The Ramsey Show - App - The Budget Is Your Map to Win Land (Hour 1)

Episode Date: November 21, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is 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. Suzanne starts us off this hour in Midland, Texas. Hi, Suzanne. How are you? I'm good. How are you, Dave? Better than I deserve. What's up in your world? Well, I'm going to turn 65 in december and i'm going to retire in january i have been on a defined benefit plan and i have an offer to either take a life annuity a monthly you know monthly

benefit or take a lump sum which is better which should Lump sum. Take the lump sum. Okay, what do I do with it once I take it? I would get with a SmartVestor Pro if you don't have a financial advisor and do a direct transfer rollover into a traditional IRA. There will be no taxes on it, and I would spread it across four types of mutual funds. I want you to learn about those and sit with that investor, that investment advisor, and get some help from them and take your time.

You've got time to do this. There's no rush. And I put mine. I'm 58. Mine are invested in four types, growth, growth and income, aggressive growth, and international. If you wanted to dial that back a little and not be quite as wild, you would take the aggressive off and replace it with a balanced. But one of our SmartVestor pros can help you do that,

or another broker can if you're working with someone else. The reason for that is simple. The defined benefit plan, by regulation, calculates your monthly payment that they're going to give you based on a 7% rate of return on that lump sum. Okay? Either a 5% or 5 to 7, somewhere in there. And if you invest this in good mutual funds, you can make, you know, 10% to 12% on average. That's what the market has averaged. And so you'll make more while you're alive.

And, of course, when you die with the life annuity, it dies with you. So what is the lump sum? $1.1 million. My goodness gracious. Way to go, millionaire. Well, and thank you, because I paid off my house, and I paid off my car, and I did what you said, and I'm in really good shape. You're in great shape.

So if you die, they keep your million dollars if it's in the annuity. No, not if you die. I guess we should say when you die, right? Right, right. And if you roll it to an IRA, it's there for your inheritance. Okay. It goes to your heirs or to whoever you decide to give it to in your will. So it's a million-dollar swing in this discussion at your death prior to your death you know um you know a million one

ought to create basically 100 grand a year in income and i doubt they're offering you that they're probably offering you more like 70 a year that would be my guess so anyway right along those lines that's what you're looking at and sit down with a smart investor pro if you don't have one just click smart investor at davramsey.com these are not people that work for me but they're people that i endorse and they advertise with us and um so there are people that will give you that sit with you with the heart of a teacher teach you you don't put money in it because i said to you put money in because you understand it but this is what i would do i would roll roll it to a traditional IRA and some good mutual funds. Better while you're alive and better when you die.

It comes out better both ways. Jason's with us in San Diego. Hi, Jason. How are you? I'm doing well, dude. Need a bit of your help, though. Okay. All right.

There's two major things. I'm a new listener, so I'm kind of brand new to all this. Um, one, I'm about 87 K student debt. That's, that's not my, not my major issue though. Um, about a year ago, I got into a car for lease and, uh, the, over the four year lease term, I would have ended up paying about 29 grand. Um, the buyout price for this loan is is i'm sorry for this for this vehicle is 32 um and i can't afford it either way okay so the current you've called them in the current early buyout on the fleece is 32 000 like your payoff right yes okay and what's the car worth? The Kelley Blue Book value, there's a range from $21 to $25. Okay.

Well, I'm guessing, is that private sale? Yes. What car is this? It's a 2018 Chevy Colorado. Oh, interesting. Okay. It's a wonderful machine. Oh, yeah, they are.

I did not know what I was getting into. They're great. All right, so let's use 25 as our example. If a buyer comes up and offers you 25, in order to give your buyer the title, you have to have another seven. Right. You'd be seven in the hole, seven upside down. I need you to line that money up either from savings or from going to your local credit union, your local bank, and lining up a loan for $7,000.

That's the first thing to do. You've got to cover the difference. Should you do that? The answer is probably yes. What's your household income? Right now, I just started a new job about two weeks ago. And if it's just a flat 40 hours a week i'm at 39 but you know there's overtime available so i can if there's a little bit in there okay yeah this car's gone yeah you gotta sell it okay it doesn't fit in

your it doesn't fit in your world now how much is left on the lease um i'm about a year into a four-year lease um that's probably my first mistake. Yeah. So if you add up three years of payments remaining versus $7,000 it costs you to sell it today, it's going to be higher. And so the $7,000 gets you out cheaper than keeping it. So, yeah, this car is gone for multiple reasons. Okay. So the first step would be to list this and find a private seller and then take out the loan and then just pay off the 7K. Exactly.

You've got to be able to pay. You're going to get 25 from a buyer, and then you've got to put 7 with that to send to the fleece company because they hold your title. Right. In our example. It won't work out exactly that way, but, I mean, basically you've got to send them what they're asking for to get the title,

and you're going to have that lined up. So the first step is go find the loan and get it prearranged. You can either take the loan or wait until you get the buyer. I'd probably wait until I got the buyer. But go ahead and talk to your credit union, talk to your local bank, get the loan in place, ready to go, and then put the car on the market and let's get it sold as fast as you can. Because you're right, it's killing you.

I mean, with your income and that payment, ouch! Ouch! Hey, thanks for the call. Open phones at 888-825-5225. He did catch on early as a new listener to the lingo. We don't call them car leases. We call them fleeces. And if you're not from the country

or old school you may not know what that means but if you shear a sheep if you take uh his hair off that's his that's the fleece and so you've been sheared you've been fleeced and uh it's the worst most expensive way to operate a vehicle. Your cost of capital on the typical car lease is around 14.2%. But that wasn't disclosed to you because you're renting your freaking car. You don't even own it. This is like a bad idea, you know? This is the Dave Ramsey Show.

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That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thank you for joining us, America. We're glad you are here. Fran is with us in Orlando. Hi, Fran. How are you? Hi, I'm doing good.

Thank you so much for asking. I actually wanted your opinion on, I'm actually moving back with family members to Providence, Rhode Island, and I'm thinking about selling my car. I got it appraised with a well-known company called Carvana, with a really well-known company called Carvana, and they're giving me the appraised value of $1,585 for a Chevy Spark 2013. I think that's pretty good because I bought the car fairly cheap. With that money, I can actually pay. I have one credit card.

I can pay $1,102.73 with that money. I can also pay a few of the extra bills that I have left and still have a little bit of money left so that I can buy myself a nice winter jacket. What do you think? Do you think that I should just sell the car and make the move to Rhode Island and just be without a car? Because it's a little easier to not have a car in Rhode Island than it is in Orlando, Florida. Okay. And what are you going to be doing in Rhode Island, kiddo? I'm actually going to go back to school. Just all my family lives up there. I currently

work as a body piercer here in Orlando, Florida, and I already talked to a tattoo shop over there, and I'm literally just going to work for him with the experience that I know. Okay. And you're going to be studying what in school? I'm a little bit, you know, stuck between a rock and a hard place. I really don't know what I want to do. So while I'm in that transition phase, I just really wanted support from my family. Okay, so you're not going to school. I thought you said you were going to school. I am going to school. It's just buckling down. I kind of had to let school go here in Orlando,

Florida, because I just couldn't afford it anymore. I got that part. I'm saying you're planning on going to school in Rhode Island. What are you going to study? I'm thinking education. Okay. Yeah, you need to have a real solid plan of exactly what you're going to do and why you're doing it before you go to the trouble to go to school on the expense of going to school.

So are you going to be living with your parents? I'm actually going to be living with my aunt. Okay. And are you on a bus line or some kind of a mass transit situation there that you can handle not having a car? Actually, Rhode Island, everything, it's so small, everything's so close that I can't, I wouldn't mind riding the bus. Okay. All right. So you've got mass transit available to you that's reasonable in your mind. Yes, I do. I have everything planned out. I just really needed your opinion on it.

I think all of that's fine. My only question would be, there's nothing wrong with Carvana. They're a fine company. They're a dealership, and dealers always give you a wholesale price on a car that they think they can sell it and make more on it. And so if they think they can sell it and make more, I always wonder if you can. But overall, your plan is fine. I wonder if you could sell the car to an individual for $2,000 is what I'm saying.

And that $600 would be a lot of difference in your life right now, that $500 difference. So I might consider trying to find an individual to buy it on Craigslist for a couple grand and just see if you can get a little bit more money out of it. But if not, the Carvana plan will work just fine. Hey, thanks for the call. James is with us in Columbus, Ohio. Hi, James. How are you? Hi, sir. Thank you for taking my call. Sure. What's up? I got a question for you. I have done things backwards. I just bought your book, and I bought books for all my kids. Thank you. We paid our house off already.

We're 56 years old. I have approximately about $25,000 left in debt. I have no credit cards, no other debt that way. But my question is, should I stop my retirement and go ahead and tackle that debt and get it kicked out, and then that way I can max out all retirement? Yeah, what's your household income? Well, I approximately make about $110,000 a year. My wife makes about $15,000 to $20,000 right now.

She's getting ready to go into her field that she went to school for. What will she be making in that? She was making approximately about $40,000 a year. Okay, great. So making $150,000, how fast do you pay off $25,000 if you temporarily stop retirement? I think I could pay it off in a year. Oh, I think you can pay it off in eight months. Yeah.

Maybe six. Yeah, we could hammer it pretty good. I mean, $4,000 a month is six months. Okay. That's beans and rice. But I don't want you out of that retirement for very long. You're 56. You want to get right back at it, right?

Right, right. And you don't have a house payment. So I know you can do $4,000 a month. See, I'm doing this calculation based on $150,000 a year, which you don't have yet. Correct. Because she's getting ready to go there. So I'm not using your current budget. I'm using $150,000, $25,000, or $4,000 a month is the equivalent of $48,000 a year out of

$150,000. You could do that, that rate. Yes, sir. And so I'm saying six months. Yeah, let's stop it for six months and knock it out and then jump in with both feet and fill up everything and retire a millionaire. Okay love it that's my question thank you sir nina is with us nina's in orlando florida hi nina how are you i'm doing good um dave how are you better than i deserve what's up um so i was calling to just kind of get some advice from you. I'm currently 28.

I'll be 29 in a couple weeks. And I have a five-year-old son that has a disability. So the past almost like year and a half, I haven't been working, just kind of taking care of him. So I used to make between $60,000 to $65,000 a year. It went down to making absolutely nothing, and I made some really poor decisions, and I'm really deep in debt right now. So my question is that this coming Friday I'm actually going to be starting a new job where I'm going to be making approximately $35,000 a year,

but I just don't know where to start. And what I'm scared of is I'm scared of, like, walking in there and all of a sudden getting a check and going back to living like I was making a lot more money than what I'm making right now, and I just kind of wanted your advice on that. So you're single? Yes. And you have a baby that's old?

He's five. Okay. All right. And if you used to make $60, why are you taking a job that's old? He's five. Okay. All right. And if you used to make $60,000, why are you taking a job now that makes only $35,000? Well, I'm originally from New Jersey, so the pay rate is way different in New Jersey versus Florida. But when I was making $60,000 to $65,000 a year, I was paying a whole lot of money in rent. I was paying a whole lot of money just on, you know, just living. What were you doing?

I used to work in sales. Okay. There are sales jobs in Florida that do not, that are not half of New Jersey. The pay rate of Orlando is not half of New Jersey on anything. So that's just not, that's not accurate. So sales, anybody who knows how to sell can make money. And so has the new job got upside where you're selling? Well, no.

So the new job is strictly customer service, but there is potential for me to move into another department where I will be doing sales and making a commission. But it's just where I got hired, I went to a hired event, and I kind of just took, like, the first thing that they had available. That's what I thought, and so you settled. Okay. I just want you to make more money, because I think you've proven that you can make $60,000,

and we're not blaming that on Jersey versus Florida. I'm blaming that on your job selection. So let's move back towards sales, because if you know how to sell, kiddo, you can always make some good money. Selling is one of the best paid professions out there. You've got a lot of opportunity there. So to answer your question, the way you control the paycheck, whether it's 35 or the 65 I want you to go make, either one, you tell the money what to do on paper before the month begins.

And once you've told the money what to do on paper, then that paper is the boss of you. It's called your budget. You're the boss of it until you get it down. Remember when you were a little kid and you said, you're not the boss of me? You know? Well, that's the deal here.

You're the boss of that piece of paper until you get it written out. And once you get it written out, then it's the boss of you. It's your map on how to go to Disneyland. It's your map on how to go to Disneyland. It's your map on how to go to winning land, where you get to win with money. And if you do something with money other than what you planned to do, then you're being a child again, and you're not a child anymore. Now you're an adult. You're raising a child.

You can do this. That's correct. You absolutely can do this. I can tell you can do this by the way the tone of your voice is. You're ready to do this right for the first time in your life. I'm going to help you. I want you to hold on. I'm going to give you a copy of the book, The Total Money Makeover.

I'm going to show you every step of what you need to do and jump online and download the app for your phone called EveryDollar. It's a free budgeting app. It'll help you put your budget together. And then you tell this money what to do. You make this money behave. That's what's necessary. This is the Dave Ramsey Show. We'll be right back. Faraz is calling from Los Angeles.

Hey, Faraz, how are you? Good. How about yourself, Dave? Better than I deserve. I see on my screen you're debt-free. Congratulations. Thank you. Thank you very much. Cool. How much have you paid off, sir? I paid off $50,000 in 18 months.

Way to go. And your range of income during that time? When I started, it was about $20,000, and I ended up in about $60,000. All right, cool. What do you do for a living? I'm an aircraft mechanic. All right, good. What kind of debt was the $50,000? It was just two things. It was $40,000 in car loans, car loan, rather, and $10,000 in credit cards. Gotcha. So what got you started on this journey to get out of debt? Well, about the start of it when I

finally woke up and realized that I was in all this debt one day, I did some research on YouTube. I found you and I listened to a couple of your videos and everything just started making so much sense right from the beginning. Then I ended up actually calling into the show, spoke to you, and then really realized how stupid I was. And then you gifted me Financial Peace University. Oh, cool. And then I just literally started right from there. I knew what I needed to do, but calling into you actually kind of made it really clear that what I needed to do.

What did I tell you to do? To get rid of that car as soon as possible. I had a BMW with a $600 car payment. I was making about $2,000 a month. So how much did you owe on it? Well, the loan was $40,000. What did it bring? The car only brought $21,000.

Whoa! How did you cover the difference? I got a personal loan. Okay. And then you had to pay that off yes so what are you driving now i have a 2005 toyota avalon that i bought from yeah i bought from my friend's parents yeah it was hit by a semi truck on the side um but it was running great, and it has 257,000 miles, and I put on about $40,000. Yeah, I paid $900 cash.

Yeah, you go from a beamer to a hoopty big time. Dude, you were doing it right. Way to go. I'm so sorry the beamer's gone. I'm so glad you got your life back. Yes, yes. It's amazing. I would do it again in a heartbeat, Beamer's gone. I'm so glad you got your life back. Yes, yes. It's amazing. I would do it again in a heartbeat.

And it's okay. I can probably have a Beamer or Lexus or whatever I want in the future. Oh, you'll have one before you know it. You don't have any dead gum payments, man. When you make $60,000 a year, pick up a little OT, you pay cash for a car in no time, right? Yep, yep. Yeah. Hey, take lots of pictures of this beater because you'll want to

show your son someday how he's supposed to live and not be a stupid man yes yes because you and me man we both got a thing for cars i love cars i'm just like you i get you i completely understand so uh very very very very well done though i you really, what you did was emotionally very hard, was it not? It was. It was very hard. It was very hard getting a 25% interest loan to get out of the car, and I was so upside down. And I didn't sell it private. I sold it to CarMax,max actually so i got even a little

bit less for it um and yeah i really got hit they gave me 21 for it i gave all that money and i literally walked out of the dealership with no car actually the car actually came through um two weeks after oh my gosh yeah um i i was so my you know i was going to school at the same time at the time and i was working on my i was i was working i was going to school at the time, and I was working. I was going to school as an aircraft mechanic, and I was working as a manager at a flight school. I was working seven days a week, going to school five days a week full-time. My dad lived down the street from the place, and I told my dad, and I said, Hey, if you don't mind, I'm just going to stay at your place until I find a car.

I was willing to just stay at his place and walk to school and walk to work every day. I didn't care. I just left out of there with nothing and no car, and I had all that debt, too. Wow. But you're on your way out. You can see a light, and you're going to be done forever. Because you'll never go back in debt after going through that crap. No.

I mean, driving a 900 car taking on a 25 loan walking out of there sleeping on your dad's floor oh my god you'll never go back never you know you're changed how old are you 29 yeah you're gonna be very wealthy congratulations i'm so proud of you who was your biggest cheerleader in this process? I don't know if I had one. I bet a lot of people said you were nuts. I think it was you because I listened to you all day at work. I'm able to have a speaker at work, and all my coworkers know about you. Matter of fact, they see me and they call me Ramsey.

Faraz Ramsey. That works. Yeah, and everyone, you know, when they first see me, they say, hey, how are you? And so, you know, just how you ask some of your people. Because they know my answer, I say better than I do. There you go. That's right. That's code for I'm getting out of debt.

Yeah. I like it, man. Exactly. I'm so glad you were my biggest cheerleader, believe it or not, because I listen to you every day. And that's what kept me motivated. Well, I am definitely your biggest cheerleader today, man. I'm so proud of you. Very, very, very well done. You are you're 29 years old. You are on fire. You've got control of the guy in your mirror. And if you can do that, dude, you can do anything. Very, very well done. Excellent job. Excellent job.

So well done. And you've worked your butt off, too, man. I mean, you've been working like a crazy man. You've done everything right. And you now know how to make the needle move in these situations. You're not a victim to your circumstance, are you? No, not at all. I work six days a week, and every time I felt like quitting, I told myself,

this is something that I caused on myself, and now I have to turn it around. I have to fix it. And the good news is you can, and you did in 18 months. Just 18 months. You turned your whole life around. You know, I mean, that's pretty stinking incredible. Well done, Si. All right, Faraz in Los Angeles, $50,000 paid off, including the sale of his fabulous little Beamer. Oh, my gosh.

18 months he did it all, making $20,000 to $60,000, working his butt off. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free. Way to go, dude. Woo-hoo. Touchdown, baby.

Yeah. That's how you do it right there. Absolutely amazing. Well, Faraz, we'll send you out a copy of Chris Hogan's book, Retire Inspired. That will be the next chapter in your story. Debt Freeze, Chapter 1, Wealth Building. Chapter 2, Becoming an Everyday Millionaire. You are on your way, sir.

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And you don't hire a novice to help you with that. As you can see, the house is now available for sale at DaveRamsey.com. Click on ELP, Endorsed Local Provider, for real estate. If you're buying or selling a house, you'll get the top people in your area that we endorse. Michael is with us in Indianapolis. Hey, Michael, welcome to the Dave Ramsey Show. Thank you, Dave, for taking the call. Sure. What's up? The wife and I are going to be selling our house. We should be closing next month.

And I was wondering, we will come out with equity. We started building on some property we have. But my question is, do we use all of the money to finish our house and not have any mortgage or use most of it to pay off the rest of our student loans and other debt that we have? We'll be living with some family members, so we will be able to save some money each month to tackle the debt even more. Okay. Well, I would be debt-free except for the mortgage by the time I move into the house. In other words, it sounds like I have to choose between a debt-free house or debt-free other stuff. And I'm going to do debt-free other stuff before debt-free house.

Okay. If you have to choose. We were able to do around $2,000 last month paying off. This is our second month using your every dollar. Cool. And I think by the time we should start building, we should have everything paid off except for one student loan, which is around $20,000.

I didn't know if I... I would try to get there. It sounds like you're going to be close. And you start building, and by the time you start building, you're not finished building. It takes another year, right? Close to it, yeah, because we'll actually be building it ourselves. We won't be hiring out.

And that extra year, doesn't that give you the other $20,000? I would think so. It should be very, very close, yeah. So I'm going to just map that out so that when you move in, worst case is you have a very, very small mortgage. Okay. Best case is you have nothing. Yeah, because we don't want anything more than a 15-year.

And we were probably looking at by the time we pay off the student loans and everything, our mortgage would probably maximum be only 40, if that. Well, no, you said 20. That would be what we'd need to pay off the student loan. Yeah, 20, you'd be debt-free, not counting the mortgage you're talking about? Correct. Okay, so if you pay off that student loan, and then you would have an additional 20 in expenses that you couldn't cover.

Is that what you're saying? Roughly, yeah. Okay, well, then you're not going to make it. You have a little tiny mortgage. But you don't need a 15-year on a $40,000. How's the household income? This year, I've worked some extra income over time to pay off some of the debt. Right now, it's right around $70,000.

Okay. And so you pay off $40,000 in five years. Okay. Yeah, it's like a big car payment. A ridiculous car payment, but it's like a big car payment, right? Right. I mean, it's a small mortgage. I agree.

And what you do is just go to the credit union, and you get that with no closing costs because this house is going to be worth what? That I'm not sure because we're building, it's only going to be a 12 by 40 square, or a 12 by 40 house with a basically. Yeah, but the house in the land is probably worth $100,000 anyway, isn't it? Yeah, if not more. Yeah, and so 40 is land is probably worth $100,000 anyway, isn't it? Yeah, if not more. Yeah, and so $40,000 is a very, very small mortgage. And it's too small a mortgage to get with a traditional mortgage company.

They don't want to write something that small. So go to the credit union, and you're looking for zero closing cost, fixed rate, five- or seven-year loan, if you have to take out a loan at all. Okay. Depending on how it goes. But first goal is be debt-free. Second goal is be mortgage-free. That's your order of priority.

Okay? All right. Sounds good. Thank you so much. Thank you. Good job, man. All right. Nicole is in Chattanooga.

Hi, Nicole. How are you? Hi, I'm good. How are you doing, Dave? Better than I deserve. What's up? Awesome. Yeah.

So I have been following your baby steps, actually. I learned about it when I was 14 years old and have been following it my whole teenage and adult life. Wow. I'm now 23 and 23. Yeah, I've loved it. It has been amazing. I started working when I was 14, and that's when I started using the principles. Wow.

And so I am now married at 23 years old. I've got two semesters of college left, debt-free. My husband has graduated from Auburn University, debt-free. We are completely debt-free. We are on baby step four. My question to you is we just moved to Chattanooga where he has a new job, and we're trying to decide what we want to do next with that baby step four and also a house. We know that we're going to want a house within the near future, but at the same time we want to start that baby step four. We're just not sure what the best opportunity would be. We do have about $25,000 in savings and then about $30,000 in our emergency. Wow.

So we do have enough for like a small down payment on a small house. It just kind of freaks me out to take it all out and do that. So I just wanted to get your thoughts on it. Well, you need to use it all except the emergency fund as your down payment so that you take the least possible debt because the goal is to get it paid off. It's easier to pay off if it's smaller. So we're going to throw everything but the emergency fund

and certainly not any retirement accounts. But no retirement accounts and no emergency fund. Everything else goes at this uh down payment uh equation it would be very easy to say we're gonna temporarily pause baby step four and just pile up as much cash as we can pile up because at 23 if you wait one year and start your baby step four you're fine you're gonna be fine okay okay it's not a big deal it's not like you're 63 okay you're not getting ready to retire so you can pause baby step baby step four for one year and see how much cash you can pile up and uh so what's your household income yeah uh right now since i'm

still in school um i'm stay at home but just him, we're pulling in about 75. Okay. And when will you graduate? I will graduate in December of next year, so about a year. Okay. And what will you be doing? I'm going to be a dietician, so the median income when I'm able to get out of that and get a job

is going to be about $60,000 is typical from what I've done research on. I would not buy a house until you guys are both in your big jobs. Okay. And then from there, so that gives you a year to save. Right, okay. So just kind of stockpile as much as possible from his, and then when I submit, kind of see what we've got, and then proceed from there, and then maybe hold off on that baby step four. Exactly.

And if it's 18 months instead of 12 because you land your big job, that's fine, because you'll then qualify for the mortgage based on your larger income, and you'll make a completely different decision on everything. It puts you on a whole different trajectory. And so you're going to be just fine. By 25, you guys are going to be sitting in some really, really good position. You already are in an unbelievably good position. So very well done.

Wow, amazing for 23. But you're a financial peace baby, so you grew up on it, and that's what happens. Raise your kids on this stuff folks then you end up having somebody as sharp as nicole i mean can you imagine being 23 having zero debt and 75 000 in the bank still in school husband making 75 i mean wow that's that's like killing it you guys that's ridiculously good very very well done uh morton is on youtube dave i'm 40 and married we're 50 000 in debt how do i buy a house have children save money for retirement um one thing at a time you uh have children whenever you have children that's not in the equation you don't buy a house until you have the debt paid off and you don't start saving for retirement until you have the debt paid off.

And that's where our Baby Steps program comes from, Morton, is what to do first, what to do second, what to do third. And it's based on two major things, well, three major things. One is personal finance is 80% behavior, So we manage it from that equation. The second thing is that to do good financial planning, you have to lay a solid foundation. And the third thing is the quickest way to wealth is to free up your income from debt.

So baby step one is $1,000 saved. Two, you pay off all your debts except your home using the debt snowball. Listing your debts, smallest to largest, and attacking them in that order. Once you're debt-free, and in your case, Morton, that's $50,000 from now. Breathe that in. I don't have any payments anymore. Wow.

Almost on cue. Cha-ching. That's what happens, isn't it? Yeah, you've got money now. And guess what you're going to do then? You're going to build up your emergency fund. Guess what you're going to do then? Save up for your down payment on your house.

Guess what you're going to do then? Maybe step four, you start retirement. Wherever you have kids in through there is fine with me. I don't care. You and God decide when you're going to have kids. None of this should stop you from doing that. That puts this hour

of The Dave Ramsey Show in the books. 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.