The Ramsey Show - App - Tammy and Eric Paid Off $394K in 9 Years! (Hour 2)

Episode Date: October 19, 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'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. That's 888-825-5225. James is with us in Charlotte, North Carolina.

Hey, James, how are you? I'm pretty good. Thanks for taking my call. Sure. What's up? So my wife and I have paid off $94,000 of $120,000, and we can kind of see the finish line. Should hit it next summer. I need you to tell me, though, if the guy is leaving a checkered flag or a white flag.

And the reason I'm asking that is we're about $34,000 behind on making our mortgage caught up to a 15-year pace. I'm sorry. No, you're not. You've paid off 94 of 120. Of obvious step two stuff, like student loans, car loans. I haven't started towards a mortgage yet. Oh, that's not your mortgage.

Nope. Okay. What's the balance on your mortgage? 147. Okay. And what's your household income? Right around 100. Good for you.

You're doing great, man. You're killing it. Way to go. So what's your interest rate on your mortgage? $3.50. There's no refi. Yeah. You would not refi this.

You'll just start paying extra on it when you get to baby step six, and you'll probably pay it off in about seven years, maybe six. So you would leave it back there even though we start off with a 30 year i was i wasn't sure if we should put that into two and finish that get it caught up before we rolled into three no no no because here's the thing when you pay a 30 like a 15 in other words if you calculate your a 15 year payment and a 30 year payment and the difference if you just paid that extra on your 30 every month, it'll pay off in 15. Okay.

You don't have to refinance to convert a 30 to a 15, particularly with a 3.5% interest rate and a 5% interest rate environment. You definitely don't want to lose that great rate you've got. Yeah, there was no chance of refi. I was just wondering if we should just put that as a $34,000 cherry on top or that snowball. I see what you're saying. No, no, because, you know, all we're doing is just baby step six is pay extra on the house, and you're just going to chunk that.

You're going to tear into that house. It's going to happen at about the same pace as if you put it into baby step two. Well, I can tell you that my wife is going to be very happy to hear that. She is just about tired of drawing out weekly menus and grocery shopping with Penny Pension with a baby. Yeah. Yeah, well, you need to get through with Baby Step 2. That's why we have Baby Step 6 where it is.

And you need to get through with that, get your emergency fund in place, and then, you know, you do 4, 5, and 6 at the same time but you guys are you know you're on track you're doing good work and i i think you're gonna uh how old are you i am 33 yeah i i really think that you're probably going to have a millionaire million dollar net worth before you're 45? Well, I really, I love hearing that from you. And one other thing, one thing that really resonated from when you've talked about being a young father and scared, and this summer we had our air conditioning go out, and it was so great to be ready for that. I mean, to provide an $11,000 check with a baby, with a nursery that was 90 degrees, three years ago, I'd have never been that prepared. And thank you for that. I mean, to provide an $11,000 check with a baby, with a nursery that was 90

degrees, three years ago, I'd have never been that prepared, and thank you for that. Yeah, you're doing great, man. You're going to be fine. Knock out that baby step two and move on through three, and then four, five, six goes at the same time, and you're going to pay off that house in about the same time as if you had done it the way you were thinking about it. It really doesn't change the math that much to move the baby step the way you were moving it, except that you're probably going to let your foot off the gas just a little bit, which you should do when you're in baby steps four, five, six. But still, you know, you're making $100.

How fast do you pay off $147? Five, maybe six years. That's about the standard that's going to work out on. You're landing right in a normal case study for us. So you're doing good. Doing really good. Christina is with us in Albany, New York. Hi, Christina. How are you? Hi, Dave. Good. How are you? Better than I deserve. What's up? So I'm just getting ready to enter your classes. I took the first class

on Saturday and I'm hoping for some encouragement because I'm really super nervous that I'm not going to be able to do this. Why? I've been responsible for my family's finances since my husband and I became engaged in 2007 and been managing everything since then and quite poorly, frankly. Where is he? He's here. Okay. Is he going to the class, too? here. Okay. Is he going to the class

too? What's that? Is he going to the class too? He's going to be a week after next because kids have soccer that he takes them to until then. Okay. Well, it's online. You've got a membership, so he needs to go ahead and take a look at the lesson that you've been to so he doesn't get behind. Because this

idea that you are the only grown-up in the house ends today. Thank you, Dave. I appreciate that. Yeah. You guys work together on this. You can do it. What's your household income?

Uh, almost 200. I would say mine is one Oh six and his is flexible. It changes on a weekly basis depending upon how many hours he works. Okay. So I'm sorry. Why in the world would somebody make a $200,000 a year? Don't think they can make progress with money?

Because nobody's ever taught me how to do it, honestly. The concepts that I'm learning in your class... It's kind of like somebody just gave you a brand-new Ferrari and nobody ever gave you driving lessons and sort of scared the crap out of you. That's exactly correct. Okay, I got it. That makes sense.

It's very powerful stuff, this money. Especially when you got 200 grand a year coming in i mean that's something you can drive in you can drive off into a serious ditch with 200 grand so good how much debt you got well i have student loans of about 150 but i'm hoping those will be forgiven after three or four more years of public service i doubt it no i'm serious 30 000 people have applied for public service loan forgiveness 96 people have gotten it so far oh rath yeah it's not going real well this uh the government is not following through on that so you might get it i don't know you're three to four

more years before you get there and you make 200 grand no i probably just pay the student loans off and be done with it how much other debt have you got not counting your house uh not counting the house we have about between i'm still in the process of tabulating it for class but we have between 50 and 60 of consumer debt and a couple of vehicle loans okay so 50 60 plus car plus student loans i think 50 60 plus student loans plus house. Oh, the cars are included in the 50-60? Correct. Okay.

All right. So let's just kind of do some quick math for a second. All right. You make $200,000 a year. You've got $210,000 worth of debt. Okay? Okay. 210 divided by 3 is what? You have to do the math for me dave that's

why i'm calling you 21 divided by three is seven seven seventy thousand okay three years seventy thousand you're 100 debt free not counting your house student loans cars and everything okay that's it life changing well but i think that's kind of wimpy i think you'll do it faster 100% debt-free, not counting your house. Student loans, cars, and everything. Okay? That would be life-changing. Well, but I think that's kind of wimpy. I think you'll do it faster than that. Okay. I'll do whatever you say.

Well, I mean, just listen. Let's just pretend that you made $200,000 a year and you lived on 95. That'd give you 105, right? Yes. I'm not counting taxes, so I'm using round numbers here. But $105,000 a year for two years would be $210,000, wouldn't it? Yes, it would. So between two and three years, I want you out of debt. I want your husband lined up and helping you do this.

You can do this. You're going to be amazing. You've got an amazing income. You're not dumb people. Dumb people don't make that kind of money. Well done. This is the Dave Ramsey Show. You've heard me talk about ID theft for years and how it's only a matter of time before you become a victim. But I ran across some numbers that even surprised me and shows the real nightmare that people go through when they become a victim. But I ran across some numbers that even surprised me and shows the real nightmare

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It's the smartest, most affordable way to protect yourself. In the lobby of Ramsey Solutions, Cody and Faith are with us from Waco, Texas. Hey, guys, how are you? Hey, Dave. Hey, how are you? Welcome to Nashville. Here to do a debt-free scream. Yes, sir. How much have you paid off?

We have paid off just over $90,000. And how long did this take you? In 17 months. Wow, you're kicking it. And your range of income during that time? It was from $30,000 up to $130,000 and then now back down to $30,000. I am so confused. How in the world did you go up $100,000 and then back down $100,000? This is where our story begins. I took a really good job um as a project construction uh project manager for a pipeline construction company and that was the the big increase in income and then i was able to pay off all the debt and then save up six months emergency fund and then i was laid off oh and so boom there it happened um all the planning so the only one that can keep a job is Faith.

Actually, I don't have a job. Oh, no. Who's making 30? Well, that's us. We're crafting. We're doing all kinds of stuff right now. We're just having fun. We're actually taking real estate classes.

We're getting our real estate license. So we're about to start a new journey here. That's fun. Okay. That makes good sense. So what happened 17 months ago that started this whole get out of debt journey well we started taking classes uh fpu class at our church timber ridge church in stevenville texas while we're dating and going to college and then um

about seven weeks into the class i was offered a job and then I took that job and moved to Pennsylvania. And then in May, we got engaged, and then in June of this year, we got married. Ah. And so then that's where our story starts together. Okay, I see. All right. So you were working to get out of debt plan separately but together. Yeah. And then you've only been married how long?

Since June. Wow. Well, congratulations. Thank you. What a way to start off. but together yeah and uh then getting you've only been married how long since june wow well congratulations thank you what a way to start off ninety thousand dollars i mean that's like the perfect job and knocked it out yeah it was it was uh it was all a god thing i mean now you're clear you can do whatever you want to do right that's that's the start of this new journey we're so excited this is a dream of ours real estate cool. It's all real estate. And all because your church taught Financial Peace University. That's right. That's right. And I was able to coordinate FPU when I moved to Indiana, Pennsylvania.

Oh, wow. Okay. So I was able to engage with some couples and help them out in their journey, and that was a lot of fun. That was a big source of motivation for me. It is. When other people are doing it, it keeps you rolling. Yeah.

For sure. So coordinating a class while you're getting out of debt is not a bad idea at all. I mean, it holds you right there on the road for sure. So, Faith, what do you guys tell people the key to getting out of debt is? Really, I think for us, because we started separate, we were our biggest cheerleaders. And then it's so normal to have debt. And we didn't want to be normal, I guess. And so I guess just really intentionality and getting started, that's just what it takes.

Get your feet off the ground and go. We figured out normal sucks. Yeah. I love it. I mean, you'd be in a mess right now if you still had all this piled around you. For sure. We were able to face this job layoff. I mean, I was grinning ear to ear because I was able to move back to Texas.

I mean, when he pulled me into his office and said, we've got to let you go, we've been shut down. So I said, man, this is actually kind of cool. I wasn't a big fan of the job anyway, so this is great. You get to start something fun. It does change that conversation. Oh, yeah. No doubt.

Yeah, I've got a big pile of money. I have no debt. I've got to lay you off. It's a different conversation than I have a big pile of debt and no money, and I've got to lay you off. It's a different rule. Wow. Well, way to go, you guys.

We're proud of you. Congratulations. Thank you. Very, very well done. Got a copy of Chris Hogan's book for you, Retire Inspired. That's the next chapter in your story for you guys to be millionaires, and you are on your way, without a doubt. You know how to do it now.

You know how to make this stuff called money behave, and you've learned it at a very young age and very young in your marriage to learn it. And a lot of people go 20, 30 years, and they're still fighting about money all the time. And you've got the advantage of being ahead of the curve on that. Way to go, guys. You're rock stars. Thanks. Well done.

Cody and Faith, Waco, Texas, $90,000 paid off in 17 months, making 30, then 130, then 30. You heard the story. I love it. Count it down. Let's hear a debt-free scream $130, then $30. You heard the story. I love it. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo-hoo!

Love it! Well done, well done, well done. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window covering. You get free samples, free shipping, and with the new promos that they run every month, you'll save even more. Use the promo code RAMSY to get the best deals. Rules and restrictions apply. Today's question comes from Kristen in Florida.

Dave took out a lease on a vehicle about four months ago before enrolling in Financial Peace University. I feel like I've made one of the worst mistakes in my life. You have. I was wondering if you could give me some advice on how it would affect me if I were to return the lease car to the dealership. Or at this point, do I just keep the vehicle? None of the above when you take a car back that you owe money on or have signed a lease on that's effectively a voluntary repossession and that that would be dumb because they're going to sell the car after they've repossessed it and uh they're and on a repossession lot and then they're going to sue you for the

difference if you don't pay them the they're going to sue you for the difference if you don't pay them the difference immediately. And you don't have the difference because you're broke. So, no, that would be a dumb idea. We're not going to do that. What we are going to do is find out two pieces of information. One is call the car fleece company that you are paying the fleece to. Yes, you're being fleeced.

And find out what the early buyout on the car is. Now, the early buyout is different than the total of your lease payments plus your residual value at the end. It should be less because this lease is very new and there should be, it's kind of like an early payoff on the loan. It doesn't include all the interest from the time that – you know, from keeping the loan the whole time. So the early buyout is your early payoff. Now, what's it take to pay the car off? They can get the title in your hand. Then you compare that to kbb.com, kellybook.com private sale what the car is actually worth and i'll just make up some numbers let's pretend that the early buyout is 20 000 and then you look

it up and the car is actually worth 16 000 that would leave you $4,000 in the hole. It's probably not far off of what you're going to find. So $4,000 in the hole means you sell the car for $16,000. You've got to put $4,000 cash with the $16,000 in order to get the title for the buyer. And so you have to have that other $4,000. You have to be able to cover the hole that you're in, the amount that you are upside down, and the way you would do that is obviously a loan, and so you start working with your local credit union,

with your local bank, and you get a loan lined up for the amount that you're upside down. You put the car up for sale, and you sell the car for as much as you can possibly get for it, which is more than they will sell it for on the repo lot. See, the bottom line is you're going to be responsible for this difference either way, but the difference is greater, and you do more damage to your life and lose more control of your life by doing a repossession.

And so you cover the difference, cover the amount that you're upside down with another loan, and I'd rather you be $4,000 in debt than $24,000 in debt or whatever the numbers are. So Dave Ramsey is telling you to borrow money. No, Dave Ramsey is telling you to move some of the debt and get rid of the majority of the debt by doing that. And so you borrow and cover the amount that you're upside down. You know, guys, we've been talking a lot about this millionaire mindset around here and why it's so important to be intentional even with the little things. There is one thing you can do right now to take care of the little things

before they become big things, and that is check your coverages and make sure you've got them right. We have a five-minute coverage checkup. All you do is text CHECKUP to 33789 or go to DaveRamsey.com slash CHECKUP. It takes five minutes. Five-minute coverage checkup, and you can make sure you're doing millionaire stuff and you've got the right amounts. Don't have the wrong things.

Have the right things in the right amounts. Very important that you don't do that. Five-minute coverage checkup. Text the word CHECKUP to 33-789. Thank you. In the lobby of Ramsey Solutions, Eric and Tammy are with us. Hey, guys, how are you? Hi, Dave. Hi, Dave. How are you?

Better than I deserve. Welcome. Where do you guys live? Thanks so much for having us. We live in Cave Creek, Arizona. Phoenix area. Yes. Yeah, I've been there. Very cool. Did a book signing up in that area one time at the mall. Very cool. We've seen you there. Well, good to have you guys. So you're here to do a debt-free

scream. Yes, sir. How much have you paid off? We paid off $394,000. How long did this take? It took a total of nine years. Oh, very good. There was a little break in there between two, Dave, where for like two years I went to school, finished that, had a construction injury. But we made it up. It's a long story. And what was your range of income through those nine years? Yeah, so we were $140,000 down to $85,000 for the four years he went to college, and then now up to $200,000.

Okay. Excellent. What do you all do for a living? So we're both in sales. I'm medical device, and he's heavy construction. All right. Very good. Yeah.

And I'm guessing with this being nine years and this much money, it's your house. Yes. Yes. You paid off your house? Yes, we did. I'm looking at weird people. Yes, you are. It's awesome to be weird. I love it. How paid off your house? Yes, we did. I'm looking at weird people. Yes, you are. It's awesome to be weird. I love it.

How old are you two? So I'm 46. 46 as well. All right. In a paid-for house. Yes, sir. Not even 50. No.

Touchdown. I love it. It's good. Way to go. It was so intense there for a while, we ate the gazelle. We did. I love it. Well, good job, you guys.

What's this house worth? Now it's probably $420,000. Yeah. Wow. Pretty neat. Yeah, the market has gone crazy in Phoenix, and we were so fortunate because when we moved there, it was the very low of the market, and we didn't have any debt. So we could afford, that was the only debt that we had. We bought that house and then we paid it off.

I mean, it was an incredible journey. It took full two years to pay it off. That was our gazelle intense. So it was hard. It was hard. I would just want to say, what you do makes a difference all through your marriage. We've grown so much as a couple going through this process.

This is not just a get-out-of-debt show. It's not just money. It's your whole life. It's your marriage. So I just wanted to mention that. I mean, it's been a fantastic journey. Incredible. I'm so proud of y'all.

Who were your biggest cheerleaders? Yeah. So my dad was a huge cheerleader. And I'd say my older brother, Dan. Yeah. So a couple of family members on the good side. Yeah. So my dad was a huge cheerleader. And I'd say my older brother, Dan. Yeah. Yeah. So a couple of family members on the good side. Yeah.

They're not on the dark side of the force. That's right. I love it. That's right. Way to go, you guys. Yeah. Man, that's so cool. So what started you doing this?

What made you say, we can actually pay off our house? Because most people never bother. Yeah. Well, because the journey happened so long ago, the beginning of the journey, he had come home from work one day and he just said, hey, I heard this guy on the radio talking about money. I was always reading books about finance. He said, take a look at this guy and see what you think.

So the next weekend, your CDs came. The very first set of CDs came that you had created. I listened to those CDs and literally that day, my life went from awesome that we had everything we could ever have dreamed of our big house and our jet skis and boat. It was awesome until it wasn't awesome because we didn't own anything, nothing. And it was just so rude awakening. And it was so scary to sit there thinking we don't own anything and so that started the journey so lots of life happened in between they removed about five times before we finally

settled in cave creek arizona eric got hurt on a construction job he was builder um and when that happened that changed our life because he chose to go to college he said you know we need to go to college that's what took the income down because i had to work and we had cash floated. And then once that was all done, I printed the amortization schedule for the house and I brought it to him and I said, I think we can pay the house off in two years. And I said, you're crazy. But I really thought we could, but this last two years has sucked. It was hard. So you did the 394 really in two years? Or how much of the 394 was the house?

The house was $240,000. We did that in two years. Whoa! That was the gazelle in tents where we ate the gazelle because we were so tired of rice and beans. So you cleaned up all the jet skis and the other stuff in the previous seven years. But then when you look down, you go, okay, game on.

Now we're going to do the house. And you leaned into it with, wow, good. That's right. Because he had graduated from college and got a good job. I had my good job. We were stable, ready to go. And we did it. I love it.

I love it. Well done. Well done. We did it. So, Eric, what kind of injury did you have? I was setting trusses and the crane kind of let go, and I had my hand on the crane, and it just pulled everything in this arm, and I had to have some work done here. So the surgeon said, you're done doing construction, and we had a big talk, and I just went back to school.

Yeah. So you're going to use your mind now. Yes. So you got a degree in? Business management. Business management. And I went into construction, large equipment sales, and stay in the construction industry. All right.

Perfect. Because you know the business. Yes, sir. Yeah, that makes sense. And then you've got the degree now to go with it. So very good. Use your experience and the education to pivot and go in another direction. And you're making great money between the two of you now.

We're doing pretty good. You are. And you don't have a house payment. No, sir. No, we don't. I love it. No. Well good. You are. And you don't have a house payment. No, we don't. I love it. No. Well done.

Well done. So what do you tell people the key to getting out of debt is? Yeah. So the key, you have to have a budget. You have to know where your money's coming and going. But you have to have a partner. Teamwork. That shares it.

Each person's going to have, somebody's going to have their hard time, and that best friend needs to be right there to pick you up, and you have to work as a team. Yeah. And then it just, it works. It works. You guys are fun. You're fun. Thank you.

You're going to be so rich. I know. And we can give. Yep. I have to say this. So the biggest line item in our budget is our giving. Mm-hmm. That is fantastic. Who would have thought

we could have ever done that? Well, you don't have any payments. I know. It's so great. Thank you so much for doing what God put you here to do, Dave. Thank you so very much. Thank you. We're proud of you. You're the reason we do it. That's awesome. Thank you. You guys are heroes.

All right. Eric and Tammy, Phoenix, Arizona, $zona 394 000 paid off but 240 in the last two years that's the house and everything over nine years count it down let's hear a debt-free scream ready three two one We're dead free! Woo-hoo-hoo-hoo! Love it! Man, that's fun. Well done, you two.

Well done. This is how it's done right here, folks. Wow. Open phones this hour at 888-825-5225. Lucas is on Instagram. Dave, I've got credit cards with high balances. I'm following your steps to pay them off. My question is, should I close the accounts and never look back once they're paid off?

Let's see, Lucas. You have open credit cards that you ran up to high balances. And you pay them off, and you're wondering if you should keep them. Sounds like a dumb question. Of course you shouldn't keep them. What's the point in paying them off? And you have a tendency to use them, we have noticed. So of course you pay them off, and of course you close them, and of course you're done with credit cards. You're done with credit cards. I don't have a credit

card. You don't have a credit card? I don't have a credit card. You don't have a credit card? I don't have a credit card. I have debit cards. And I go travel more than any two of you put together. And I put up with the same stuff everybody else puts up with out there. My debit cards work just fine, thank you very much. And do everything a credit card will do except put you in debt. So you have to rethink this, folks. You have to rethink it permanently. So get you some debit cards, Put some money in your account.

Don't buy stuff if you don't have money. That's kind of how that debit card thing works. And you close all the credit card accounts. All of them. Every one of them. This is the Daveave ramsey show We'll be right back. Thank you for joining us, America. Alexis is in Tampa, Florida. Hi, Alexis.

How are you? Hi, Dave. I'm well. How are you? Better than I deserve. What's up? So I was wanting to get your guidance on something. My husband and I have kind of two school of thoughts on something.

So we just started listening to your program a couple months ago, and we're kind of on baby steps two and three, because we were sort of doing them before we got to know you, but kind of out of order. So anyways, we have some rental properties. The argument is my husband thinks that we should sell our two rental properties and throw all that money towards our primary home. And my thought is to keep them because we make a profit on them. And we have renters who have been there a couple years and have indicated that they're not really looking to go anywhere. So, you know, one of our tenants is a schoolteacher. Her school is right down the street from our home, and she doesn't plan on moving. What do you owe on rental property

number one? On number one, we owe $107,000. And what's it worth? About $165,000. Okay. And rental property number two? We owe $165,000, and it's worth about $295,000. Okay. All right. You're making a little profit. You're not making a lot. No, it's about $1,000 a month. I mean, it's definitely not anything to quit our job.

No, that's your gross. That's before you count vacancy and major repairs that come up. That's the gross cash flow, the difference in the rent and the payment. So $12,000 a year minus vacancy, minus an occasional heating and air system or a roof occasionally, you're making a little bit of money. Right. Five grand, four grand, something like that a year, something like that overall. Average.

I mean, some years will be better than others and that kind of thing. I own a bunch of rental properties, so I can kind of do these things in my head. And what's your household income? So we bring about 110 gross. Okay. And what do you owe on your home our primary um we just purchased it um 10 months ago so we owe 280 and it's worth about 300 okay good all right and so he's saying um you've got 130 and uh 50 or so. So you got 180 if you sold both of these, give or take, expenses that you could throw at your 280. And that's what he's saying to do.

You're saying, we're making a little money. I like rental property. These are good renters. I think I want to keep it. And that's the discussion. Am I right? Yeah. I think I want to keep it, and that's the discussion. Am I right? Yeah, because my thought is as soon as we're done, we have about $10,000 left in debt. How much is in your savings account?

We have combined probably at $12,000 because we had a lot, but we took a bunch out of it and threw it out of debt. Let me help you with this because the baby steps are very clearly defined that you do one before you do the other. You can't sort of do them. You can have your plan, but you can't call them baby steps. I won't let you if you're going to do your plan, okay? If you're going to do my plan, you'd write a check today and be debt-free. Yeah, the only reason I was hesitant is because I'm a single. I know, because you're doing your plan.

No, it's just the end of the year is always really tough in my sales environment. So it was just there in the event that my commissions just don't come through for the next three months. I just was afraid to liquidate it. And then if I don't sell anything for the next three months, being a tough spot. So I figure come Christmas, if everything goes well, then I would just write the check. Okay. That's your plan. Okay.

You know, you're not making a ton of money on these properties. You don't have a ton of margin in them. So they could flip on you pretty quick. At a minimum, a good compromise between the two of you. I'm a rental property nut. I love it. I love real estate. And I want you to keep them if you want to keep them.

And the big one that's got more margin in it and more equity in it is the most appealing to me, the 295 over 165 one. And so I might keep one and dump the other one. The $50,000 doesn't move the needle much, but the one that only got a $50,000 equity, you're not hardly making anything on that. And you ain't got much spread on that at all, which means that it could turn upside down on you, meaning if it went vacant for three months, you could be writing checks.

By the end of the year, you'd lose money on that house if you had a three-month vacancy if the market softened up so you just don't have any wiggle room in that thing so it's as much a liability as it is an asset in your situation even though it technically has equity so i'm probably dumping the little one as a compromise between the two of you. And if you're going to hold the other one, then you guys just got to, you know, let's start working these baby steps the right way and following on through and getting the emergency fund done and get a proper emergency fund in place. And if your income is volatile enough that you need to have an additional account to cover income volatility that's separate from your emergency fund, then you could build that one up too and build you some cash position so that you're not constantly in this lurch back and forth.

I mean, you're making good money overall, but you kind of live in hand-to-mouth anyway. And that's the cycle you're trying to break. So good question. Thanks for joining us. Open phones at 888-825-5225. Mike is with us in San Francisco. Hey, Mike, how are you? Hi, Dave.

How are you doing? Better than I deserve. What's up? So I just started in October here, and that's when I got my starter set. So I have, with the money makeover, I got $800 in my emergency fund, so I'm on baby step one. It's the first time I'm doing a budget, and it's a mess. It just seems like I just can't dial it in. Are you on every dollar?

Yeah, every dollar. Okay. What are you having trouble dialing in? Well, it just seems like I kind of make an estimate of what I think things are going to cost, and then it just either seems like it goes over, and then there's things that I think we're going to have to pay for, but then there's nothing really happening. It stays kind of just dormant.

You've been doing it a whole two weeks. Yes. Yeah. Well, it just takes a little while to get things adjusted. The first thing you would tell you is this. When you're doing your every dollar budget, whatever you think you're spending on food, you're wrong. Put more in there. Yeah.

But people always spend more on food than they think they are. I mean, I've had people go, I live on $25 a month. I'm going, no, you don't. It's just no way. You know what I mean? So whatever you think you're spending on food, you're spending more. And really quick, I wanted to ask, when should I invest in the Financial Peace University? Should I get that now or kind of get it after I'm done with my thousand, just put everything in there first?

That's up to you. I mean, you can decide what you want to do. Why don't I just give it to you, and that way you don't have to worry about it. Oh. Okay. All right. Yeah. That way you can get signed up and get the EveryD every dollar plus going and that's a one-year membership for

that thing and then you get in the class you know you go to the nine nine lessons and you've got the online experience and that's going to answer a bunch of these questions as well but basically if you just visualize a yellow pad forget every dollar. Forget budgeting and all that. And just go, okay, here's what I make at the top of the page. And then every dollar of my – every one of those dollars needs an assignment going down the page. I'm going to spend X on food and Y on utilities and Z on rent and so on down the page until every single dollar has an assignment. You don't have any leftover money in your budget. It is a great app. I mean, it's definitely the easiest one.

I've done other ones before in the past, and this one is definitely the easiest as far as telling you. The problem is you're facing your realities. It's not the app, and it's not the system even. It's just the first time you do a budget, you suck at it. Yeah. You know, and it just takes a month, and then the next month you'll get better. Really, about the third month you're doing it, it'll be accurate. It'll take about the rhythm of about 90 days, about three times through it,

and you'll go, oh, I'm not forgetting those soccer pictures again. I got this one dialed in, you know. And we know what the food really costs, and we know what the utilities really are. You've got a few things that are fixed that are predictable. I mean, your rent or your mortgage payment, that's a fixed thing. We know what the utilities really are. You've got a few things that are fixed that are predictable. I mean, your rent or your mortgage payment, that's a fixed thing. We know what that is. But some of these other things, you're just taking your best guess, and it just takes a little while to get the trial and error,

get the course corrections done and get adjusted. So you'll get it, man. Hang on. I'll have Kelly pick up. We'll get you signed up for Financial Peace University. Thanks to James Childs, our producer, Kelly Daniel, our associate producer. I'm Dave Ramsey, your host, and we'll be back. Hey, it's Blake, chief production officer for the show, and here's a little tip for 2018.

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