's just a little older. Sell at private sale today. Because you'll get a wash selling at private sale. You think so? Put it on Facebook Marketplace, put it on Craigslist, and at least give yourself a couple of weeks. Okay, okay.

Yeah, I mean, I know the Kelly Blue Book on it was about the same. It's a car max. It was ranging the same as selling it to CarMax. It was ranging from $15,500 to $16,500, but I mean, the market is a little higher right now, so somebody might be willing to pay the difference. Yeah, I think you've got to do a little more research. Do you have the cash to pay the difference right now? By next Friday, I will. Okay.

If you end up there, I won't hurt my feelings because you've got another truck already paid off. It wouldn't hurt my feelings. I mean, it's a 99 F-250. It's got 350,000 miles on it. I mean, it's kind of high mileage. Yeah, but it's just getting started. That car is going to last forever. I mean, you've got 14% interest, man. Just doing the math makes me want to throw up.

I know, and that was the thing. It's like I look at it, because they take most of the interest right off the top of the loan. So it's like I paid $6,000 of the $10,000 interest besides what the car actually cost. I think you list this thing today and on the contingency that it's picked up

next Friday, and you can pay the difference on the loan when it does sell, and we kiss this thing goodbye. So yeah, I would try to list it, even if i would try to list it even if you just have to list it even so it's even money when you sell it um try that for a week and if not go back to carmax get your money and then if you do it private they're going to want to negotiate a little bit they won't have much margin in this market but you know list it for for where you'd have a clean deal there and if they come down a little bit you should have the cash to

cover the difference yeah that's what i do i bet i'm selling this car before i can before the weekend of next before next weekend's over for sure absolutely all right let's go out to will in nyc what's up will hey how you guys doing outstanding brother what are you up to all right uh i got three separate retirement accounts that i've never contributed to but i'm leaving one job and hopefully starting another one next month. I'm just wondering if it'd be beneficial to convert any of this. Like I got two 401ks and then a separate annuity. Are you getting laid off? About 21,000. Are you getting laid off or are you quitting? It was kind of an injury thing, so it's kind of quitting and getting laid off.

Okay. And when you say, I hope to have a job next month, do you have something lined up? Yeah, I got an interview on Monday. If not, I'll probably wind up going back, so I'm like, I'm not fully terminated just yet, but I know that the union has closed out my account. Okay. Well, good luck on your interview here. There's no contribution at the moment. Okay.

So circle back. Walk me through again what you're talking about. What are your accounts? So I'm just wondering if the, if I'm leaving this job and the two accounts that I have are going to start, the one annuity is going to start to pay out. And I think it's like once a month for 10 years. And the other one's just a 401k. Should I can like, should I put the two 401ks together on one account? Should I try to do something into an IRA? I would do a direct rollover to an IRA. That's going to give you the most control, and you're not going to have any tax implications that way.

Okay. And that will give you the most investing options. I don't like the idea of these just sitting around with your old employer. So I want you to do a direct rollover. You can contact one of our SmartVestor pros in your area. Jump on to RamseySolutions.com, and they can walk you through the best option for you, which I'm guessing is going to be a direct rollover to an IRA so that you have full control over that and it'll stay with you and not with

any employer. Okay. And Will, I just did this when I came to Ramsey. I had 401s all over the place, 403s all over the place, and it's a pain in the butt. You have to get on the phone with your advisor, and they have to talk for you, and it's a whole thing. And you sign some papers, and then all of a sudden you look up, and it's all rolled over into one place in one, in the same account. It's all rolled over there, and it's nice and smooth. Yeah, so it's a pain, and it's worth every minute you spend on it. All right. Get it done, brother.

I appreciate your time. You bet. Hey, George, can you roll out of an annuity? I believe you can. Okay. Yeah, I think it depends on the type of annuity because there's a whole bunch of types here, but you should be able to roll over that into an IRA

just like you would your old 401K. There's variable, there's fixed, so I would work with a SmartVestor pro to walk through what the implications of that. But annuities in general are a no-no in our world. Garbage, that's right. So that's to say if you roll out of that, absolutely take your money and go there. Yeah, and you'll have full control that way. That's right.

All right, Daniel in Macon, Georgia. What's up, Daniel? How are we doing? Hey, guys. How are you doing today? Excellent, excellent. What's up? Hey, I got a question.

So my wife and I, we're on baby step number two, and we are snowballing debt, and we just paid off $13,000 in debt just in the past, like, three weeks. Awesome. So we are gazelle intense, trying to get this done as fast as we can. We have a question, though. We have a piece of farm equipment that is zero-based interest no matter what. There's no, like, deadline. There's no month end on it.

It is zero-based length of the loan. And then we have a vehicle that has an interest rate on it, and our goal was to kind of pay off the vehicle first because of the interest. However, we owe less on the piece of farm equipment than we do the vehicle. So if I understand everything right, we're supposed to... About $20,000. Okay.

And you paid off $13,000 in three weeks. So it sounds like you could pay off... Yes. The $20,000 in a month and a half? Part of that was tax return, and then my wife's also a realtor, so she had a good month. Got it. But that's not guaranteed money. So we live off of my paycheck. I'm actually a pastor, and I was in the military for a while, too, so we have some coming in from that. And we live off of that, and we pay debt with the extra income that she makes in the occasional side job that I do from time to time.

Got it. And what's left on the other debt, the car? About $30,000. I'm paying off the farm equipment first. Yep. No ifs, ands, or buts. How much do you make? So with the church and also with my military about five thousand a month

is that total household income uh that well because her just so erratic we don't really count hers unless it's you know a good month or something that's considered that is my that yeah that is that is the entire house that is a lot of car for a $60,000 a year income. Okay. Have you thought about selling that car and really cut down your debt? We did. We actually, the dealership actually offered us, offered to buy it back from us and then put us in a older, we have five children, to put us in an older van, which it would have been fine, but the payments were the exact same.

Yeah. Why are they putting you back in payments? They were the exact same. I'm not doing that deal. Yeah, I'm not going to get into payments. Exactly. So we actually kept our newer van because it was actually the same payment. Well, how much could you sell it for?

Probably, I don't know, a third. I really don't know. They offered us like two or three grand under what it was at the time. If you can sell that thing and get out from under it, that's going to clean this up because you guys have too much car for the income right now for where you're at. I know you've got five kids and two of you, so that's seven people. I'm getting an old beater minivan right now

and getting rid of this. Yeah, getting to and from. But if you can sell that $30,000 car, even if you have to take out a loan for a $15,000 car or a $10,000 car, now you're talking about a totally different ballgame. And yeah, sell that farm equipment first. I don't care about the interest rate.

I care about the psychology of this. Do it right. We can't start caring about math after we go into debt. That's not how it works. That's right. Get that sucker paid off and run, run, run to the end zone here. We'll be right back. We are back on The Ramsey Show and on the debt-free stage, two beautiful good folks, Dylan and Lauren. How are we doing?

Pretty great. How about you? I'm assuming—I'm doing great. We never know about George, but I'm assuming that because you're on the debt-free stage that you are here to do your debt-free screen. Yes, we are. Congratulations. So how much have you paid off? We paid $120,783. Let me just check that note. Yep, $93. Not that we're counting every penny, right? And where do y'all live? We live in Pittsburgh. Pittsburgh. So what do y'all do for a living?

I'm an orthodontic dental assistant, so I do the wire changes, x-rays and stuff. Yeah, and I'm an energy strategist. Energy strategist. That sounds like a job my five-year-old self would make up and go, that's what I'm going to do when I grow up. And you're doing it. I'm going to strategize about some energy and stuff. Excellent. How much do you make? We currently make about 130K.

130K a year. Fantastic. How long did it take you to pay off $120,000? One year, 11 months, and four days. Good night. Who did you sell? Tell us this journey. What happened? Yeah. We graduated from college in 2019 and we really got on the bandwagon right around then. Now, I had been working a lot of jobs before that, but that's really when we kicked it into gear. And we went from about $17,000 and combined $18,000 in combined income all the way up to $130,000 in this time period. So what was this $120,000 debt? College.

All my college student loan debts. Yeah. The way Lauren looked at you before she answered that question. So what did you study? I studied energy business and finance. So it was directly correlated, but still super expensive. Wow. So $120,000. How in the world did y'all figure out how to pay this much off in one year and 11 months? The Dave Ramsey books. Yeah, doing everything underneath the sun that we possibly could. It was working late nights, Ubering. I even was a food server at a country club when I moved over to Pittsburgh, and I was serving my coworkers on a regular basis for my day job, and it's humbling. I bet so.

What did they say to you when you walked up? Were they like, whoa, what are you doing here, man? It's a little bit of that. They also understand. I mean, we're young, so they get it, but they also don't understand why someone would be able to work a highfalutin corporate job and then turn around and go serve people at the other side of it.

How old are you two? I'm 25. I'm 23. Wow. Wow. Okay, so take me back to the original conversation. Somebody sat down with somebody and said, we owe $120,000.

We need to get bonkers about this. You want to go first or you want me? You can go. It was kind of you, I think, who initiated. Yeah. So I'll say I only started realizing how much in trouble I was in my junior year of college. And it didn't really hit me, though, until I started dating this girl that I really, really liked and realized that. Please be Lauren. Please be Lauren.

Please be Lauren. It was. set please be lauren please be lauren yeah it was but the thing is that i realized that i'd be bringing all this debt into this relationship and that really helped me kick into gear when i was like i i don't want to burden us let alone someone who has no student loan debt and say hey you should marry this guy who owes so owes so much money And it's just sat down and I started working with it and she enjoyed the idea and we just kept going afterwards. I bet she did. So Lauren, tell me this, did you feel the weight that he was feeling of this debt coming into the marriage? Especially in college when I saw him selling plasma twice a week. Did you want me to bring that up? Yeah, he has a scar on his arm actually. Um, so that'll be there forever. But just seeing

him like eat ramen or skip meals altogether, I was like, Hey, I want to like do this with you. And I don't think I was ever like as gung ho, um, as he was in college, but like we kind of both, like when we got married, we got married, last year. We both started living like that. I never sold plasma because they said my veins were too tiny. But you don't need that. So you started paying this off in college is when you got gazelle intense. I started saving up money during that time period. I didn't make the actual first payment until after graduation.

Good for you. Very wise. Very, very wise. But you guys were willing to do whatever it took to get this out of your life. And a lot of people ask, they say, well, would you marry someone who has debt? And clearly the answer was yes,

as long as he was wanting to pay this off aggressively. I think it was a pretty good deal. It paid off. Man, you guys are amazing. Okay, so what would you tell people the key to getting out of debt is? I'll go on that one. It was starting with a plan, having a vision for that future, and then just hard work.

Luck is a product of hard work. And some people would look at me and say, hey, you're a college kid out of like two years out and you're making a lot of money. Like that's crazy, but you got lucky. And the truth is that I was working 16 to 20 hours a day. It's not luck. it's hard work so hard work and hard work and hard work and what would you tell the millions millions of young couples who find themselves in your exact situation we owe six figures of student loans we're staring at each other and I think I like you, but oh man, we just jumped into a river with concrete chained to our feet, right? It's going to be hard to breathe for a few. What

do you tell those couples? Don't put it off. Don't normalize debt. Get out of it as fast as you can. That's the only way it won't bite you in the butt later. So on the other side of this, have you had that incredible feeling? Have you received a paycheck, had your paychecks deposited, and you don't owe anybody anything, and it's all yours? So we paid off our debt today, officially. Oh, today! Oh, my goodness. So our final payment, we wire-transferred it yesterday on the car ride to Nashville and got a practice of the debt-free scheme then,

but it didn't go through until this morning. Just in the nick of time. Kelly's checking your bank statements going, you of the debt-free scream then, but it didn't go through until this morning. Just in the nick of time. Kelly's checking your bank statements going, you got better debt-free. So I actually heard over the police scanner, two young people screaming out of the top of their car while they're driving down the highway. That must have been you two. Yeah, I was joking with him. We got to roll our windows down so that when we speed past people, all they hear is, whee!

So this is yesterday. So you'll have the benefit here in a few weeks when you get your next round of paychecks that it deposits and you go to make that payment and you think, oh, this is ours. Yeah. Well, we actually, it all happened because my bonus payout just came perfectly on time today.

And so that's why this was able to happen. And because of that, though, it actually pushed us all the way from, in Baby Step 2 2 all the way, all the way to Baby Step 4. Oh, wow. So you have an emergency fund now? Yep. And we're ready to go, like, have a good time now because it's ours and we have some cash to go. Dropping a 50% tip on a bill last night because we could.

Wow. And it's just great. That's so good. I love that your first impulse was to give last night too. We're going to have fun. And by the way, we're going to give, and that's going to be fun too. Who are your biggest cheerleaders?

So I'd say first was my family. My family started with me, I think first. And then your parents caught on board with it right afterwards, understanding where we're coming from. And they're like, hey, my daughter's marrying this crazy guy. But they got on board and they're a great support for that as well. I also have a financial coach and actually did that as another psychic.

I helped him out doing financial coaching too through Dave Ramsey's site. And that was John Murdoch at Waypoints Financial Services. So a little shout out there. Very cool. I just wanted out there. Very cool. I just wanted to shout out to my Aunt Lee because she let me live with her for several months before we got married. And I was able to set aside the money

that I would have spent on rent and just pay that completely toward the debt. So it sounds like it was a whole team effort. Once you said, we're going to put our noses down, you had some people come around you that lifted you up when this thing was hard. And y'all really got after it. Really got after it. So,

one year, 11 months, making about $130,000. You paid off $120,000 and some change. You are now debt-free. So, in front of you two, in front of the whole world, in front of the planet,

count it down. Let's hear your debt-free scream. Three, two, one. We're debt-free! Yeah! I love watching young couples who, A, still like each other. That's big. Who, B, they're like gross in life.

I know. Well, they're so young. They're newlyweds, and they're debt-free. And they just went on a great adventure together, and they paid off all their debt. And we're going to give you guys a copy of Baby Steps Millionaires and Total Money Makeover. You're going to pass this on to someone else, get them started on the journey. We're so proud of you guys. That's the next step for you. Millionaire status. Let's go. Way to go. so

so Over the last 30 years, I've walked with thousands of people and their families to help them overcome their challenges, things that they're going through in their life. And I got a new book available for pre-order called Own Your Past, Change Your Future. And it's selling like crazy. It's going real well. Pretty excited about it. Everyone wants and needs this information, this idea that you're not broken. You're not dysfunctional.

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You can preorder this book for $20. It comes with a free month of therapy and a couple other things. Go to ramsaysolutions.com and pre-order Own Your Past, Change Your Future today. George, I'm pretty excited about this thing. I'm very excited too. I just got my advanced reader's copy and we got the real hard copies in just yesterday. Yeah, I'm pretty excited about it. It's amazing. They look pretty sharp. Yeah. And the content's even better. Is it? Yeah. Your face on the cover is not the selling point. Let's just be honest. It's amazing. They look pretty sharp. And the content's even better. Is it? Yeah. Your face on the cover is not the selling point. Let's just be honest. It's not the selling point. It's the words inside that can help. I know.

And that's... Never mind. Let's go to Sherilyn in West Palm Beach. What's up, Sherilyn? How are we doing? Hi. Thank you for taking my call. Of course. Thanks for calling. What's up? So, Stork Fund, right? You paused the debt snowball and then just pile up cash while you're expecting.

So, that's what we were doing last year. And then October comes, we welcomed our third baby. And then November, a couple weeks later, I realized, hey, we've got all this money saved up and we're down to our final debt. And I said, we have enough that we can go ahead and pay off this final debt, leaving the $1,000 emergency fund. And since Baby Step 3 is just, you know, building up the fully funded emergency fund and saving, we can just, when the bill from the hospital comes, we can just pay straight from that and we'll be good to go. I was really excited to get off that final debt. So that's what we did. But now we got the bill from the hospital

and we apparently did not get our savings built up quite enough and it will pretty much wipe out our savings, including that starter emergency fund. So did I just really screw that up? Well, I don't know if that's the right question. You probably jumped the gun a little bit, got excited about paying that thing off. So it kind of sounds like when someone says, hey, I'm getting a $10,000 bonus, and someone goes ahead and buys a $10,000 thing, and the check comes in at $7,500, right? So you got excited and jumped the gun. I think the question of did I screw something up, I don't know if that's a good use of your time right now. I think the best use of your energy and time is so what do we do now what comes next um because

this isn't something that's going to happen on on repeat right unless you get pregnant again down the road and then you'll know let's hang on to that that emergency fund um have you met with the hospital about your bills no okay and i do know we'll have another one coming once there's another claim that processes. Okay. I would strongly recommend you get the entirety of your bill. And since you have money in savings, since you've got money in your emergency fund, generally, that you have cash, that you go sit down with the hospital and say, what will you settle this for with me if I pay you in cash right now? And here's what's critical.

You have to get their offer in writing. Don't give them anything. But when it comes to having a baby and you having cash, it's a win-win for everybody. They want you to have a good experience in the hospital. And so I would sit down with them and say, what would you take for cash right now? We want to settle this bill. We don't have the full amount here. How much would you settle it for? And I've heard them saying, well, how much can you pay? And so you and your husband might

want to have a number in mind and say, we could do this today. And clearly it's not going to be a wipeout for y'all. You don't want to wipe out everything you've got. And the worst they can say is absolutely not. And then you can say, well, cool, then we'll put you on a plan and we'll pay the best that we can as we go. Most places, most of the time, we'll take your cash in hand today and then you will be done with this thing. Does that sound good? That does sound good. Yes. So that would be- I'm kind of hoping for something like that.

That would be my hope. And again, the worst thing I can say is no. And if they say no, I am not going to risk my family's future right now and completely wipe myself out and have nothing in case I get a flat tire on the way home. So I'm going to keep some money in my emergency fund and I'm going to pay them what I can, what's safe for our family. And then I'm going to make regular payments with them until we get this thing knocked out. Sherilyn, how much are the medical bills that you know of right now? What's the total? It's $2,800. Oh, okay.

Yeah, it's not like a lot. And how much do you guys have in cash? Well, if I were to pay exactly what that bill is, it would leave us with $50 in our emergency fund. Okay. Yeah, then, I mean, go with what John's saying and see what their response is. I think they'd be willing to work with you. They probably will knock off 25% if you just paid in full

and got this thing out of there. They'll take that money now. They like that. Maybe you walk up with $1,500 in cash and say, I'll give this to you today if we can settle this thing. We don't have a lot, and we have 100 kids here. In fact, I think we have 1,000 kids. Will you take $1,500 in cash, and we can wipe this thing. We don't have a lot and we have 100 kids here. In fact, I think we have 1,000. We take $1,500 in cash and we can

wipe this thing out and they may say, we'll take 2,000 and you can shake their hand and say, great, and we're going to settle this. And then y'all are just going to be running and gunning to get that emergency fund built all the way to the tip top so you can move on to Baby Step 4. Thank you so much for that call. Let's go out to

Riley in Flint, Michigan. What's up, Riley? Nothing from Riley. Riley, you there? Hey, Riley, what's up? You spooked us. Hi, thanks for taking my call. Of course, what's up?

So I'm a college student. I took off this semester because I have some credit card debt and just between work and school is getting to be too much to try and manage my debt and my finances and work. And so I took this semester off and I've been working on paying my credit card off. And I actually just got pointed in your guys' direction about two weeks ago for all the baby steps. And I kind of decided that I do want to pay off my student loan debt and try and get all of my debt paid off. I've always been terrible with money. And so I'm taking some time off for school. I'm a computer science major, so I can do a lot of stuff on my own at home. I'm just kind of wondering if it's a smart idea to

try and pay off my student loans before going back to school. What's the total debt that you have? So how much in credit cards and how much in student loans? For credit cards, I have about $2,300. And for student loans, I have about $35,000. $35,000. Okay, and how much school do you have left? I have three semesters left, so one and a half years. One and a half years, okay. Can you do this program elsewhere or online that's cheaper? Is this the best option? Yeah, I was thinking about transferring my credits to something a little bit closer to home so that way I don't have to pay for rent. But sometimes when you're in your last two years, you may lose a lot of transfer credit. So

I would check on that, okay? Don't just jump ship and run. Make sure you've got good data before you jump ship. Because you may run to a school closer to home to save money on rent, but because you're in the last two years, they're going to make you retake some courses that are specific to their college, and you may end up costing yourself more, whether in time or in tuition. Riley, what's your income right now? I make about, well, I'm working as a mail courier. I just got this job. So as of right now, I think I make about $30,000 in a year.

Okay. Well, here's what I'll tell you. I don't think you need to pause school and pay off all these student loans and wait that long. But what I would do is make a plan to cash flow the rest of your school, invest in yourself right now. And as soon as you're out and you've got a better income, we focus on crushing this debt. Yeah, let's get this debt. Let's get school out of the way, not get out of the way. We've got to get your income up.

That's part of it. Yeah, get this stuff out of the way, and then out of the way. We've got to get your income up. That's part of it. Yeah, get this stuff out of the way, and then you can be about paying it off when you get out of school. That is another hour in the books. We'll see you shortly righthost of The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week? A lot of those people listen on one of our 600-plus radio stations across the country. To find a station near you, go to RamseySolutions.com slash show.