The Ramsey Show - App - The Emergency Fund Is Murphy Insurance (Hour 3)

Episode Date: November 22, 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. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. Jose is starting off this hour in Boston. Hi, Jose. How are you?

Hey, Dave. How are you? Better than I deserve. What's up? Quick question. My wife and I just started Baby Step 2, and I guess my question overall is our expectation and aggression toward Baby Step 2 to tackle our debt. I want to go 100 miles an hour.

I think we can do it. But a part of us together combined, we start thinking. I don't know, by nature, we kind of start thinking, well, is that enough? Are we being too aggressive? Should we pay off the debt within two years instead of one year? And we're just having really issues on that kind of expectation. Okay. So you just started?

Yes, sir. Okay. Like a month? Yeah. Yep. Just about a month. Okay. And what's your household income?

It's a base. It's $145,000 a year. Good. But that's probably closer to $160,000 once you add in over time, et cetera, et cetera. Good. What kind of debt? How much debt have you got? Well, we have $58,000 in debt, about 85% of that is school loans, and we have a mortgage of $168,000.

Okay. And so what's the other 15% of the $58,000? We actually, when we first bought the house, we wanted to do some quick repairs, and my wife took a loan against the 401K to pay it back at 2.8% interest. So we're just paying that off. That's the other. Okay. We have no more credit card payments or anything like that.

Gotcha. Okay. All right. Wow. Okay, so $58,000 making $165,000. When do you propose to pay it off? How long do you think it's going to take you? Well, that's my thing.

I want to do, like, in 12 months, I want to get that off as soon as possible on one person. So I know that's going to be about a little over $4,000 a month just towards that. Yep. You know, and I know you say rice and beans, and I think I'm willing to do that. It's just, you know, we've got to get both on the same page. So your first month, when you did your budget for the first month that both of you agreed to, how much is going towards debt? So we agreed to it's going to be $2,200. After everything else, we had about $2,200.

Okay. So that puts you on about a two-year schedule. Correct. Again, I think we have, and that's how everything was done, because over time, you know, it's not going to be the same every week. So I think after everything, I think in some months I'm going to be able to be much more aggressive than other months. That makes sense. All right. Here's what I think. I think you're doing really, really good. You've gotten started. You're both talking. You've both looked at the budget. You've both approved the budget.

And you're paying at a rate of $30,000 a year against your debt. That's pretty impressive. That is a very good start. Now, in order to double it, what have we got to do, which would be a one-year plan instead of a two-year plan? And then, you know, what you're going to end up doing is you're going to increase your intensity. So what I would do is this. Why don't you work the plan you're working and just keep talking about it each month without panicking about are we doing enough?

And just go, look at how much progress we made. What generally happens is the more success you have the more excited you become and that's one of the reasons we work the debt snowball the smallest debt to the largest debt because it gives you some some success and a reason to believe that you're going to win right now this is a little bit theory because you've yet to prove it in your life. And so I would do this. I would work it and just get more and more excited and get more and more excited and let her get more and more excited. Because the closer you get to the finish line, the harder you can run. And so if it takes you two or three months to get from the 2,000 up to 2,500 to 3,000 to 4,000, you know, by this time next year you're you know you you'll probably be well on your way it might take you 18 months using

that but i think you're going to be fine i don't think you have to go completely bananas if you both want to go bananas that's fine but you're saying she's she's willing to try this at this level well let's have some success and when when she sees that success, I suspect that excitement will cause both of you to want to dial down some of your other expenses and dial up your income as much as you can and knock this out as fast as you can. I think you're going to get there. I don't think it's going to be in a year. It's probably going to be in a little over a year. And I think that's going to be just fine. The trick is to get there. That's the big deal. Meryl is in Chicago. Hi, Meryl. Welcome to the Dave Ramsey Show. Thank you so much for taking my call. I really appreciate it. My pleasure.

I am calling because I am a little embarrassed, but desperate. Okay. I hear all the great stories about couples that have, you know, tackled their debt and how they're, you know, doing it together. But I'm a 52-year-old that is single. And I have about $111,000. Excuse me. I'm getting over a cold. But I have about $111,000 of debt that includes credit cards, my car loan, student loans. I went back and finished my undergrad and got my master's degree from DePaul. So how much student loans do you have? It's 60.

Okay. And you said 100 in what total? So 111. Okay. And you said 100 in what total? So 111. Okay. And how much of this is CAR? $8,000. Okay. And how much of it's credit cards?

Credit card is around, not bad with credit cards, right at $5,000. Okay. And then what's the rest of it? So it would be like, so the eight for the CAR. I got 70. I got 72 right now, 73. Okay. Between the car and the student loan.

And then the $38,000 that I owe on my home. Oh, that's your house and everything. My $38,000 is what I owe on my house. Yeah, that's your house and everything, though, is the $111,000. Okay. Yes. I got you. So you don't have much of a house payment.

That's great. So what's your income? So my income, I'm right at $56,000. It actually decreased. I was a caregiver for my brother, one of my older brothers that has multiple sclerosis, but I had to recently make a decision to transition him to a skilled facility, so it kind of decreased. And I don't care about that money. It was like making the best decision for him. Sure, sure.

You did the right thing. Yes. But you know how to be a caregiver. Could you do that for someone else? The thing about it is that I work a full-time job for the city. Okay. And I make, like I said, I'm at $56,000 a year. But I want to, and I'm a single parent of an adult child,

but I want to live like the second half, you know, debt-free, and then leave something for my daughter and my grandbabies. That's cool. I love it. I want you to, too. Yeah, you're probably going to increase your income. You're going to get on a written budget for the first time in your life, and I'm going to help you do all of it. I want you to go through Financial Peace University, which is our one-year membership. It's nine classes, nine lessons in the class, and the EveryDollar Plus is included in it.

I'm going to give it all to you as my gift, and I want to hear back from you how you're doing. Do you know who is a prime target for identity theft? Your children. Kids have no debts or credit history. Their personal information is just as easy to get, but the theft could go completely undetected for years. Every day all over the country, young adults are starting down their own path in life by opening a bank account or renting their first apartment, only to find out that they somehow already have credit card debt, a mortgage, or even a criminal record. It's devastating, but it can be fixed when you have an ID theft protection plan from Zander Insurance. They monitor all personal info for the entire family, and they take over all the work if you become a victim. Best of all, your kids are covered for free on their family plan. Call them at 800-356-4282 or visit zander.com. It's just the smarter, more affordable way to protect your entire family.

And it's the only plan I provide to my team. zander.com or 800-356-4282. Following on Instagram, which over a million of you do, thank you for that, at Dave Ramsey. I've been posting some blog stuff on there, too, by the way, for those of you that want to see some interesting different things that some of my musings. I don't do that very often, but I just started again a little while back. There's a few of them floating around there on Instagram and on our blog page on DaveRimsey.com, too. But anyway, Sam says, Dave, I'm so close to being debt-free. I've got $1,000 left, and I have $1,100 in my emergency fund.

Can I just take it out and pay it off tomorrow? Well, you can. It leaves you pretty vulnerable, though. And that's why we tell you to keep $1,000. I mean, what if your alternator goes out on your car the next day, and it's $400? What are you gonna do sit until payday i mean um it's up to you you can do what you want to do i want you to be out of debt as bad as anybody on the planet i love getting people out of debt i love you being out of debt i

love you being this close to being out of debt but we tell you baby step one's a thousand dollars and i wouldn't get below that because you you know, that's not even enough. It's just a starter emergency fund. It's not even a real emergency fund, you know. But, man, you're sitting there with nothing. You got $100 or something. That's what you'd have. You got $1,100 and $1,000 a day.

You'd have $100 left to your name. But, I mean, if you do that tomorrow and you get paid the next day and you can put the $1,000 back, then just wait one day, you know? Wait one week, whatever it is. You're that. I wouldn't do it, no. I want you to have a little bit of a time. $1,000 is not much margin, but it just gives you a little bit of Murphy insurance. Megan's in Madison, Wisconsin.

Hi, Megan. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for all that you do. Thank you. I wrote this out hoping I would be quick and concise, so I'll just read this quick. Five years ago, I went on a trip to Italy, and in our rental car, we drove to Florence. There was an area near the city center that said authorized traffic only, so when we came to the barrier for it, I don't recall why I didn't back up, other than the street was narrow, but I made a U we came to the barrier for it, I don't recall why I didn't back up other than the street was narrow, but I made a U-turn around the barrier.

Later after our trip, I got a ticket mailed to me from Italy for something like 200 euros. I tried calling to explain to get out of it, but I wasn't able to talk to anybody, so I decided to ignore it. Now it's five years later, and we suddenly got a letter from a collector asking for $430. And apparently there are actually two tickets, but I don't know where the second offense occurred because I wasn't aware at the time that we did this twice. So I didn't know about the second one until now, but the total between the two tickets is $860 with the collector. Because I don't really feel like these tickets are valid based on what happened,

I don't want to pay them. But now that they're with collections, I think it's too late for me to try to work with the Italian police to get rid of them. So I wanted your advice on whether this is the same type of collections that you talk about where I can offer a lump sum to get rid of bulk debt. And my questions basically are whether or not that's possible, how much you think I should offer, and also if there's any need for me to worry about this being on my credit report.

My credit's currently good, but my husband and I are working on baby step six, and we ultimately plan on having a zero credit score and buying our next home with cash. So can I ask the collector not to report them, or is it something I shouldn't worry about because we don't have a plan on how our next house purchase would be? I don't know what has happened here, but I smell a rat. Okay. In the credit card world, which is not what we're talking about, in the credit card world, if you have an old credit card debt,

the banks sell those off for three to five cents on the dollar. So 50 bucks for a thousand dollars. Right. And these debt buyers buy these things and they oftentimes, there's been several articles out, they'll try to collect on a debt that's actually been bankrupted, which is illegal to try to collect on a bankrupted debt. They'll try to collect on a debt that's outside the statute of limitations. And they're buying junk debt is what it amounts to. And then they just go after people.

And rather than deal with the hassle of it and the fear that it's going to be on their credit bureau report, people pay them something when they shouldn't have to because it was bankrupted and it's the balance is zero after bankruptcy so i'm not saying any of that applies here except that this feels like one of those people this feels like a debt buyer buying junk debt from from tickets in italy I mean, my God, from five years ago? I mean, really? So I honestly don't know anything about the law on it. Hypothetically, anybody can pop something onto your credit bureau report.

I suspect that there's a statute of limitations on this. I suspect the chance of them collecting internationally on you is almost zero. I suspect you probably could beat the snot out of these guys. And so what is your household income? It's $155,000. So it's not that we can't pay it. I know, that wasn't what I was asking. What I was trying to determine is if you wanted to fight could you afford it because if it was me right now and that happened um i would hire i would call my attorney

and give him a couple hundred dollars and tell him to pound these people into sand because i smell a rat i think this is a skunk i don't think there were two tickets i think there was one and i think they're trying to load you up and just see what happened see what they can get away with i smell i did quasi yeah i did email the um well i called first and then the guy gave me his or i gave him my email address because he was going to send me evidence of the second ticket because i called and said i don't know why there's two. Yes, he did. There are pictures, apparently, that he got from, I guess, the Italian police with the license plate of the car at like 15 minutes apart.

But like I said, I don't know where the second thing happened and how we didn't notice. But there's also, because they had sent me like certified mail. I'm almost positive you're not dealing with the Italian government. No, this is actually a collections agency. Well, they're a collections agency that bought this debt. Yeah. They're a debt buyer, like I'm talking about. They're a bottom feeder.

Right. Okay. And so in that case, they probably have $15 in this. Mm-hmm. That's what I'm saying. So, yeah, if you want to pound them, it sounds like they've got a little bit of evidence. I don't know if statute of limitations is run or not. If you want to fool with it, you can, or you could just say, I'll give you $100.

Okay. There's no possible way I'm giving them $800. Yeah. Just on principle. Right. I'm going to gonna spend a thousand dollars to not give them eight hundred i mean i was thinking about you know whether or not it should get any sort of lawyer involved but it seems like i i thought i'd probably end up spending more you will you will you will but it's just i'm just i'm i'm just hillbilly i like a good fight so you know that's what it comes down to and so it's that's i just can't stand somebody screwing me around and i think you're getting screwed around i really do and you do too that's what you the story you told me led me to believe that right yeah yeah so the convenient thing is to settle it for some amount

of money you can afford uh zero to eight hundred it's none of those numbers are going to kill you uh whatever you do you get it in writing and uh you staple it to all those emails in hard copy and you keep it in a file the rest of your life because this these idiots may raise this up again as if you didn't pay it before or something because i i'm not accusing the italian government of anything but i am telling you that debt buyers are the bottom feeders of this world there's a few of them that are decent but most of them are scum okay and so you're dealing with slimy and so be careful don't get slimed get everything in writing no electronic access to your checking account keep hard copies of everything when you're done and then if it

comes up again you can you can defend yourself hypothetically from more hypothetical crap. Wow. That's hard to believe. I did a U-turn five years ago in Italy, and I get an $800 bill. Wow. Oh, my gosh. This is The Dave Ramsey Show. Thank you. In the lobby of Ramsey Solutions, Jeff and Leslie are with us.

Hey, guys. How are you? Good, Dave. How are you? Welcome, welcome. Where do you guys live? Just in Grapevine, just north of Dallas. Yeah, wonderful area.

Well, welcome to Nashville. Thank you. And all the way up here to do a debt-free scream. Yes, just north of Dallas. Yeah, wonderful area. Well, welcome to Nashville. Thank you. And all the way up here to do a debt-free scream. Yes, sir. Very cool. How much debt have you paid off? Just over $60,000, and it took about 24 months. Good for you.

Well done. Very well done. And your range of income during that time? It started around $60,000, and then we ended 105 to 120. Cool. Very good. Doubled your income. Yes, sir.

What do you all do for a living? I'm an escalation engineer at Microsoft. And I homeschool our kids. Okay, cool. So you've just been jamming on the... You said you're what kind of engineer? An escalation engineer. What is an escalation engineer?

I support the core operating system. Oh, okay. Okay. I kind of knew what some of that was. All right. Good. Very good. Cool.

So you've just been accelerating in your career. Yes, sir. Okay. Escalating in your career. Yeah. All right. Cool. What kind of debt was the $60,000?

Good. It was mostly, it was a motorcycle, her car, student loan. Why are you pointing at her? It was a motorcycle. Motorcycle, her car. student loan. Why are you pointing at her? It was a motorcycle. Motorcycle, her car. Thank you. Student loan, some medical debt. I think that was it.

Yeah, that was it. Got it. Cool. Okay. The first time around. So how long have you two been married? 10 years on Thanksgiving. Okay.

So after eight years of marriage, you decide we're going to get out of debt. What happened? So it kind of goes back a little bit from that. So about, I guess to start, we both grew up at a church where the pastor has been out of debt since the late 90s, and he's kind of taught those principles along the way. Good. And I would say about eight years ago,

a friend of mine, Ben, gave me a total money makeover. And I read it in about a day and a half and I came home and told Leslie, we're selling everything and we're getting out of debt. And she kind of gave me a thumbs up and then I didn't do anything. And that went on for, uh, you know, it was, it was just trying to not get further in debt over the course of time. And then about two years ago, um, uh, I just said, Hey, if I bought FPU, if I bought the home study kit, would you go through it with me? And then we went through FPU and getting her on board, not saying it was completely her fault, obviously, but getting her on board

was kind of the key to move it forward from there. Because I was grocery shopping, making payments payments that was my job okay so you were like spending money on ridiculous things like food yeah yeah i can't imagine that yeah why you would do that buying food gosh what kind of a woman are you well done you guys okay so but i mean so it's kind of hovering in the background, so to speak. It's kind of out there in the edge of the fog. But it comes out of the fog and you go, we got to do this. And you bought Financial Peace University, went through it and then did it. So what prompted you to come out?

I mean, the edges of that, because, Jeff, I mean, you came in, you said, if I bought it, would you do it? What caused you to do that you know I think it was um I think I realized that we had kind of been just spinning our wheels for six years and that was kind of we had we had kind of brought up because we're budgeting every month and we're watching where the money goes and we're keeping track of where the money goes but not making any progress um and I think I think that was what it was is finally it was kind of I just like came home one day and was like, I'm done. I'm fed up with this. Leslie, you said you were buying stuff.

Were you doing the budget too? I was signing the budget and then just kind of not abiding by the budget. Oh, okay. Now I get the picture. I was dead weight for like six years. I can admit it. He had to drag me. Well, but what happened was I see.

Okay. So what happened was, is that you guys were working on it together, but you're like, okay, I got to get until Leslie gets on with, until we're doing this together, it's not going to work. Correct. That's all he said. Yeah. It was kind of, he didn't call you dead weight.

It was kind of that whole Dave, Dave was a curse word for the first six years. Yeah. Yeah. Yeah. Church people cussing. Okay. Good for you guys. Well done. I'm proud of you. Thank you. How's it feel now that you did it? Amazing. Kind of still unreal, I think.

Was it worth it, Leslie? Yes. Absolutely, it was worth it. Did you sell his motorcycle? He sold his motorcycle. I was okay with it. What kind of bike was it? It was a Kawasaki Vulcan Custom. That's hard to get rid of. A little bit of a tear when that went out the driveway.

Just kind of eyes leaking a little. We kept it in the family. Yeah, I sold it to my brother. He sold it to his brother. You can ride it whenever you want to. I do sometimes. Yeah, that's cool. But it's not the brother. Well, you can ride it whenever you want to. Yes. I do sometimes. Yeah, that's cool. Okay.

But it's not the same. No, it's not. No. I'll get another one. Yeah. Giving your brother your prize hunting dog. Exactly. Well, good job, man.

Good job. So what do you tell people the key to getting out of debt is now that you did it? I think for me, there are two aspects of getting out of debt. Not getting upset when the saver wants to save because the goal is to get out of debt so you can do stuff. And as a mom, it was really hard to be like, oh, you can't do that. It's not in the budget. But now they get to do and they're here. They've got to do everything they wanted to do on vacation that we've paid for yeah and there's no stress it's like oh sure you

want that go ahead yeah um so that was a big deal just living like no one else so that you can live and give like no one else including your kids yes yeah good very good yeah it's um yeah there's a there's a delayed gratification thing is what you're talking about there. Yes. Good. What about you, Jeff? What's the key to getting out of debt? I would say, aside from the budget, I mean, for me, that was the key.

But getting your spouse on the same page. Yeah, that's the moral of your whole story. Yeah, just getting her on the same page to understand what I'm seeing long-term and what I was thinking long-term rather than, you know, just the short-term gratification. That was, I think that was key for me. Yeah. Now, this is an interesting dynamic because Leslie's the relationship person.

You're the process guy, the programmer guy. And so you see things through the programmer process eyes and she's like, no, you're not going to process our family, you know, until she figured out that it was relational to do it yeah and then we did it together and then there we go that's a that's a good it's a good story y'all thank you very good story well done outside of the two of you who are your biggest cheerleaders um probably there's a like i said my friend ben yeah ben and his wife, Kelly, um, they're ones that he, he kind of got this whole ball rolling when he gave me the total money makeover.

And he's always, he's always encouraging me. And, um, um, where'd it go, Ben? Yeah. Yeah. And obviously our, our family, nobody's been negative about it. They've all, we got really lucky. I say nobody, nobody in our family has been negative about it, but,. But obviously friends and people like that are, well, what are you doing? Like, just go on vacation.

Live your life. But no, yeah, I would say Ben and Kelly and then our family. Cool. Cool. And you brought the kiddos with you. What are their names and ages? Jason is eight and Laurel is three. All right.

Very cool. Very cool. Good job. And so we've got a copy of Chris Hogan's book for you, Retire Inspired. That is the next chapter in your story. We want you to be millionaires now and outrageously generous along the way. And with your income shooting up and not newfound control of money and no debt, you're going to be in a position to do that. Yes, sir. Well done. So the kiddos been practicing their debt-free screen. You better believe it. We had a ride from Texas and we practiced

a good portion of it. Alright, let's see how the practice worked out. It's Jason and Laurel, Jeff and Leslie, Dallas, Texas. $60,000 paid off in 24 months, making $60,000 to $105,000. Count it down!

Let's hear a debt-free scream! Are you ready? You ready? 3, 2, 1. hear a debt-free scream. Are you ready? You ready? Three, two, one. We're debt-free! Yeah! Yeah, baby! Woo-hoo! Yeah!

That's how it's done. You know what you just heard then? Did you hear the sound? That was the sound of a family tree changing. It just changed. That family will never go back. They're done. And even those little kids will remember the day they did this weird thing called a debt-free scream. That was the celebration of our family getting out of debt and never, ever, ever, ever, ever going back. We're free. Finally, we're free.

This is The Dave Ramsey Show. Thank you. Our scripture of the day, James 4, 17. So whoever knows the right thing to do and fails to do it, for him it is sin. Juliette Gordon-Lowe said, Right is right, even if no one else does it. Yeah, you don't get to make up the truth. You just get to participate with it. I don't care if you agree with the law of gravity or not. Try jumping off a building and see how it works.

You don't get to make it up. Your little wings won't work. You will find the sidewalk. Splatty, splatty, there we go. There goes a fool who thought they could make up their own rules. No, there are rules. There's life. There's truth. North is always that way. You can go the other way and call it your truth, and you'll get there eventually, but it's the long way around. North is that way.

Right is right, even if no one else does it. Just because normal people who are all broke do something with money doesn't make it the right thing to do with money. As a matter of fact, it probably tells you it's the wrong thing to do with money since they're broke. Seventy percent of Americans live paycheck to paycheck, so what do we care what they think about money? Their plan's not working.

It's like hiring a personal trainer and walking in and finding out they're 400 pounds. It's kind of a problem. I mean, if you have a keg and they have a six-pack, listen to what they say. Do what they say to do. This is how it works. There's a truth that's independent of your feelings. I don't feel, I don't care about you feelings. I'm sorry. Your feelings don't affect me. You're sweet. I'm glad you have feelings. It's good. Call the wambulance. Call somebody else that cares. I'm going to tell you the truth that's going to change your life. The only question is, are you going to align yourself with that? Are you going to do it? And you can do it. You can do it.

You can win. I'm telling you, people are winning like I've never seen in my life right now. It is such exciting times. Our question of the day comes from Blinds.com. Brand new custom blinds from Blinds.com are the easiest and most affordable way to give your entire home a facelift. With Blinds.com, you get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Use the magic word, the promo code RAMSY, and you get the best possible deal. Blinds.com. Wendy's in Colorado. Is it better to bank with a local credit union, a state credit union, a local bank, or a national bank? Most banks are national banks. Technically, they participate in the Federal Reserve, the FDIC insurance supplies. Most credit unions are insured by the NCUA, which is the equivalent for credit unions of the FDIC. And so most financial institutions that you deal with nowadays,

90-some-odd percent of them, I don't worry about their financial solvency as a matter of whether you bank with them or not. Now, I don't deal with the large mega banks under any circumstances. And I actually don't understand why anybody does. Why you would get treated the way you get treated at Wells Fargo or Bank of America and then keep doing business there is beyond me. Because if you want to find incompetence and by the bushel basket, you can find it around places like that. It's horrendous. I mean, they're as dumb as those airlines who are dragging people off their airplanes. You know, it's just the customer does not matter.

People don't matter to them. You're a number. So I have chosen to do business only with regional banks where I can have solid connectivity with relationships and or smaller local banks and or credit unions. There are a few credit unions, but very few that are very, very large and kind of lost their soul. The 99% of credit unions out there are very customer oriented. They're like a very, very small town bank in most cases. But if you can get a local bank, you're just going to get treated better. And this day and time with the Internet and the way they package their services, you're going to get the same level of, you know, web access, web sophistication for dealing with, you know,

your checking account, moving money from savings to checking and balancing your reconciling your checking account. We used to call it balancing your checking account online. All of that, you can do it. Just about everybody's got all that now. I mean, if you find somebody that's substandard on that, then don't do business with them. But, but, you know, it's just really even the smallest of the small pretty much has a cut and paste thing they put together in there that they bought from somebody. But the bottom line is a service to you is just fine. Just fine. You've got access to multiple ATMs. You got access to, you know,

everything out there. And what you're looking for is relationship, and you may get some better fees here or there. Credit unions, by and large, will have better deals on checking and a few little odds and ends, maybe a little bit better interest rate on your savings or something like that, but not always, but most of the time. So just check all of that, and that's what you're looking for. But I'm not going to take a quarter of a point on my savings account and then be dealing with freaking Wells Fargo. No, thank you. There's not enough money on the planet to get me to go in that place again.

No, thank you. I mean, they have fired almost 10,000 people now for creating accounts fraudulently for people just to meet sales goals. When you fire 10,000 people for fraud and you're a bank, hello. I mean, really? I mean, you deal with somebody like Wells Fargo. It's just silly. Bank of America, the way they treat people, Fifth Third, the way they treat people, SunTrust, the way they way they treat people i mean just look at these large banks and look at it no thank you i don't want anything to do with that stuff no i'm not calling for a boycott i'm just calling i'm just telling you look why do you do business with people that give you lousy service

and and you know and mistreat you that's just silly don't do it matthew is with us in providence rhode island hi matthew how are you hey doing well dave how's it going better than i deserve treat you. It's just silly. Don't do it. Matthew is with us in Providence, Rhode Island. Hi, Matthew. How are you? Hey, doing well, Dave. How's it going? Better than I deserve. What's up? Hey, so my wife and I are in baby step two. We have $190,000 of debt besides the house. Good Lord. On what? Yeah, mostly private student loan debt of mine. What are you, a doctor or a lawyer? I'm a stupid musician. A stupid musician? Yes, sir.

Actually, I'm not currently working with music right now. I'm making money. I'm actually in insurance. So that just goes to show you the biggest stupid tax I've ever done. Good Lord. What is your degree? Did you get a degree? No, so even worse. done. Good Lord. What is your degree? Did you get a degree? No, so even worse.

Oh my Lord. And how much of this $190,000 did you spend on that, not getting a degree thing? Yeah, about $150,000. Yeah, I've been beating myself up the last however many years. So what is your household income now, sir? It is $160,000. That's good news. that's good news that's yeah so you got a big hole you got a big hole in a decent shovel good okay and so uh so almost all the 190 is student loan then or 110 of it is uh yeah so it's mostly student loan there's 14 in credit cards and about just under five of a car that we're going to pay off very soon. Yeah. Okay. So you're working the debt snowball then? So we're working the debt snowball. We're on baby step two.

The question is, so my plan, or I plan, I should say, was to finish this in about three years with the income that we have. Yeah. And we're going to upgrade in-house. We have a family of four. After. After. Absolutely after.

The question that my wife proposed was, our house, we have about $100,000 worth of equity in the house. So she was proposing, what if we get down to about the $80,000 mark or so in a few years, two years, maybe cut the debt snowball by a year by selling the house at that point, finishing it off, and renting while we save up for, you know. Yeah, it's still the same period of time to get into a new house, though. Yeah, I mean, that's my original plan was to just work the debt snowball. You're going to get to a, you're going to get, I mean, because here's the thing. If you sell the house and pay off the debt early,

you still got to put the $100,000 back into the account before you buy a house, right? Right, right. And so you're just swapping pockets with your money here. You're not gaining any time on your calendar towards getting a new home. So I'm going to sit right there. I'm going to sit right there in that house. Moving is expensive emotionally and financially. So, I mean, if you had $300,000 worth of equity and you still had $200,000 to buy a

house with later, that'd be different. But you got $100,000 and it's going to be gone. I mean, when you do this. So now you got to start over saving for a down payment. And so you don't really gain anything on your calendar doing that. Now, hey, I'm glad you're working your way through it. It sounds like you got it lined up. And hey, we've all done stupid stuff in the past. It's in the past. Put it behind you. But plow through it. Clean it up.

Learn your lesson. Teach your kids. Don't do this. So you change your family tree now, man. Way to go. Good for you. Congratulations. 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's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Child, producer of The Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.