The Ramsey Show - App - The Difference Between Commission and Allowance for Your Kids (Hour 3)

Episode Date: December 27, 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. Thank you for joining us, America. It's a free call at 888-825-5225. That's 888-825-5225. Starting off this hour is going to be Kristen in Greensboro, North Carolina. Hey, Kristen, welcome to the Dave Ramsey Show. Hi, Dave. I'm calling today because my husband and I are recent graduates of FPU, and we are now in that precarious position of trying to pay off his student loans. He just earned his doctorate, and the result of that is about $150,000 in student loan debt. Woo! So what's his doctorate in?

It's in communication studies. It's in what? Communication studies. Okay, and what's he gonna do teach he yeah he already is teaching actually okay what's he making uh about 42 i'm sorry professors don't make 42 with phds it's a it's a contract position um so it's he's just starting out unfortunately like 142 is what i'm going to be making so when's he getting that job oh he's already started no the 142 000 job oh uh you don't go spend $180,000 to work for $42,000. Right, yeah. And with my salary added on to that, we're at about $72,000. Okay.

I've really got to stay on this career thing because I'm really disturbed. You are telling me that he is going to be making north of $100,000 as a professor. I hope someday, yeah. No, darling, that's starting out. Hmm. Yeah. I mean, really, I mean, a PhD in communications, teaching communications in an institution of higher learning would pay north of $100,000.

Mm-hmm. That's the going rate. I mean, that's the going rate. Why in the world would you do anything else after going to all this trouble and spending all this money? Yeah. What's your hesitation? I don't understand. He tried.

I mean, we've tried to find positions that were better paying than this, and this was really the only thing we were able to line up, I guess. He was on the market for quite a while, and there's just a lot of people applying for the same positions in his field. Okay. Well, we've got to work on this because you guys have spent so much money on this that you don't have a choice. He's got to go make more money than this.

Yeah. And so, you know, his job hunt is ongoing until he lands something north of 100. Mm-hmm. I mean, it's not, this isn't, you know, you have to believe that. I mean, and you have to go get that and do that. That's just not, you know, it's absolutely crazy to say I spent $180,000 to make $42,000. Yeah. We're just not, I can't live there.

We're concerned, too, just with, I mean, obviously interest will continue to build, so there's that concern as well. Yeah, but the concern is that making $70,000, you guys have $200,000 in debt and you shouldn't be making $70,000. You ought to be making $170,000. Yeah, yeah. That's the concern. And that solves a lot of your problem. I mean, because right now you are facing a huge mountain with a tiny shovel. Yes. And what we need is a we need is a a big shovel to attack a big mountain and that's why i went there is just for you i'm not trying to shame you or something but i mean you guys have really got to get your you need to get some professional career counseling and coaching and and find out how in the world you land professorships and what the process is because just just throwing your name out in applications and saying, oh, there's a lot of people in the field, so I can't win.

That's not okay. You guys got to go make some money. And he has the ability to do it. He's got a freaking PhD. And that solves everything you got then. In the meantime, you're going to tread water because you're not going to make big progress with the ratios you're giving me of shovel to hole, a $200,000 hole with a $70,000 shovel. And the good news is, is that he should be making a whole lot more.

And so that is the answer to you guys' dilemma is let's get him employed as he should be and spend all of our time on that. So you can do this. You can do it. I wish I could help you. You know, maybe have him call Ken Coleman Show. Ken may have some insight on how to land a Ph.D. into a professorship. I don't. I've never done that.

But I work with enough Ph.D.s in professorships that I know that, you know, that is a typical income. All right. Maurice is with us in Detroit, Michigan. Hey, Maurice, welcome to the Dave Ramsey Show. Hey, Dave, how are you doing? Better than I deserve. What's up in your world? I've got a question for you about debt settlement.

My wife and I, we called one of the companies to see if we can settle a debt. Pretty much, it just actually rolled into collections. She had got sick over the summer before we got married. And I guess, you know, with the hospital, somehow they ended up transferring it over to the collections agency without going through the proper authorization. Because they were supposed to get authorization to do the procedure on her, and they never got it.

So they said that they was going to put it in review. And I guess somehow they never got back with my wife about the review. I'm sorry sorry did they do the procedure yeah yeah they did the procedure so what is out what is up for review it was supposed to be um i guess according to what my wife was saying she was saying that they were supposed to get authorization to do the procedure i guess through the insurance company right so so somehow she found out that they didn't get the information through to the insurance company. So basically, they said they were going to review it because they said she

was right. You know, we didn't get the authorization, and they agreed with her that they were supposed to do that. And they said they were going to review it, and the next thing you know, it got sent over to collections. Yeah. How much is it? It's $1,100. Okay. And what should it have been with the insurance, if the insurance had paid what they were supposed to pay? I'm not sure exactly what it should have been. I would have to ask my wife that to get more information on it. So Collections is offering you what? Well, they want us to pay the full amount of what it is for the actual deal.

Not a chance. Not a chance. Here's the deal. Your Bozo Hospital didn't turn this in for insurance properly, and they did the procedure anyway. It's on them. It's their fault. We will give you $200 and settle this debt.

Okay, okay. Yeah, because I had talked to them yesterday, and I ended up talking to the manager at the collections company, and he said, you know, and I did everything that you know that you teach, you know, basically, you know, get it in writing. He said, oh, no, we don't do anything in writing. Well, then you don't get any money. Right, right.

And then he turned around and said, and then I said, you know, I want to get, you know, either a money order or some type of certified check. He said, oh, no, we only do electronics. I said, are you guys kidding me right now? Yeah, that's why we tell you this every day, because you can't trust these guys. So, no, I mean, you can do a money order or you can do a prepaid debit card or you can do whatever, but no electronic access to your checking account. It has to be in writing.

And, you know, about $200 is probably whatever the insurance company wouldn't have paid that you should have paid. And the rest of it, the hospital needs to eat. Okay. And if you can't get this through with collections, then schedule a meeting over at the hospital with one of the people in the business office, and let's have a little meeting, a little come-to-Jesus meeting here, because this is not right. I mean, you should not owe $1,100, so I'm not willing to pay $1,100. How's that? You know, that's the truth.

You know, this is a reasonable person hearing this case is going to have that reaction, including people that work at the hospital. Support a small business this holiday season that does business right. I'm talking about Grip6 belts. It's the only belt you can get online with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable. I personally own a number of these belts. Plus, these guys have a great story.

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Hey, Dave. Hey, how are you? Welcome to Nashville. Here to do a debt-free scream. Yes, sir. How much have you paid off? We have paid off just over $90,000. And how long did this take you? In 17 months. Wow, sir. How much have you paid off? We have paid off just over $90,000. And how long did this take you?

In 17 months. Wow, you're kicking it. And your range of income during that time? It was from $30,000 up to $130,000 and then now back down to $30,000. I am so confused. How in the world did you go up $100,000 and then back down $100,000? This is where our story begins. I took a really good job um

as a project construction uh project manager for a pipeline construction company and that was the the big increase in income and then i was able to pay off all the debt and then save up six months emergency fund and then i was laid off oh and so boom there it happened. Okay. All the planning. So the only one that can keep a job is Faith. Actually, I don't have a job. Oh, no. Who's making 30? Well, that's us. We're crafting.

We're doing all kinds of stuff right now. We're just having fun. We're actually taking real estate classes. We're getting a real estate license. Oh, wow. Okay. We're about to start a new journey here. That's fun. Okay.

That makes good sense. So what happened 17 months ago that started this whole get-out-of-debt journey? Well, we started taking classes, FPU class, at our church, Timber Ridge Church in Stephenville, Texas, while we were dating and going to college. And then about seven weeks into the class, I was offered a job, and then I took that job and moved to Pennsylvania. And then in May, we got engaged, and then in June of job and moved to pennsylvania and then uh in may we got engaged and then in june of this year we got married but ah and that's so then that's where our start

story starts together okay i see all right so you were working to get out of that plan separately but together yeah and uh then getting you've only been married how long since june wow well congratulations thank you what a way to start off ninety thousand dollars i mean that's like the perfect job and knocked it out yeah it was it was uh it was all a god thing i mean now you're clear you can do whatever you want to do right that's that's the start of this new journey we're so excited this is a dream of ours so real estate so and all cause your church taught financial peace university that's right that's right and i was able to coordinate fpu when i moved to indiana pennsylvania oh wow so i was able to engage with some couples and help them out in their journey and that was that was a lot of fun that's a big source of motivation for

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

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

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

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

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

and you've learned it at a very young age and very young in your marriage to learn it. And a lot of people go 20, 30 years, and they're still fighting about money all the time. And you've got the advantage of being ahead of the curve on that. Way to go, guys. You're rock stars. Thanks. Well done. Cody and Faith, Waco, Texas, $90,000 paid off in 17 months, making $30,000, then $130,000, then $30,000.

You heard the story. I love it. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! We're debt-free! Love it! Well done, well done, well done.

Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window covering. You get free samples, free shipping, and with the new promos that they run every month, you'll save even more. Use the promo code RAMSY to get the best deals. Rules and restrictions apply. Today's question comes from Kristen in Florida. Dave took out a lease on a vehicle about four months ago before enrolling in Financial Peace University. I feel like I've made one of the worst mistakes in my life. You have. I was wondering if you could give me some advice

on how it would affect me if I were to return the lease car to the dealership. Or at this point, do I just keep the vehicle? none of the above when you take a car back that you owe money on or have signed a lease on that's effectively a voluntary repossession and that that would be dumb because they're going to sell the car after they've repossessed it and uh they're and on a repossession lot and then they're going to sue you for the difference if you don't pay them the difference immediately, and you don't have the difference because you're broke. So, no, that would be a dumb idea.

We're not going to do that. What we are going to do is find out two pieces of information. One is call the car fleece company that you are paying the fleece to. Yes, you're being fleeced. And find out what the early buyout on the car is now the early buyout is different than the total of your lease payments plus your residual value at the end it should be less because this lease is very new and there should be it's kind of like an early payoff on the loan. It doesn't include all the interest from keeping the loan the whole time. So the early buyout is your early payoff.

What's it take to pay the car off? They can get the title in your hand. Then you compare that to KBB.com, KellyBlue book.com private sale what the car is actually worth and i'll just make up some numbers let's pretend that the early buyout is 20 000 and then you look it up and the car is actually worth 16 000 that would leave you four thousand dollars in the hole it's probably not far off of what you're going to find. So $4,000 in the hole means you sell the car for $16,000. You've got to put $4,000 cash with the $16,000 in order to get the title for the buyer.

And so you have to have that other $4,000. You have to be able to cover the hole that you're in, the amount that you are upside down, and the way you would do that is obviously a loan, and so you start working with your local credit union, with your local bank, and you get a loan lined up for the amount that you're upside down. You put the car up for sale,

and you sell the car for as much as you can possibly get for it, which is more than they will sell it for on the repo lot. See, the bottom line is you're going to be responsible for this difference either way, but the difference is greater and you do more damage to your life and lose more control of your life by doing a repossession. And so you cover the difference, cover the amount that you're upside down with another loan, and I'd rather you be $4,000 in debt than $24,000 in debt or whatever the numbers are. So Dave Ramsey is telling you to borrow money.

No, Dave Ramsey is telling you to move some of the debt and get rid of the majority of the debt by doing that. And so you borrow and cover the amount that you're upside down. You know, guys, we've been talking a lot about this millionaire mindset around here and why it's so important to be intentional even with the little things. There is one thing you can do right now to take care of the little things before they become big things, and that is check your coverages and make sure you've got them right. We have a five-minute coverage checkup.

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supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. That's chministries.org. Dropping by the lobby of Ramsey Solutions, is with with us from Chico California hey Rick how are you hey I'm doing great Dave thank you for having me here it's wonderful I love it and I just want to really appreciate you I'm I listen to your podcast every day and as I heard

a scripture recently in Romans 5 it said that we rejoice in our sufferings because it produces perseverance and that perseverance character and that character hope. And I know you're about hope. And the reason I listen to your show every day, even though I'm debt free, except for my house is because you're continuing to develop my character and hope. And you're doing that for a lot of people. So thank you. Thank you very much. So what brings me to ask my question today is I have four children, two, four, six, and eight. So I'm just getting started, and we just got a puppy. As if you didn't have anything going on.

Exactly. My wife wanted another child just so we can have a puppy instead. So it worked out. But I've got three girls and a boy. The boy is a two-year-old. And my question is simply, I was raised getting an allowance, but I've read some of your stuff and I've heard some of you talk about this. We are kind of trying to get started with a chores idea. And what I'm trying to figure out is,

number one, how to really kick into it, but to decipher between what's the commission-based chore and what's a mandatory chore. And so we want to go with a commission-based. We love that. But we understand you have to brush your teeth, you have to make your bed, you have to clean your room. But now that we have a dog too, it's like, okay, you got to take the dog out to go do your business. But I just wanted to have a conversation and understand where you're coming from. How do we parse out the commission-based, and if we say to my oldest, hey, go clean the baseboards, or go vacuum, and you're going to get a couple dollars for it, and she's like, eh, I'm good. I've got enough money. So what motivates them to then go ahead and do that on the commission-based chores, and do we make them do it

anyway? Right. Okay. Good discussion. Thank you. The only reason we changed the word from allowance to commission is that words are powerful. Yeah. Commission says you get paid, don't work, you don't get paid. Allowance says I get money because I breathe. And I'm making allowance for you because you're inept is what the word. And the words are powerful.

I don't want welfare kind of trapped in my kid's head, you know, kind of thing. So that's the only difference on that. We did have both kinds of chores at our house. Some we did, you did because I'm your dad and I said so. And some you did because you earned money doing them. And there's no real formula that we used for that. We just wanted to develop both things. We wanted to say you're part of the family and that means that you help your mom you know and if i tell you to do something

you do it it's an obedience issue okay um and we wanted to develop that family connection that sometimes you just love your family well by doing things with them and for them uh the second part then is i i wanted them to make the emotional and visual connection between work and money. So you can just say, do everything because I said so. There's nothing wrong with that. But you lose the teachable moment of work is where money comes from. And you want to, you know, I meet 58 year olds that haven't learned that and eight year olds that have. It's true. You know, so work is where money comes from. And you want the, you know, I meet 58-year-olds that haven't learned that and 8-year-olds that have. That's true.

You know, so work is where money comes from. And you work, you get paid. You don't work, you don't get paid. I want them seeing that visually. I want them experiencing that. I want them being able to give with money that they quote-unquote earned. I want them being able to buy something for themselves with money they quote-unquote earned. I want them to be doing some saving with money that they quote-unquote earned quote unquote because they're not they're almost never worth what we pay them that's not you know that's not the point no it was not an economic transaction

it's a teachable moment it's parenting so um that's what you do now as far as whether if they just go no i don't want to do it. There's kind of like two things there. You can do that occasionally and not get paid. If it's something like feeding the dog, that's harmful to the dog. If you've agreed to do that and that's one of your chores you're going to get paid for, you're going to feed the dog. I mean, because the poor dog needs to be fed. And so that actually was one of ours that they got paid for was feeding the dog you know keeping the water bowl fresh and all that kind of stuff um around the dog brushing the dog was another one you know we had one that needed brushing and so that kind of stuff so you

could you can just decide and putting your putting your dishes in the dishwasher after dinner was one you didn't get paid for that was you're helping your mom clean the kitchen. But you can decide. I don't care. The point is have some. We had some because we wanted you to understand you support the family and some that you earn money. Now, eh, I don't want to do it is okay occasionally, but my job as dad, your job as mom, mom's listening,

is for your child to learn life skills. And one of those life skills is work. So, eh so i don't want to do it ever is like i don't do my homework ever you know you can't do that you gotta do your homework because you need to get a degree and make money so you can leave here later and please yeah there you go so but you know we're i have allowed our kids to, without me standing over their shoulder, to goof off and not study for a test and suffer the consequences on a singular basis, but not as an ongoing pattern. I wanted them to feel what it feels like to be embarrassed by not having done your work. And it's okay to feel what it feels like to be

broke because you didn't do your work you didn't get money you know but over the scope i need to teach them to study over the scope of their life over the scope of their life they need to have the self-discipline to do work to create money so eventually you're just gonna do it because i said so and i'm not gonna do it ever and everything's not a union negotiation it's what do i get paid what i'll get paid you know you don't want to get into that. And everything's not a union negotiation. It's what do I get paid? What do I get paid? You don't want to get into that with everyone. So all we did was we just made it really, really fun. We didn't have a lot of those kinds of conversations.

It was just like, we're going to do this. All right, here's the thing. Here's the thing. Put the dry erase board on the refrigerator, you know, all that kind of stuff. We made up our own. Now there's one in Financial Peace Junior in the kit, you know, to teach the kid how to do it. But, you know, we let them suffer the natural consequences of poor choices on a limited basis, but we didn't let them develop patterns of poor choices that were going to cripple them through their whole life, you know, and that's not working or not brushing their teeth or not whatever, you know, so that kind of thing.

So we weren't overly strict, but we also didn't just let you do whatever the flip you wanted to do. It's not anarchy either, you know. I don't know. Does that make any sense? There's a little bit of rhythm in that. Yeah, I like it because you could say, no, these things are commissioned, and these things are mandatory, but that rubric, I really appreciate that because I want to leave a long legacy, and I want to develop my children to be able to work hard.

Yeah. People who ask a question about how to do these kinds of things very seldom. The biggest mistake, the most often mistake is they just get too. The parents get too wired up about it. Yeah, that's me. And it's like every freaking little detail. Yeah. Every little thing. It's like they have anba or something and they're not doing their strategic

thought oh my gosh you know lighten up it's an eight-year-old you know that's why i love my wife yeah balances me yeah just have a little have a little rhythm with it and so sometimes we bail them out if they goofed up with their money or they got there and they didn't quite have enough money yeah but a couple times i was telling them listen you don't have enough money and they want to go down to toys with them and get the barbie anyway and they get down there they don't have enough money i'll let them sit there and experience it and that's and that's good to have a a sort of a goal out there like hey we're going to the yeah the festival or going to disneyland or exactly yeah we got a lot of families that save up for a trip like that and the kids are going to you get

to purchase stuff on the trip yeah you want to buy popcorn you buy your own popcorn or you want you want to buy a stuffed animal or whatever, you get to buy your own little souvenirs. Buy your own cake pop at the cake pop place. But here's what's interesting. As soon as they do that with money they earned, you'll watch their body language change. They throw their little shoulders back, stick their little chest out. They walk a little different. There's a dignity to working and accomplishing a goal with money. And there's something that's going on in the development of that child, as well as you're teaching them the economic skills to survive,

life skills to survive. So it's very, very cool stuff. Have you got Financial Peace Junior, the teaching aids? I have it, the old one. You got the new one now. I'm going to give you one. Oh, you're so awesome. Thank you. Thank you for dropping by, brother. And you just made my dog a little more expensive by paying the kids to feed it. So I don't know if they're going to listen to this. I'm sure they will. But thanks.

Well, you can decide. That could be the one that they don't get paid for. We'll edit that out. So thanks. Thanks, brother. Good to have you. Thanks for dropping by. Cat, take care of him.

Get him a copy of that Financial Peace Junior. If you don't know what that is folks that's the box of teaching aids it's got the three envelopes in it for the child that give save and spend envelope it's got the dry erase board for the refrigerator and teaching uh instructions kind of the stuff we just talked about and we talk about in the book smart money smart kids too how to teach your kids how to handle money it's how you break these chains off your family tree, how you break the family curse of being broke. Not only do you get your financial aid together, but you help them do the same. our scripture of the day james 122 do not merely listen to the word and so deceive yourselves do what it says ralph waldo emerson said common sense is genius

dressed in its working clothes. Well, there you go again. Love it. Open phones this hour, 888-825-5225. Lee is in Pittsburgh. Hey, Lee, welcome to the Dave Ramsey Show. Hey, Dave, thanks for taking my call. Sure, what's up?

So I'm looking forward to paying off my mortgage. I think I paid too much for my house and I wanted your opinion on if I should sell my paid off truck or not. It's only three years old and it's probably worth about $28,000. And would it be worth it to start by selling that and putting like $20,000 down on the mortgage and kick-starting it that way? Would you recommend that? I mean, it's a new truck. Yeah, what's wrong with the mortgage? Well, I owe $169 on it.

And my payment's like $1,200, $2 a month. And it's probably going to go up a little bit now because school district just upped my taxes. But I just want to pay it off, and it's a lot. And that's the last thing. Other than that, I don't have any other debt. Yeah. What do you make a year? What's your household income?

Well, the last two years I made $126,000, but my base is $80,000. So that was with a lot of everything. Well, your house payment's not out of line, and your truck is not out of line, and you're making progress. I mean, making $126,000, how fast do you pay off $169,000? What, three or four years? Yeah, I guess I could. Maybe five years?

I mean, how old are you i'm 26 and you have a paid for house when you're 31 uh yeah yeah i guess that would that'd be nice it'd be okay right i mean i mean five years into 169 that's that's doable it's only about 30 grand a year okay without so without selling the truck no i mean i think you're on a really good path and i don't think you anything to wring your hands about you're really focused you're really making big decisions you're doing weird stuff that normal people don't do normal people are broke so you're doing you know you're you're going to be in a really fine position very soon if you keep this up.

I assume you have your emergency fund in place. Yes, I do. Six months' worth. Good. Well, you're doing all the stuff in the right steps. And I would just keep chunking on that house and say, you know, 30, 40 grand a year. You're going to be done three, four years. As you get raises during this time and get the chance to make more overtime, which is what you've been doing, it sounds like, then you just keep chunking on it.

And you're going to be there really, really fast before you know it. Heather is in Portland, Maine. Hi, Heather. How are you? Hi. Thank you so much for taking my call. Sure. What's up in your world?

Well, my stepmom and my dad brought your book to me about 13 years ago. I was in a ton of debt, and I worked myself out of that. I got debt-free. I'm now on baby step four. In the meantime, at that time, I was renting. Since then, I bought a house, so I do have a mortgage, about $116,000. Good. I'm a single mom. I about 40 000 a year um since then both my parents have passed my dad most recently yeah i'm sorry thanks yes um so we my brother and i sold his home and i have uh we put,000 into, I think, a 529 for my son.

And my brother took care of that. I'm pretty sure that's what. So anyway, I have about $80,000. But I'm wondering what the best thing to do with that is. I do have $20,000 in IRA. Okay. All right. Are you putting 15% of your income away in retirement?

Yes. Good, good. Then you're working baby steps four, five, six. It sounds like five has gotten taken care of with the 25 towards the 529 and then that leaves us to six let's pay off your house you owe 116 80 towards it would just leave 26 000 dollars or 36 000 owed and you pay that off fast okay you'd be debt free how old are you 48 yeah i mean like it sounds to me like when you're in your early 50s this house is paid for what's the house worth uh well about 148 wow very good i mean you to be that

close to being debt free you just have like 30 000 bucks owed right okay yeah um i was only i Okay, yeah. I do have an emergency fund. Good. I just was concerned with putting all of that money into the house and not having anything liquid, you know, just besides my emergency fund. What do you need something liquid for? I don't know. I was just feeling nervous about it. So that's really why I wanted your advice. I also, pardon me, really want to take my son somewhere on a trip.

I know my dad would really like that. Okay, so pull five grand out and go on a cruise with him or something. Okay. You know, that's fine. That's not the end of the world there. Sure, you can do some of that if you want to. But I guess the point is that where you are is you're working baby steps four five and six you've already got four going that's 15 of your income five you've checked that box by the 125,000 and 529 six is the house which is the next thing

in order so yeah i mean have you got six months of savings in your emergency fund or three i have five actually okay we'll beef that up a little bit to give you a little bit more comfort then and throw some money towards the trip and um throw the rest of the mortgage and then let's just start looking at gosh how quickly can we pay off this house let's get her done as fast as you possibly can that would be because it'd be so neat to have no house payment and what a great legacy because your parents are the ones who sent you the book in the first place. Yeah, yep. Great legacy to have the house paid off, and it was their fault, you know, from their inheritance.

So very cool. Very well done. Brent's with us in Boise, Idaho. Hi, Brent. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure.

What's up? Well, my wife and I, we've got around $13,500 in credit card debt, $12,500 in collections. And we've got two older cars that are paid for. And she actually has a car through her work that's provided for her. So we're trying to see if we should try to sell one of the cars to kind of expedite the process or kind of keep it as a backup since both cars are fairly old and possibly unreliable. So what are they worth? We've got the one that we're looking at selling is probably about $3,000. It's a 07 Honda CR-V.

And what's the other one worth? That is a Denali, or like an 02 Denali. That's probably worth about $4,000 or $5,000, but we need that one more because we've got five kids, so we need the extra space on that one. Okay. Well, that car doesn't sound like it's about to lay down to the point you need a spare. Right. Yeah. Well, we've had some

problems in the last year um we've probably put about close to 2 000 into it but i mean it's a it's an o2 so it yeah there's two options there's two options here keeping the car is silly but the other so there's two options sell it and sell the denali and buy a new car, not a brand new car, but another car with the money together. Buy a $7,000, $8,000, $9,000 car, pay cash for it, so you've got a good solid car there and then you've got hers. Or just keep the Denali, keep patching it up for now, and throw the money at the debt, which is probably what I'd do. Okay.

But, no, I don't think you need a spare. Okay. Fair enough. You know, you got $25,000 in debt you need to clean up here. So what's your household income? Just under 90 was what we made last year. Okay. That was net, yeah.

Have you guys got your written budget going on every dollar? Were you really attacking this, or are you just starting to discuss it? No, we started actually in December, actually writing it all down and doing every dollar. And so, I mean, we're on the process. Today I'm going to pay off our first, our smallest credit card. Good for you. Way to go. It feels good, doesn't it?

We're rolling. Yes, it does. I love it. Yeah, well, okay. I'm knowing where everything's going. Yeah, I'm going to just, I think I'm going to use that $3,000 to continue this momentum. So, yeah, sell the car and throw it at your dad's snowball. I'm with you there.

You're going to do this. You're going to blow through it. You've got this. You're really doing it. I love it, man. Well done. Proud of you. Very proud of you.

That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there is 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.