The Ramsey Show - App - The Cavalry Isn't Coming...You ARE the Cavalry! (Hour 1)

Episode Date: January 14, 2020

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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. Thank you for joining us, America. We're so glad you're here. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is going to be Andrea in D.C. Hey, Andrea, how are you? I'm good, Dave. How are you? Better than I deserve what's up? I have an inherited IRA

that I have to cash out and I guess I was wondering what exactly to do with the money that I'll have after the taxes and stuff okay how much is in it? it has about $40,000 in it.

After taxes, it'll out get like $25,000, between $25,000 and $30,000. All right. You're not required to cash it out. You are required to take required minimum distributions, RMDs, on it, but you don't have to completely cash it out. Now, depending on where you are in your baby steps, I might recommend that you do because there's no penalties on it, only taxes. Now, where are you guys in your finances?

Are you getting out of debt, or what's going on with you? I have one non-mortgage debt. It's a timeshare. Okay. Well, you can probably just get out of that, go to timeshare exit team, and dump it would be a better plan. Yeah, well, I mean, I actually have done that, and that takes a little bit of time.

I'm waiting on it. I'm in the midst of that process right now. Okay. Yeah, it takes about a year, year and a half, something like that. All right. Good. Okay. So you don't really need to use the money for that, though, right?

Correct. Okay. And you don't have any debt. Do you have your emergency fund in place? Yes, I do have an emergency fund in place. Okay. Are you putting 15% of your income towards retirement? Yes.

Good. You're doing great. Okay. You got kids? No. Okay. No need for kids college. Baby step five, do you own a home? Yes. You have a mortgage on it? Yes. Baby step six is any money we can find at the stage you're at beyond 15% going into retirement beyond kids college, which doesn't apply here, baby step five is baby step six, pay off your house early. So what do you owe on your mortgage? I think it's about around $130 less, between $140 and $130 less. Great.

And what is your income? I just got a promotion, so I think it'll be around $110. Okay. Well, you're killing it'll be around 110. Okay. Well, you're killing it. You are doing a great job. You've got everything organized and laid out the way we teach you to do it, so I'm real proud of you. Excellent job.

So at this stage, any extra money you get your hands on, we're going to get your house paid off as quickly as we can. If I woke up in your shoes, I would cash this money out, pay the taxes on it. I would enjoy some of it, like going on a trip you wanted to go on or you've got this trinket you wanted to buy, and I would throw the rest of it at the house. Okay. Does that make sense? That makes sense.

Hey, thanks for the call. Open phones at 888-825-5225. John's in Florida. Hey, John, how are you? Hey, Dave, how's it going? Better than I deserve. What's up? Hey, I am a service member, and unfortunately, I have short order military orders,

short notice military orders, and I have to move here soon. But I found you a little bit late. I've been listening to you about six months ago. Unfortunately, about a year or two ago, I did a cash out refinance on my house. So I lost all the equity. I'm not sure what to do. I owe about $277,000 on the home.

After meeting, interviewing three realtors, one of them being an ELP, the house is probably going to sell for around $280,000 to $285,000. And when you factor in all the costs associated with selling, commissions, everything like that, I just don't have the money. So I'm not sure if I'm going to do it. Where did the cash go when you cashed out on the refi? Paid off some other debt.

We didn't change the habits. Like I said, I just found you too late. I thought it would solve the problem, and it didn't. We've since gone through FPU about six months ago, which was great. We started doing a budget. We started, I'm going to call it 1B, 787-1B. How is your credit? We knew the move was coming up, so we started, you know,

piling up money. So I've got about $5,000 on top of the emergency fund. Okay. Credit is okay for me. I might say like low 700s. Okay. So you could probably borrow the amount it takes to get rid of the house above the cash that you have.

Yeah, and I've heard you talk about doing that for cars, like getting out of leases, but I didn't know if it would apply for houses. Sometimes it would, sometimes it wasn't. This is a small amount. You're not going to be in, it's not $80,000 or something. It's going to be $5,000, $10,000, right? Something like that that you don't have today to get out of this thing. And I want you out of it.

I don't want this thing riding you like a horse while you're deployed. Right. Are they moving you or are they just sending you to the sandbox? The whole family. We're getting relocated to another state. Okay. All right. So it's just a change of a quick change but a change.

Yeah, I would get rid of it. I think it's not going to be a blessing to you. You could go through a lot of trouble to sit on the house for a year and hope it comes up in value or while you pile up the money for it to come down. The house could get torn up by a renterter you could go through a lot of hassle you could write a lot of checks because it wouldn't rent you know you can get into a lot of stuff here i would put the thing in the market and sell it okay uh what would you be your advice then in terms of paying for two households at the same time while we're waiting for it to sell how quick are they moving you should we moving you? Should we borrow some extra money to account for that?

And the house needs a little bit of work, probably about $4,000 of realistic things to make it marketable. Well, you have that money, and how much is in your emergency fund? Well, the emergency fund is $1,000, and then we've got about $5,000. So you have a starter emergency fund. Correct,000. So you have a starter emergency fund. Okay. Correct, yeah. So like I said, we were going to start with Baby Step 2, but we decided similar to like if you were going to have a baby.

You could tell this was coming. You could smell it in the air, yeah. Exactly, yeah. So how quick are they moving you? In about two months. All right, and what's your household income? It's $110. Good. Okay, just put full stop on everything and pile up cash.

Yeah, and that's what we've been doing. We've been doing minimums on all the payments, and just over the last six months we've accumulated like $5,000 on top of everything else. Yeah, I think you can do more than that even because you're in emergency mode now, and you're going to need the cash to do this. I don't think you're going to be operating two households. I think you might have a house payment, but you're going to need the cash to do this. I don't think you're going to be operating two households. I think you might have a house payment.

But you're going to move your family with you. You're going to get a rental on the other end. And, you know, you're going to do that in about two months. And so I just get ready for deposits and that kind of stuff with cable and rentals and rental fees and that kind of stuff and get ready to move. I get this loan arranged. And you're probably going to use this $5,000. You know, you're probably scraped together in two months, another $5,000 or $10,000. Yeah, what would you recommend for the loan in terms of term and amount? As short as possible.

I mean, put it on three years or something, and then go in there and pay it off in 20 minutes as fast as you can, as fast as you can get settled on the other end and you get rid of this house payment. Once you push your baby step two play button again, once you're settled in and the storm's gone by, then that's what you would do. Hey, thanks for your service, brother. We appreciate you. This is the Dave Ramsey Show. show. You know what I've learned after talking to so many people who have been victims of ID theft?

They feel violated and they have a sense of fear and intrusion. It can be overwhelming. It's scary and infuriating at the same time. People question your character. You try to figure out how it happened, and you worry it's going to happen again. Then you have to deal with cleaning up the mess. Bill collectors, credit bureaus, even the police just make the nightmare worse. And trust me, ID theft is not going away. That's why I personally worked with Zander Insurance to develop an ID theft plan that provides the best protection and value.

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Hi, Jennifer. Welcome to the Dave Ramsey Show. Thank you so much for taking my call. I really appreciate it. Thank you. Really quick, I've had a few coworkers and friends, and I've been seeing it a lot on Facebook, where apparently there's this program where you sign up and they will eliminate all your credit and debt that you have. And your credit score will jump up to like 600 from 430 days.

And it just completely blows my mind. And it kind of scares me. And it's hesitant. And I'm just wanting your thoughts. Okay. I'm so confused. I thought you said something about Financial Peace University? No.

You didn't? Okay, good, because we don't do any of those things. All right, so someone's offering you a thing, what, on television or something? Hello? Yes, apparently it's word of mouth through facebook and um what they do is i guess they reach out to the different uh people that you owe credit you know you owe money to debt collectors and they will completely squash it out without paying any balances um and that's a complete that's a complete lie that is a scam okay i it it seemed like one but again it was just weird to see so many people behind it and pushing it well there's a lot of people get scammed have it in writing there are people that send the nigerian prince money too mean, you've seen that one, right?

Surely. Yeah. I mean, that goes back before there was email. I used to get those hard copy in the mailbox a long time ago. So, yeah, there's people that believe in that, too, but they're not getting anything. And there is no Nigerian prince, and you're not getting any money from him, either. So, no, there's no magic wand, kiddo. Anything that sounds too good to be true is now what there is that is similar to what you're talking about,

but is not what you're talking about is a, uh, what people coin as debt consolidation, although it's not really debt consolidation. What it really is, is a debt uh payment plan that is a bad one it's also a bad idea but it's not technically a scam and that is where you pay your payments to a company they don't pay your bills on purpose you get way behind on them and then as they collect more after they've collected their fee from you then they collect more money and settle your debts for pennies on the dollar. And that's been going around for years. There are several companies, large companies, that do that. But it destroys your credit, of course.

And the problem is many of them don't follow FUBU. And, you know, once they get your money, they're very difficult to communicate with. So I don't recommend those either. I recommend you handle these things yourself. But there is no such thing that is true as someone that you just give them money, and they squash your debt, and your credit score jumps up immediately. That's a complete lie. It does not exist.

Okay? Okay. Thank you so much thank you i appreciate the call michael is in colorado hey michael welcome to the dave ramsey show hey dave thank you so much for taking my phone call sure what's up hey um i am 28 years old and uh my company i work for a coal-fired power plant. My company just announced the other day that by 2030, our plant will be down. And so within 10 years, I'll be looking for a new job. I just became debt-free.

Good. And thank you. My question to you is I was starting to invest invest and I was starting to save for a house. Since I won't be in this town in 10 years, I'm not saving for a house. My question is, I make a good amount of money where I'm at. And I was wanting to know, should I max out my Roth 401k and my Roth IRA for the next 10 years instead of saving for a house. What do you make? My base salary is $73,000, but I've made $100,000 the last so many years.

What do you do? With Oak. I am a scrubber operator. I make sure that we put clean air back into the atmosphere. Cool. And what are you going to do? I'm going to try to, you know, move into, like, wind or solar within the same company within the next 10 years. But me being a planner, I just want to, you know, have the worst-case scenario. What town do you live in?

I live in i live in uh craig colorado it's a northwest uh right by wyoming and right by uh utah so fairly rural yes very yeah we're uh we're farmers and uh coal coming gotcha okay and with the coal plant shutting down real estate in that area being the down, real estate in that area, being the primary employer, real estate in that area is going to struggle. Exactly. Yeah, because it's a small town and the plant's closing, like some kind of a movie or something. Okay. So, yeah, you don't buy real estate there. I agree with you. Yes, I would load my Roth IRAs, my 401ks maxed out. I also would set some money aside that's not in 401ks or Roth IRAs. It's just in good mutual funds for two things or three things. One is for you to retool if you need to take some classes or whatever in order for you to have the money to move and maybe buy a

home number two okay uh and then number three you could use that money to start a business in 10 years you might decide not to wait on them to close you might decide to leave earlier right exactly my uh my rough ira is in uh mutual funds yeah i'd put Roth IRA is in mutual funds. Yeah, I'd put all of it in mutual funds, but I want you to have some that's not in IRAs for your move, for your reset in your life, your education, for your maybe start a business thing, and to buy a house when you do move.

And I'm going to get out of there sooner rather than later i don't want right this plane they've announced the plane is going down i don't really want to ride it all the way to the ground exactly yeah i was uh since i made good money i was gonna see if i could just you, at least set myself up well for my next job and, you know, have some decent retirement by then. Yeah, but also, I mean, what would be wrong with making more money three years from now in a different career and leaving? Right, you're exactly right, yes. You don't have to make less money when you leave.

If you think this through, you've got a little time. There's no panic here. So you can sit here and dream and say, gosh, on my second act, when the curtain comes up again after the first act is closed, but the second act, I might want to make $200 a year. And I might want to be in, I don't care what you want to be. You just decide and then figure out what you need to do to go be one of those and create a different set of opportunities or a different set of things

and then decide where you want to live in that process. It might be that you stay in energy. You may want to completely back up and whiteboard your life and just say, where do I go from here? Hey, it's a pretty cool opportunity you got. Hey, thanks for the call. Open phones at 888-825-5225. Amy's on Instagram.

I'm having trouble with the concept of stopping my 401K. My husband and I make $140,000 a year. We only have $50,000 in debt. My employer will contribute 8%. I contribute 3%. How can I pass up this free money when we don't have that much debt anyway? Well, honey, if you don't have that much debt anyway? Well, honey, if you don't have that much debt, you're not passing up much free money because you're going

to pay it off real fast. Yeah, you're talking out of both sides of your head, kid. Here's the thing. You're not passing up that much money. It is time for you to focus on getting out of debt. It is your primary blocker. And you can work your plan if you want to work your plan, Amy. Our plan is what you focus on is what you win at. And so you need to focus on getting out of debt so that your shortest path then is to wealth, is to be debt-free. So the good news is that you probably can pay this debt off in about a year if you roll up your sleeves and do it and stop everything. But quit trying to be several things at once. It just doesn't work for you. I love talking about companies that know how to do business right.

You've heard of Grip6 belts, right? Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk. I'm talking weightless. And the buckles come in really cool designs and are interchangeable. I personally own a number of these belts, and they're so comfortable, you forget you're wearing it. Plus, these guys have a great story. BJ Minson started Grip6 on Kickstarter from his garage in 2014 and now sells hundreds of thousands of these American-made belts to customers all over

the world. As a mechanical engineer and a minimalist, BJ took his dislike for heavy, bulky leather belts that never fit right and created the Perfect Belt, a high-quality, minimalist belt that gives the strength and support of a belt without even knowing you're wearing one. I'm really proud of these guys. Check out this month's special offers for my listeners at Grip6.com. in the lobby of ramsey solutions on the debt free stage she's here my anna is with us hi my anna how are you i'm good how are you such an honor to be here well we're honored to have you where do you live i am currently from milwaukee wisconsin but i live in murfreesboro tennessee i've been here for about four years now okay cool well welcome and all the way over here to do a debt-free screen free screen i've been living for this every day working hard paying

off bills to get here i love it i'm glad you're here how much have you paid off i have paid off 64 000 in two years good for you yes making what kind of range of income? I started, well, I moved here with a husband and no job, and I currently have no husband, but I have a better job, and so I came with a budget of about $50,000, and currently I am at $92,000. Good for you. What do you do for a living? I am a project manager at the state of Tennessee. Great. Awesome. Very cool. So you trade your husband for a great job not a bad trade yeah not a bad trade you know you lose some things but you win some things as well so what kind of debt was the 64 1 000 of a credit card and the rest 63 000 was that good old great lake student loan

good old student loan sally may got kicked out kicked out the building finally now i can look at my diploma with peace now. They're not going to repo it. Exactly. Exactly. Good for you. Good for you. So what started you on this get out of debt journey two years ago?

Well, again, I'm not from here. And prior to moving to Tennessee, I never heard about you. So I, like I said, I came with no job. And then I took a few little small little contact jobs here and there. So one particular contract was located here in Franklin, Tennessee. And so it was with a health care company. And it was this big deal for the new people to go see Dave Ramsey's house. And so she was like, have you seen Dave Ramsey's house yet?

We're going to go to the 14th floor, go to the west wing of the building, and you'll see Dave Ramsey's house. And I'm like, okay, for one, who is Dave Ramsey? And who cares about his house exactly exactly so boring exactly so it's this big tourist attraction for new people with this company so we went to the 14th floor the west wing and if you squint you can see a little bit of the house and so i'm like okay well so who is he uh why what's the importance of this yeah she's like well i'm debt free and i wait i six figures, and I'm a financial coordinator for a financial piece.

I'm like, wait a minute, back up. So I'm a contractor making $16 an hour with a master's degree, and you don't need this job? Like, tell me about this Dave Ramsey, shall we? Yeah, now I'm interested. Exactly. So she told me about you. That's fun.

I still didn't really dive into it. I was kind of doing my ish thing. And then finally going through a bad marriage and trying to get financially on peace we just could not get on one accord for anything so then I dived into okay let me look into this Dave Ramsey guy that I've been hearing about followed your program heard about your program brought it to the the husband as he's referred to and he still didn't want to jump on board so I'm'm like, okay, well, I'm going to go through financial peace myself because I always wanted to be debt-free. I was raised to pay bills and pay them on time and have an excellent credit score,

but, okay, after that, what happens next? And so I went on the financial peace journey by myself, and finally I did the baby steps, baby step one, two, three, and here I am. Wow. Well, congratulations. Thank you. What do you tell people the secret to getting out of that is? Well, I want to talk to the woman that's out there that's trying to hold on to a marriage that has failed. I've listened to so many of your callers, and I've wanted to call in, but some of the answers that you gave, I'm like, ooh, I'm just going to take his advice. I'm not going to call him. I'm not going to call him.

But your advice that you would give to so many women out there. I know you're all about marriage. I was all about marriage. And I was raised in the church. So you're always raised to make your marriage work, make your marriage work by no means necessary. And I've done that. I did that. We went to counseling.

We went through everything. And it just didn't work. And so I just want to talk to the woman out there that's on the fence who's afraid to leave, that still feels like she's trapped in that failed marriage, because I felt there. I've been there. I've done that. But I trusted God and I did it scared. And here I am debt free. And I did it scared. And I just put my trust in God. This is like a dream come true. I never would have imagined that I'd be debt free, single. And making 92 grand. Making 92,000. And slaying it. I I mean you're doing great

I'm trying Dave I'm trying I thank you for your plan I thank God for you wow such a blessing you too what a great story very cool so the key is just do it and do it scared do it scared that's what I had to do I had to trust God and do it scared that's that's that's all I can do there's no magic magic trick I had to pick up a part-time job being married. We went through some financial hurdles that he put us in, and I told him, okay, let's just both get part-time jobs. Let's follow this plan, and we'll both get part-time jobs. Well, I did, and he didn't. So I think that was a straw for me.

Here I am, a grown woman taking care of a grown man with two jobs, and all I was doing was working and working out. So during that time, to keep myself sane, I picked up bodybuilding. I got into fitness. I got involved with fitness. Wow. Bodybuilding is what helped me take my mind off of a failed marriage and sticking to the plan. So I said, well, what I'm going to do is work on myself mentally,

emotionally, and spiritually. And so physically it was working out, and financially I did your plan, and I did them simultaneously all at the same time and it works it works just have to trust God and do it for a freight do it here just get after it do it just go for it who was your biggest cheerleader while you're doing well I really didn't tell a lot of people so my family my father um really helped me and just encouraged me but other than that I didn't advertise it people just knew that I was working out all my whole life consumed a working a full-time job a part-time job and um working out that was it so i really didn't know i didn't have time so it wasn't this big thing i just wanted to do it

even with the marriage you know i suffered in silence for two years and i just did it you know i just prayed and just and just did it so i just really didn't have a big audience i just wanted this between me and god just me and god move just to make sure that I do it successfully. I didn't want the distractions. I didn't need the interference. I just wanted to do it. Good. Well, he's a pretty good cheerleader. Yeah. God is. Yeah, he is. He is the best. Well, congratulations. We are very proud of you. Thank you so much. So proud of you. You've been through quite a journey to get here, but here you are. Here I am. You're standing on the debt-free stage. You did it. Yes, sir. I love it. You get the trophy. Yes, sir. Thank you. And I just, again, thank God for you and your program. It just, it really,

I know you don't say that you've changed lives, but with your guidance, it helps lead us to where we need to be. So thank you so much. You're the one who did it. I'm proud of you. Very well done. We got a copy of Chris Hogan's book for you, Everyday Millionaires, because that's definitely the next chapter in your story. That's where you'll be headed now. So very, very, very well done, Myanna. Very well done. Thank you.

All right, Myanna from Murfreesboro, Tennessee, just outside of Nashville. $64,000 paid off in two years, making 50 to 92 quite a journey. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free. Yeah. Yeah.

That's how it's done. That is how it's done. That is how it's done. Man, oh, man, oh, man, oh, man. I love it. Chelsea is on Twitter. My mother says it's my and my husband's obligation to pay for my son for out-of-state tuition, even if it means a parent loan. We're new to the baby steps, and we refuse to take on more debt.

We told him to get scholarships. Are we doing the right thing? Well, your mother is interfering in stuff that's not her business. So as gently and firmly as you can, you need to tell her this is none of your business. My goodness. She's got a lot of you. None of you business. My goodness. She's got a lot of backbone. Mom, if you want him to go out of state and you think somebody ought to pay for it, you ought to do it because we're not doing it.

As a matter of fact, I would sit Junior down and just tell him he's not going out of state. You all don't have the money. Now, if he can do something where he gets a complete free ride and wants to go out of state, that's fine. But I'm guessing Junior's not getting a free ride. I'm guessing he's not got 100% coverage on this out-of-state tuition. So, no, we'll be going in-state, honey, and that's what we've got the budget for and what we can afford. And there won't be any loans taken out in this house, even though your interfering grandmother thinks that we should but it's none of her business my goodness gracious some people have a lot of gall my goodness gracious hey grandma ain't none your business. Shut up.

That's from Dave. This is The Dave Ramsey Show. Thank you. We'll be right back. Well, the holidays are over and the year has begun. Some of you are thinking, I need to get focused on my financial goals. I got the Christmas decorations put up. And some of you have been putting off investing. Maybe step four and beyond, you don't need to put off investing. Game on, baby. If you're saving for your retirement, guess what?

It's your responsibility. I sure think the government, which is well known for its ability to handle money, will take care of me. That would be a stupid statement. Nope. I think you better get ready for retirement. The Calvary isn't coming. You are the Calvary. The good news is you don't have to figure it out.

You can have people in your corner with the heart of a teacher. That's what a good financial advisor has, the heart of a teacher. Our SmartVestor pros don't get to become someone that we send you to unless they have the heart of a teacher. They allow you to invest with confidence because you understand what you're doing. You don't do it because they said do it. You don't do it because Dave said do it. If you're ready to get started, go to DaveRamsey.com, click on SmartVestor, put in your info. It'll drop down a list of the SmartVestor pros in your area, and you select the one you would like to work with. Or you select all of them and interview a bunch of

different ones and then figure it out but it's all up to you to pick that's how this works kevin is with us in connecticut hi kevin welcome to the dave ramsey show hey dave honored to talk to you thanks so much for taking my call sure how can i help okay so my wife and i are just starting out on your plan. We're really excited about it. Just started using every dollar this month and it looks like we can put about $2,500 to $3,000 towards debt a month. Good. We have about $28,000 in debt and still have about $8,000 in savings that we were saving to put down on a house before we found your plan. So with that $7,000 above the Baby Step 1 amount that we have,

we were considering paying off our car to free up a $200 a month payment. I just wanted your thoughts on that, if we could kind of start off with a bang since we have a little money in the bank, or if we should just do the traditional Step 2 debt snowball. The math won't change. Right. So if we just keep paying on the car, it won't change.

I mean, it changes your monthly amount that you're freed up, but you will get out of debt at exactly the same time mathematically that you would have otherwise. So it doesn't matter. So you'd have $ uh seven thousand is obviously not your smallest debt then no it would actually uh be the last one oh okay all right so you've got a bunch of little ones yeah well it's we got about three thousand credit cards eighteen thousand student loans but they're all they're all split up into tiny ones. Yeah. So just where the car lands is kind of last.

Yeah, I got you. It's okay if you want to do it. The thing is, I mean, I probably wouldn't. I probably would work the straight debt snowball. Again, the interesting thing is when you run the math out, it's going to come out exactly the same. So the only argument I hear is which one gives you the most jet fuel emotionally to attack this stuff with. And, you know, look down how many of those little ones you could pay off for $7,000.

That would give me a lot of jet fuel. Because it's like it's going to be a whole bunch of your list, right? Because you've got a lot of stuff under a thousand bucks yeah definitely how many i mean um so it's it's my wife's student loan i know it's our student loan yeah but um so i don't have the the breakdown right in front of me but i think the biggest one is like like three thirty two hundred maybe no no i'm talking about the little credit cards because you got a lot of bills under one thousand dollars you got a lot of bills that are under a thousand hundred on one yeah yeah like 300 on one 1200 on one and then like i don't know 1500 on the other we would knock those out like right away yeah

they'd be done it'd be nice to be done credit card free i mean i don't it doesn't you know it's just kind of uh which one's going to give you guys when you talk it through together the most the most emotional jet fuel and because mathematically it's going to come out i mean within within a penny or two of the same so doesn't matter to me um i'm probably gonna do the i know what i'm gonna do i'm gonna pay off the little ones because i I like the idea of getting rid of a whole bunch of stuff on the list rather than one thing on the list. That just, that would give me more boost the way my, the way I'm wired. So, hey, thanks for the call.

All right. Sarah is with us. Sarah's in Tennessee. Hi, Sarah. Welcome to the Dave Ramsey show. Hi, Mr. Ramsey. Thank you for taking my call. Sure.

What's up? Um, I am a, by the way, I want to say say to i think it was my honor who did her debt-free screen that i am the woman she's speaking to that was very interesting that she had to say that today so wow so cool um but anyway the reason why i was calling was um i have a ross i believe it's an IRA. My parents had set up, I guess, for me and my brother, obviously. This one's mine. He handed it over to me for me to put into just right before I got married, about six or seven years ago. And it's kind of just sitting there.

When I had my first child, I ended up pulling out of putting anything into it. And it's sitting there around $15,000. And I've only recently started listening to you. And I just wanted to get your input. Like, can I cash that out and use it towards debt? Or is it better just to leave it there and start contributing again when I can? What we teach people to do is to stop investing temporarily while they attack their debts. And so, no, I wouldn't add anything to it. But I also tell folks, don't cash out retirement accounts because of the penalties and the taxes that will be due

unless it's to avoid a bankruptcy or foreclosure, and that's not what you're calling me about. So, no, I suspect this is invested poorly, though. Yeah, I think it is. I mean, I really should. I've got a guy, I guess, that I call every once in a while. Well, jump online and hit the SmartVestor tab at DaveRamsey.com. Find the SmartVestor Pro in your area. Sit down with them.

They can help you do a rollover into some good mutual funds with this. That's what I would do with it. I would not cash it out, and I would not add anything else to it until you've worked through your debts and worked the baby steps. Baby step one is you stop all investing and saving until you get $1,000 saved as a starter emergency fund. Baby step two is you list all of your debts except your home, smallest to largest, pay minimum payments on everything but the little one, and attack the little one with a vengeance. Once it's gone, you attack the next one. Once that's gone, you attack the next one.

Once that's gone, you attack the next one. Once you're debt-free everything but your home, that frees up a ton of money. You go back to your $1,000 account, raise it up to three to six months of expenses. And once you've got that set, then you start investing. Maybe step four, 15% of your income going into retirement. At that point is when you might start, get back with your SmartVestor Pro and start doing your new Roth IRAs and so forth with with your investing that'd be a thing to look at all right casey is with us in utah hi casey how are you hey dave i'm good how are you better than i deserve what's up okay so i had to my back was up against the wall and i had to take out a high interest loan to avoid having my paycheck

garnished from my employer, from the repo and a couple other things. With that loan that I took out, I have a few, I got about $1,200 left over. I got a letter from the IRS stating that I owe them some money. Do I start with the debt snowball and pay off the credit cards? You do the debt snowball, but if you owe the IRS money, you put them at the top of the list because they have unlimited power, very heavy penalties and interest. Okay.

How much do you owe them? So right now they're saying about four grand,000, and that's with pelting interest. Do you know that that's accurate? I can fight that. No, I didn't ask if you could fight it. I asked if it was accurate. Just because they say you owe it doesn't mean they calculated your stuff right. Right.

They sent me a bill the other day for $25,000 that I didn't owe. They had miscalculated one of my deals. My tax guy had to get back with them and explain it to them. They're not that competent over there. So first, ensure that you actually owe the money. Second, figure out why this mistake happened and that you never do it again. Third, put them at the top of your debt snowball and knock them out as fast as possible. Hey, thanks for the call. This is the Dave Ramsey Show.

Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt presc scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.