The Ramsey Show - App - Stop that Crazy Commute and Get Your Life Back (Hour 2)

Episode Date: June 20, 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. You jump in, we'll talk about your life and your money. This is where debt is dumped, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. You jump in, we'll talk. The phone number is 888-825-5225.

888-825-5225. Chris is in Ontario, Canada. Hi, Chris. Welcome to the Dave Ramsey Show. Hi, Dave. It's a pleasure to meet you or talk to you. Thanks for taking my call. Certainly, sir. How can we help? Well, I was turned on your show about a couple years ago, and I basically used your methods

to be able to cash flow my wedding. And now I'm sitting, and I kind of did something stupid, I guess. I went and I got what you guys call a HELOC. Here it's called a merit line. And my mortgage is coming up for renewal. It's the only debt I have. And I was wondering if it would be a good idea to refinance my mortgage and just roll the whole HELOC or merit line into my mortgage, and then all I have is a mortgage payment. What do you owe on the merit?

On the merit line, it's a $60,000 limit, and I'll be sitting at $35,000 for it. What's your household income? Household income is about $60,000 gross. Mm-hmm. Okay. Yeah, I probably would roll it in as long as your first mortgage has to be refinanced anyway. It does. It has to be refinanced or, yeah, renewed in about six months' time.

It gets renewed, so. Okay. Why is that? I've already talked to the bank, and the bank says that it's not a problem, but I was just curious what would Dave do to cut him off. Yeah, I would go ahead and put it in there. It's more than half your annual income, so it's a baby step six item. It's going to be less interest and more stable being in your first mortgage

than it is sitting as a second mortgage or merit. And so, yeah, I would definitely do that rollover. Thanks. Patrick's in New Mexico. Hi, Patrick. Welcome to the Dave Ramsey Show. Hi, Dave. Good afternoon, sir.

Good afternoon. How can I help? So currently I commute 100 miles each way for work. It's a three-and-a-half-hour commute total a day. I have a job opportunity to change companies, to work in the city that I live, but it would pay about $10,000 to $15,000 less. And I've only been in this position for six months. The new opportunity would be the exact same job, just different companies. And I'm wondering if it's worth it to switch.

Why does it pay $10,000 less then? It's just a different company. That's what they're offering for the position. The reason I was able to get $10,000 or $15,000, the reason I was able to get more where I currently am is because it's so far away. Getting combat pay. Okay. All right.

What do you do? I'm a contractor for the Department of Energy. So what do you make a year? Right now, 80. Okay, so you're going to be making 70, but you don't have a three-hour commute. Yes. Kind of sounds like a no-brainer. Okay.

Is this what you want to do with your life? Yes, I really love this kind of work. And this is the way I was looking at my foot in the door. Has this new place got an upside potential? Yes. Yeah, okay. It's kind of a no-brainer. You get your life back.

Your commute is horrendous. Right. Yes. All right. And another thing there, their benefits package is a little bit less right now. Current one matches 6% to 9%. And the new one would only match 4% for 401ks for Ross.

I don't know if that would make that big of a difference. It's up to you. You want to drive three and a half hours for that. I wouldn't. Right. Okay. But, I mean, I'm not above asking them to pay more. Right. Okay.

They already offered you one position. Why don't you just go, Hey, i'm already making this over here can you get close to that if you will we got a deal and i i did do that and they said no this this is what it pays okay which makes me wonder if there's upside potential right um what i do now they're currently just implementing at this new company so it's kind of work helping them implement it and work it from the ground up. Okay.

So I do believe there's potential for growth and building this program. Okay, cool. And the other place is not a place you want to move to then? No. I knew that when I took the job, but it was worth it for me to drive that much every day. But I knew I didn't want to live in this community. yeah i'm out of there then good question thanks for joining us open phones at 888-825-5225 common sense for your dollars and cents you want to know a sneaky way to get ripped off just keep paying for insurance coverage that you don't even need.

Or you can just keep paying the same provider year after year while the rates go up and you could have gotten a better deal somewhere else. This is an insurance company. It's not your wife. You're not married to them. A better way to manage this stuff is to do an annual review on your coverage. And then you adjust based on how your life has changed and if somebody can give you a better deal. There's 10 kinds of coverage that you might need.

Eight of them are insurance. And we built a tool that will help you see what you need, see if you're doing it right, and it only takes five minutes, and it's free. So get out your phone and text the word CHECKUP to 33789, CHECKUP to 33789, or you can just go to DaveRamsey.com slash checkup. It's our five-minute coverage checkup, and it's completely free. Tristan is in New Orleans. Hi, Tristan.

Welcome to the Dave Ramsey Show. Hi. Hey, what's up? Okay, my husband is military, and we've got 10 years to retirement and then two years in florida for here schooling we bought an rv and a new truck um we move every two to three years i just want to know was that smart should we have bought a house considering we move every two to three years yeah buying a house is not smart when you're moving that fast uh Okay. RVs go down in value, so you'd have been cheaper to rent.

Well, basically, the military gives us about $1,800 a month. I know. So that pays for the RV and the truck? No. They give you $1,800 a month whether you had an RV or a truck. Well, yeah. So the RV is going down in value. Okay. So I figured we were throwing away money renting this you're throwing away money owning an rv it's going down in value faster

than your rent would faster than your rent is well our plan was after we retired to keep the rv and travel the united states when we wanted to United States when you want it to. Is that still bad? Yeah. When you retire, you can buy an RV and pay cash for it if you want to do that. But in the meantime, you're living in a car that goes down in value faster than rent would be. Just run the math out. If you bought a $50,000 RV in 10 years, what's it worth?

Five years, what's it worth? Nothing. Nothing. You just burned that much money, plus you paid payments. And you justified it because the military is giving you money, which they're going to give you whether you own an RV or not. So you've been better off to burn the money on rent, personally, and a better quality of life, probably. You can do whatever you want to do, but the math isn't working on what you're doing. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health care ministries or chm helps christian families churches and ministries

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That's chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thanks for joining us, America. We're glad you are here. Ariel is with us in West Palm Beach. Hi, Ariel.

How are you? I'm good. How are you, Dave? Better than I deserve. What's up? So I just graduated with my master's and social degree, and now I'm looking to get a job. Now, this is my fourth degree. With the other three, I didn't take a loan.

It was all scholarship. But for the master's, I had to get a $20,000 loan. Now, I live with my parents, and they were always, you know, as long as you're doing what you're supposed to do, as long as you live on your roof, you don't have to work. But now that I don't have any other financial responsibility and I just want to tackle this loan, how should I handle it? Because I know they already saved a thousand dollars. Once I start working, you know, what steps should they take to just get rid of this loan? Do you have your new job lined up? No, not yet. I'm hoping that I'll have it lined up in the next few weeks. And when I talked to one of our, somebody I worked with formerly, they were saying that the salaries are normally between $30,000 and $42,000.

So I'm hoping along that range that I'll get in as a salary. So you got a master's degree to make $30,000? Yeah, well, that's a starting for somebody who's just like literally right out of school yeah that sucks yeah especially with social work yeah okay um all right so well i mean what we teach people is to save a thousand dollars first and then list your debts, smallest to largest, and attack them in that order. Is this one single loan or is it a total of little loans that are $20,000? Well, it's from the same loan company, but it's two different loans. So I was hoping to consolidate them because it's really $2, $3 a day.

It doesn't matter. It doesn't matter whether it's consolidated or not. I wouldn wouldn't even bother i would just attack them with a vengeance are you going to be living at home while you start the job yes okay so you can put all this you can put all of your money towards this loan then okay just so put all the money everything you can yeah okay so don't save anything i'm living at? No, $1,000 first, and then let's pay off these. When are you moving out? Well, my parents are Jamaicans, so they're like, you know, you get married. Like, you know, we're in the church.

You get married. Then you leave. It's not really a push as long as you're being responsible. You're living under their roof. Like, you're not doing anything to mess with yourself. That's what we say. I'm sorry. What did you say your parents are?

We're Jamaican. Oh, okay. Okay. So you're just saying culturally it's more normal in your heritage to live at home? Yes. Well, yeah. As long as you're, you know, I always went to school. I understand.

As long as you behave. I got that part. Okay. Yes. Yeah. All right, good. Well, then you're going to be there a little while, and let's pile up this cash. I mean, let's pile this cash towards this loan and get rid of this loan as fast as you possibly can.

And then I would start saving towards moving and getting your own place at some point. So, good question. Kara is with us in Lexington, Kentucky. Hi, Kara. How are you? I'm well, and yourself? Better than I deserve. What's up?

Great. Quick question. My husband and I, we have about $75,000 in student loan debt combined. We have an income roughly of $75,000 to $80,000 a year, and we have paid off a bunch of our little small debts, medical bills, and then my car. The only other debt that we have is his car, and we owe about $11,000 on it. We just want to get all this knocked out as soon as possible, and it's kind of overwhelming with such large numbers.

The small debts were easy, but the bigger ones are kind of overwhelming to us. Well, yeah, the debt snowball slows down to a screeching halt once you get past the little ones, right? And so we're still going to list them smallest to largest, and we're still going to chunk away on it. And then I just start backing off. I kind of pan out and look at the scene a little bit wider, and that helps you have a little bit more hope. So you make $75,000, you have $86,000 in debt. If you're going to do it in two years, it would be $43,000 a year. That's probably not quite going to happen.

Right. Probably going to take you closer to three years. Yeah, we were wanting to do three years or less. But also on top of that, I just applied, and hopefully I will be able to do it, to teach children in China English. So that will be an extra income for me, probably maybe up to $600 a month. Done remotely, I take it? Yes, absolutely. Okay.

All right. Sure. Okay, great. Anything we can do. But, you know, basically what we're saying is about $3,000 a month towards this debt chunks it off. So the car debt is how much? $11,000. Yeah. So $3,000 goes into $11,000 how many times?

Four months. You're done. Right. Okay. And then you're done. That would be good. But we also have money. We have about $15,000 saved up right now.

Oh. We'll pay off the car today. Can we just go ahead and pay that off? Yeah, pay off the car today. Baby step one's $1,000. Anything above $1,000 starts going towards his debts. Okay. Are you on a written budget yet?

I'm sorry? Are you doing a written budget yet? We just started back in April trying to do a budget of how much we spend and how much we bring in. And so we're kind of getting a better idea of where our money is going. But it's still overwhelming. We don't know if we're doing it right or not. You're not doing it right. I can tell by the way you said that.

Yeah. I kind of want to sort of get a feeling of where I'm going. No, that's not how budget works. It's not kind of sort of feeling. You write it down. You know exactly what you're going to spend on every category, and then you stick to it. And you and your husband, pinky swear and spit shake, this is the freaking plan. Right.

So jump on EveryDollar and download the EveryDollar app tonight. You and your husband go build a real budget. And a budget is you tell your money what to do. EveryDollar has a name. EveryDollar has an assignment before the month begins every month. And then you stick to that. And you stay out of a restaurant. You don't need to be inside a restaurant unless you're working there.

Right. You're broke. Okay. And you don't need to be talking about a Right. You're broke. Okay. And you don't need to be talking about a vacation. You're broke. Yeah, we've already discussed that we don't need to take any vacations or anything like that. And we've already canceled. We had one planned, but we canceled it.

Good, good. So what happened is that you've taken all the big pieces and you put them in place, and the only step left for you is the fine tuning and really just take take two more steps down into the details okay you're still hovering just above the details on your budget as an example and then you can look at it and go okay three thousand dollars a month boom car's done in four months boom three thousand dollars a month when's the student loan gonna be done boom and we're gonna be done with the whole thing 86 000 bucks which is 11 month, when's the student loan going to be done? Boom. And we're going to be done with the whole thing. $86,000, which is $11,000 plus $75,000. That's your student loan plus your car.

That $3,000 a month for 30 months does it, right? That's two and a half years. That's 90 grand. That sounds good. So is there something I need to do with my student loans? I just want to know that the extra is just principal above my regular payment. Nope, just start filing. Yeah, just put principal only on the payment.

Are you paying it online? Well, no, it automatically is deducted from my account every. Okay, but see if you have an online ability to pay. Most of the time they have principal only. I do. Selection on the online page, and you can just say this goes to principal, this goes to principal. You do not want to prepay payments you want to pay principal only payments is what you want to do when you get to your student loan but right now the first four months we're on your car

and then we attack from there so hey you're doing great you got this you you got this down you got it you got the ideas and you got the play the pieces in place. So now let's dive down into the details on this budget tonight, get this thing laid out. Because what's happened, you kept saying I'm overwhelmed. The reason I know you're not doing your budget is if you had it all laid out in detail, it's not overwhelming. How do you eat an elephant? A bite at a time, and you have a diagram of where to take the first bite. And that diagram is called a budget. Every dollar has an assignment.

That's my diagram on eating this elephant. It's an $86,000 elephant that's going to take 30 months. You can do it. This is doable. And you've got this extra income. You've got all this other stuff going on. It may even happen faster than that for you. Probably will, actually.

But we know we can do it in 30, so it's not overwhelming. Great job. Proud proud of you this is the Dave Ramsey show Thank you. In the lobby of Ramsey Solutions, Danielle is with us. Hey, Danielle, how are you? Better than I deserve, Dave. I love it. Where do you live? Richmond, Virginia.

Oh, cool. Welcome to Nashville. And all the way down here to do a debt-free scream. Yes, sir. Love the t-shirt. Straight out of debt. I love it. Thank you so much.

Very cool. How much have you paid off? $20,550. $20,550. Very cool. And how long did this take? About eight months. Eight months.

All right. And your range of income during that time? About $37,000 to almost $50,000. Good for you. What do you do for a living? I'm an underwriting specialist at a local insurance company and I have a part-time job as a mechanic in a bowling center. Oh, neat.

That's cool. And what kind of debt was the $21,000? Mostly my truck debt at a truck loan with a local credit union, and I also had a credit line with PayPal. Oh, a good thing to get rid of. Yes, sir. Very good. How old are you?

28. Okay. So eight months ago, ding, ding, you turned this on fire. What happened? Actually, it, you turned this on fire. What happened? Actually, it started back a little ways ago. Growing up, my father always told me to be leery of credit card debt, and I listened for the most part and didn't listen all the way through. So I got a better job in 2016 and in 2017.

I was like, all right, I'm ready to go. Let's get rid of this $3,000 credit card that I had. I also paid off a credit line back then that had another one with another bank. And I saved up and bought a truck at the end of 2017. And then in 2018, I realized I still have debt. And I wanted to move out. I'm still with my parents currently. And I didn't want to be a turkey anymore.

So I was trying to fix that. And I started saving for a house first. And I looked at the truck loan. I'm like, I'll be fine. I'll just pay extra on it. And so I wasn't, I was being Dave-ish basically. And after saving about two months, starting my part-time job and putting all that money for the house that I wanted to purchase at the time, I decided, no, let's pay off this truck. Let's pay off this credit line. I can't proclaim that I'm a Dave Ramsey follower and yet still have debt. So I picked up my bootstraps and got started.

You're done. You're done in eight months because you had the money to jumpstart it, right's what it amounted to and you just had to make a decision to do things different good for you okay cool how's it feel oh it's crazy you glad you did it yes sir it's it's such a relief and it's even more crazy now that i'm here it's hitting me all sorts of different right now like oh my god okay i was going to do this and now, oh my God, it's done. It's never again. Wow. Good for you. So who were your biggest cheerleaders? Definitely my boyfriend, Corey. My father, for sure. My dad and I are very close. And once I told him I was getting serious, he's like, it's about time. What took you so long?

But he also was worried about me getting this house. So paid off my student loans last year too. I meant to mention that. So after that, that's when I thought I would celebrate and do all sorts of other stuff instead. But ultimately he was a cheerleader. My friend Lakeisha was a major cheerleader when I was working on this project at my insurance company. The guy that turned me on to you was a major cheerleader. His name is Rashad. He's a major follower as well. But I beat him as far as getting out of debt, so I win.

I love it. But he was a cheerleader, too. He's been cheering me along this whole process. Good. Very cool. Good for you all. Well done, man. This is awesome.

Very proud of you. Very good. Very good. So what do you tell people the key to getting out of debt is work i mean honestly um picking up the part-time job i was but i worked so many more hours i went from working obviously 40 hours at my major job at the insurance company and as a mechanic i went from 10 hours 15 to 20 to 30 and sometimes over 30 so i was working 70 80 hours a week exactly yeah i didn't see very many people yeah but you got it out but you got the debt completely cleared up in eight months yes sir yeah so what's your next plan what are

you gonna do now um safe for this house okay i gotta do it i'm so excited um i still live with my parents right now and they're allowing me to live uh rent free i'm helping out quite a bit but you know they're allowing me to help out and get out of out of the house i'm so ready dave i want to move out i don't want to be a turkey anymore no you're fine you're doing good you got a plan that's what amounts to your turkeys are those that just laying in the hammock asleep you're not asleep you got a plan you're going somewhere with this good Good for you. Very proud of you.

So you listen to us on the radio up there or what? I listen to the podcast. Okay. So especially when I'm working as a mechanic, for the most part, I have a lot of downtime in between calls and things like that. So when the lanes break down is when I would jump on there. But most of the time I have a headset similar to this one. And I'm just listening to your show and laughing a lot. Sometimes crying like, ah, I've got to hurry up and get this done, but mostly laughing.

A lot of encouragement. I love listening to your show. It's awesome. It's really helped. Well, I'm glad. Thank you very much. Congratulations. We've got a copy of Chris Hogan's book for you, Everyday Millionaires. That's also the next chapter in your story.

You get that house, get that house paid off, and you continue your career path. You're going to be doing great. Yes, sir. So well done. All right, Danielle, Richmond, Virginia. It's real. She's here. $21,000 paid off in eight months, making $37,000 up to $50,000,

working those 70, 80-hour weeks. She put her down. Good job. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free! Yeah!

Well done, well done, well done. Man, that's fabulous. That's good stuff. I appreciate it. Man, that's fabulous. That's good stuff. I appreciate it. Man, that's amazing. Nick is with us in Oregon. Hi, Nick.

Welcome to the Dave Ramsey Show. Thank you, Dave. I'm 66 years old. I'm not collecting Social Security yet. I've got $150,000 invested, and $100,000 of that, I'm being advised by my financial advisor to put that into an income annuity where I could draw 5% a year off of that. And I'm just not sure what to do. I just kind of want to know what you think about it.

If it's not a good idea, I just kind of don't know what to do. I would like to retire. I'm not collecting Social Security yet, but that's really all I've got, that $150,000. Well, 5% is $7,500 a year. 5%? No, it would just be the $100,000 that's in the income annuity. Okay, so it would be $5,000. $5,000. How does that make you retire? It doesn't.

$500 a month. Yeah. $50,000 of it is in American funds, but he wanted to put this $100,000 into the income annuity. I don't understand. Why would you ever invest money at 5% interest? Well, it's guaranteed, I guess. It's guaranteed to suck. Yeah.

Yeah. No thanks. I would pass on that. As a matter of fact, I think you need to get a second opinion. I don't trust your financial advisor. Yeah, he said the only way I could ever get that money, that $100,000 out, well, the only way my wife could is if I died. Yeah, no thanks.

I'm not a fan of fixed annuities. Variable annuities have a place in some cases. I'm not a huge fan of those, except in rare circumstances where someone's just begging for some security. But this is a fixed annuity. It's a bad rate of return. It's basically an insurance product. It's not really even an investment.

And so what I would do if I were in your shoes is I would just click at DaveRamsey.com, SmartVestor, and go sit down. It'll drop down a list of the SmartVestor pros that serve your area that we recommend. And you sit down and pick which one you want to talk to or two or three of them if you want to. Go get some other opinions and learn what else is available out there. I'm 58. The chances of me putting money in a fixed annuity ever are zero. Ever.

You know, I'm guaranteed to get nothing is what I'm guaranteed. It's a horrible rate of return. A series of good growth stock mutual funds will outperform that by double. And, you know, I just wouldn't do it. You can do what you want. But I think at a minimum, you need to don't take a radio call on something this important in your life. Go sit down with a different professional and get another opinion and see and learn. Learn from them what you think. But I think you're getting bad advice. I really do.

Thanks for the call. This is The Dave Ramsey Show. Thank you. thanks for joining us america this This is the Dave Ramsey Show. Open phones at 888-825-5225. Yolanda is in San Diego. Hi, Yolanda. How are you? Hi, Dave. Thank you so much for taking my call. How are you? Better than I deserve. What's up? Yes. I started your program back in February. I took FPU through my church. And when I started, I was $170,000 in total debt. I make $130,000 a year. My debt breaks down to I have $109,000 in student loan debt.

I have about $30,000 of credit card debt, about $21,000 of car loan debt. I'm really struggling hard with my budget and following the debt snowball because I keep running out of money and having to borrow from my emergency fund just to make it through the month. Where did you run out of money? Well, I have my emergency fund saved. I know, I got that. But where did you run out of money?

I'm paying my bills off, Dave. Okay. I'm sorry if you laid out a budget and told every dollar where to go before the month begins where did you run out of money well it's because i get paid bi-weekly but you know that before the month begins how did you run out of money well i haven't ran out of money yet you just said you did you said i keep running out of money and using my emergency fund yes didn't you didn't know what you just told me okay so um are are you, coming up short on food? Yes, I'm coming up short on actually just getting the bills paid. No.

You would have laid the bills out on paper. They are laid out. I do. I have them all laid out. Okay, so what is your take-home pay per week, per paycheck? You get paid every two weeks. Yes. How much is your take-home pay for a check?

I get about $3,400 bring home on my check, and I get about $655 of child support. So about $4,080 every two weeks. And you told me you made $140,000 a year. $130,000. So you got a big tax refund? This year I got about a total of $4,000 back in tax refund, which I used to pay off what I owed in federal tax from the year of 2017. So far, I've paid off about $10,000 of debt in three months after starting your program.

Okay. Well, you're currently bringing home $88,000 a year. You make $140,000. Those numbers don't work. Do you have your 401k still coming out? No, I make about $130,000. Yes, I stopped all of my retirement contributions. But you shouldn't have a $40,000 tax bill. Even in California? Oh, well, what happened is the year before,

I ended up in tax trouble because I cashed out a retirement plan to have enough money to put down on buying a house. I know now that was the biggest mistake I could have made. I didn't know about you then, Dave, but now I know you and you're like, you know, it's like we're having an affair. I listen to you all the time, driving to work, at home. I watch your podcast.

I watch your YouTube videos. I get encouraged daily by the debt-free screams. But right now I'm just getting so discouraged because of... Okay, I want you to hold on while we get done. I'm going to have Kelly get you with one of our coaches because there's two major things going on here that I'm hearing, okay? Number one, your take-home pay does not add up with what you're telling me you make. You should be bringing home more than $90,000 when you make $130,000

even if you live in California. That's wrong. There's something wrong with the math, okay? And I want someone to000 even if you live in California. That's wrong. There's something wrong with the math. Okay, and I want someone to look into that with you that will help you do that. The second thing is you are not budgeting enough for food. You're kidding yourself when you do your budget. You need to put more money in your food category because you're coming up short every month. Bills that are fixed bills, you shouldn't come up short on

because if you put $3,400 at the top of a two-week period of time and you give every one of those dollars an assignment, you shouldn't spend more than $3,400 on paper for that two-week period of time or $7,000 for that two-pay period of time for a typical month. You should not come up short because you shouldn't plan to come up short. The only place you could come up short is if you underestimated something like food or you underestimated something like your utilities, and they came in higher than you thought.

That would cause you to come up short, but you shouldn't be having any reason to dip into your emergency fund with what you've outlined for me and so um you have enough money coming in to pay the bills that you outlined here unless your house payment is outrageous and if you bought into an outrageous house that may be choking you down but even then you can still lay out on paper exactly what you're going to do, and every dollar has an assignment, and you would never have a plan to come up short. I'm planning to come up short. No, you would never do that.

And so that means you're underestimating one of the categories like food. Like you may need to put several hundred dollars more on the food category than you are now as an example. I don't know what you're doing. But hold on. I'm going to have Kelly pick up. We're going to get one of our coaches in the area with you, one of our Financial Coach Master Series folks with you to help you look into those two issues, why your budget's struggling because it shouldn't be,

and what's wrong with your take-home pay because it's screwed up some way or another. Open phones at 888-825-5225. Morris is in Chicago. Hi, Morris. Welcome to the Dave Ramsey Show. Hi, Dave. How are you, sir?

Better than I deserve. What's up? Just a quick question for you. I'm currently on Baby Step 2. Started about nine months ago. We've paid off $50,000. Good for you. About $87,000.

Yay. And I'm a little bit of a crossroads with me and my wife. We have a CD that's going to be ready to mature in a couple of months, and I want to use the rest of that money to be debt-free, but she doesn't because our last loan that we have is a car loan at 0%, and she just wants to keep working the baby step until it's gone in about six months. Well, she's not working the baby step. Baby step two, by definition, is you use all money that you have, not counting retirement, to pay on the debt.

You should have already cashed out this CD and put it on this debt. Well, the reason I felt like I didn't want to do it because of the penalty that was involved. Honey, they ain't paying you nothing. So the penalty ain't nothing. If they kept all the interest, they wouldn't keep anything. It's 1%. It's a joke. Yeah, it's a joke.

Cash it out and pay off your debt. And just do what I, so if I cash it out early, apply all of it to the rest of the debt we have, and then from there. Then go to Baby Step 3. Well, that's the thing. We're kind of in the middle of these two baby steps because Baby Step 3, I feel like that is our emergency fund.

Honey, you're not on Baby Step 3. You still have debt. Mm-hmm. Baby Step 2, by definition, what we've taught for years in all of our materials is you stop all investing. You take all savings and all assets that are not in a retirement account, cash them in, and throw them at your dad. Once you are debt-free other than your home, then you are on baby step three. There is no circumstance in which we've ever described that you are in baby step two and three at the same time. You're just screwing around with a savings account and wussing out instead of cashing that

thing out and paying off your debt. That's all you're doing. And you need to cash it out today and pay off your debt that's what i would do you called and asked me now you and your wife decide what you want to do but that's what i would do hey thanks for the call that puts this hour of the day ramsay show in the books our thanks to james childs our producer kelly daniel our associate producer and phone screener i am dave, your host, and we'll be back. 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.