The Ramsey Show - App - Slow and Steady Wins the Race to Get Out of Debt (Hour 2)

Episode Date: October 28, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Joe is with us in Arizona. Hi, Joe. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thank you so much for taking my call. Sure. What's up? So I got into a car loan this year.

Right now the debt is at $22,000, So I got into a car loan this year. Right now the debt is at $22,000, and I'm trying to figure out what's my next move and if I should sell this vehicle. What is your household income? $45,000. Yes, you should sell the car. Okay. And what is the car worth?

So I just got into a car accident. Somebody ran a red light and T-boated me. So currently I'm working on getting an appraisal, but I'm not too sure at this point. Probably, I'm going to guess $14,000. Oh, but the car is going to be repaired by the person who hit you, right? Correct. Okay. So that's already taken care of but um i i don't know why 14 000 you just bought the car true but i'm just making an

estimation because i don't know how much of the value was lost because of that accident oh not anywhere near that you're guessing yeah okay so uh is the car has been repaired. Correct. Okay. Well, just jump on Kelly Blue Book and see what a private sale is. Okay. And it's going to be somewhere around there. I mean, you may have lost $1,000 in value or $2,000 in value, but you didn't lose $8,000 in value. So what do you think this car is actually worth on Kelly Blue Book? Do you have any idea?

About $19,000 to $20,000. Okay. So how are you going to come up with the difference? Well, my savings is about $1,000 right now. I was hoping on building up a bigger savings by buying a hoopty and then not having to worry about that payment. That way I can pay off the difference during that time period. Okay. All right.

How's your credit? Credit's good. Why don't you just go borrow the $3,000 or $4,000? And then use that money to buy it? Use that to cover the difference, and then you can get the car sold. So if the car sells for $18,000 and you owe $22,000, you need $4,000 to be able to get the title, right? Correct. Okay.

So we need a loan set up. You don't have to take the loan today, but you need the loan arranged for $4,000 in order to have a buyer come up and hand you a check for $18,000. Then you put the car on the market and get it sold. Now you're $4,000 in debt instead of $22,000. And now we're moving in the right direction. And, of course, somewhere in there is the saving up and getting the hoopty and that kind of stuff. So you're not walking. But, yeah, start with a hoopty, and then you can move up rapidly

for what your car payments are. I mean, your car payments are ridiculous. Matthew's in Florida. Hey, Matthew, how are you? I'm great. How's it going? Better than I deserve. What's up?

Okay, so I read in your book that we should do a health savings account or that that's a good option, and I just want to see if it's a good option for me in my current situation. So right now I have a family of five, three kids, wife and three kids, and I'm self-employed. So I currently have Blue Cross Blue Shield health insurance for the whole family. It's $1,400 a month. So the health savings account would be $1,463. So $63 more a month through Blue Cross Blue Shield.

Why? That doesn't make sense. Does that include a savings contribution? I'm not sure. The only difference between the two things would be a $6,000 maximum out-of-pocket for the health savings account one and an $8,200 max out-of-pocket for the normal one that I currently have. My financial advisor said it would save me

$7,000, $2,100 in taxes, maximum contribution of $7,000. Is2,100 in taxes, maximum contribution of $7,000. Is that what he was saying? Yeah, but is the $7,000 built into the $1,463? It must be. Here's what I have. Okay, what's your current deductible on your current plan? My current deductible is, I believe, $6,500,

but with a maximum out-of-pocket of $8,300. So you're running a high deductible anyway. Yeah, exactly. Because usually an HSA is a higher deductible, but is cheaper premium in most cases. That's weird. Yeah, this one's a lower deductible, but a higher premium. Well, you're carrying a very high deductible. Yeah, but for the health savings account one, it would be a $6,000 deductible. I know.

But I'm saying, and you said yours is $6,500 on your current plan, right? Yes. Yes. Yeah, which most people have like $1,000. Really? Yeah. Which would probably cost you $1, bucks the way they're charging you there thank you obamacare you're man you are getting hammered i got yeah i'm getting hammered i'm

hoping something happens with this soon but i'm used to it i guess i'm used to it um well if you still have debt the only purpose of the health savings account, do you still have debt? No, we're on step four, five, and six, and we do about $250 a year. Okay. Well, you can do the HSA, but the only reason to do it then is to create the savings account option, and you don't need to do that necessarily. It's not that big a deal. I mean, obviously, if you don't do that, you cannot contribute the $7,000, right?

If you do do it, you can contribute the $7,000, which in your tax bracket will save you more than $2,000 on taxes because you're in a 40% bracket. I don't know how he's calculating that. So probably more like $3,500 in taxes or $3,000. But anyway, somewhere it's not a big difference. Bottom line is it's not for anything except you've line is... But then the $63 a month extra... It's not for anything except you've lowered your out-of-pocket stop loss. You've lowered your deductible and you've lowered your stop loss.

Right. Which you don't need to do. So you recommend to not do it? The health savings account in this situation? In your situation, I would not. Okay. I wouldn't mess with it. I would keep the higher deductible, the slightly higher out-of-pocket,

the slightly lower monthly, and then I would just do my investing somewhere else. The only reason to do this is to lower your risk. You can handle the risk. It's not that much different. And the only other reason to do it would be to get the $7,000 into the health savings account. I wouldn't do all this for that. Nah, I'll pass. It's a very unusual situation you're in, though.

The reason is your income is so high you were willing to take on an unusual health policy, which is a super high deductible. And that's what's changed the numbers here. But, hey, hey you know normally what it would be is you would be like with a thousand dollar deductible and you'd have like a two thousand dollar premium but if you went with a higher deductible hsa plan you'd have like a fourteen hundred and sixty three dollar premium that would be the normal comparison with a typical person calling me that's what the book was addressing matthew hey thanks for the call

this is the dave ramsey show that's what the book was addressing, Matthew. Hey, thanks for the call many families suffer by not having life insurance. It's not that they didn't care. It's just that they didn't know, so they did nothing. That's a huge mistake. Listen, husbands and wives, moms and dads, think about it. If you died, how would your family pay the bills, the mortgage, food, and plan for a better future? This is what life insurance is all about, and term life is the only way to go. It's not expensive, and it's not complicated. Stop wasting money on cash value plans. You need 10 to 12 times your income in protection,

and I recommend 15- or 20-year-level plans. I also only recommend Zander Insurance, and I have for over 20 years. These are the only people I personally use, and they only offer the plans I recommend. Call them at 800-356-4282 or get instant quotes online at zander.com. Trust me, these simple steps will let your family know how much you care. If you aren't strapped with student loan payments, odds are you know someone who is. One in four Americans are dealing with the pain of student loans. Millions are having to put off things, or choosing to put off buying a house, or choosing to not have kids because they feel like they're stuck. We've launched a brand new podcast exploring the epic failure that is the student loan crisis.

The podcast is called Borrowed Future. There are eight episodes, four of them, five of them have now landed, and it exposes the broken system that is the federal student loan program. And it shows how the predatory lenders have screwed over a generation of people. Episode five drops today. It includes Seth Godin, Anthony O' o'neill me many other thought leaders and students from across the country are learning that they do not have to get trapped in this predatory student loan industry there is a movement of students who will graduate completely

debt free we've had almost 5 000 reviews on borrowed futureed Future already on Apple Podcasts alone, and this is the way it's changing people's views. One guy says, excellent information. I wish I'd had this before I went to college and took out student loans, because I was told it was the only way, and it's not. Anthony O'Neill's number one best-selling book, Debt-Free Degree, clearly outlines that you can go to school without debt. It is possible.

You do not have to graduate with student loan debt. If you did, while I'm on your side, I'll help you. Some of you got a real mess. And you can find Borrowed Future on Apple Podcasts, Spotify, Google Play, anywhere great podcasts are. We're in the top five or ten on almost every one of these right now. The thing has exploded. It's become very, very popular.

It's very well done, too. It's a new endeavor for the Ramsey Network to do this format. All of our other podcasts are one of us personalities yakking, and this is more of the NPR style with an interviewer and a host. And George Campbell is the host on it. He did an incredible, incredible job. All right. Bridget is with us in Texas.

Hi, Bridget. Welcome to the Dave Ramsey Show. Hi, Dave. I'm so ecstatic to be talking to you right now. You too. How can I help? Well, I have been a student loan debt um i guess uh basically i was first generation student and i have a master's degree so i have 150 000 student loans um i've been on

the income repayment based plan where they're supposed to, after 180 payments or 10 years, discharge the rest of it. I've been on that for two years, and my payment has been zero based on my income. What is your master's degree in? A nurse practitioner. How is your income so low as a nurse practitioner that you qualify for zero? Well, because Texas is very saturated, so it took me almost a year to find a job. So they were basing it off my income, which was at the time I didn't have any.

So now you found a job. What do you make now? I make $99,000 plus bonuses. Cool. How much overtime can you pick up? I have been picking up any overtime they allowed me to get. Okay. So you can kick the $100,000 up even.

And you owe how much? It's $150,000. Okay. And your question is what? Well, I was considering, because my interest rate is 5.81 with the current creditor I'm with, what my bank offers, because they work with Baylor students in Waco, Texas, they offer refinancing, and I would probably get a 3.79 is the highest interest rate for me. If I refinance my student loans, but I didn't know if that was a good choice or if I should just, because I'm basically two years ahead according to the student loan forgiveness

program. So if I pay eight more years, then the rest should be forgiven. And when I added it up, it should be like $85,000 that I end up paying at the most, and the rest forgiven. Okay. Here's the problem. 32,000 people have applied for the forgiveness. 94 have been granted.

Wow. It's not happening. Okay. So that plan is not, that ship has sailed. We're not going to wait on the government to keep its word and forgive these loans. It's just not happening. So instead, the good news is you make 100 plus you're picking up over time, and you're used to living on nothing because that's

what you just made was nothing right before this right and so what if we put 75 000 of your 100 on student loans i think your student loans would be gone in two years well here's the problem um before i i just heard about you last month, so I've been following you. I've been doing the baby steps. I currently bought a home back in April, and I am a single mother at the time with two kids. How did you buy a home with no income? I had got a full-time job. I had it for about two or three months, and then they gave me the home.

Oh, okay. So what is your house payment? It's right now $1,672. Sell the house. Sell the house? Yeah. You're broke and deeply in debt. You can't afford a $1,600 house payment while you're trying to get out $150,000 in student loan debt.

Go rent you a two-bedroom apartment. How many kids have you got? Two. Good. Okay, go rent you a two-bedroom apartment, a three-bedroom apartment. It's the cheapest thing you can get. Live on nothing and go get out of debt if you didn't have any payments in the world with the money you're making now you'd be in really good shape very soon wouldn't you right but if it's going to add a year and a half to two years to you getting out of debt

is it key if you try to keep this house if you want to keep it you keep it but it was a mistake to buy it in the mess that you're in, and it's going to be like trying to run a race with ankle weights on. It's going to be very, very difficult mathematically. And, you know, mama's going to be helping you watch these babies for two years, and you're going to be laying it on fast on the overtime, and you can get this debt cleared up in two years and you're going to be laying it on fast on the overtime and you can get this debt cleared up in two years but it's going to take you three years maybe four if you keep that if

you keep the house that's what the math changes on this because you're paying double what you'd be paying somewhere else and um yeah and so you do what you want to do kiddo But that's what I would do if I woke up in your shoes. And no, I would not be waiting on the government to forgive anything when 93 people out of 32,000 have actually been granted it. That says they lied is what that says. You can say it a lot of different ways. You can say policy change. You can say they didn't fill out the paperwork right. You can say a lot of different things.

But the bottom line is that they lied. And when you wait on the government to fix your life, that's the kind of crap you end up with. So the thing is you go fix your life, and you'll get yourself out. I'm sorry you're facing this. Thanks for the call. Open phones at 888-825-5225. That's 888-825-5225? That's 888-825-5225. Sonja is on Twitter.

Are there certain types of debts that should be paid off first before starting the debt snowball? If you're behind on anything, you would be current. So you're current on your utilities. You're current on your rent or house payments. You're current on your car payment. And then you start your baby steps. Baby step one is $1,000. Two is the debt snowball, listing your debt smallest to largest.

The only thing that jumps ahead on the debt snowball is the IRS. If you have an IRS debt, especially a small one, medium-sized one, you put it at the front of the line because their interest, their penalties, and their power are virtually unlimited. And you want the KGB, I mean the IRS, out of your life as soon as possible. This is the Dave Ramsey Show. Thank you. In the lobby of Ramsey Solutions on the Debt Free Stage, Nathan and Kelly are with us. Hey, guys, how are you? Great.

Pretty well, Dave. How are you? Better than I deserve. Good to have you guys. Welcome. Where do you live? Louisville, Kentucky. Fun. And how much debt have you paid off? $255,000. Woo! I love it. And how long did this take? It took us 20 months. Way to go.

And your range of income during that time? We started at $273,000, and we are trending to end at around $430,000. Goodness gracious. What do you all do for a living? I'm an HR leader at a private conveyor manufacturer. And I'm a program manager for an e-commerce company. Way to go, guys. Man, you're killing it.

Look at this income. Ding, ding. Well done. Thank you. And the $255,000 was what? Okay. So it was $18,000 car, $14,000 personal loan, $33,000 credit cards, and $188,000 student loans. You just got the thumb, dude.

Did you see that? She just thumbed you. I saw it. I got free reign to apply for all the loans in school myself, so I took them out for cars, barbecue, everything but class. Okay. All right. Cars and barbecue.

Yes. Those are the first two things that come to mind. I was pretty popular for the first two years. I love it. I love it. I love it. How long have you two been married? Two years on the 24th. Cool.

How long have you been out of school? Six years. Him six years, me several more. Okay. All right. Good. A couple more. All right.

Good. Good. Well, your careers are very, very impressive, and the fact that you decided to attack this right after marriage is impressive. So tell me the story. What happened? You woke up. I mean, you know you're marrying into this big student loan dad, obviously. I mean, Kelly, you're looking at him going.

That's not how that went. That's not how it went? She found him on the plane where we're getting married, though. Oh, that's good. Oh, now tell this story. This is great. I want to hear this. So she mentioned a couple times about doing, like, the journey of becoming debt-free.

My experience, like, for when I grew up, the only time I would see you is if you were selling me Amway, a Kirby vacuum, or, like, term life. Wait a minute. I never did any of that. What are you talking about? No, like, that was my experience with anybody that came to me to that. What are you talking about? No, like this is the, that was my experience with anybody that came to me to try and like teach you

how to like handle money. Oh, I see. And so before, so when she mentioned it, I anticipated like, oh, like this is going to result in six years of trying to sell Nate's generic Amway cleaner

like out of my basement for the next seven years. So it took, it took a while and then she eventually said something. I was like, oh babe, hey, by the way, before we get started,

I know we're about to merge finances. Here's my Sally Mae receipt of $184,000, just so you know that we have this here. You were on the plane when you did this? Yes. Going to get married. So you did a destination wedding. Yes, we got married in Cancun. And so you're on the way to Cancun midair.

Yeah. Did you consider throwing him out the door? That was probably the nicest thing I considered. Costs less than $180,000 to turn the plane around. Yes. Oh, man.

Mess up a honeymoon, you will, dude. You really or something. I waited until the last minute. She was asking for the login info and i was like oh i guess this is it here we go and so i handed it to her on the plane i knew we had debt i mean i had a car i knew we had credit cards i just didn't know how substantial yeah so as we're sitting in our first class seats on this flight then i find out we have an additional 188 000 worth of debt so all joking aside, Nathan, were you just, you didn't think it was that big a deal

or were you too ashamed or what? How do you almost get married and she doesn't know? So I think the, and it took a while to realize the space I was in, but just the space I was in was I always thought that there was something quick that I could do to get rid of it so it wouldn't be a big deal and so you always hear about like you know going you can flip houses or you can do this like i'll give you 30 grand real quick turn into 60 and so uh i was always seeking out to look for like the really rich person or somebody that was savvy to tell me something the get rich quick idea but the first thing i did when

i got that info was always immediately open my mouth with some kind of rebuttal like oh you don't understand you don't make enough money or like you don't have as much debt so you don't know what I'm going through as opposed to listening to the most thing that people that are wealthy give you the advice of like well this is how you go about it or like this is how you gradually build your money as opposed to like there's nothing that's quick and so when she would give me like the risk reverse approach to kind of talking through finances I just felt like if I can shut up long enough then I can find something quick get rid of the debt and then show her my account after all of it's gone and so it took it took a while to to get to the point of communication

where you could be transparent and then just say like we're here here's that we have you don't have to hide it and then we started to work together so like that was the difference i think when things kind of flipped around for me because it was the first time i felt like you could do things together and be transparent and then you're able to see change as opposed to having to avoid the pain of being like honest and transparent so yeah it keeps you from being outed in first class in midair yes yes ouch ouch wow that's a good discussion that's interesting very interesting and so all kidding aside, Kelly, what was your, what happened, like, I mean, when you hear this, what happened to you? Well, Dave, I knew about you, and I had been out of debt before. I'd been married previously.

I'd had debt. I'd cleared all that up. So I've had my own little solo private, you know, I'm debt-free screen. And so while I was upset because, again, he wasn't very transparent, I knew that there was a way out. We make really great money to be this broke. Yeah. So I knew that if we could get on the same page and follow the plan, that eventually we'd be able to, you know, live the life that I wanted to live. Yeah.

Very cool. And so she starts telling you that this is possible and it doesn't involve selling a rainbow vacuum or any Amway soap powder. And did you start believing her at that point then? No, because then you sent envelopes to the house that I was supposed to put my money into. So it was still a fight. It took a couple months of like, all right, well, here's the thing we want. Or like if you just listen to this plan, when things happen, they're not an emergency. So the first time I learned, like, you just listen to this plan when things happen they're not an emergency so the first time i learned like just stick to the plan pay things

off the day that we got debt free air conditioner went out yeah and it was so awesome to go upstairs and say all right it's really hot like all right baby air condition gonna cost you know x amount of dollars well just cash flow it we got the money and then we'll put it back you know right on our next paycheck and so that was that was that was the best part i think it's a whole different way yeah was the best part. It's a whole different way. Yeah, just a whole different way. Yeah, a whole different way from the way you looked at things previously. So did either one of you grow up in homes that were responsible financially? No, family, $430,000.

My parents recently passed, and I found out we had, like, it was over $140,000 worth of debt just in that side. So that same mindset is what continued for me, which is you live life based off minimum payments, not based off of what you can actually afford to cash flow. So that's the mindset I had up until nine months ago. And then you don't make $30,000. I mean, you're slaying the income side. But you can't beat stupidity.

So I just knock it out. You can't out-earn it. That's it. Yeah, wow. Good for you. What about you can't out you can't out earn it yeah yeah wow good for you what about you kelly um oh no no it was my mom and and i and i mean i think the most she made was four dollars an hour working a factory job and she was the same mentality you know if i can afford the minimum payment then we're good so no this was completely foreign to me until i heard you on the radio i I think, one day going to work. I was young, 20s, but that was the very first time I ever heard anything about being debt-free

and actually, I don't know, saving up to buy things. I'm telling you, if your mom and dad look at your incomes now and the fact that you don't have a single debt and the fact that you're under control with money, they have to be very proud. They have to be very proud. Looking at you from heaven or whatever, but they have to be very proud. We're proud of you. Absolutely incredible. You are a rock star couple.

I mean, these numbers are just amazing. Absolutely amazing. And, man, you've got a really, really bright future. It's going to be incredible. Well, well done, you guys. Very well done. All right, we've got a copy of Chrisris hogan's book for you everyday millionaires you'll be one in 20 seconds if you're not already oh my gosh everyday millionaires yep how ordinary people built extraordinary wealth and how you can

too and it's what those rich people said slow and steady right yeah same thing all right it's nathan and kelly louisville kentucky 255 000 paid off in 20 months making 273 to 430 wow count it down let's hear a debt-free scream three two one Absolutely amazing. Wow. Love it, love it, love it. Wow. Man, oh man. Can you imagine that flight to Cancun? Ha, ha, ha, ha, ha, ha.

This is the Dave Ramsey Show. Only a few days left for your high schooler to enter the debt-free degree scholarship giveaway. We are giving away $10,000 in college scholarships, a $5,000 and two $2,500s brought to you by the folks at Speedy Prep. The giveaway ends Halloween, October 31st, so you better get in while the getting's good. No purchase necessary. And we want to give away some money and help offset someone's student loan potential.

That way you go to school debt-free with the debt-free degree, all off of the debt-free degree number one best-selling book by Anthony O'Neill. So October 31st, it ends, the chance to register. No purchase necessary. Go to DaveRamsey.com slash scholarships or AnthonyO'Neill.com slash scholarships. Heath is with us in Florida. Hi, Heath. Welcome to the Dave Ramsey Show. Hey, Dave.

How are you doing? Better than I deserve. What's up? I have a real estate question for you. I am 45, currently debt-free. I'm a single dad, and I own my townhouse, which when I purchased it, I planned on it kind of being my retirement where I would rent it out. It's currently worth about $110,000. I could probably rent it for about $1,000 a month. It's more of a bachelor pad, and I'm looking to move out of it with my daughter.

So the question is twofold. How do you determine how much house to move into despite the fact that you're debt-free, and then how do you determine whether or not to sell the potential rental that we're currently living in? Do you rent it for the $1,000 a month, or do you sell it for the $110,000? That's kind of the dilemma I'm in. Do you have the cash to pay for the next house in cash? No, I'm currently saving the money of about $30,000 in the bank right now. I would sell the condo.

And here's why. If you own the other house and you put the $110,000 down on that house and then you work to get it paid off. That's your next financial step then, okay? Because if you own the other house, would you borrow money on it, refinance it, and borrow money on it to buy a rental condo? No, you would not. and by not selling this, it has the same exact effect to your finances as having borrowed on your new home to buy it because you're lessening your mortgage by $110,000 by selling it. So I would sell it, and then I'd get the other property paid off. As soon as it's paid off, if you want some rentals,

at that point I'd start saving cash and buy the rentals with cash. It is actually what I did, by the way, personally. Years and years ago, got me started back in the rental business, only this time with no mortgages, and now we own a bunch of real estate, and over time, it just keeps making more and more and more money. It's a wonderful investment. All right, Bill is with us in Connecticut. Hey, Bill, how are you?

Doing well, Dave. Thanks for taking my call. Sure, what's up? My son is a senior in high school, and he's looking at colleges for next year. And we have been fortunate enough to save in our 529 plan, save enough for pretty much any school that he would choose. There's roughly about 270,000 in his 529 plan. Wonderful. We've been very fortunate

to be able to do that. That said, I want your opinion on whether or not we should pay for his entire four-year schooling or whether we should insist that he pay for some of it himself. Now, I already know what your view will be on debt, but he could take a job while in college and chip away at, let's put a number on it, perhaps $5,000 in the course of a year, right? And do you think this is a good way of having him put some skin in the game, or would you say, hey, he needs to focus on his studies let him let him work that way well i don't use it i don't use the studies as an excuse because the data we we have says that a kid who works 20 hours a week actually has a higher gpa than one that doesn't work so um that's what the data tells us now having said that um i not, and it sounds like you guys have done very well financially,

and so you're in a position to do most anything you need to do here, and he doesn't have to pay for it. The only question you're looking for is him having skin in the game, him having focus and intensity and intentionality about graduating and studying hard and not get sidetracked and take three classes in beer pong or something, right? Exactly. Yeah, and so what we did was we just had real open discussions with our kids. We said, you can work a job if you want some extra money.

Here's your monthly budget for your spending money. We're going to cover your housing your tuition and your books and you the but your first job is to behave and then we listed out what that meant and for us it means that we're a family of believers we're a family of christians and so that means you're walking the way God wants you to walk. You're not rolling, you know, you're not doing a whole bunch of weird crap and run around doing stuff that most college students do. So you're going to behave morally. The second thing you're going to do under the heading of behave is your job is to go to class. Your job is to do the homework. Your job is to make sure you take the classes necessary and complete them to graduate in four freaking years, not five. That is your job.

If you behave and you do the academic part of behave and the moral part of behave we will pay for this the moment that you don't we will pay for zero and we just said this is your job now and if you don't like the budget that's okay you can work extra my son worked a lot um he likes to he's entrepreneurial and he liked to earn extra money and have some extra pocket money and uh he worked a lot while he was in school uh neither one of my daughters did a lot rachel did do some events and things with us weekends and a lot of stuff over the summers and things uh denise did a little bit too but neither one of them held outside jobs, outside of Ramsey, in terms of earnings. So I didn't put that on them to have skin in the game,

but we had very, very clear, very blunt, repeated over and over and over for four years discussions of what behave looks like. And that's how you earn this money in other words to go to school i'm not paying this because uh you know you you just happen to hit the lotto and your last name is ramsey i'm paying this contingent upon you behaving and it's not does that make sense i mean and it worked for us all three of ours graduated in three years and uh you know none of them are in drug rehab and you know so on so uh it worked and i and i don't think they are they all three work with us they're and they have excellent work ethic uh they're not lesser they're not spoiled brats you know which is kind of what you're concerned about

and honestly i was concerned about that too but we just, we're not going to force you to do that. And that's how we handled it. But you can do whatever. So it's a neat discussion to have. And if you want to put $5,000 on them, not in debt, but say you have to earn $5,000 of your deal every year just to prove you can, that's okay. That's not that onerous. I mean, it's 500 bucks a month or something? Jeez.

I mean, that's not that big a deal. You can do that. So what you're proposing is not that out of line. I just can't tell you that I did it because I didn't. I did what I just outlined, and I got a good result out of it. But it was combined with, again, a lot of very clear, open Ramsey-style communication. There's a lot of stuff around Ramseys within our family that happens. But lack of clarity is not one of them.

Arguments? Yes. Lots of them. Lack of clarity no so uh heated arguments yes lack of clarity no so that's how we approached it and it worked out well for us and i'm okay i've got a friend of mine that's a multi-millionaire and he said i'm not paying for a dime of their school they can work their way through through. I did. And he put the whole thing on them. That wasn't what we did, but that's what you want to do.

It's your kid and your money. And so you can go either direction. That puts us out of the Dave Ramsey Show and the books. Our thanks to James Childs, our producer. Kelly Daniels, our associate producer and phone screener. I am Dave Ramsey, your host. We'll be back with you before you know it. Hey, it's Kelly,

associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry.

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