The Ramsey Show - App - The Budget Is Permission to Spend (Hour 3)

Episode Date: July 5, 2019

Take control of your money once and for all. The Dave Ramsey Show offers up straight talk on life and money. Millions listen in as callers from all walks of life learn how to get out of debt and start building for the future. Check out the fifth most downloaded podcast of 2018!   Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE     Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Thanks for being here, America. Dan is with us to start off this hour in Kansas City. Hi, Dan. How are you? Good. I was wanting to call in today. I had a question between saving or spending debt down where I fortunately paid off my outstanding credit cards and small interest loans, and so I just have my first and second mortgage.

Good. And I'm trying to pay the second mortgage off as quick as possible, but I know in a year I've got a lot of expenses for home repairs and potentially replacing wife's car. I'm trying to figure out, I'm trying to save about $500 a month and I'm paying about $600 a month to pay the second mortgage down. I'm wondering if I should be more aggressive paying the debt down or more aggressive with the savings. What is the balance on your second mortgage? $17,000. And what's your household income? The gross is about $150,000 a year. Okay. When we have a second mortgage that is less than half your annual income, which yours is,

we count it in baby step two, we call it, which is where we have everyone pay off all your debts except your home. Now, if you had an $80,000 second mortgage, we wouldn't do that. We would leave it at what we call baby step six, and you would just pay on it only as you got ready to pay on your home. But this is like a credit card debt or a car payment. It's a small debt. And so what I would do is I would stop all investing, and I would stop all saving of any kind,

and I would pay this off in an instant do you have any money saved or invested that is not in a retirement account uh at this point no i've i've tried to save up for emergency and how much is in that about three thousand dollars all right then we take that baby step one. What we teach people is a process called the baby steps to the fastest path to building wealth. Okay. And baby step one is a thousand dollars saved as a starter beginner emergency fund. Anything above that,

we throw it at debt and we stop all investing and saving and baby step two. And that's become debt freefree everything but your home and that would include a small home equity loan like you have so that's where you are you're at that step so i'm taking two thousand dollars i'm throwing out of your three i'm throwing it at this the car and the home repairs are on hold for right now they're they're a thing you need to do but they're not an emergency today, and you need to clear this debt as quickly as possible. Once that's gone, and it should be gone in no time. I mean, if you stop everything and completely point all of your guns

at this one debt that's only $15,000 after this discussion and you make $150,000, you should be done with it in just a matter of months, right? A couple of months. Just knock it out fast. Well, yeah, I still look at it about $1,200 a month, so it could still take nine to 15 months or something. You make $150,000 a year. It shouldn't. Okay.

And I don't know how that is with taxes and insurance, but when I calculated what we actually bring home, I think it's closer to $92,000. You don't pay $60,000 a year in taxes. True, but I looked at what my take-home was. I understand. Did you get a huge tax refund? No, actually. How much is going into 401K? Right now, I'm putting 6% in.

Stop that. That's what I'm saying. Stop all investing temporarily and completely focus. Because your take-home pay, i'm talking about after taxes your actual tax bill on 150 000 i mean you should be bringing home 120 your tax bill is about 30 and so about ten thousand dollars a month minus your health insurance and your how i don't know how expensive your health insurance is but 120 $120,000 minus health insurance, and then just crunch your budget down to nothing. And when you start doing that, $15,000 goes away in a matter of about three months, four months.

You should be done with this before Christmas for sure. And then I want you to build your emergency fund of three to six months of expenses. Raise that $1,000 up to about $20,000. And then pay cash for thousand bucks and then pay cash for a car and then pay cash for the home repairs and only then do you restart your 401k and that's baby step four and you put 15 of your income not six percent into your 401k see what's happening right now dan is you're falling into the classic trap that causes people to not get traction is you're trying to do six trap that causes people to not get traction,

is you're trying to do six things at once and none of them are getting done. You feel that? You're putting money in your 401K, you're trying to pay extra on this loan, and you're trying to save money for a car. And none of them are really going very fast. And you make $150,000 a year and you've got no traction. So the difference is what i tell people to do is what you focus on is what wins and that's caused people to be able to win now you can do whatever you want to do dan but you call me and this is our plan and it has

worked for millions of people so it's what we tell folks to do hang on i'm going to send you a copy of the book the total money makeover is Gift. Read through that and then make your decision. It's very persuasive because it's correct. You know, the things that we focus on are the things we win at. And when you try to do six things at once, nothing, you know, it's jack of all trades, master of none. Nothing gets done. Nothing gets done. Nothing gets done. When you try to do six things at once, there's no power focus.

And so it makes you very nervous to not have but $1,000 saved. It makes you very nervous to turn off your 401K. But it ought to make you very nervous that you don't have but $3,000 to your name and you make $150,000. That ought to make you nervous. And that ought to tell you that you're not getting the traction that you should be getting here. If you do what I'm talking about in one year, your life will be dramatically changed in the financial area. Dramatically.

Because you make really good money. You're just not winning with it. So, hope that's helpful to you, brother. Hold on. I'll have Kelly pick up. We'll give you a copy of the book. Spencer's on Facebook says, Dave, I've got $1,000 saved beyond baby step one. The one problem is I need a car badly, but my only debt I have left is also $1,000.

What should I do? You should pay off your debt, and then you should save up and pay cash for a car. Badly is the only time you need a car badly is if you don't have a car. Other than that, you've got a car. The car you have may suck. You may be driving a hoopty i got that and you probably do need to move up in car but if the car you've got is driving if it's not sitting in the driveway broken and you can get to work drive it and shut up this is a temporary thing we're not driving this car for five years. We're driving it for a month or two months. You pay off your debt, you build up your emergency fund, and then you save for a car.

And just do this in the right order, man. You have to. When Sharon and I went broke, a guy loaned me a car. The predominant color on the car was Bondo. I drove a 478,000-mile used Cadillac, very used Cadillac, and the color was Bondo. That's who you're asking this question of. This is the news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal.

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That's 888-562-6200 or churchillmortgage.com. Thanks for joining us, America. Chris is with us in Washington, D.C. Hey, Chris, how are you? Hey, Dave. I'm doing good. I really appreciate what you do. I've been listening to you for a long time, and I can't say that I follow all the rules,

and I hope I don't get taken to the woodshed too badly. But you've definitely changed my family's life for the better. Cool. Cool. How can I help today? Sure. So, long story short, my wife and I sold a house that we had on the market for about a year, and we took all of the equity that we had. We have another mortgage in the house that we live in, but we paid off all of our debt except for the $30,000 of student loans or so that we have. So we have an envelope

budgeting system that we try to adhere to pretty well every month. But we have about $30,000. We could pay the student loans off today, but we would not any longer have like our 90-day slush fund. So I'm trying to decide if I should write a $20,000 check to pay off what I can today and keep another $10,000 or so set aside for our 90-day of emergency fund, or if I should continue paying what we've budgeted, which is $1,000 a month, and then write a check when I can just pay it off in a single lump sum. I'm basically afraid to let go of the money that we've got right now. So that's kind of my question to you.

What's your household income? A little over $200,000. Okay. And so why would you only be paying $1,000 a month on this? It's, I would say, Okay. We have a certain type of lifestyle that we don't want to give up, and we feel that, you know, paying off the loan in a year to two years is acceptable for us.

Yeah, that's kind of pitiful, in other words. Yeah. Yeah, and you knew that. You knew that. I didn't have to point it out. You already knew that was coming. Part of it is we're putting about $2,000 a month into the 401K, and that's a lot. Okay, now let's stop.

You said earlier in the conversation that you have been listening to me for a good while. Yes, sir. Okay. So it ought to be fairly easy for you. The only question is, are you going to do your plan or are you going to do the plan I teach? Either one's okay. You're not a dumb guy. You make $200,000.

You're going to be all right. You're not going to go bankrupt. But if you're going to work our plan, you know what that plan is, right? It would be to cut some of our lifestyle choices so that we could pay it off now and save up our money. No. Save up the 90 days as quickly as we could. No. You've linked the test.

Okay. Baby step one is save $1,000. When you start getting out of debt, you clean out all non-retirement savings and you throw it at all non-mortgage debt in baby step two. So all of that says we'd pay off the student loan 100% today, leaving you penniless making $200,000 a year. And, oh, by the way, during that time we stop, and we stop putting money into the 401K until we get the emergency fund built, and we're debt-free with Baby Step 2 and 3, right? You heard all that before?

Yeah. Listen, you get to do what you want to do. You're not going to do it, okay? But the system is. Well, no. Oh, you're not. I mean, it's okay. I'm not mad at you.

And I'm not taking you to the woodshed. But the process is this. What we have found is that you have a weak foundation in your home because you still have debt and you don't have enough savings for somebody that makes the money you make in your emergency fund. And so the foundation in your financial plan is weak. It's not necessarily going to fall in as long as your income stays where it is. But, you know, so what would I do if I woke up in your shoes? The first thing I'd do before I went ahead and finished building my house is I'd shore up the foundation.

And so I'd write a check today, and I'd be debt-free. You're not going to do that, but that's what I would do. And then I would stop my 401K temporarily, and you're not going to do that, but that's what I would do. And then I would stop my 401K temporarily, and you're not going to do that, but that's what I would do. And then I would take every dollar I can squeeze out of my budget, and I'd put $30,000, making $200,000 a year, into an emergency fund, a rainy day fund. And I could do that in about five months. Okay. Okay, four or five months. have i'd have zero debt except my home i'd have my thirty thousand dollars and so at the end of five

or six months or whatever that ends up being i'm going to restart my 401k and i'm not going to play with it anymore i'm going to now put 15 of my income into retirement which are the kind of money you make that's going to make you very very wealthy that's baby step four five is kids college i would start that or restart that at that point and six is pay off your house early with any other money i can squeeze out and what we're finding is with all the millionaires that we've studied the ones that have followed our stuff or the ones that have followed their own stuff, is they do, there's two things we see them all doing. They steadily invest in their 401k and they pay off their house early.

And they avoid all other debt like the plague. Some of them have a credit card, much to my chagrin. I don't want them to even do that. I want them to have debit cards. But some of them actually have credit cards but none of them carry a balance under any circumstances ever and haven't in 30 or 40 years they pay off their home in 10.2 years on average because they worked some semblance of what i'm laying out here the problem with your situation is you're trying to do too many things at once you make really good, and it covers up your mistakes.

There's enough salve on this because of the income that you can limp along and be okay. You'll be okay. But you're not maximizing the opportunity that's at your disposal. So you get to do what you want to do. My prediction is you're not going to do any of it. But it's a good discussion to have. It's fine. And And again, I'm not calling you out. It's just, you know, you make 200 grand. You don't have to do it, you know, and, and you don't, you know, it scares you to death and your wife will think you're crazy. If you come back in and say,

announce that that's what we're going to do and all that's going to happen. And you know, you're not going to do all that and that's okay. It's okay. I appreciate having you a listener anyway, and hope we can continue to entertain you. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Brian's with us in Modesto, California. Hey, Brian, how are you? Hi, Dave.

Thank you so much for taking my call. Sure. What's up? Well, thanks to you, i'm out of debt and uh i'm officially weird so that's that's awesome so thank you for your plan um so now i'm on baby step six which is a payoff mortgage uh and i'm just having uh trouble figuring out how much and how aggressively i should be putting towards that towards principal every month. Currently, I'm thinking, okay, if I put $500 towards principal every month, that should be okay, I guess.

I don't know. I don't know if I need to be more aggressive or what you think. You know, I'm still kind of... What's your household income? 98. Good. You're married? No, sir.

Okay. You got your emergency fund in place? Yes, sir. I got $20,000 in there. Good. And you're putting 15% towards retirement? Yes, sir. My biweekly income is after retirement and health care and all that stuff is $2,100. Good for you. Okay. And what's the balance on the mortgage?

Just under $200. Okay. Well, $500 a month is 6 000 a year and times 10 years would be 60 000 that you're reducing the principal over 10 years in addition to what you're paying early um it's not bad like for you to do a little better because i'd like for you to get that house paid off in that 10.2 years that'd be my game plan certainly if you get any other money coming in like a bonus or an inheritance or some kind of found money shows up, I'm throwing that at the mortgage to accelerate this.

There's nothing here to panic about. You're on a good schedule. How old are you? 31. Oh, you're young. Okay. You've got plenty of time. Cool.

Well, here's my prediction. I think by the time you're in your early 40s, you're probably going to have worked around and paid the house off. But it's not from the $500 only. Yeah. You're going to continue to concentrate on it. You're going to throw some extra money here and there at it. You're going to get some raises that you throw at it in addition to what we're talking about. And by the time we get you up to your late 30s, you're probably paying $1,000, $1,500 a month by then

from various things that are going to happen good in your life because you've been making really good decisions. Man, you are doing great. I'm so proud of you. Very well done. 31 years old, $98,000 a year. Everything's paid for but your house, putting 15% away, and you've got your retirement in place. That puts you in the top 3% of Americans right there, dude.

You are on your way. Well done. Don't stop, sir. This is the Dave Ramsey Solutions, Phil and Vesta are with us. Hey, guys. How are you? Hi. Good.

How are you? Better than I deserve. Welcome, welcome. Last time we saw you, we were at the Rock and Roll Half Marathon, and we ran right by you. Oh, you ran right by me. Yeah. You sure did. That was not much of a task.

The old man was moving slow. We managed to snap a quick picture of you running. Oh, if you call that running, yeah. You were in the zone. I was trying to survive. Trying to breathe. Hey, good to have you guys. Thank you.

So where do you guys live? Columbia, Missouri. Cool. And how much debt have you two paid off? $58,000 in 14 months. Wow. Good for you guys. Thank you.

Very good. And your range of income during that time? $145,000 to $150,000. All right. Good for you. What do you guys do for a living? I'm a software architect. I teach kindergarten. I also teach group fitness classes. Very good. And what kind of debt was this $58,000? It was student loans and a car payment. Okay. How long have you two been married? Coming up on eight years. Yep, eight years in August. So what happened 14 months ago? Well, so we had just signed a contract to build a new house,

and my gut feeling didn't match up with the math very well. So I was thinking we could afford the house we were going into on a 15-year home loan, and started to do the math and figured out we were going to be breaking even every month. Which we shouldn't have been. We were making plenty of money, so we shouldn't have been breaking even each month. So it was out of fear, basically, that we decided something needed to be done. Absolutely. And so I asked around with a few friends and family members, and your name came up,

and I started listening to your podcasts, and I was on fire after that. Okay, cool. So Vesta, he gets a little bit freaked out, listens to the podcast. And how did the conversation go with you? Well, he came on very energetic. Imagine that. Yes. It was kind of like that call you had a few minutes ago.

This is what we're going to do. Aren't you excited we're going to do this? And for me, I don't deal with change well. So when he told me, this is what we're going to do, I'm so when he told me this is what we're going to do no this is not what we are going to do um i like to spend my money how i like to spend my money so i don't think this is going to happen but the more he kind of focused on well wouldn't it be great if we could send our son augie he just turned two um wouldn't it be great if we could pay for his college we could go on all these great vacations. We could give generously. And when he kind of took that approach, I'm like,

yeah, that does sound nice. And I think the thing that really turned me around was he kind of looked me in the eye and he said, Vesta, this is so important to me. One out of 10, this is a 10. This is so important to me. And once I saw, wow, this is really important to him, it became important to me because I love him so much. So I'm like, okay, I'm on board if this is what you want to do. And then once he started explaining it more, I'm like, well, this makes sense. So there we are. So did you cancel the contract on the house or did you close it? No, we closed on it.

And still sucked it up and did this in 14 months? Sure did. Wow. Very cool. Well, congratulations. Thank you very much. So what do you tell people the key to getting out of debt is? I'd say being on the same page and just really paying attention.

Like before we started your program, it was a lot of like maybe we'll come home with more money this month or maybe we'll go a little negative this month. And just not really knowing where our money was going and paying attention and just having an intentional plan of these dollars are going here and these dollars are going here was really big for us. I loved having the budget, seeing where everything was going in each place. It was kind of freeing. And I didn't feel, when I went and spent a little bit of money,

I didn't have to feel guilty about it because, okay okay, this money's for that, and I bought it. Rachel Cruz says the budget is permission to spend. Yes. Absolutely, yep. And it is. Because you're not spending your kid's college fund. You're not blowing up the house by buying this thing. So you don't have the guilt associated, this sense of dread or regret when you buy something.

And before the budget, I had that sense. Anytime I'd go buy much of anything, especially for myself, I always felt guilty. And so once we had that, well, it's in the budget. So it works. Yeah, it's in the budget. We can actually eat this month. It's okay. We don't have to feel bad about eating.

That's the way it is. I mean, you're going through the checkout at the grocery store, and you don't know if you can pay the light bill. Right. Because you don't have a plan. Right. But once you've got a plan, you go, we can buy this, and there's no trouble. I can buy this piece of clothing, and there's no trouble.

Absolutely. Whatever it is, once you've got a plan. Well, way to go, you guys. Thank you. Thank you. How's it feel? Feels great. Yeah, it feels awesome.

Yeah. I feel like I know where my money's going. I feel like I can see the future and how bright it's going to be for retirement, and I'm just really excited about it. It's funny how many people we run into, they're just so surprised when we say we're debt-free. You're only 30. How are you debt-free already? And so once we kind of explained to them the process and Phil made this really cool app

actually where it shows all of him explaining it. I call it the snowball motivator, but basically since I'm in software, I do nerdy stuff like that. And basically it was something to kind of visualize if I put in software, I do nerdy stuff like that. And basically, it was something to kind of visualize. If I put in these debts and want to put this much extra on the payments each month, how fast can it pay off? And how many months does that calculate down to? So it was kind of proof for people that were naysayers maybe to, hey, look, this is the math. If you watch it and put this much extra there, it really does pay off.

He's a math nerd. I love it. Well done. Good for you guys. Thank you watch it and put this much extra there, it really does pay off. He's a math nerd. I love it. Well done. Good for you guys. Thank you. That is fun. Very, very good. So you've been married eight years.

Yes. Have you ever been debt free? No, sir. Wow. Not in your adult life? No. And you're 30 years old. Yeah.

You're paid for everything and a 15-year mortgage on the new house. Yes, sir. Yes. And you ran the country music marathon. Yes, we did. Half marathon. Half marathon. I beat him just putting it out there. She how bad did you beat him no not 10 feet no it's a few minutes it was oh you did you left him yeah she just turned around and said goodbye

i mean like minutes two minutes is an eternity i mean you just left you yeah it's like you guys left me that's what's the same thing. So what was your times? I think they were just shy of two hours. It was hour 55. I was way behind you. I ran like a 228. It was the worst one I've ever run.

You finished. It got hot by the end of that. It got hot fast. It got real hot. It was hard. Yeah, it was fun. There was a bunch of us out there together. About 400 of us ran.

I looked at every Dave Ramsey shirt. I said, I'm going to find him, Phil. I'm going to find him. I said, there's no way we're going to see him. There's 30,000 people here. I said, there he is. I said, no way. And I turned and I was like, that's Dave Ramsey. Put on my phone.

Took it quickly. He's that guy puffing over there. Puffing and puffing. I love it. Well, congratulations, you two. Thank you. We got a copy of Chris Hogan's Retire-inspired book for you. That's the next chapter in your story, making $150,000 a year.

You don't have any debt except your house. Yes. You're going to be millionaires. Thank you. You're well on your way. You're going to be one of our everyday millionaires. I'm proud of you. Well done.

Well done, well done. Phil and Vesta, Columbia, Missouri, $58,000 paid off in 14 months, making $145,000 to $150,000. Count it down., making $145,000 to $150,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yep.

That's how you do it. Right there. Well done, well done, well done. Man, oh, man. Good stuff. Open phones at 888-825-5225. Kathy is on Twitter. Dave, I've been hearing about home title fraud and ads for title insurance.

My home's paid for. Is title insurance something I should purchase? No. Not if your home is paid for and you already own it. I always purchase title insurance when I'm buying a piece of real estate, 100% of the time, but that is not because of title fraud. Title insurance is about clean title when the title is given to you. It does not cover title fraud. Title fraud is when someone poses as you and tries to retitle your home,

and that's a form of identity theft. And what you would need there is something like Zander Insurance's ID theft protection, which is what we strongly recommend. And if someone tried to steal your identity and thereby use that stolen identity to steal your home or steal title to your home, then that would apply. Title insurance insures the title that you were given. In other words, when the last six buyers and sellers transacted, was that all done properly?

Were all liens released as they should have been, former mortgages and all that kind of stuff? Do you have clean title at the day you buy the home? That's all title insurance covers. Title insurance does not cover title fraud. So if you're seeing commercials for that, it's a scummy version of identity theft protection, and I wouldn't buy it. But title insurance at the purchase of a home, at the purchase of a piece of real estate, 100% of the time I buy title insurance at the closing table. But not after, and not before. This is the Dave Ramsey Show. Our scripture of the day, Proverbs 3, 5, and 6.

Trust in the Lord with all your heart. Lean not on your own understanding. In all your ways acknowledge Him, and He will make your own understanding. In all your ways, acknowledge him, and he will make your paths straight. Ella Fitzgerald said, It isn't where you came from, it's where you're going that counts. I heard Condi Rice say that.

That saying's been going around a lot. I've quoted Condi about 20 times in the past six months on that. But she was asked, you know, what did she learn from her? What did she attribute her in the interview that was done at Entree Leadership Summit? What did she attribute her unbelievable accomplishments to? And she said her parents and her upbringing and she was raised in birmingham alabama in a segregated neighborhood and she said the people in my neighborhood my parents included said education is the answer don't let other people set your worth for you uh when you use racism as an excuse,

this was Condie quoting her, it gives someone else power instead of holding the power yourself. Just because somebody is a racist jerk, don't give them power, in other words. And she said, my parents told us all the time, it doesn't matter where you're coming from. All that matters is where you're going. And she ends up National Security Advisor, Secretary of State. Her intellect is just unbelievably intimidating. She's so nice, but she's one of the smartest human beings I've ever been in the same room with.

Unbelievably well-read, well-spoken, poised, absolutely incredible. So, yeah, I'm going to be quoting Condi for a while because it makes me feel smarter when I do it. Yeah, doesn't matter where you're coming from. What matters is where you're going. You know, you could say that about your neighborhood. You could say that about your family. You could say that about whatever you're going to say it about. You could say it about your stupidity.

Like, you know, I was a millionaire by the time I was 26. Starting from nothing. But I was stupid. Borrow time I was 26, starting from nothing. But I was stupid. Borrowed up to my eyeballs. Bank got sold to another bank, called our notes. We spent the next two and a half years of our life losing everything we owned. We were sued and foreclosed on and finally bankrupt. By the time I was 28 with a brand-new baby, a toddler, and a marriage hanging on by a thread, I was broke.

Could have stayed there. Could have just said, okay, that's my identity. I'm the guy that filed bankruptcy. Because a lot of times when you're a victim of your own stupidity or a victim of something else, it's easy to make that your identity, isn't it? All of us have that. Well, you know, the neighborhood I grew up in, this little man can't get ahead. You don't know about people like me.

You don't understand people like me. I was in New York speaking a while back, and the audience was basically United Nations. I mean, there was every possible mix of person in the audience. You know, it wasn't the United Nations. It wasn't what I was speaking about. I mean, it was a real mixed in the audience. You know, it wasn't the United Nations. It wasn't what I was speaking about. It was a real mixed, wonderful audience. It was a lot of fun. And this woman comes up afterwards.

I was cracking up. And, of course, I'm a southern hillbilly, right, stuck in the middle of New York City doing this thing. And this woman comes up. She goes, you don't understand. And I said, what do I not understand? She goes, I'm Puerto Rican. And I said said what's that got to do with the price of beans and she said puerto ricans have to have new cars i said what i said you think that's a puerto rican disease i thought

it was a hillbilly disease i thought cajuns had that disease i thought i thought everybody of every color every background anywhere had that same disease it It's not a Puerto Rican disease, kiddo. Puerto Ricans have to have new cars. Give me a break. But isn't it interesting how we self-identify and we say our group can't get ahead? Because our group does this. I'm a millennial. I can't get ahead.

I'm a baby boomer. I can't get ahead. I'm over 50. I've got ageism. I can't get ahead. I'm a baby boomer. I can't get ahead. I'm over 50. I've got ageism. I can't get ahead. Nobody hires anybody in the 50s. Well, so start a business, goob. This is America.

I mean, have you not learned anything in those other decades up to now? Of course you have. Go do something. See, you're not stuck. It doesn't matter where you're coming from. All that matters is where you're going. I love that, man. That'll preach right there.

All right, Nancy's with us in San Francisco. Hey, Nancy, how are you? Hello. Hi. I'm going to try to contain myself because I'm very excited to talk to you. How are you? Well, I'm honored. How can I help?

Okay. We haven't opened one of your books. I just stumbled across your YouTube video where you say to run like a gazelle. And after that, I started listening to your podcast, and that was a month ago. Wow. So thanks to you, my husband and I, we sold our land and we're going to use that money to pay off all of our debt. Wow. Yes. But here's the thing. Um, we made a couple of mistakes. Um, one of the mistakes was I, uh,

I'm going to say this out loud. I, uh, bought,000 beautiful Jeep the week that I was laid off from work. So that was two years ago, three years ago almost, and I didn't go back to work. I stayed at home, had a couple more kids, and now I'm a stay-at-home mom. Gotcha. How can I best help you today? Well, I want to know, with this $100,000, I want to know if we should pay off the Jeep or take that money, sell the Jeep, and get a $5,000 car or something to get me around. What's your household income?

It's projected to be $110,000. Okay. And what is the other vehicle? You have a $40,000 Jeep and you have a what else? We have a truck, a work truck that he owes $12,000. He owes $12,000. What's it worth? Right now it's worth probably $12,000.

This is 2011. All right. And so if the Jeep's worth $40,000 and the truck's worth $12,000, that means you have $52,000. That's less than half your annual income. So your cars are not way too expensive. The Jeep's a little weird. It's got kind of a weird history to it in that you bought it in like a weak moment when you were like grieving or something. You kind of had a crazy moment, right?

But other than that, it's fine. Do you like the Jeep? Of course. Oh, yeah. Okay. Well, it's not required that you like the Jeep? Of course. Oh, yeah. Okay. Well, it's not required that you like it, so I just wondered. Okay. So you have other debt other than these two debts?

Yes. I have $71,000 in debt. Including that, it's, well, oh, the other mistake. Okay, look, I'm going to run out of time. Stop. So how much debt do you have not counting your house? $71,000. Okay, and you can pay all of that off with $100,000,

and you make $100,000 and some change, and everything's paid for except your home at that point, and your vehicles are worth less than half your annual income. I would keep the Jeep. Okay, all right. Because it's less than half your annual income. I would keep the Jeep. Okay. All right. Because it's less than half your annual income and you're debt-free. Yes.

Okay. But here's the thing. Let's go back and if I'm you, I'm going to go back and say, okay, just like when I went broke, I did the same thing to myself. I did a CSI on it. I did an autopsy on the patient why did the patient die okay and i went back and i said okay there's a dumb thing i did there's another dumb thing i did there's another dumb thing i did and you need to clearly identify the dumb things okay i'll go

ahead and tell you what one of them was here okay you can look at them you can figure it out for yourself but the way you told the story told us all the jeep was a dumb purchase why was it a dumb purchase because you did it as at a really high stress time and you impulsed it to medicate your sorrows over having lost the job not the way you make a decision to make a purchase you don't make purchases to medicate sorrows you'll be broke your whole life because there's always sorrows you don't you never do that and you certainly don't make purchases to medicate sorrows. You'll be broke your whole life because there's always sorrows. You never do that. And you certainly don't do that with $40,000.

So you go back and you look at that and you go, I'll never do that again. I learned my lesson. And as long as you quit repeating stupid stuff, you're going to walk out and you're going to be fine. Honored to talk to you, Nancy. Thank you for being a listener. That puts this hour of the Dave Ramsey Show in the books. We will be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's

to walk daily with the Prince of Peace, Christ Jesus. 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.