The Ramsey Show - App - Stop Debt Payments From Getting in the Way of Your Dreams (Hour 2)

Episode Date: March 1, 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. You jump in. We'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. You jump in. We'll talk about your life and your money.

Savannah starts us off this hour. Jackson, Tennessee calling. Hi, Savannah. How are you? Good. Next year, I'll be attending a four-year college on a full-ride basketball scholarship. Good for you. After college, I'm planning on attending medical school.

I know medical school is very expensive, upwards of $250,000, but I can't get a job in college because basketball is my job. Plus, I'll be taking rigorous classes in preparation for medical school. So how do I pay for medical school? Well, there's a couple of ways that you can look at towards that. The first thing you've got to consider, and people don't consider this very often when they're looking at medical school or law school, is that as you become a doctor or you become an MD or you become an attorney, very few people ask where you went to school.

There's a few times you're in a specialist situation and so-and-so went to school at Johns Hopkins or something like that matters. But 90% of the time, 98% of the time I go to the doctor, I don't ask where they went to school. Or if I hire an attorney, I want to know that they know what they're doing and that they're capable of solving the problem that I've got, but I don't ask where they went to school. However, let me tell you what happens.

When people graduate from undergrad and they get accepted to medical school, regardless of where they got accepted, they have a celebration. And they could have gotten accepted to the most expensive medical school on the planet and getting ready to go $450,000 in debt, but they're just happy to have gotten accepted. So the first goal is to actually get accepted at and agree to attend a school that is less expensive so you don't have to face the huge bill. That's goal number one.

And it's a different way of thinking than most people do, the type of thinking that most people have when they think of med school. Thing number two is investigate what are called the MD-PhD programs, where you actually, it's a tough, talk about rigorous, this is rigorous, it's a tough talk about rigorous this is rigorous uh it's a tough thing to get into but if you can get into it it's like getting into a fellows program where you actually become an employee of the university and you're teaching classes and so forth and proffing and so forth while you're in med school, but med school's paid for. And like Duke has one of those as an example that's a really good one. And if you can get in it, that's a tough one to get in,

but if you can get in it, it's a big deal. Of course, another option is the military. Lots of people choose to go that way and serve the military with their medical degree for a few years after graduation. And, of course, the military will pay 100% of it for you then. That's an option. The third option is the fourth point is very, very weird and very difficult, but I have seen it done.

There are a lot of very large hospital companies now. For instance, the largest is Hospital Corporation of America here in Nashville, HCA. And they have lots of hospitals that they have trouble attracting docs into in rural communities or inner city communities. They're just less than desirable situations. And in order to attract docs into those areas, they pay bank and big bank, like double, triple for some of these docs. I was talking to a heart surgeon the other day making $600,000, and he's probably worth $250,000 because of where he agreed to work. And the same thing applies then. Some of those types of companies have scholarship programs, but in return you're agreeing to work for them in one of these situations for so many years afterwards.

It's almost like an indentured servant program. But all of that to say that if I'm in your shoes and you're smart enough to get the grades to get accepted to med school, and I suspect you are after talking to you, and you're obviously quite an athlete as well, then you continue to just lean in and work on this and say, I don't want to do this the way everybody else does it. You don't want to do this the way everybody else does it you don't want to be a normal doctor a normal doctor maybe gets through med school hopefully gets through med school hopefully passes their boards after that and then spends the next decade or 15 years cleaning up the financial

mess you don't want to do that. That's not a desirable career path. It's not worth it. And with the current condition of the medical world slash Obamacare, it's just not that appealing. It's not that appealing of a track, a thing to go into. So the return is not there so you've got to think through and be smart about how you how much you spend and how you come up with the money to cover it and if you do go into debt how quickly you're going to turn and get the debt paid off uh and don't just go the

normal path the normal path is it's financial suicide now and i can't recommend it i was talking to some dentists a while back. They're going $450,000 in debt to be a dentist. Just shoot me and get it over with. Oh, my gosh. That's just nuts. And you cannot make that make sense, y'all. It does not make sense.

It has a career path, a stress level. These are supposed to be smart people, and they do stuff like that. So don't do that, kiddo. You know, just have a different path. I want you to be a doc. I want you to be a successful doc, but I don't want you to regret the day that you decided to be a doc because you did it wrong. Be smart about how you're getting after it.

Thanks for calling in. Alicia is with us in Dallas, Texas. Hi, Alicia. How are you? Hi, Texas. Hi, Alicia. How are you? Hi, Dave. I'm good. How are you? Better than I deserve. What's up? My mom passed away on December 20th. I'm sorry. Thank you. She had a life insurance policy that me and my siblings did not know about, and we just got a check for that yesterday, and we also have her 401K that is still coming. And I don't believe, if I've listened to you correctly, that the life insurance will have tax. No, it does not.

We don't pay taxes. Right. How much life insurance did you get? We each got about $45,000. Okay. And how much is in the 401K? I don't know exact numbers, but we're guessing around $100,000, so $33,000 each. Gotcha. Okay. That will roll to an inherited IRA, and you do not pay taxes on it if you roll it to an

inherited IRA. Okay. We're in baby step two, so we were planning on paying off debt with that. No. Not with a 401k, I wouldn't. No. Okay. I'd roll it to an inherited ira for now how much debt

have you got uh about 90 000 okay yeah i'd use the your your share of the life insurance on that for sure uh are there any other assets uh she has a small disability it's like 3300 each and then my dad had a life insurance policy and he's uh going to gift us $10,000 each. Okay. All right. He can gift up to $14,000 each if he wants to without any gift tax. But, you know, I would roll that, and let's start with that, that we roll the inherited 401K into an inherited IRA and then use the other Torture Debt Snowball.

I'm sorry you guys are going through this, but use it in a smart way. The last thing I want you to feel is buyer's remorse, especially when you offered thousands more on a new home to win a bidding war. If I've taught you anything, it's that blindly throwing money at a problem is a stupid plan and something you'll regret for years. The key to avoiding this rookie mistake is to call Churchill Mortgage and get certified. This easy program puts you miles ahead of your competition because you are pre-underwritten. Your interest rate is secured, and yes, you can close within 14 days.

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I'm good. How are you, Dave? Better than I deserve. How can I help? Hi, well, I'm 26. I've been looking to buy a house for about three years now. The market down here is tough. It's low inventory in my budget and just overall pretty high prices. And so it's kind of been rare that a house that I'm interested in has come to market. It is either a location or a condition and it's killing me to have money making me so little interest in a savings account. I paid off about $150,000, and I'm just, like, scared to jump into any old house because this is my first big purchase like this, and I just want it to be more, you know, bluffing rather than a curse.

So I'm curious, kind of, like, am I being too picky with housing? Should I jump in on something looking at it from an investment standpoint? So you're out of debt. Yes. And how much do you have saved um total i have about 160 000 saved looking at 150 yeah and you're looking at what i'm looking at putting about 150 000 down um What price of home? Well, using the rules of the 25% of your take-home, my take-home, so after I take out for taxes and retirement, my take-home is about $3,000 a month. Okay, but your gross income is what? How much are you taking out for retirement?

Right now, and I know I need to reduce this based on the baby steps, but right now I'm taking out 18%. And my growth income last year, it's going to change this year because I switched from night shift to day shift. We're moving a little bit of a pay differential. But my taxes this year came out to about $89,000. And that was about half the year on night shift, half the year on day shift. So you're thinking about buying a price range home of what? I'm thinking about, I really don't want to go with high of $300 because it just kind of scares me.

I want to have a nice, healthy cushion and definitely more conservative. So your question is, should you buy a $300,000 house now? Kind of. Yes. Yes, you should. There's also, like, life happening. You're being too freaked out. Calm down.

It's just a house. There's a house on every corner in Portland, Oregon. And if you don't like this house, you know what you can do with it? If you don't like this house, you could sell this house and buy another one later. Okay. So it's not like you make a mistake here that you can never, that it's going to ruin your life or something just be careful and thoughtful and say i'm going to buy a nice property in a nice neighborhood not something weird not some white elephant thing but something that if i don't want to stay there i can resell it

if my life changes and i and i you know and i want to move to boston i can sell it and so you just think about it that way and buy something reasonable. And with $150,000 down, making $89,000 at 26 years old, the other $150,000 on 15-year fixed rate will be just fine. You should go buy a house. The other thing that I'm kind of catching is, like, so I live about an hour and a half out of Portland, and it's a college town, and the college rental market really drives up prices here and so a lot of the properties

are kind of too much drama it's a house It's just a house. If you buy it and you don't like it, get you another one. It's just a house. This is too much drama. If you don't want to live in that town, move before you buy. But if you're going to live in that town, just look around, calm down, enjoy the process, you know, and just buy you a house, kiddo. You're in good shape.

You're doing really good. You're doing really good. Just enjoy the ride. I mean, you're 26 years old. You're debt-free with $150,000 in the bank. You know what that makes you? You're a freaking unicorn. I mean, there's nobody like you. You're so far ahead of the game.

Way to go, kiddo. I mean, you're the Ram you. You're so far ahead of the game. Way to go, kiddo. I mean, you're the Rambo of money. You killed this. Okay? You got this. You're doing good. Lisa's with us in Tulsa, Oklahoma. Hi, Lisa.

How are you? I'm doing great, Dave. Thanks for taking my call. Sure. Okay. Okay. Well, I have a question about a letter that we got about an overdue credit card account and a quote program that they're offering us as far as repayment. Now, this has not been sent to collections.

So it's like still through Discover. Like that's who I called, who I got the letter from so obviously the letter's like you need to pay or we're going to send this to a lawyer and the lawyer is going to see you for the full amount and everything like that so how far behind are you months and months six months six months what's the balance I mean um I don't want to say it It's about $13,800. Gotcha. And what's your household income? To gross, I just started, I'm trying to think, sorry, I just started working recently. So maybe $75 gross between the two of our incomes. And I take it you don't have any money. No, we're still like stupid.

Okay. And what is their offer what's their offer well what they're offering is a quote program um it's 60 months uh like 0.9 percent fixed interest um there this includes like a credit toward the account they They're like, we'll give you a credit. It was either $1,200 or $1,500 just credit toward the account. And I'm trying to – sorry. What do you got to do? It looks like – What have you got to do?

The thing that scared us about this, and this is like why my husband was like, we've got to call Dave and ask him, was one of the requirements is that for at least the first four months, it's like they do, it's like a setup on automatic payment. Okay. They said after four months that we can call and say, okay, you know what, no, now we want to pay you every month versus it being automatically taken out. How much is the payment? The payment, it's like $230 a month okay or something like that how much other debt do you

have not counting your house um probably at least an equal amount um not including the house is probably another okay so twenty six thousand dollars in debt making seventy five eighty thousand dollars a year you should be completely debt-free in under two years. Would you agree with that? I hope so, yes. No, I don't hope so. You should do it. Yes.

Okay. $26,000 in two years is $13,000 a year, making $80,000. If you can't do that, you're lame. Okay. That's not hope. I mean, that's math. You should do that. You need to get on a budget, and you need to quit going out to eat. Okay. That's not hope. I mean, that's math. You should do that. You need to get on a budget, and you need to quit going out to eat.

Okay. And you need to stay home from your vacation, and you need to get this dadgum mess cleaned up. I would take the deal. This is called a renovation or a rehab. You may have seen one of those two words in the language, a renovation or a rehab. To rehab your account or renovate your account. They're trying to do this not only to get paid but to also keep you as a customer for life you and i are going to do this

to get the 1200 in the 0.9 while you pay it off okay yes i don't need to be worried about them having access to our account no i would not because you're going to pay them off really fast anyway yes yes yes we are yeah i mean you need to be completely debt free in under two years and you need to be get your every dollar budget downloaded get your butt in gear okay it's time to get after it you've been sloppy and you know it and i know it i can see it between the lines in this discussion but you can do this you're smart you're articulate you can do this so if you're going to screw around with this account i might not do it but if you're going to pop it in the head and pay the whole

thing off in under two years all of your debt except your house this is a fine deal it knocks 1200 bucks off and gets you a better interest rate while you're doing it and it gets you on track and uh so yes i would do this and discover you know, it's a standard thing that these companies sometimes will offer. It's not an unusual offer, a renovation or a rehab. And, you know, what they're hoping to do is to, you know, keep you addicted to the heroin. That's what they want. They want you to continue to stay drug addicted to their product. But we're not going to do that.

We're going cold turkey, and we're going to pay them off real fast. But we're going to take the $1,200 to help us do that and the better interest rate to help us do that. Good question. Thank you for joining us. Teaching you to live on less than you make. A concept Congress can't grasp. This is the Dave Ramsey Show. I get asked all the time about what people need to do to improve their family's money situation. Two of the most overlooked things are term life insurance and disability insurance. Both plans make sure that you have income to pay bills and take care of yourself and your family if something were to happen. For term life, you need to carry 10 to 12 times your income, and I recommend 15 or 20-year plans for most families. Stay away from cash value or return of premium plans.

They're just a ripoff. Disability insurance is just as critical. How are you going to pay your bills if you're unable to work? Disability is the leading cause of bankruptcies and foreclosures, and that's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years. Call 800-356-1780 or visit zander.com and compare online. That's 800-356-1780 or zander.com. In the lobby of Ramsey Solution, Samson and Hope are with us. Hey, guys, how are you? Hey, we're doing great.

Doing wonderful. Wonderful to have you. Where do you guys live? Oklahoma City. Awesome. Welcome to Nashville. Thank you. And all the way over here to do your debt-free scream.

Yes, sir. Love it. How much have you paid off? $95,000. Cool. Good for you, man. How long did that take? It took about 22 months.

Wow. You killed it. And your range of income during that time? It was about $90,000 to $100,000. $90,000 to $100,000. What do you guys do for a living? I am a registered nurse at a hospital in Oklahoma City. And I'm a pastor.

Good. Very cool. Good for you guys. And what kind of debt was the $95,000? So 92 of that was all student loan debt. Actually, all of my student loan debt. And about three was a small car loan. Okay.

All right. So Hope comes into the marriage and she's like debt free. Debt free. And she's saying, i hope he's worth it how long you two been married two years okay so that's what started this whole thing then you get married and 22 months later you're done 24 months later yeah very good okay so tell me how this conversation goes how did you end up doing our stuff how did you end up here standing here doing a debt-free

screen yeah so um actually we we were talking about doing the whole dave ramsey plan even before we got married yeah um and so when we got married we both actually had kind of two conflicting ideas about it uh so i had the longer 10-year plan in my mind and she had a pretty intense uh two-year plan and yeah i think that's something that we thought she had a pretty intense two-year plan in her mind. Yeah, I think that sums it up. So she kind of pretty much more had the Dave Ramsey plan, and you had the Samson plan. That's exactly right. Okay, I got you.

That would be it. Yeah. And so we got married after we got back from the honeymoon. I wanted to make a big-ticket item purchase. So I brought it to her, and she immediately shot it down and wanted to talk about the debt. And so we'd just been kind of putting away that conversation for a while.

And so we realized we need to have this conversation. It was actually probably the biggest money fight that we've ever had in our marriage. And it was pretty early on. And so I remember, you know, I got pretty upset. She got pretty upset. And she made me go outside and mow the lawn, which I absolutely hate. Because we were not going to pay money to mow.

And I downloaded your book, Total Money Makeover, on Audible. And I was actually listening to your book while I was mowing the lawn. And fuming. And fuming, yeah. And fuming the whole time. Because I hate mowing the lawn, and I really didn't want to listen to you. And so she'd already yelled at you, then I'd yell at you. You're just completely beat down to nothing now.

And I think I'd mow the lawn for like three hours straight because I listened to the book the entire time. I didn't stop. Wow. And so at the end of that, I realized she was right and I was wrong. And I wish I could just tell you I went back in the house and told her you're right. That didn't happen. I know. And I wish I could just tell you I went back in the house and told her, you're right. That didn't happen. Well, I mean, he's all sweaty.

He's been cutting grass. We'll cut him a little slack here. We will. So my pride came into factor. And so it was actually about a few weeks later, I went on a trip with a good friend of mine named Dane. And we had this long conversation in the car. Shout out to Dane. Yeah. And I realized conversation in the car. Shout out to Dane. Yeah.

And I realized she was right and I had to have this conversation. And so all this time, actually since that, she stopped talking to me about the whole debt thing. She just kind of left it alone. It seemed like, and while she was quiet, I felt like God was just talking to me for the whole time. And I know for her,

for me, I think initially when we had got married, Samson was being like this super sweet husband that constantly wanted to buy me things, wanted to get me like a new car and he wanted to purchase some things as well. So one of the more difficult things was in the beginning, um, just having enough foresight to know that even though that would be really

enjoyable and sweet, it wasn't really good for our family longterm. Um, but I did kind of, I had the advantage of having lived in West Africa for a year. And so my whole life was in one suitcase. And I never really remember feeling upset about that or like I didn't have enough. But then coming back to America, I quickly became wrapped up in the consumeristic mindset again. And so for me, it was much more personal to kind of get back to that place of contentedness that I was in Africa.

And so apart from this whole financial thing, I had told God, I had a conversation with him. And I said, I'm just so tired of fighting with my husband about this. If you want things to change in our financial trajectory, I'm not going to say anything else and you're just going to have to handle it. And so for months, I just. So he comes, he comes back from the trip with Dana. Now it's his idea. So we sit down together and, uh, uh, you know, I tell her what God has been talking to me and then she tells me what God's been telling her. Um, and so we, uh, took basically, we took all the money we had in savings, uh, down to our just a $1,000 emergency fund, put the rest and kind of jumpstarted the plan. Um, and it's actually funny because one of the things we talked

about, we had all these goals in our life. You know, as a pastor, I knew at one point I wanted to plant a church. And I knew that we wanted to have a baby. And actually, this last month, we planted a church in Deer Creek, Oklahoma. And Hope is pregnant. We're so excited. It's all coming together. Very cool. cool very cool so you sat down then i guess i started doing a budget and just took the total money makeover material and did it from that

absolutely yes okay very cool so what do you tell people the key to getting out of debt is you pay off 95 000 in 22 months i think for me the key was self-denial and so i did something a little bit more radical i took a year off of shopping completely so i didn't buy clothes accessory shoes perfume makeup hair products and my friends really did think i was crazy um but for me that self-denial really taught me so much about myself and what really that was. That was just tied to your prayer and the West Africa thing is it was getting out of debt. It was more of a spiritual walk for you. It was really, truly more spiritual than financial, but it did help with the financial aspect as well. Oh, definitely helped.

Yeah. Staying out of the mall, keep you some extra money around for sure. And for me, I would say it's being in agreement, being in agreement with hope and being in agreement with God, having that three-string cord in our life and putting him first. Absolutely. And that really changes the game when you're together. We, since then, have never fought about money to this day. No, we haven't.

That's true. Very cool. Very cool. Well done, you two. Thank you. Great story. I'm proud of you. Thank you.

Did you have people cheering you on or people thinking you were nuts? We did. So it was actually funny. We didn't tell anybody we were doing this for about a year. It took a while. And last January in a staff meeting, I told our senior pastor that we were doing this. And so the next Sunday, his sermon included us. And so he kind of told the whole church about us.

He threw you out there. Yeah, he did. And so by then, we really had to stick to the plan. Yeah, you became a sermon example. Now you've got to do it. That's very true. Yeah, very cool. Well done, you guys.

Thank you. Very well done. Proud of you. Good stuff. So we've got a copy of Chris Hogan's book, Retire Inspired, for you. We want that to be the next chapter in your story. Yes, sir. Because you've already hit these goals, planning a church, having a baby.

So now it's time to move on. Let's be millionaires and outrageously generous as we go along. Very well done. All right, it's Samson and Hope, Oklahoma City. $95,000 paid off in 22 months, making $90,000 to $100,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! scream three two one well done that's how it works right there how many couples when they start their marriage don't do that most marriage, don't do that. Most of them don't do that. These guys start their marriage and, you know, a couple bumps there, but really come to the conclusion we've got to work together. We're not hitting any of our life goals not working together. But sometimes people just go off to their corners and live the next 10 years and don't talk about this. Instead of sitting down and saying, hey, we've got to get rid of this debt

so that we have the margin to live our dreams. Having babies, planting churches, what are your dreams? What's in the way of your dreams? Financially, I'll tell you, mathematically, it's called debt payments. When you don't have any payments, you get to live the dream, baby. People ask what you're doing. How you doing? You say, I'm living the dream.

You've heard the saying, right? That's it. I'm living the dream. I had a dream, and I'm living it. And sometimes that's meant in a negative way, like sarcastic, but not if you're really doing it. It's not sarcastic. Hey, I'm living the dream. I'd like for you to join me.

That's what this show's about. This is The Dave Ramsey Show. try again here uh melanie is in bakersfield california i'm melanie welcome to the dave ramsay show thanks dave um my husband and i are just starting to save for our first home. Good for you. And we were having a little debate on the best way to go about purchasing our home. So I told him that I've been listening to your show and that you suggest people have, you know, they get a 15-year fixed rate loan. And he said, well, that doesn't make sense.

Wouldn't it make more sense to get a 30 because you can start paying into your savings account sooner and then refinance into a 15. And I said, no, I think it makes more sense to save more money and put in a larger down payment and get the 15 to begin with. The FDIC says that 97.3% of loans in America, including mortgage loans, are not systematically prepaid. So this idea that you're going to systematically prepay a 30 like it's a 15 almost never happens. 100% of the time, a 15-year mortgage pays off in 15 years or less. Okay.

My suggestion was that we wait a little bit longer and save up a larger down payment and then apply for the the 15 years i think i think we've gotten to the real root of your husband's problem he wants to buy a house that you all can't afford right well that's what i'm afraid of yeah that's really what it comes down. And then he's trying to rationalize that. But I'd like to make it a little bit more comfortable. Exactly. Yeah. He's just trying to rationalize it with some intellectual gymnastics.

But bottom line is you just can't afford to buy the house he wants to buy right now unless you do it in a dumb way, which is a 30-year mortgage. And that would be dumb. So we tell people 15-year fixed rate where the payment's no more than a fourth of your take-home pay put down a good strong down payment and you have your emergency fund left over after you do the down payment and you don't have any debt when you do this now you're in bakersfield california you have a high cost of real estate there so you're probably going to on on a first-time home purchase in that area, you may be moving from the area that you're in and have a bit of a commute in to get to some real estate prices that you can afford.

It's a tough market because real estate, of course, in that area is very, very expensive. But just because real estate's expensive doesn't mean you get a pass on math. Like, I'm in California. No, they still do math in California. You know, you still have to do it. And so it's tough. It's legitimately tough. But don't get into a bunch of intellectual gymnastics where you just basically are trying to figure out some way you feel cool about buying crap you can't afford.

And that's what people do. Well, I could buy it and I can invest and I can do this. You're not going to do any of that. Just take a 15-year, pay your house off. The average millionaire pays off their home in 10 to 11 years, 10 and a half years. And they become a millionaire as a result of not having a house payment and as a result of having a house that was affordable to them in the process. That's the averages.

And so that's the thing to keep in mind. Chris is with us. Chris is in Memphis. Hi, Chris. How are you? Hey, Dave. Thank you so much for taking my call. And on the front end, thank you so much for what you do for everyone that calls in

and even people that you talk to. So I really appreciate it. You're very welcome. Hey, so I have two quick questions. The first one is a year ago, my wife and I got on the program and we had 55,000 in debt and we have that debt down to about 15 now in 12 months. The 15 will be paid off on March 16th. That is when I'll be debt-free, but I'll be left with a primary mortgage and a secondary mortgage. The secondary mortgage is $300 a month.

It's 38 grand, and principal off that is like 70 bucks. So it's nil. I mean, it's not very much at all. My question is do i need to treat that secondary mortgage as one of my baby steps to pay off in my snowball or do i treat that as my uh you know my step six where i'm i'm going up and and and um paying the mortgage off uh yeah we put we put a second mortgage in baby step two in your debt snowball if it is less than half your annual income. What's your household income? $160,000, and yes, it's definitely under half,

and we're all over the place. Yeah, it's a baby step two item. Okay, awesome, awesome. Thank you so much, and then the next question, short and to the point, the 15% investing, is that on the gross or the net? Gross. Oh, man, you're awesome. All right, Dave, thank you again so much, man. I really can't tell you how much I do appreciate everything. My wife and I, because of you, have been laser-focused. But, Dave, our lasers are armed, and they burn everything in sight that's derelict.

And that's all because of you, sir. Hey, you're doing it, man. Congratulations. I'm proud of you. Keep it up. Open phones at 888-825-5225. Samantha is in Salt Lake City. Hi, Samantha.

How are you? Doing well. How are you, Dave? Better than I deserve. What's up? So my husband and I, so I'm 28 years old and my husband is 30 and I run a small business and he is in law enforcement. And so my question is on his pension, he has 10 and a half more years until he can essentially retire. So at 41, he'll be able to retire and start collecting on his

pension. Now, what they do for his pension is they take his highest three years, and they take an average of it. At that point, he'll be 20 years in, and so he'll get half of the three highest-paying years. Regardless, what we tell you to do is you guys need to be, when you're at baby step four, you and him need to be putting 15% of your income. The pension doesn't count.

The pension is just gravy on the biscuit. Because here's the problem. You don't have control over this pension. You don't have control over it. If that city does a bad job of managing money, that pension could get in trouble, and that's happened more than once. And I don't predict that. I don't know anything about Salt Lake City's pension plan being in trouble.

I'm not saying that at all. But when you do Roth IRAs or you do 401ks, that money is in your name. You choose what it's invested in. And if you leave, you take it with you as a rollover into a direct transfer rollover to an IRA. And so you've got control of not only what it's invested in, but you own it. It's not going to go broke. Pensions, you don't control it.

You don't know what they're going to do. They could manage it well. They could not manage it well. It's just out of your control. I love that he's got this great pension. That's a wonderful benefit. I'm glad that's there. But that doesn't mean you guys as a couple can't put in 15%

of your household income into retirement investing somewhere. And I would when you're at baby step four. I certainly would. Thanks for the call. Jeff is on Twitter. Dave, how do you feel when someone says they're going to file bankruptcy instead of doing the work. Well, a lot of times when folks file bankruptcy, it's not because they didn't have options. It's because they lost hope, and their emotional gas tank was completely run dry. And I've been there. I mean, I filed bankruptcy was it was a disastrous mess i was 28 years old so it's 30 years ago and it just gutted me it was an awful awful experience and uh it's shame and condemnation and i just wouldn't wish it on anybody. And so I always fight with you, not at you, but with you.

I'm beside you. I'm fighting on your team so that you don't have to file. And I'm going to show you every possible option and give you hope that you can get there. Then if you still file, I'll still be your friend. You got enough shame and condemnation without me heaping it on you. So, you know, it's like I've got some friends that are going through a divorce, and I think they could have turned it around if they would both sit down with a good counselor

and they would both not be so dad-blame immature and they would both not be so dad-blame selfish. I think they could turn it around. But I think I want it for them more than they want it. And so am I going to be mean to them? No. But I can see how they can do it, so I'm kind of sad for them. That's how I feel.

I feel sad for them. When they could have turned it and didn't, I feel sad for them. That puts this hour of the Dave Ramsey Show in the books. This is James Childs, producer of the Dave Ramsey Show. Did you know you can now listen to the Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at daveramsey.com slash show.