The Ramsey Show - App - Sometimes You Don't Need Feelings - You Need a Calculator! (Hour 2)

Episode Date: April 10, 2020

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🎵 Live from the headquarters of Ramsey Solutions,casting 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 am Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Robert starts off this hour in Miami.

Hey, Robert, welcome to the Dave Ramsey Show. Thank you, Dave. It's a pleasure to be on. I really appreciate you taking my call. Well, thank you, sir. How can we help? My wife and I, we're currently in open enrollment. I really appreciate you taking my call. Well, thank you, sir. How can we help? My wife and I, we're currently in open enrollment,

and I'm a big believer in your teachings as far as the HSA plan. She wants to do the PPO. Now, my thing is this. Whether you're in an HSA or a PPO, you have to hit the deductible before they cover 100%. More specifically, I mean, you need to get to, I guess, the max out-of-pocket. Now, for the PPO, the deductible is lower. For the HSA, the deductible is a little higher, but the max out-of-pocket is a little bit

lower for the HSA. Whether you go with the HSA or the PPO, you still have to pay that deductible and get to the max out-of-pocket level. Now, my wife and I recently had a baby, and they paid really $130,000 worth of bills, but we didn't hit the max out-of-pocket. And now she's on this, she has this concept in her mind that we still need to go with the PPO because the insurance recently just paid so much for our child. But I don't understand how they did that if we didn't hit the max out of pocket. And I can't get her to switch to the HSA, which I know is going to give us tax benefits at the end of the year, based on the fact what just happened with our child. Okay. So she doesn't want to switch because she feels like she owes them money since they

just paid claims? No, no, no, no. She feels that it's more beneficial. Well, I don't really care how you feel. This is a math thing. You don't need feelings. You just need a calculator. Yeah.

And so it's a calculator. Both of them will cover your family. And the only question is when you run out different scenarios, which one's going to cost your family more? Now, here are the two things that you can look at. And this is the way the math will work. If your family is very healthy and doesn't go to the doctor much at all then the hsa is a lower premium higher deductible and you're not going to doctor much

at all and so it's going to be cheaper okay the hsa is also going to be cheaper because it has a very very low out of pocket once you make the deductible, most of them cover 100%. Does yours? I think it's 10% coinsurance. Okay. Up until what? Do you know what your stop-loss is? Up until the max out-of-pocket is $7,300 on the HSA, the deductible is $4,000.

Oh, okay. As opposed to the PPO, where the deductible is. Yeah, the as opposed to the PPO where the deductible is. Yeah, the max out-of-pocket would be a half million usually. Half a million? Yeah, it could be. I mean, what's your max out-of-pocket on your PPO? On the PPO, max out-of-pocket is $9,000. Okay, so there's a $2,000 difference.

So just run the scenarios out. Under what circumstances, and is that 80 20 on the ppo on the ppo i think yeah i'm pretty sure it's 80 20 yeah okay so twenty thousand dollars would get you of uh of expenses would make the hsa anything above twenty thousand dollars would be cheaper anything under the deductibles would be cheaper. The only time the PPO is going to be the best deal mathematically, and you can run these numbers out, but this is the way it'll work,

is where, see the $2,000 difference with your max out-of-pocket, you've got to make that up at 10% or 20%, depending on whether it's PPO or HSA. You've got to run those both out. And that takes $20,000 to do that, to get that covered, because you've got a 10% difference, so you've got $2,000 on Okay? And that takes $20,000 to do that, to get that covered, because you've got a 10% difference, so you've got $2,000 on 10%.

So that's $20,000. Okay? So anything above $20,000, the HSA is going to be cheaper. Anything under $20,000 down to the deductible, the PPO is going to be cheaper. So where are you going to have the most of your events happen? Between $5,000 and $20,000, above $20,000, or less than $20,000? If you have a sick child that's got chronic stuff, and you're going to be spending a bunch of time in the hospital,

the HSA is going to be cheaper, because everything after $20,000, you're making money on the HSA, because it's at 10% rather than at 20% on the copay. Right. You see how I did that? Right, right. So it's at 10% rather than at 20 on the copay. Right. You see how I did that? Right, right. So it's a math thing. Yeah, I do. Like, I've got a friend who, no, it's a math thing.

If she refuses to discuss this based on math, then we can't have a discussion about it. We have a different issue. Now we have a marriage issue. Right, right, right. Okay? Because it's not a feeling thing. Because both of you want your family to be covered.

The only question is mathematically which is the cheaper. Okay, I have a friend who has a child with chronic illness. His HSA has saved him a bazillion dollars because he has a $5,100 deductible and 100% is paid after that. He meets his deductible the first month of every year. And so if you're not sick at all or you're sick all the time, the HSA is cheaper. It's if you're in the middle that the PPO is cheaper. If you just want to go to the doctor and have a $20 copay and go to the doctor all the time and you're going to live over at the pediatrician three times a month and you pay the $20 copay, the P the doctor all the time, and you're going to live over at the pediatrician

three times a month and you pay the $20 copay, the PPO is probably going to come out better. Right. But if, like, we hardly, we, knock on wood, Ramseys have not spent a lot of time in hospitals or at doctors. We've been really, really blessed with health. And so the HSA has saved me a bazillion dollars because the premium is lower on it than it is on the PPO. How much lower is your premium?

See, the premium is $174 on the PPO, but what I would want to do is to just put the wife's mind at ease. I would put that same $174 every pay period into the HSA, so we can eventually get up to the point where we have the max deductible, I mean the max out-of-pocket in the HSA. That's a different discussion. That's a different discussion. All we're talking about here is the insurance portion, not the savings portion. So the HSA, the premium is how much?

It's whatever we want. No, no, no, no. With nothing going into savings, what is the health insurance premium? Like I said, we're switching, but this year, when on my single HSA, What is the health insurance premium? We're switching, but this year on my single HSA, I put in $44 every pay period. We're switching to a family because we just had a kid. Listen, you can't compare the savings element. The savings element is an independent variable mathematically. The savings element has nothing to do with it.

So you've got to find out your premium. If the premium is $175 on one and the premium is $100 on the other, you have a $75 savings a month. And then you can offset that against the other. Now, if your deductible is a little bit higher, yes, you can use the savings portion of the HSA. And, yes, you do get a tax deduction. And, yes, those do add benefits to the math. But, really, it's an independent discussion. Because her concern right now, because she's got a sick baby, is do we have the money, do we have an insurance coverage that's going to take care of my family? And do we have it most efficiently mathematically?

And so I don't need to appease her. I'm not trying to appease her. I want to have an honest, intellectual, mathematical discussion, insurance to insurance. And then she says, okay, I see that, but I sure would feel better if we throw another $100 into the HSA. Cool. We'll do that to appease her. But we've got to make the decision as a family based on math because that's all this is. There's not one of these that's better quality than the other.

Both of them are going to get you good doctors. Both of them are going to take care of your family. This is the Dave Ramsey Show. Business leaders, hiring right now may be the furthest thing from your mind, but the fact of the matter is we will recover. In the meantime, one of the smartest things you can do for your business is to be prepared. During this time, you can count on my friends at LinkedIn. LinkedIn Jobs puts your job post in front of qualified candidates every day. When the time comes to hire for your business,

you can get $50 off your first job post at linkedin.com slash ramsey terms and conditions apply Thank you for joining us, America. Tina is in Chicago. How are you, Tina? Hi, how are you? Better than I deserve. How can I help? Dave, my question is actually regarding my parents.

I found out a couple weeks ago that they are basically broke. They are in tremendous debt. They still have a mortgage on their home, quite a substantial mortgage on their home. And I'm trying to figure out a way of advising them what to do, where to go from here as far as getting out of this debt, selling their home, possibly maybe looking into a rental somewhere. My mom had asked me about a reverse mortgage. I don't really know much about that. She has also considered bankruptcy.

They do have a little bit of equity in Germany. What do they owe on their home? Okay, let's see here. They owe their first mortgage, they owe $167,825. They also have a line of credit of $30,145. So they owe a little under $200 on the home. What's it worth? If they were to sell, I would say after selling, this is being conservative, about $275,000. So you think the house would go on the market for around $300,000?

Right. Okay. all right. I think they could probably list it for, you know, $330,000 after it's all said and done. Okay, that's what I was asking. Maybe coming away with two cents. So what other debts have they got? Okay, they have probably around $44,000 in credit card debt. Okay, what else?

That's it. They own their car? They own their car, yes. They have an older vehicle that's⁄2, she's 66 1⁄2. Their income is basically Social Security, his Social Security, her Social Security, and then they have an annuity that pays them payments monthly, which the total of all three is $3,763. How much is in the annuity? The annuity they get payments from, I don't know a whole lot about this, but I saw a paperwork that said as of the end of December of last year, the balance was $64,504.

Okay. So basically we have $100,504. Okay. So basically we have $100,000 in equity, we have $64,000 versus a $44,000 debt, and they don't make enough income to pay their house payment. That's how they've gone into credit card debt. Their house payment is a little over $1,000. By the time they pay both their house payments, $200,000 worth of debt cannot be supported on $3,000 a month.

Correct. That's how they got into credit card debt. Because they're paying their house payment, and then they use credit cards to live. Exactly. Exactly. I figured out they have around $4,500 of expenses. So they're in the hole. They're in the hole. A couple of grand a month, which is $24,000 a year, is going to be added to this credit card debt until they go bankrupt.

If they don't stop. They're in a death spiral. Mathematic death spiral. Okay. So the house is gone. They can't afford it. Right. Can't afford it. And. Can't afford it.

And no reverse mortgage will touch it, because reverse mortgage only makes a loan of 55% to 60% of the value of the equity, and they don't have any equity if you apply that figure to it. So besides that, reverse mortgages are horrible. But aside from that. So we're selling the house. Okay. Where do they live in Chicago?

We're actually about an hour outside Chicago in in indiana crown point indiana good okay so there's a chance we find them a little condo for 100 i've been looking into that that's very hard to do i know i know but it's just i mean here's the thing if you're not opposed to getting another mortgage on something small? I don't want them to have a mortgage. They don't make any money. They have a $3,000 income. They can't afford a mortgage. I mean, I, you know.

And they got $44,000 in credit card debt. So I will take their $100,000 equity and buy them something if I can pay cash for it. But otherwise, I'm going to pay off their credit card debt. So I will take their 100 equity and buy them something if I can pay cash for it. But otherwise, I'm going to pay off their credit card debt and let them rent. Okay. Because I do not want them back in a mortgage again. And I hate to cash out this one asset, this annuity, although it probably sucks. Yeah. But if you cash it out, it's probably going to have taxes on it

hey jump online and get with one of our smart investor pros and unpack that annuity with them and see if you can get up get them out of it if you can get them out of it and clear the credit card debt i would rather than be in a paid for house with almost no money and be debt free credit cards and everything a paid paid-for condo. And I would liquidate that annuity. I would liquidate that house. I'd pay off the credit card debt, and I'd buy something for cash with what the cash is left and try to leave $10,000 in an emergency fund, and they're 100% broke with a paid-for condo of some kind

and a $2,000 a month income to live on, and they make it out on that. Okay, so you do think they should get rid of it, cash out this annuity? Possibly. That's why I said you need to sit down with a smart investor pro. I don't know what the implications of that are, because without getting into unpacking the entire annuity on the air, which I'm not going to do. We've already unpacked their entire situation on the air.

So just sit down with somebody and look at that. That's a possibility. But I can just tell you 100%, they can't afford this house. There's no scenario in the mathematics you gave me here where they afford this house. Unless you guys write them a check for, you know, $100,000 or something. If you've got an extra $100,000 laying around, maybe they keep their house. You pay off the credit card debt. You pay down the mortgage.

You pay off that second mortgage. Maybe they can make it on the first mortgage. But unless you've got $100,000, you can throw at this, they don't keep this house. They've already spent all the money. Because basically they were asleep at the wheel financially. And the credit card debt is not because they were irresponsible. It's because they had a burn rate above their income. And they've been covering the burn rate for existence.

That's what's going on here mathematically. It's so hard to work through these things, though, Tina, because it's just so emotional. You love your parents, and you wanted good stuff for them, just like you love your kids, and you want good stuff for them. And the sad story is, unless somebody's got some money to throw at this, there's not going to be a really super wonderful fireworks going off financial happy ending to this. It's going to be a struggle all the way through because of their ages and their incomes, and that's where they are.

So that's the thing. Hey, thanks for the call. Guys, did you know if you invest $100 a month from age 30 to age 70, you're going to have around a million dollars in your mutual funds, in your 401K? $100. Some of you spend that at freaking Taco Bell. $100. $100.

And you don't have to have this phone call with your daughter that this lady just called. You know how much, $100,000, how much it would change that situation. $100,000, one-tenth of that, how much it would change that whole situation I'm just talking about. They probably wouldn't have gotten in a couple of these things. But, you know, you cannot spend all you make all your life and end up anywhere except dependent on social insecurity.

And it's tough to live on social insecurity. It's not enough money. It was never intended to be a retirement plan. It was intended to be a supplement to your retirement plan. And when you don't have a retirement plan, it's your whole retirement plan. I mean, you're on the Alpo budget. It's not good, y'all. It's such a sad situation that Tina's facing.

When it's your mom and dad, it breaks your heart. And that's where Tina is. And she kind of, like she said, she just discovered this. So they've kind of, from their shame, have hidden it all these years. This is the Dave Ramsey Show. If you do this one simple thing that we all do, you are literally at risk of being hacked and someone stealing what you've worked so hard for. Do you ever use public Wi-Fi? I'm talking about getting online at a coffee shop, a store, the airport, or even at home. Hackers can use a simple $100 device to mimic Wi-Fi, and with just a little

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Hey, good afternoon, sir. How are you doing? Better than I deserve. I see on my screen you're debt-free. Way to go. Thank you. How much do you pay off? About $36,000 in about 12 months. Good for you. And your range of income during that time? $86,000 to about $95,000.

Cool. What do youall do for a living so i'm a united states marine and my wife is a uh stay-at-home mom slash she's been picking up some side jobs here to uh to help out very cool thank you for your service and how much what was this 36 000 in debt so uh this particular portion of our debt was $5,000 in my wife's student loans that was left over. We paid off our phones, which are about $1,000, and then a $25,000 minivan that we couldn't live without. Okay. Did you sell the minivan you can't live without, or did you pay it off? No, sir. No, sir. So basically our story is kind of an interesting one.

We took SPU a couple years ago, about four years ago, and we tried to cherry-pick your plan, and it worked a little bit, but obviously if you tell us in SPU that you really can't cherry-pick the plan. So about a year ago, we were just looking down and we're like, why are we not making any movement? We're not making forward progress. And we bought the minivan because we wanted to become foster parents. So we became foster parents because it was on our heart.

And then the minivan was so we could have more kids in the back of the car. And then we realized we were just going back in debt. So that's when we got so intense, and we decided we're just going to plow through this thing, and we paid the thing off as quickly as we possibly could. Okay, so you just rolled up your sleeves, did the budget, and submitted yourself to the plan. Yes, sir. Went crazy. In fact, when we did FPU the first time,

we only went to part of the classes. I had just had our first son, so I think that we used the plan as much as we attended the class, if that makes sense. Yeah, which was not much. Right. Yeah. So now you've

gone, did you go back through the class? We did. We're actually coordinating one. We're on our eighth week coordinating our first class. Oh, very cool. Thank you for doing that. Absolutely. Well done. Well, that'll also make you do it.

When you're actually teaching it, you can't be a hypocrite, right? Exactly. Yeah, you've got to be all in. And now you've got a story to tell the class that you did it, man. Way to go, you guys. I'm very proud of you. Thank you. Thank you.

Yeah, you kind of got on the wagon, kind of fell off, and then got completely on. Yes, sir, and we're never going back. No. Cool. So tell people, what's the secret to getting out of debt? You paid off $36,000 in 12 months, making $86,000. So, you know, my number one is committing to no more debt because we started our marriage with $80,000. So, you know, my number one is committing to no more debt.

Because we started our marriage with $80,000. We paid most of that off and then went back for a second helping. So you never get out of debt if you won't promise to never go back into debt. That's a big one. That's a good observation. The second step for me was I felt like I was squandering the water because I hadn't properly explained to my wife the importance to it. And the second she got 100% on board with the same page as I was on. We just lost you.

You're going to have to talk directly into your phone. Oh, yes, sir. Sorry. Okay. Can you hear me? Yes, sir. That's better. All right.

So getting on the same page. When we were pedaling at different speeds or swimming in different directions, it just wasn't working. When we got on the same page, we said we're going to go out all on this plan. We went into light speed. So that's number two. And then number three and number four for me are having a budget that's zero base balance and then sticking to that budget. Okay. Cassandra, what do you think? Well, you know, I agree with him. I think, number one, having that big why, why are we doing it?

When I realized actually through your podcast, listening to them with him at first, not really loving it, then eventually really loving it, I found the value of getting out of debt, that we could actually have money to give to people when we wanted to give it instead of paying everyone our money. So that was huge for me. When that clicked, that moment, it was a moment. It was like, oh, I get it.

And then, you know, the budget, of course, we use every dollar app. I use it every day. It's just that interaction, daily interaction. It's working on it. Rather than just putting it off, next month I'll think about day. It's just that interaction, daily interaction. It's working on it. Rather than just putting it off, next month I'll think about money. It's every day I'm doing it. And the last thing for me is contentment. That has been quite a lesson through this journey.

And the scripture that you quote a lot in the FPU class, Proverbs, I think it's 1312, about hope deferred makes the heart sick, but when desire comes, that's just been really helpful for me in learning contentment and putting something off, knowing that there's something better to come. Where did the burden for foster kids come from? Well, my husband long ago. Yes, sir. I think that it comes from just our generation is called the fatherless generation, and if there's anything that I can do to reach out to children that need a father,

need a home, need a safe place to be, and living in the city of Albany for the past three years where the Marine Corps has had a station, there is such a need, and we just saw it. One day we were on a family walk, and looked to our left and there was a kids center two blocks from our house and we were like, we got to do something. So that's when we, despite the 80, 90 hour work weeks

that I worked through, we were just like, hey, you know what? Let's do this. And really it was, I told Callie at the beginning of our marriage, this is on my heart, but because of my job and because of what I do, the burden of it physically is going to fall on you, so you tell me when you're ready.

And the second she was ready, we just went all in. Wow. Yeah. And again, God leading us at the same time. And being in a financial position with no debt now puts you in a position to have choices about serving in that way. Yes, sir. We just want to give all our money away. put you in a position to have choices about serving in that way. Yes, sir. We just want to give all our money away.

We want to become millionaires and then just give it away. Yeah. Yeah. You're doing great. I'm so proud of y'all. Do you have people cheering you on? Yeah. So both of our families are extremely proud of us.

Some of them are probably listening right now. We've had a little bit of the mixture like, hey, you're crazy, but at the same time pretty much everyone is extremely proud of us. Grudging respect, if nothing else. I love it. Well done, you guys. Well done. Very proud of you.

We've got a copy of Chris Hogan's retire-inspired book for you. That's the next chapter in your story, as you said, to be millionaires and give like crazy in the process. You're already doing that. You're giving your lives away in so many ways, serving your country, serving those kids. And you've put yourself in a position financially to do that. I'm very proud of you. You're a sharp couple.

Very sharp. Mark and Cassandra, Albany, New York, $36,000 paid off in 12 months. That includes the minivan, the second helping. $86,000 to $95,000 income. Count it down. Let's hear a debt-free scream. Three, two, one. Yeah! That's what it's about right there.

Man, what a great story. What a great story. You see, if you live like no one else, you know what you get to do? Later, you get to live and give like no one else. That's what you get to do. You get to live and give like no one else. I mean, they're giving in so many ways you know people say oh i don't have that you know when you're broke it's hard to think about anything but yourself it's very hard to because you got to eat you got to

keep the lights on and the heat going right got to not be homeless and pay the mortgage or the rent. It's hard. Being broke is hard. But you can make choices to not be there anymore. Live like no one else. Work like no one else. Give like no one else. Drive cars that no one else would drive. Do things that no one else would drive. Do things that no one else would do so that later you can live and give and drive cars and do things like no one else has ever done.

No discipline seems pleasant at the time, but it yields a harvest of righteousness. This is the Dave Ramsey Show. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern, minimalist belt made of high-quality materials with no holes, no flap, and no bulk.

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Hi, Rebecca. How are you? I'm fine. How are you? Better than I deserve. What's up? Well, my stepson received Social Security benefits from his mother that passed away. Mm-hmm.

And he's going to be starting college in about four years, and we have no money saved for him. Mm-hmm. Can we put some of this money aside into a college savings plan? Sure. And will this lessen how much money he receives? Receives from what? From the Social Security. For college?

My husband seems to think that if we put money into a savings account, that that's going to decrease the benefit that he receives. No. Okay. I didn't think so, but I just wanted to make sure. You can put it in a savings account in your name if you want. Okay. And I was reading, though, that we can only put the savings into, like,

those state-run college plans and stuff like that, that you don't like. But, um, well, I was reading online and that's where I'm getting all confused with all the information that's out there. Okay. You can put the money in where you want. You don't have to put it in college at all. You can spend it on the electric bill.

Okay. It's completely, the money's just part of your household income and you know it presumes that you're taking care of the child if you're taking care of the child you know you can do whatever you want to do um i mean the money is not you there's no obligation for you to put that money in a certain place one way or another uh Do you all have other children? No. Okay.

Do you have debts? Yes. And what's your household income? About gross is about $180. Okay. How much debt do you have? Right now it's about $85. On what?

My student loans, truck we remodeled the kitchen so those are our basic ones because we've already paid down like about um 70 000 we've been doing the baby steps oh good okay so when do you expect to be debt-free? At the end of this year. Good. And when will he go to school? In about four years, because he'll be starting high school next year. Okay. In about four and a half years. Okay. Well, I suspect you're cash-flowing college, by and large. Because this Social Security number piled up, this payment piled up for four years. It's not going to amount to much.

Okay. Not enough to to amount to much. Okay. Not enough to send him to school. Okay, right. And what he was going to be doing is the high school that he goes to, they give him college credit. So it's going to be like a dual thing. So he could graduate with an associate's degree, and then we would just put the last two years.

Yeah, that's great. But just the same you're going to use some of your 180 000 debt free income to cash flow college so my point is what you do with the social security money is not really relevant it's okay whatever you do with it if you throw it all at your debt and you get out of debt a little bit faster and then you use your income to build up uh to build up a college fund to send the kid to school, then that's okay, too. There's nothing wrong with any of that.

And that's usually the direction we go. But there's no requirement that the Social Security money that is received be left in that child's name, morally, ethically, or legally. Because you're taking care of this child and have all along a lot more so than what Social Security has paid in. Emily's with us in Chicago. Hi, Emily. How are you? Hey, Dave. You're breaking up. Try again.

How are you? Facebook Live loves you. Oh, thank you. How can I help? Hey, I'm calling because my husband and I, I stay home, and he is 100% commission. So although he averages about 110 a year, we are just starting to get gazelle and knock out these baby steps but i feel like we're constantly in limbo between two and three because we're scared to tap too much into that savings not knowing when the next commission could possibly be so my question how long has he been straight commission five years okay and how many months of zero has he had? Zero. Okay, and so what is his low month?

If he has a low month, what does it look like? So we keep $6,000 in our checking. That wasn't what I asked. I asked if he has a low month, what a low month looks like um so that's a low month would be i mean 4 000 okay and a high month is what 12 000 yeah high month could be gosh 40 grand on a really good month and so what does it take you to operate your household? How much income a month do you need to operate a household, minimum? $5,500. Okay, so you need $1,500 max.

How many times have you had three, four-month, $4,000 months in a row? Zero. Correct, yeah. So use actual math and actual history, not feelings, to decide how much you need to have set aside. You need your $1,000 emergency fund as baby step one. And then you need what we call a hill and valley account, which is the money set aside for the valleys when you're up on the hill. But $6,000 is pretty rich. You only need $1,500 times two, maybe $3,000 in there.

Okay. And then if you use that money, then replenish that in another up month. But I would keep about $3,000 in a hill and valley account, about $1,000 in your emergency fund. Because with what you're giving me historically, you never have needed more than that. Right. Yeah. You hit the nail on the head when you talk about feelings that's that's just it yeah it's just it and and and the thing is we're getting out of debt which

is even going to make it even more stable right so how much how much longer before you get baby step two completed well we're just started so about 21 months okay cool but in 21 months you have no payments see except your house right exactly so we just stabilized everything it changes everything when you do that so you got 21 months you have to work this hill and valley idea against your emergency fund then you build a full-on emergency fund but i probably in addition to your regular emergency fund would always keep a hill valley account uh you know to smooth out the volatility is what it amounts to and so good question good question you're stepping on it you're paying attention and make sure if he's in sales on this straight commission that he's involved with you on all these decisions i want him to feel the weight of all these steps, the weight of the baby steps,

the weight of the death snowball, because I'll tell you what that does as a sales guy myself, is it gives me incentive. It gives me an angle, what I've got to go get. It shows me what my goal is. And salespeople have a tendency to increase their income dramatically when they have a very clear reason to do so and a very clearly defined amount of money that we need to hit so when you lay that 21 months out there he may very well bring that in in 16 months if you've laid it out there really

really clearly and you know that that's it hey thanks for call. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Dusty's on Facebook. About 5 million of you following us there on facebook.com slash Dave Ramsey. Thanks. Dave, how do I cancel my credit cards? You chop them up and you call the company and say, I want the account closed.

And then you will have to argue with them for about 15 minutes because they are very good salespeople. But if you'll open up and say, I'm doing the Dave Ramsey thing. It's the first thing out of your mouth, and I want my accounts closed. That will shut down a whole bunch of the crap that they try to shovel in your direction because they pretty much have figured out Dave Ramsey followers are going to close the account no matter what they say. So it short-circuits the 10-minute conversation down to about two minutes. Usually. Not always, but usually.

So you close the account. Now, the account cannot be closed when there's an outstanding balance. So you've got to cut up the credit cards, get it paid off, and then close the account. But make sure you take those steps. Very, very smart to close those up and get them all cleaned up. It really sets you up for a lot of fraud when you've got 14 of these things out there. And your wallet's so thick, it causes your hip to be out of place. This is The Dave Ramsey Show. Hey, it's Blake Thompson, senior executive producer for the show.

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