The Ramsey Show - App - Surviving College Life Without Debt (Hour 1)

Episode Date: June 27, 2018

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show. Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Kathy starts off this hour in Decatur, Illinois. Hi, Kathy, how are you?

Hi, Dave. It's a pleasure speaking with you. You too. What's up? Well, I have a question. I have read Chris Hogan's book, Retire Inspired. My husband and I each have a pension, and I was wondering how do pensions impact millionaire status? Well, if you could figure out if they give you a cash value of the pension, a lump sum,

you could use that as an asset of yours in your millionaire net worth. When you pass away, obviously, the pension is worth zero. And so it is not an asset of yours. It's just the income is what it is. It gives you income to work from. And the definition of a millionaire is net worth. It's what you own minus what you owe and to the

extent you could put a value on the pension while you're alive you could you could include that if you want to but it's more of just a decision on your part than it is anything actual because you can't access that money unless they allow you to do a lump sum and if they allow you to do a lump sum you should roll it to an ira anyway and then you would know exactly what how it impacts uh but if you've got the lump sum number you can use that in your calculation it doesn't again it you know if you've got two very very juicy pensions uh you would need less net worth to have the same quality of life as someone that didn't in other words if you've got $10,000 a month coming in, $8,000 a month coming in, that's $100,000 a year.

It would take about a million dollars to replace that. If you had a million dollars invested at 10%, that'd be $100,000 a year, about $8,000 a month, give or take. So, you know, that's what that's worth, but it's not worth anything because you can't get to it other than it spits out income. So for every $8,000 a month of pension you have coming in, you need a million dollars less net worth to compare to someone that does not have that pension, if that makes any sense. Because that's all it is. What's the purpose of the net worth?

It's to be able to live the life you want and to leave assets to your kids and, you know, to change your family tree. And, you know, to the extent if you have an asset that doesn't create any income, it helps your net worth status, but it doesn't help the quality of your life. Let's say you owned a large piece of raw ground, just a piece of farmland, not even farmland, just woods, okay, just sitting there. It's not creating any income, but it's worth a million dollars. Well, that makes you a millionaire in the sense of your net worth. It adds a million dollars to your net worth, but it doesn't create any income for you. So it's the opposite of where

you are. You've got something that doesn't affect your net worth, but it doesn't create any income for you. So it's the opposite of where you are. You've got something that doesn't affect your net worth, but it creates a fabulous income for you. So, you know, what we're trying to do is just figure out how you can have your best possible life. And, you know, getting a million-dollar net worth is a neat goal because it indicates that you've got control of enough assets to have control of most of the variables in your life from a financial standpoint. It doesn't mean you're rich.

It just means you're beginning rich. But it's not over for sure. Good question. Robert is with us in Waco, Texas. Hi, Robert. How are you? I am doing wonderful. And you?

Better than I deserve. What's up? Me and my wife are newly married. And we're trying to start your baby steps, and we didn't know if we needed to pay off the credit cards first or the student loans or the vehicles. You list your debts, smallest to largest, on the payoff balance, regardless of the interest rate and regardless of what type of debt it is. So take your debts and each one, each individual debt, not category, but each individual debt, and then list them smallest payoff balance to largest payoff balance.

Pay minimum payments on everything so you don't get behind, except that smallest one. And then attack that smallest one with a vengeance. And when it's gone, you take that little payment that you don't have anymore, plus any other money you can wring out of your budget, your extra jobs, and living the scorched earth lifestyle, and you attack the next one down. And then you attack the next one down. Every time you pay off one, you get this benefit of, wow, I just lost another pound on my diet, right?

Wow, this works. You have that same benefit, and you've got a little extra money that you used to pay out in the payment on that little one. And so every time that snowball rolls over, it picks up more snow. Each time you pay off a debt, it frees up more money to attack the next debt down. And that's why we call it the debt snowball, and it moves you right through in that direction. So that's what I would do. Get after it, man. You can do it.

Jake is on the line in San Francisco. Hi, Jake. Welcome to the Dave Ramsey Show. Hey, Dave. Thank you for taking my call. Sure. What's up? You know, I'm trying to do a 1031 exchange, and I've got a couple properties I want to exchange, and I'm trying to figure out where to take the money from to do

the fix-up that I need to do before I put them on the market. It's over $2 million between the two properties in value, and I probably need to put at least $100,000 into them. My concern is, I mean, I've got, you know, including my house, over $3 million in property, but my cash is not, I don't have a lot of cash, and I'm 70 years old and retiring, and I've got like a couple hundred thousand, and I run a hundred thousand cash. You said you need to spend a hundred thousand, right? Yeah, I need to spend a hundred thousand. Does right? Yeah, I need to spend $100,000. Does it make sense? I mean, you know, because once the money, I put the money in to do the fix-up,

that goes with the exchange, and I never get that money back. If I want my money, I've got to borrow it from me. That's true. So, you know. Or you've got to do an exchange that's not 100% to 100%. You move down a little bit in the exchange, and it'll free up some capital. Yeah. I mean, I know you don't like loans, and I'm just wondering. Before I borrowed money, I would do an exchange of $2 million down to $1.5 million,

which would free up $1.5 million once you do the exchange in cash. You pay taxes on it, capital gains on it, but it's only at a 15% rate. And that would free up some cash because if you got a $3 million net worth and you only end up with a couple hundred thousand dollars in cash, that's a little scary in liquid

assets. I mean, you're pretty illiquid at that point, even if everything's paid for. Well, what I'm going to do is once I get the exchange done, I'm going to sell my house and then move down to a smaller house. And then I'll probably pick up another maybe $300,000 or $400,000 cash to use, plus I've got Social Security. Why do you have to wait on the exchange to happen to do that? Because I want to get the properties exchanged, get that out of the way before I move.

Why don't you move and free up the cash to do the exchange with? Okay, but then still the cash goes in the exchange. Yeah, but it's only $100,000. Or you can move down in the exchange. No, I'm not going to tell you to borrow on this. I wouldn't, and so I'm not going to tell you to borrow on this. I wouldn't, and so I'm not going to tell you to. But, you know, move from a $2 million in property down to a million eight in property and free up a couple hundred thousand and pay the capital gains rate on that much of it. You can do a partial 1031. You don't have to do 100%. And that's what I would do in this case,

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It seems like a Roth IRA, but through an insurance company with life insurance included. I'm debt-free, and I've been super approved. Oh, wow. It's always good to get super approved as opposed to just approved for an LIRP through a company. Investing in an LIRP sounds like a good idea. Why would you not recommend investing in it? Because it sucks.

That's why. It's a horrible rate of return. Anytime you get involved with a cash value life insurance policy, you are going to get horrible terms and high expenses. And so there's just no exceptions to that. Some are slightly better than others, but one sucks and the others just double sucks. And you just don't, there's no point in doing this. Listen, you're much better off to do your investing in good investments. There are no good life insurance investment

products. There's none. There's none that can keep up with decent growth stock mutual funds invested in your 401k and in your Roth IRA. We've just finished surveying 10,162 millionaires, asking them how they got there. Do you know how many of them got to be millionaires asking them how they got there. Do you know how many of them got to be millionaires because they bought cash value life insurance? Of the 10,000 that we interviewed, do you know how many? Zero. Out of over 10,000 millionaires, not one said they used a cash value life insurance product to become wealthy.

Not one said, I did all my investing in cash value, in LIRPs, in indexed universal life policies, in universal policies, in variable life policies. Not one out of 10,000 said they built their wealth using life insurance as an investment product. Not even one. I mean, my God, you would think that a blind hog could find an acre never so often, that at least one out of 10,000 could become millionaires. But these products suck so bad that they suck the very bone marrow out of your cash flow

and they put it down a rat hole. You're flushing it down the toilet and it virtually guarantees you're not going to build wealth. So when you're arrogant, got their glasses down on the tip of his nose, rolling his eyes about Dave Ramsey, insurance agent,

says, well, all the wealthy use cash value life insurance. Let me just tell you, I have done, our company is just doing with Chris Hogan, the largest study of millionaires in North America ever done, and not one of them, not even one. You would think one at least. I mean, there were more people that became wealthy using CDs, making nothing on their money than they did using insurance as an investment product. They all say, I mean, 89%, 91% say,

I used mutual funds for my Roth IRAs and my 401ks, and I put money in there, and I paid off my house in 10.2 years. And this is almost every one of them. So the deal is this. Not one, if I made myself clear, not even one of these millionaires that we've interviewed. I cannot think of anyone I've talked to in 30 years of doing this that said, Dave, you know, I made my money. The thing that caused me to become wealthy was I invested in life insurance.

I've never heard that. Not once. Now, I will admit to a bias on that because I tell people it's stupid. For 30 years, I've told people it's stupid. So I'm not likely to run into somebody that goes hey i'm stupid so if they know it's me now the survey the research we did did not know it was me doing the research so they were not biased in their answers but you know if i'm talking to somebody here on the air they're not likely to call up and go you know i got rich using whole

life life insurance from northwestern mutualual. I've never heard that. I mean, buying whole life life insurance from Northwestern Mutual, it's kind of like buying a $100,000 boat. It's a good way to turn $100,000 into $10,000. You know, it's a good way to take a a billionaire and make them into a millionaire you know it just so let's just not be unclear about this there's no data anywhere except hypothetical examples by your whole life agent by your cash value life insurance agent that says this is a good idea it's's just not a good idea, folk. Hope I wasn't unclear.

Randy is on Facebook and says, Dave, what are your thoughts on prepaying funeral expenses? I wouldn't. I would preplan it, but I wouldn't prepay it. Because were you to take that same amount of money and invest it in decent growth stock mutual funds, you'd have a lot more money than the cost of the funeral has increased. When you pre-pay anything, your rate of return on your investment is how much it goes up in cost. So what's the inflation rate of funerals? If the inflation rate of funerals is 12 a year which is not then you'd be making 12

on your money by prepaying inflation rate on funerals however runs more like three percent so you're making three percent on your money if you invested the money at 10 or 12 percent and when the cost of funeral went up by three percent a year you'd still come out like way ahead you see what i'm doing so you don't pre-pay anything way into the future like that i would pre-plan it and you can go down and say i want the chevrolet coffin i want the cadillac coffin i want the bentley coffin i want the thing that leaks because i never could swim or doesn't leak because i never could swim or whatever i don't know whatever it is you want with your vault and all that stuff you go down there and pick it all out and look at the

costs and then your relatives don't have to do that while they're grieving, and they don't have to make a $10,000, $15,000 worth of decisions, $5,000 worth of decisions while they're grieving because you don't make nearly as good a decision when you do that. So I do believe in pre-planning your funeral. And, you know, here's another thing. Get your will done and make sure you have life insurance in place. These are the processes that you go to.

Lance is on Facebook. What's your word on points for travel earned by credit cards? Why is it a bad decision? When you use a credit card, Lance, you spend more money than when you use a debit card. And in either case, you spend more money than when you use cash. When you lay $100 bills on the table or $20 bills on the table, you realize you spent money. It activates the pain centers of the brain, literally. MRI studies done at MIT indicate this,

that the pain centers of the brain are activated when you spend with cash. When you spend with credit card, with plastic, you don't realize you spent money as much. And even the most disciplined that feel like, oh, I'm not really buying stuff just to get points, you are. The very fact that you ask the question tells me that you're willing to spend money just to get points. And having met with, again, thousands of millionaires, I've never met one that said,

Dave, you know, I made all my money with my airline miles. The high quality of my lifestyle, Dave, is because of my airline miles. If you spend like no one else on your credit card, later you can live like no one else on your airline miles. No one ever said that saying. If you spend $100,000 on your credit card, you can fly on a flight. It's kind of expensive. Kind of stupid. You're falling into their trap. You're not winning.

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It really is the smartest way to protect yourself and your family. Go to Zander.com or call 800-356-4282. Thank you for joining us, America. Britton is with us in Palm Springs, California. Hi, Britton. How are you? Hey, Dave. How are you doing today? Better than I deserve. I see on my screen you're debt-free. Congrats. Yes, sir. Thank you very much. I appreciate it. Absolutely. How much have you paid off? I paid off about $16,000 over the last year. What kind of debt was that? A new car. Oh, okay. And what was your range of income during

that year? It was about $50,000. Okay. What do you do for a living? I work security at a high school. Good for you. Okay. And what kind of car was this? It was a, I actually bought, Dave, I actually paid off my house in 2016, and I made a poor choice of buying a brand new car a couple months later. Okay.

But to answer your question, it was a Toyota Camry. Oh, okay. Cool. How old are you? 29. Okay. Why'd you your question, it was a Toyota camera. Oh, okay. Cool. How old are you? 29. Okay. Why'd you decide to pay it off? Well, I mean, you know, I didn't...

Oh, you're talking about my house or my car? No, your car. Well, I didn't want to have any debt, you know? There was a... Well, that didn't... I already paid off my house, and I'm like, well... Yeah, that didn't bother you at the time you bought it. Well, unfortunately, when I bought it, I actually started listening to you about a month or two after I bought it well unfortunately when i when i bought it i actually

started listening to you about a month or two after i bought it which was pretty funny okay so that's what that's what got you moving then okay yes yes sir so well congratulations how's it feel to have everything paid off house and everything oh it's awesome you know just to be able to uh max out my roth ira and to give you know even more and just to help people out is definitely uh amazing you know you'll be in a to help people out is definitely amazing, you know. You'll be in a position to do that for sure. Very, very well done. Will you go back in debt again?

Well, I hope not. I mean, that's not the plan. I mean, I know eventually my house is two bedrooms. Eventually I'm going to, if I get married and have kids, I'm going to have to upgrade. But, I mean, definitely not planning on going into debt. Okay. Good for you. Very cool. Well done, sir. What do you tell people? What do you tell people the secret to getting out of debt is? You know what, my friends always tease me and they call me they tell me I'm kind of boring because I don't go out and spend a bunch of money. But I always tell them, you know, I, I think it's not necessarily a bad thing to be boring. And I'm

just always on top of things with my money and always just making smart decisions and just being very intentional with my everyday choices. Being broke can be pretty boring. Absolutely. In some ways. In some ways it's rather exciting because you're stressed out. But being broke is – I'm probably more boring now that I'm not broke, come to think of it. I don't know. You never know. You can do a lot more boring now that I'm not broke, come to think of it. You know, I don't know.

You never know. You can do a lot more cool things when you're not broke. Anyway. Exactly. Exactly. Good for you, man. Well, congratulations. We've got a copy of Chris Hogan's retire-inspired book for you.

That will be the next chapter, I hope, in your story as you become a millionaire. And, of course, call in on the Everyday Millionaire theme hour and be outrageously generous, as you mentioned, as you go along. So very, very well done. All right, it's Britton in Palm Springs. Paid off $15,000 in one year. That's his car. His house was already paid off, making $50,000 a year. Count it down.

Let's hear a debt-free scream. Three, two, one. I'm debt-free scream. Three, two, one. I'm debt-free! There we go, man. This is how it's done. I love it. Nancy is in Jasper, Georgia. Hi, Nancy.

How are you? Hi, Dave. I'm great. How are you? Better than I deserve. What's up? Okay, so I can't believe I'm talking to you, but here we go. I am a 64-year-old woman, a widow, and we were debt-free about 20 years ago, long ago

listening to you, but we got debt-free but not budget and savings. So the bottom line is that I am at a place where I have plenty of retirement funds available to me, but I would like to pay off my mortgage. Good. And I just went through all of my reserves on some major home issues that I had to get resolved, and now I'm saying, how do I start getting this house paid off, and should I do that instead of putting more in retirement and in rebuilding my emergency fund? What is your income?

Okay, it's $72,000. So you're working? I am. Okay. And what do you owe on the home? $102,000. Okay. And how much is in your retirement nest egg?

$620,000. Okay. And how much is in your retirement nest egg? $620,000. Okay. And so if you paid this off, you would have $500,000? Correct. And have no debt at all? Yeah. Yeah. And I also have $13,500 in a company 401k.

So I moved all that money into managed funds outside of my retirement. So I still have $13,500 in my other 401k. Okay. Do you have any money that is not in a retirement account? Not anymore. All of the $600 is in an IRA. All of the $600,000 is in an IRA. It's actually in being managed funds. It's split between, and this is, so don't yell at me. It's in an annuity for $250,000 and $350,000 in responsible investing stocks.

Okay. All right. That's fine. Okay. As long as it's a variable annuity and it's invested in good mutual funds inside that annuity. Yeah. It's not my first choice, but it's okay if you're there. It's a little more expensive for you, but it's an okay way to go.

It gives you some guarantees that you were probably liking when they were explaining it to you. Right. Yes, very much. But yeah i in out of the other money obviously you're not going to touch the annuity you can't but out of the other money i'd probably pay off the house today why wouldn't you i'm really why wouldn't you just because i like i don't ever want to have to work what's the difference What's the difference in $600 and $500? Yeah, yeah, yeah. Emotional. Can I just ask you one question? Sure. What about stopping any more investment

in any of the 401ks and using that as my emergency fund and then going aggressively after my mortgage. It's the same thing. It kind of is, isn't it? You're just swapping dollars. The P's still under one of the shells. It's just which shell do you want the P under.

Okay. You know the shell trick, right? I do. Yeah, it's the same thing. You're just swapping it around. And what's your deals? Your deal is a three-year deal, probably. And my deal's by Friday.

Oh, man. But, I mean, here's the thing. Let's try this, okay? If you pay off your mortgage and you hate it, you could go get another mortgage. Yeah, yeah, yeah, yeah, yeah, yeah, yeah. Okay. I'm messing with you, right? You are.

You are. But I would have to pay taxes on that money. Well, so what? It's okay. Yeah, you're 64. If the $500,000 that's remaining is invested in decent growth stock mutual funds, and they're averaging 10% to 12%, In seven years, when you're 71, if you don't add anything to it, the $500,000 will be a million.

It'll double about every seven years. And that's all I care is just to not be a burden. Yeah, and you won't have a single house payment. You won't have a payment in the world. By the way, you're still working and making $70,000. Oh, and by the way, you don't have a house payment anymore, so you can start banking. I mean, what's your house payment?

It's, um, I'm actually paying $1,000 a month. It's actually $700 a month. Okay. So you can take $1,000 a month plus whatever other money you want to invest. You can probably invest $3,000 a month. I could. If you wanted to. I could. Oh, by the way, if you needed to do something to the house, you just

stop that investing a little bit and fix up the house with cash. And, you know, make sure your emergency fund's in place and make sure, and then just invest and enjoy your money. You've done a really good job, you and your husband. Thank you. You've done a very good job. What's the house worth?

It's worth about $125, but it's a log cabin in the mountains, and it is amazing. So neat. You can't trade money for a life down there. Oh, North Georgia mountains are gorgeous. Yes. Absolutely. One of the prettiest places on earth.

Yes, and I'm a hiker, so I'm loving it up here. There you go, man. So you got it dialed in. All right. Thank you so much. I'm going to give you permission to pay it off by Friday. And then if you hate being debt-free, just go get you a mortgage later. That Dave Ramsey's crazy.

I'm going to get me a mortgage. I don't like being debt-free. 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 join together as the body of Christ to share their major health care costs.

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a house out in the mountains a year and a half ago and the first snowstorm that hit, I almost didn't make it home. Kind of panicked after that and let the Subaru dealer talk me into a lease in a new car. Now that I'm trying to do your baby steps, I'm on baby step one right now, and that pavement is kind of looking ugly right now so i'm wondering if i should do a private sale on this and take a slight loss and get a cheaper car but i also need something that's reliable and i also work 40 miles away from home so obviously you need front wheel drive or four wheel drive anyway huh yeah okay all right and um so have you done any research on the car as it currently sits? Like what is it worth today?

Yeah, $23,000 is what Kelly Bubuk says, possibly up to $26,000 based on what I'm seeing on Craigslist. Is that a private sale? Private sale. Okay, that's not a wholesale. Right. Okay, and have you called Subaru to ask what the early buyout on the lease is? Yeah, it's $26,000 right now is what I have. Okay. And how much is your payment?

$390. Okay. And so when does the lease run out? A year and a half. Okay. I think you're driving it. Here's why. Let's say that it takes you $4,000 cash to get out of this lease. Let's just pretend. Let's say you sold it for $23,000 and you owed $27,000, or you sold it for $22,000 and you owed $26,000, something like that.

$400 a month into $4,000 is 10 months. You could have driven it for 10 months right okay for that four thousand dollars you're gonna write four thousand dollars give up the car you're not gonna have the car and you're not gonna have the four thousand dollars or you can spend the four thousand dollars and have the car for that 10 months then there's only another eight months left after that so i agree with you it was a stupid move to buy it but i've done dumber things so i can't yell at you too bad but uh i mean you've already identified that before you came to me you said this was a dumb thing i got emotional and i you know i went and impulsed a car is what you were saying right i love the car and it gets me there but yeah well yeah you don't but

you just don't love this the deal the deal sucked in your life because you didn't write a check. Nothing wrong with Subaru. You just write a check and pay for it if you're going to buy one, right? And so here's what the deal is. What's your household income? I bring home $5,100 a month. Okay. I'm saving like crazy so at the end of 18 months,

I can write a check and buy the car you want and turn this baby in. Yeah, I'm also trying to get out of debt, so... Well, this is one of the things you've got also trying to get out of debt. Well, this is one of the things you've got to do to get out of debt. Yeah. I mean, because otherwise you're going to try and borrow money to buy a car in 18 months, and that's kind of going backwards, isn't it? Yeah. So part of your get-out-of-debt plan is be ready to buy a car in 18 months, and in this 18 months, drive the Subaru and write the check.

Okay. How much other debt have you got? I've got $60,000 total on half of its car, so. Okay. Well, you may be done in 18 months, then. You could be debt-free by the time you get there. Yeah, trying for it. By my calculations, if I can get about $1,500 a month extra to throw at this,

then I'll be out in time. Yeah, not counting the car. You could be debt-free in 18 months, right? You've got to find that extra income. And if you turn the car in in 18 months, you are debt-free in 18 months, but now we've got to buy a car. Yeah. So that's the trick.

And I think you can do all of this. It's just you're not buying a $20,000 car in 18 months. I can tell you that. Yeah. Well, in 18 months when this lease is up, I'll owe $19,000 on it. And because of how many miles I'm driving, I won't be able to trade it in, so I'll still have to buy it at the end of that. No, no.

You are trading it in. Oh, so you're going to be way over the miles, too. Yeah. Oh, that changes the equation. You may need to go ahead and sell it now. Okay. And just get rid of it, and let's get the $4,000 hit then, and then you're going to have to go buy something super, super, super cheap,

like $3,000 or $4,000. And that will get me through the mountains in the winter? If it's got four-wheel drive, it will. There's no snow that says you cannot pass here because you have a cheap car. The snow says your wheels aren't all turning, and so you can't go here. That's what the snow says. You can take a $500 four-wheel drive pickup and go up the side of Pikes Peak with it, but it's got to have the right tires, and it's four-wheel drive pickup and go up the side of Pikes Peak with it, but it's got to have the right tires and it's four-wheel drive, right?

Right. And bags of sand in the bed or whatever. I mean, it's how the car is equipped and how it's geared and whether you've got the right tires and weight distribution and all that kind of stuff, whether you can drive it in the snow. It's not how expensive it is. So you've got to make a decision. But, yeah, I'm getting out of this car, and car and no i'm not going back into another debt car i'm going into something super super super cheap

and if you want to move up again in car later sure absolutely i'll move up in car later so there you go uh brad is with us in charlotte north carolina hi brad how are you doing great how are you better than i deserve what's up? Better than I deserve. What's up? Hey, so me and my wife, we've been married a year coming up in August for our first year, and we have knocked out some debt, about $15,000.

We recently purchased a newer home. It's about $160,000, and we've been shooting on that. We've been paying off on that trying to get that knocked down as much as possible we're on baby step number three and we're a little confused on where now i'm confused i thought you said you're paying extra on your house we we are you're not on baby step three i got a a little excited, and I skipped it. Yes, sir.

Oh, then you're not working our plan. Okay. Yeah. Okay, so you're working your plan. I am, but that's why I'm calling you. My wife said your decisions are basically right under God's decisions. They're very important. I doubt that.

But all you do is ask my wife, and she'll tell you different on that one. But when it comes to this financial stuff, I have helped about 30 million people with it. So we do have a leg up. So what I would do is stop putting extra on your house, build your emergency fund, and then start what we call Baby Steps 456. Once your emergency fund is in place and you're debt-free, everything but the house, then and only then do you start building wealth. And that's Baby Step 4 is 15% of your income into retirement.

5 is kids' college. And 6 is pay extra on the house. You do those three simultaneously once you get the emergency fund in place. Ann's with us in Syracuse, New York. Hi, Ann. How are you? Hi, Dave. I'm better than I deserve. How are you today? Just the same. How can I help? Oh, good. I have a question for you about two Bible verses I've come across recently. My husband and I are FPU coordinators

and we're on baby step seven. So we definitely know plenty of Bible verses that are anti-debt. We're not going to change our stance on debt based on what I'm about to ask you, so I'm not about to go back into debt. Don't worry. Okay. But I'm just hoping you can help me understand these verses because they're not negative about debt or lending. They're actually a little bit positive, which kind of confused me.

Okay. Do you want to hear what they are? Sure. Matthew 5, 42, Give to the one who asks you, and do not turn away from the one who wants to borrow from you. Okay. Look at the other one.

Stop just saying it. Go to your Hebrew and Greek and look up the Greek on the word lend, the borrow. Okay. And what you're going to find is it's another version of give. Okay. Because what it's another version of give. Okay. Because what it's doing is picking up the King James English, and it's not picking up the actual interpretation of the Greek. And because it's, in other words, that verse,

and if you go back and read a couple verses on either side of that one, what you're going to see is the whole spirit of the thing in context is all about loving other people well not making it not making them your slave and so um this is not this is not like uh an excuse for the banking business to be in existence you know and you you're not yeah you're not you're not being adversarial i understand that so but it's just certainly it's just the spirit of lending there is like you would uh you ever have somebody say i want to borrow a cup of sugar? Right.

But they never bring it back. No. Okay. I borrow a tissue. Yeah, it's that kind of – can I borrow a tissue? Yeah, yeah. Yeah. Can I borrow some toilet paper?

Please don't bring this back. Yeah. And so, you know, that kind of stuff, right? So it's that kind of a thing. It's that kind of a borrowing and lending. It's not a transaction like a bank. And I'm running out of time, but right quick, tell me what the other one is. I'm dying. Is it Genesis?

No, the other one is Psalm 112.5. It's probably the exact same problem, but it's probably from the Hebrew. Good will come to those who are generous and lend freely. Yes. Who conduct their affairs with justice. Again, go pull your Hebrew on that and what you're going to find there is that you give that cup of sugar is lending. I'm going to lend you a cup of sugar, and I don't expect it back, really.

And that's where usury laws in the Old Testament come into play as well. So, hey, good question. I love having those discussions. Appreciate you calling in. And thanks for leaving the class. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.

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