The Ramsey Show - App - Stop Rationalizing Your Money Habits (Hour 1)

Episode Date: November 25, 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 done, 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, America. It is a free call at 888-825-5225. That's 888-825-5225. Starting us off this hour is Utah. Brian is calling. Hey, Brian, how are you?

I'm good, Dave. How are you today? Better than I deserve. What's up? So my wife and I are 25 and make about $65,000 a year. I have $145,000 in a beneficiary IRA left for my dad. We're on baby step four and already have about $30,000 saved towards retirement in Roths and 401ks. What we want to do is cash out this beneficiary IRA and use it as a down payment for our first house. Everyone whose advice I trust from our SmartVista Pro to our SPU coordinators have been really split on what we should do, and I really want your opinion. It's not your IRA. It's a beneficiary inherited IRA, right?

Correct. Yeah, and so there's no penalty to cash it out, only your tax rate, which is probably south of 20%. I would. I would never cash out your personal retirement, but I would use all non-retirement money, and I definitely would do that. Now, you've got to set aside enough to pay the taxes, but there's no penalty on that, and you're going to be able to grow your retirement just fine, and you're going to pay off your home in a quick period of time, and then you're going to be able to continue to grow your wealth just fine if you're following our steps, right? Exactly, yeah. Yeah, yeah. I never tell people to use their own Roth IRA or their own retirement to pay off debt or to cash it out because you've

got a penalty and because I don't want to violate the muscle you've built saving for your wealth. But this is an inheritance. Would I use an inheritance for a larger down payment on a house? Yes, I would. All right. Well, thank you. Easy enough, huh?

Absolutely. Hey, thanks for the call. Brian, or Jessica, is with us in Wyoming. Hi, Jessica. How are you? I'm good, Dave. How are you? Better than I deserve.

What's up? So, we just recently found out we're pregnant. I'm sorry. I can't hear you. Speak directly into your phone. I'm sorry. Try can't hear you. Speak directly into your phone. I'm sorry. Try again. Can you hear me better now?

Yes, ma'am. Okay. We just recently found out we're pregnant. We're about two months in. Yay! And we're starting baby step two about halfway through. We have $49,000 of debt between credit cards and vehicles. And my question was, I'm fully covered medically through the VA being service-connected.

My child will not be. They will be on my husband's insurance. And me never having had normal insurance through Blue Cross Blue Shield. I was thinking saving about $7,000, so stop paying the debt for a little bit. What is your household income? $100,000. Good. How old are you two? I am 30.

He is 34. Okay, cool. What we recommend is when a baby's on the way, you stop your total money makeover. You stop the baby steps. Okay. Just push pause. Pile up as much cash as you can pile up. Okay.

During the nine months, or in this case, seven months remaining, right? Yep. Okay. So during the seven months, how much do you think you can save? If you just don't pay any, you pay minimum payments on your debts, you live on a budget, and all the money that you would have used to reduce debt, we're going to pile it up in a savings account, how much would you have in seven months?

Probably close to $20,000. Great. Okay. Now, let's run that scenario out. Baby comes, mom and baby are both okay, insurance does what it's supposed to do, there's no hiccups, and mom and baby are both okay, insurance does what it's supposed to do, there's no hiccups, and mom and baby come home, how much of that $20,000 would have come out of your pocket to pay for this labor and delivery?

That is fully covered. Zero. So unless there's a problem with the child of some kind, you would have zero out of pocket, right? Correct. Okay. So you come home, you and baby come home, there's $20,000 in a savings account. You take 19 of it and you put it on your debt snowball. Okay.

And you restart, you push play again on your baby step two, baby steps, and rock on through. What you have lost by doing that is whatever you would have saved in interest on the debt you reduced during seven months on $19,000, which isn't spit. Okay. Interest isn't the problem, okay, on this because it's a short-term thing and you're just piling up cash and there is something very comforting about a big warm pile of cash when you're just piling up cash, and there is something very comforting about a big, warm pile of cash when you're going through a medical procedure you've never been through before, like having your first child. I agree 100%. That's why I was a little nervous and scared. I'd be a lot nervous. I'd just push pause and then push play.

My point is, if you stay on your budget and you do exactly what you would have done in terms of sacrificing and saving instead of sacrificing and paying down debts, you're going to end up seven months from now in almost exactly the same place when you write the check, when the baby and you come home. Okay. You're really not going to lose any ground by doing this when you push play again. Now, if you screw around and you relax and you use some of this money to decorate the nursery and all this kind of stuff, then you've messed this plan up. That's not what I'm talking about.

No, we're planning on buying everything second-hand. You see what I'm saying. There's a lot of ways you can screw this up. If you treat this money like it was already paid on the debt and you only use it if there's some kind of a need for you or the child medically. Okay. If there's not, I expect all of that money to still be in that freaking account. Okay.

Got that. Ah, okay. Now we're getting dialed in. Good. Hey, thanks and congratulations. Very cool stuff. Open phones at 888-825-5225. You guys jump in.

We'll talk about your life and your money. You know, our culture is interesting these days. I got to do a little traveling this weekend. We were in Charleston, South Carolina, and I did an event there, a sold-out event for 3,000 folks, Financial Peace Live, last week, and Chris Hogan and I. It was a lot of fun, and I get to meet a lot of folks that are coming to the events and meet people at some of the other things we do around an event and different things. And

it's always interesting. I mean, the number of people that came up to us at the hotel or in some restaurant or somewhere, hey, Dave, thanks for everything, man. You changed my life, saved my marriage. You know, really nice comments. And occasionally somebody says something like, you know, I really like how harsh you are with people. And I'm like, I think you kind of missed the point. Blunt? Yeah. Clear? Yes.

The coach at halftime jacking you up to go win the second half for your own benefit? Yes. I don't put any of that under category of harsh, though. Maybe you do. But we live in a very tender culture. Everyone's so soft and sweet and kind. And if you just tell someone something, it's like, ah, you can't do that anymore. Plain spoken, we used to say back in the day. He speaks his mind, they used to say. But some people don't have anything in their mind, so they shouldn't speak it. But there you go.

So we'll continue with the harsh advice shortly here on the Dave Ramsey Show. I got a call the other day, and I thought it was worth talking about again. It was from a wife looking for life insurance for her family. She asked why I only recommend term life insurance instead of cash value plans like whole life. I usually explain how you overpay for coverage, earn a horrible rate of interest, and don't get your cash value when you die. But this time, I just had her go straight to Zander.com and get a rate. And then we compared that rate to the whole life plan, and she immediately saw the huge savings. She realized all the things she could do with that money, like paying down debt, investing in a smarter way. That made it

real for her. It makes no sense to buy or keep a cash value plan when there are smarter, less expensive ways to protect your family. That's why I suggest that everyone go to zander.com or call them at 800-356-4282 and get a free quote that's zander.com or 800-356-4282 Thank you for joining us, America. We're glad you are here. Jason is with us in Washington. Hi, Jason. How are you? Hey, Dave.

How are you? Better than I deserve, sir. What's up? I love it. Hey, newer listener within the first month here, and I am on gazelle intensity, but I am getting one of my horns stuck in the sand here, so I'm hoping you can kind of walk me through this real fast. My wife and I, two years ago, lost our jobs, and in a bunch of fear and fog and unknown,

we did a stupid thing, and that was we took our retirement out. We took nearly $150,000 out of retirement and paid off everything, including two brand-new vehicles that were worth about $45,000 each. And, of course, not fixing our habits, we dug ourselves a new hole and took out a HELOC and took out some more consumer debt. And so this year in our taxes, we ended up owing the IRS nearly $41,000 because of that bad decision.

Sure. And so what I'm really stuck on is we hired a consultant firm to help bring resolution to that. And they're telling us, don't do anything right now. And my wife and I, she's completely on board with the direction, and she's been listening like crazy like I have to your radio show and your books. And so my thing is I have a brand-new truck on most that I could sell probably for nearly $40,000 that could help us immediately pay off the IRS potentially or pay off some of this other

debt. And I'm curious to get your advice if we should hold on that until the tax resolution comes back or if we can take some action. Yeah. You applied for an OIC, an offering compromise? Yeah. So we're going through a company called Coast One, and forgive me if I can't figure out how much they charge you. About $3,500 that we paid on. They should not have taken any money from you because you're not going to qualify for an OIC. The IRS forgives debt only when you have no earning power and no assets,

not when you have a $40,000 truck and a $40,000 tax bill. Okay. You're not going to get it. So the odd you think? You're not going to get it. All right. 100% of the time, you're not going to get it. And, oh, by the way, you shouldn't get it.

You shouldn't get it. Yeah. You shouldn't be forgiven for taxes when you have the assets to pay them. And so, yeah, sell your truck and pay your taxes. Okay. And that's where I'm really struggling because right now, like you said, I've been selling everything. It's not nailed down, and my kids are coming to me with stuff before I sell them, right?

Yeah. But you've got a truck sitting there that will cover it to get the IRS out of your life. Okay. And then take care of the rest of it by getting a second job or something. Yeah. And just, you know, just scratch and claw, scratch and claw and get the rest of the way out. But you do want the IRS out of your life. And, um, I can just, I mean, I've, we've worked with OICs and with bankruptcies and with repossessions and with foreclosures. And, um, this is the field I'm in for the last 30 years. And I do not do tax work,

but we have had a bunch of clients apply for OICs, and they almost always are denied. It's not because the person doesn't know what they're doing that are doing them. We have some of the best tax people in the world at our fingertips. But it's simply the IRS laws are very, very, the Congress has very strict laws on when the IRS is allowed to forgive taxes. And you basically have to prove pauper status. You have to prove that you have no income and no means to make money and no money of any kind, no assets of any kind. But they don't let you just walk away from your taxes when you're driving a forty thousand dollar truck and the truck and the tax bill is forty thousand dollars

they just don't brother i'm sorry i wish they would but they don't all right brett is with us brett is in north carolina hi brett how are you hey dave thank you so much for taking my call. It's an honor to speak with you. You too. So I came home back in August, and unfortunately, everything, well, my wife had left my house and left a letter. She wanted a separation. I've been going through that. And so we had about $10,000. We were debt-free. I've been following you for a long time, so we didn't have any debt. We had about $10,000 and she took half of that. So I was left with about five. And then I had to get a lawyer, you know, that's a 2000 retainer. And then, um, my car worked down, of course, I had to spend a thousand to get it fixed and all this stuff. I'm basically down to

a couple thousand dollars. Um, and I'm just making enough to get by every month right now because I still let her be on my insurance. I can't be divorced until next August because you have to wait a year in North Carolina. So I'm not out of money yet, you know, but I'm getting really low. And I was just wondering if I should think about, I mean, I don't see a way around getting a loan to pay my lawyer fee, right? Because it's ended up being around a thousand a month for my lawyer. And I was trying to save at least three to 500 if I could.

But, you know, I was left with the house and mortgage and everything. So I'm paying for all of that right now. How old are you So I'm paying for all of that right now. How old are you? I'm 29. How long were you married? Two years and two months.

My goodness. I'm sorry. Thank you. Okay, I don't know North Carolina law. This is the first time I've ever heard of a state taking a year to get a divorce unless the parties involved were both adversarial. And I don't know why you would pay your lawyer $1,000 a month while we sit and wait on this clock to tick. A $12,000 divorce for a two-year marriage for a 29-year-old?

Well, it's just been paying for making the separation agreement and getting all of that settled. But, I mean, again, you said $1,000 a month. What do you make? I make $80,000 a year, and she wasn't working. Why are you broke? You make $80,000 a year. Where's all the money going? You told me you didn't have any debt.

I don't. So, like I said, it seems like I spent $1,600 to the lawyer last year. Maybe I just have too expensive of a lawyer. I thought you said you paid him a $2,000 retainer out of your savings. I did. So how much money have you given this guy total? So it was $2,000 for the retainer. Yeah.

And then I've spent, last month, I spent $1,600 on top of the retainer, you know, an extra. And then the month before that was about $700 or $800. Okay. I think you need to have a discussion with your lawyer about when these legal fees are going to end, because this is a very expensive divorce attorney, considering there's nothing here to contest, and there's no real argument going on okay do you have children no sir okay are you paying her money no sir good okay so you have eighty thousand dollars coming in and what is your so your monthly take-home pay is what, $7,000, $6,000? Yes.

What's your house payment? It's $1,000. Okay, that leaves $5,000 to get by on. I'm sorry, I don't know why you can't get by on this. I think you need a budget. I think your heart is broken and your brain isn't working. I've got my every dollar budget. I apologize.

It's hard for me to pull it up. That's okay. I mean, you don't have any debt payments but a $1,000 house payment, and you have $6,000 or $7,000 a month coming home. Yes, sir. I think probably what's happening, I mean, you just got the wind knocked out of you because you got gut punched here, brother. You're hurting, and that causes your brain to be in a fog a little bit. That's all normal.

But I'm just pointing out that mathematically, you should have plenty of room in this budget. I know a big part of my paycheck goes to my health insurance because she had some health problems. And so it's like $700. I get paid every two weeks, and $350 each paycheck goes to. I think you need to figure out where this $6,000 or $7,000 is going, sir. I haven't found anything in this discussion that tells me where it's going yet.

It's a very difficult time for you. I'm sorry you're hurting. But normal human beings, when we're hurting, our math brain doesn't work as good. So dial in on that, and I think you're okay. No, you don't need a loan. You need to tighten up and live on what you've got coming in. This is The Dave Ramsey Show. In the lobby of Ramsey Solutions on the debt-free stage,

Michael and Martha are with us. Hey, guys, how are you? Hi, Dave. Great, how are you? Welcome. Where do you guys live? Middletown, Delaware. Oh, and all the way to Nashville to do a debt-free scream.

On Thanksgiving week, no less. We're very thankful. I love it. Very cool. How much have you paid off? We paid off $130,568. Love it. And how long did this take?

34 months in the last, was it the last 30,005 months. Wow. You kicked it. Yes, we did. And your range of income during that three-year period of time? It was between $185,000 and $201,000. Great. And what do you guys do for a living?

I'm an executive secretary. And I'm an Army pilot. Oh, very cool. Well, thank you for your service. Excellent. What kind of debt was this $136,000? A little bit of everything. We had a home equity line of credit, a little bit to the IRS, a couple credit cards, a couple car loans, a school loan, and a family loan.

Four kids. Six kids. Six kids. We only brought four today. Okay. Well, it's always good to leave a couple behind. You guys were normal. Wow. so what woke you up three years ago tell me your story well we had a large we thought a large 529 account and uh our oldest started to

repeat chem two twice and physics two twice and calc two twice and things were not going as planned and we saw that the train was coming from both directions, and we were going to have to cash flow two in college at the same time. Ouch. And so we had to get it together. Thus the two that aren't with us, and four coming up behind them, huh? Quickly. Yeah, all right, wow.

So the college bearing down on you woke you up. Yes. Then what did you do? Wow. So the college bearing down on you woke you up. Yes. Then what did you do? Then we read the Total Money Makeover, and we started with that. And then we had another impact moment. I worked for an elected official who was not reelected, and we were staring at the possibility of my income going away and so we we thought we were gazelle intense but i was a grass-fed gazelle

so we uh we really scraped the couch cushions then and we just pretended like i didn't have a job and everything i made we just threw it at the debt and got it. The last $30,000, that's where that geared up. Yes. Okay, the intensity turned up. Yes. We thought we were scared, but then we were more scared than that. Gotcha. So you did all of this with the Total Money Makeover book? We did, and we also, that same last six months, we also went through Financial Peace University. Oh, okay. All right. Your church or a local church? A local, yeah. Okay. All right. Very cool. Very cool. So now that you did it, with all that intensity,

how's it feel? It's really hard to explain, but I don't feel like it's quite kicked in yet, but we're still trying to breathe through it. We've had, yeah, we're still trying to process. Yeah. It's a little surreal. It is. It feels like a pilgrimage to be here today. Yeah. Yeah.

So how long have you guys been married? 17 and a half years. Have you ever been debt free during that time? Just now. Yeah. Just now. Just now. Yes.

Wow. And it feels just weird now, huh? Yes. It's kind of floaty. It's awesome. Yeah. Well, way to go. We're so proud of y. It's awesome. Yeah. Well, way to go. We're so proud of y'all.

Way to go. Very, very cool. So in your financial peace class, people know that you paid off $136,000 in 34 months. And some of your friends you bump into, they go, how did you do that? What do you say? Well, you just, what do you tell them you do? So you have to stop rationalizing and making excuses for everything. I love when someone calls in your show and they say, should I do A or should I do B?

And you say, well, I like C. And that's really where the growth is going to come. You really just have to dig in. And we thought we were doing a budget. We thought we were being intense. But you really just start and you start to carve out a little bit more and a little bit more. So we, we hung up our, our chain of shame.

This is our chain of shame. And this is our last six months. Um, so when we would get there, we would say, oh, well, if we just pay off like another hundred dollars, we can cut another link. And so then it was uh you know we went from you know grass-fed beans and rice yeah yeah rice and beans ramen noodles yeah soggy tuna fish sandwiches will survive yeah just just make it huh yes wow wow well way to go way to go very very cool so the stop rationalizing yes Yes. And what else?

There's a little bit of gifting in there as well. Yes. Our very last month that we were getting ready to be debt-free, again, I was coming up with that option C. So I really wanted to run a race. I'm a runner. I came to Nashville to run a race. When we booked it, I thought I was going to run a race. I'm a runner. I came to Nashville to run a race. When we booked it, I thought I was going to run it. Maybe it would be our death-free scream time, but we didn't quite make it. We were about a month short. So I ended up coming anyway. I was running for St. Jude's, raising money for

them so I could get a free race bib. And here we are staying, three people in a one-bedroom Airbnb with a Murphy bed and a pull-out couch., and, uh, I got a call from a friend of ours who had recently lost his daughter to a tragic accident. And, uh, she had done, um, work with the military and, um, with autism specifically, and Michael has autism. And, um, we, uh, they said, uh, you know, we've heard about your journey. We've watched it on Facebook and we really want to be part of it. And in honor of her and her memory, we'd like to give you a check. And so we keep the check and the letter, and we're going to frame it, and it's part of our story.

And so it moved us up another month, and that really is our why. We want to give, you know, I mean, I'm not, occasionally I would run into a fundraiser and have too many glasses of wine and make a really generous contribution, but we were pretty good about it. But now we can really do it and we can really give back. So we've picked a military family for next year on Mia's birthday. And we're going to make, we're going to put her kids through camp. Oh, neat. Yeah.

As part of our giving back. So every year we put our birthday on our calendar and we're going to put her kids through camp. Oh, neat. Yeah, as part of our giving back. So every year we put our birthday on our calendar, and we're going to give back every year. Very fun. Yeah. Very fun. Well done, you guys. Very well done. I love it.

I love it. I love it. So now that you're free, what's the first thing you're going to do other than the giving? Come to Nashville. Come to Nashville. than giving uh come to nashville come to nashville we have our five cars with a median mileage average mileage of about 200 000 miles so i think we're probably going to start saving and upgrading we're going to probably upgrade a few cars get rid of get rid of some of the hoopties out of the driveway yeah and take a vacation there you go i love it well congratulations

you guys we've got a copy of chris hogan's book for you, Everyday Millionaires. You'll be one before we know it at this rate. Very, very, very well done. And the kiddos that are with you, names and ages? This is Cambria. She just turned 12. This is Lelia. She's 14. This is Michael.

He just turned 17, and Warner is 15. All right. Very cool. Well, congratulations, you guys. Michael and Martha and the gang, $136,000 paid off in 34 months, making $185,000 to $201,000. Count it down.

Let's hear a debt-free scream. Ready? Three, two, one. We're debt free! Well done, you guys. Very well done. Well, that's how it happens. You're just going along normal,

and then something knocks you off the normal track. You don't want to be normal anymore because normal sucks. Maybe you just watch this particular YouTube post of this particular family, and you just say, you know what? We need a chain of shame around our house. We're done with this. We're not going to live like this. I'm sick of this. I'm not going to be this way anymore.

All you've got to do is just decide. It's a decision. You just have to decide. That's all these people do. They don't have magical powers. They're not different. They just decided. That's the only difference in them and you.

They decided. And you're still sitting on your freaking couch. It's time to decide to change your life. This is the Dave Ramsey Show. Thank you. Malcolm is in New York. Hey, Malcolm, welcome to the Dave Ramsey Show. Well, how are you doing? Better than I deserve. What's up?

So I'm currently in college. I finished my first year out of 4.0 GPA. Congratulations. Cool. What are you studying? Thank you. I'm a pre-med. I'm trying to get into medical school.

Excellent. Yeah. So I have a dilemma. So I saved up money to live in New York while going to college. So I'm paying rent of, uh, $1,100 every month. And I only had, uh, a couple thousand saved up. I believe at the start, I had around 8,000. Uh, but now I'm nearing the end of the amount, the money. And, uh, my parents, well, my parent, my mom wants me to move back in with her in Pennsylvania. Now there's, there's only, there's only one college near her within like a,

within like a four hour radius, basically. So like, yeah, yeah. So there's only one college that gives a good pre med degree for me to go to medical school. That's right next to her. And, uh, but they, they, they're going to charge me after uh but they they're going to charge me after federal aid they're going to charge me around ten thousand dollars a year and i was wondering if it was worth it to uh to take out a student loan to do that or should i not and work and save up the money and then go okay how are you paying for the school you're in? Federal aid is actually paying for it because my mom has income that they... So they cover 100% of the school you're in? 100%. And the college that's near her does not cover 100%? Yes. Okay okay where does she live in pennsylvania uh she lives in central pa

uh right by gettysburg okay all right um okay so let's see one option is new york which is twelve thousand dollars in rent and free tuition the other option is free rent and $10,000 out of pocket, right? Yes. Okay. So it sounds like a break-even to me. I wonder if there's a third option. So I was, I mean, I could go to PA.

They have a lot of factory jobs over there. And I was thinking I would just get a factory job and save up the money. But I was wondering, is it worth it to do that? Then to just go straight into college, finish up as fast as I can to get to medical school, do medical school, because I'm going to get, I'm going to get dead anyway, because medical school, no one's going to pay for me for that. So there, I mean, they'll be able to cover someone because doing good, I should be able to get a scholarship. But, uh, but yeah, it's like, uh, I'm not sure if I should really acute, acute this debt from, uh, starting from my four year.

I was wondering if I should just save up that money for the four-year and then, you know, start getting into debt in medical school. I understand what you're saying. I'm just saying I think there might be another option other than the two you presented me. There's an infinite number of schools that do pre-med, and there's all kinds of different costs on them. And if your mom is set up to where you qualify for pell grants and you're making a 4.0 i wonder if you can't get scholarships and some other things and go someplace where you live and go to school free yeah that's what i i would i would love to do that but uh but you just haven't found that they're kind of really it's really hard for a transfer student to actually get a good scholarship to another college, like a scholarship in which they give you money to live there too.

And especially in New York, it's pretty much, I mean, the only ones that do that in Manhattan, I really don't want to live in Manhattan. Like, I really don't want to live there. Okay. I don't want you to either. It's too expensive for you in this situation. But I think you've gotten some bad information. There's untold billions of dollars of scholarships that go unclaimed every year, and they can be used for anything.

Some of them are academic-based. Some of them are need-based. The fun thing is you actually qualify for both of those as well as all of the other scholarships. And so I think I'm going to put you on a different track completely. Number one, let's just stop for a second. I want you to look at a third option or a fourth option or a fifth option because if the two options that are in front of you suck, it means you don have enough options and that's what you've given me are two bad options and so a third option that comes to mind immediately is not quit and go work a factory job to save up you only need

ten thousand dollars do you have a car uh yes i have a car deliver Yes, I have a car. Deliver pizzas every night, and you'll make $1,500 a week, or a month, rather, and you can pay for $10,000 worth of college. 1,500 times 12 months of work is $18,000, and you can cash flow college while you're in it, while you work. Walk dogs, cut grass. I don't care what you do, but work at something that's profitable and makes you money, not minimum wage, but not a factory job, and then go to school during the day and, you know, and pay cash. That's a possible third option. I really think you're going to qualify for a whole bunch of these other things that are out there. And so what I'm going

to do is,, including medical school, see, what you did is you just laid down. You said, okay, the two ways I know how to do it are both $10,000, $12,000 short, and so I'm going to have to go into debt. Worse than that, I'm going to have to go into a lot of debt to go to medical school. And so what you did was you just took a normal path, and that gets people deeply in debt and deeply disillusioned. And I don't recommend that path. Instead, I would tell you there's actually ways to go to medical school debt free.

There's a thing called the MD PhD program. There are fellowships, there are scholarships, there are all kinds of things, especially where your mom has a lower income that qualifies you for all kinds of need-based things. That should open up a ton of doors for you. And you got a 4.0 your first year. That should open up a ton of doors for you. So I think you've got too narrow a vision. I want you to broaden your vision on where you might go to school and where they might pay for it and where you can get some scholarships and the type of work you can do while you're doing your undergrad and start investigating now how you're going to do medical school debt-free.

Oh, there's a lot of work for you to do, young man. Hold on. We're going to send you a copy of a book called Debt-Free Degree, which is what you and I are discussing by number one best-selling author Anthony O'Neill. It's a number one bestseller, and it will walk you step-by-step through exactly what I'm talking about. And go to Anthony's website and look at the scholarship search tool, and go to Anthony's website and read about anything that he's got on there to help you get through school debt free. And this book will help you as well. So you hold on. I'll send that

to you and broaden your options. So good question. Our question of the day is from blinds.com. They have a 100% satisfaction guarantee. That means even if you mess up, if you mismeasure, you pick the wrong color, they will remake your window blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best possible deal. Today's question is from Lynn in New Jersey. I inherited a portion of my dad's 401K, about $85,000.

We need to take a distribution from it each year. Should I take the extra money out with this year's distribution to pay off our debt and be out of baby step two? Yes. Or treat it like a 401k and not touch it? No. We'll treat it like an inheritance that is taxed, because that's what an inherited IRA is. I do not cash out your IRA with penalties and taxes for anything except to avoid bankruptcy or foreclosure. You're not facing that. But this is an inheritance. It just happens to be a taxable inheritance.

Most inheritance is not taxable, but if you inherit an IRA, you will pay your tax rate on the money as you withdraw it. And I would withdraw it to get out of debt. I would withdraw it for a lot of different things be sure you set aside the money for the taxes that are going to be due as a result of you making the withdrawal so good question thank you for writing in today lynn in new jersey that puts this hour of the dave ramsey show in the books our thanks to james childs our producer and madison browder filling in for the vacationing Kelly Daniels. I am Dave Ramsey, your host. We'll be back with you before you know it. This is James Childs, producer of The Dave Ramsey Show.

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