The Ramsey Show - App - The Key of Success to Debt Freedom (Hour 2)

Episode Date: July 4, 2018

The show about you

Live from the headquarters of Ramsey Solutions, 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. That's 888-825-5225. John is with me in San Antonio, Texas. Hi, John. How are you?

Doing fine, sir. How are you? Better than I deserve. What's up? I got a question about a pension. Should I take the pension? Can we offer a question about a pension. Should I take when the pension can be offered now to take it? So do I take, there's different options to take one to pay out for life. One's a 20 year payout. One is to pay off and take it at 55. He reduces at 65. So

the question is which, which way is the best way to go? Do you have a lump sum option? Take the whole thing? I don't know, probably. They offered to pay me out a couple of years ago, but it wasn't enough money, so I waited until it came due to receive the pension. Gotcha. How old are you? I'll be 55 in a couple of days, about a week. Okay. Well, my preference, 90-something percent of the time when you run the math on it,

here's how it comes out. You can get with someone in the business, a professional financial planner, and get the numbers run to be sure. But here's what happens, okay? Almost all pensions are calculated based on about a 6% or a 7% rate of return maximum. Okay? Were you to invest in good growth stock mutual funds, you can outperform that. Right.

I have some there. I have 600, well, about 750 in the market. Good. Okay. So, in other words, if you had some money invested at 6%, you could move it to there and do better. Agreed? Right. Okay.

The thing is, they only want to give me $100,000. I know, but that's all it is. agreed right okay the thing is they only want to give me a hundred thousand i know but that's all it is because here's the thing the payment that they're offering you is creates the lump sum that they offer you based on about a six percent discount rate is what it's called but it's basically calculated on a six percent interest rate in other words that lump sum at six percent will create that payment that they're offering you well if i take the thousand dollar a month payment in 30 years it'll create three hundred thousand three hundred three thousand dollars no no if you take the thousand dollar a month payment the thousand dollars is based on that lump sum creating six percent and then based on your average death age of 76.

And so if we take from 55 to 76 at $1,000 a month at 6% based on that particular lump sum, it will have depleted that lump sum 100% gone. That principal amount will be gone at 6% by your average death age of 76 or 78 is how it's calculated and so it's not the total because the money has value over time is the point and so that right if you take the lump sum the lump sum is only a hundred thousand dollars okay at six percent that's six thousand dollars a year right that's $6,000 a year, right? That's right. And so $1,000 a month is $12,000 a year. So you're depleting this by $6,000 a year until it's gone, and that's how we could determine exactly what they think your average death age is going to be.

And that's going to be probably about 20 years. Right. Exactly. I did a 20-year payout.. I did a 20-year payout. They offered me a 20-year payout. No, you misunderstand me. When you die, your pension dies. That's correct.

It's gone. But they also offered me one that I can pay to someone else on a 20-year payout. All right. Yeah, but again, that's a lower payment now. All of this is calculated based on 6% and the money going away at the end of the program, either your death or your death plus the 20-year payout, however it works. It's all calculated based on that, and it's going to deplete the principal during that time if you live average. If you die sooner, it's a horrible deal. If you die much later than they have calculated, you got a better deal.

But that's the only way it works out. And it's calculated based on actuarial tables, which is the same tables the life insurance company uses. It's how it's done. So what would I do if I were in your shoes? I would take the lump sum and roll it in an IRA with no taxes into good mutual funds. Do a direct transfer of the lump sum, and then when you want to take the money off of it, you'll be taking the money off, and the money will outlive you. Plus, when you die, the money's not gone.

Right now, if you die, the money's not gone. Right now, if you die, the money's just gone. It dies with you, unless you do the extension, but then it dies with her. And so either way, it dies at the end of these two programs. But if you put this money, that $600,000, $700,000 you got now in the market, it doesn't die with you. It doesn't die with her. It doesn't die with her. It survives both of you if you don't spend it out. So it almost always, 98% of the time, works out better because it doesn't die with you

and because you can outperform 6%, moving lump sum pensions when you can with a direct transfer rollover into good mutual funds. The math will work out. So if you want some help figuring it out and talking it through further, just go to SmartVestor, click on that on the website at DaveRamsey.com, click on SmartVestor, and then put in your name. It'll drop down a list of professionals in your area that we recommend. I'm not in that investing business, but you can sit down with one of them,

and they'll show you what I'm talking about on the calculations in detail, and then you'll have the aha moment. Thanks for calling in. Mark is with us in San Antonio. Hey, Mark, how are you? Just fine, sir. How are you? Better than I deserve.

What's up? Well, I had an interesting question for you. We're a self-made millionaire. We started in 98 with $15,000. We're worth about $4 million now. Good for you. How'd you do that? We didn't go on vacations.

We drove used cars. We always lived way under our means and saved our money. Wow. How old are you? I am 62. My wife is 61 and still working full-time. And I am semi-retired with being a landlord of nine homes. Yeah, good for you. Cool.

Thank you, sir. Thank you very much. We have no debt. Our net worth is about $3,600,000. We're spending about $120,000 a year, It's a little different than most of the calls. No, it's fine. No, it's good. You should be able to. You've lived like no one else. Now you can live like no one else. Yes, so we're trying to do that.

We call life heaven right now, and we are enjoying it very much. But my wife is working. She wants to know if she can retire. Well, of course. No, that's not the right answer, Dave. No, you're a dadgum slave driver. You quit. You got a $4 million net worth, man. If she's not working, she's going to spend more money.

I think you're going to be okay. You got a $4 million net worth. I think you're going to struggle through, brother. You think you're gonna be okay you got a four million dollar net worth i think you're gonna struggle through brother yeah yeah what sharon and i have discovered is we still even though we have very large sums to put in the categories in our budget we still need to talk about spending we still need to talk about stuff before we buy it and so we don't neither one of us buy any big thing without first talking to the other one and that involves putting together our budget it's very liberal it's got a lot of room in it's got some big numbers on it we've got the ability to do that without trouble and you do too but yeah she can quit dude you're

funny this is the the Dave Ramsey Show. Okay, I need you to listen to this. Because one normal routine that everyone does can cause total chaos in your life. I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and every search you're doing online. It doesn't matter if you're on your cell or your laptop. They can see you visiting websites, streaming or downloading,

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You can be secure in seconds. Download Hotspot Shield by Anchor Free today. Thank you for joining us, America. We're glad you're here. Dusty is in Dallas. Hi, Dusty. How are you? Hey, I'm good, Dave. How are you doing? Better than I deserve.

What's up? Hey, I'm just trying to see if you can just kind of settle a disagreement between my wife and me. Okay. All right, so my company puts in 13% of my income, no cost to me every year, into my 401k account. Wow. Yeah, very nice. And my wife, we're about to start putting 15% of her income into retirement. Now, the question we have is, should we put just 2% of my income towards retirement,

make it to 15% and throw the extra amount towards our house, or should we bump it up, my actual income, into 15%? Well, here's the thing. The numbers that we've run over literally tens of thousands, hundreds of thousands of cases now of people putting 15, you putting 15% of your income out of your income leaves you room after baby step four to reasonably pay off the house. The average is less than seven years. If you don't do that and you do what apparently you're wanting to do, the 2%, it really doesn't change the equation on how fast you pay off your house but about a year, maybe a year and a half.

So we're not really arguing about anything but a year and a half, number one. I mean, I don't know your exact numbers, but that's the averages, okay? And you'd be very skewed, some kind of whacked income to be able to change those numbers. I mean, if you're making $700,000 a year, maybe we talk about different, right? But what is your household income? It's about $130,000. Oh, okay. Yeah.

Then I'm right. So I want your house paid off as bad as anybody on this planet because I am Mr. Get-Out-Of-Debt Dave Ramsey, right? But there's no reason to not put 15% of your income in. What do you owe on your home? $212,000. Okay, and when are you projecting to pay it off? Probably about seven to eight years because it's a 15-year fix. So I'm pretty close then, yeah, seven or eight years.

And if you do it your way, how much of the $130,000 is your income? Roughly around $100,000. Okay. Oh, so most of it. Okay. Yes, sir. And so that's $10,000 a year. $10,000 a year for seven years is $70,000.

So it throws off, I'm about right, it throws off how fast you pay off your house. The real discussion here is not as, the differences are not as dramatic. When you actually crank the numbers all the way through both ways, you're going to find about an 18-month difference on when the house is paid off. Both are smart things. Nobody's going to yell at either one of you for being stupid. I mean, you know, we're getting out of debt. We're saving money, right?

But I would like to see you get ahead of the curve on the compound interest and get some of these investment dollars working for you, even though you've got that fabulous, man, that is a wonderful benefit with your company. But that doesn't, you know, I'm still going to put 15% of your income in. I don't know who's arguing which way, but I'm going to stick with that. I've run those numbers so many times, and it doesn't pay off the house that much faster, even though. But you could do either one, but if you want me to blow the whistle and wear my referee's jersey and all that kind of thing, I'm going to stick with the baby steps.

You put 15% of your income. She puts 15% of her income. We put 15% of our household income into retirement, regardless of what match we have or don't have, and pay off the house as baby step six as fast as you can. And that's what I would do. That's the answer to the question. But again, Dusty, it's not, you know, I wouldn't stay up nights worrying about it.

Because both things are smart things. Ann is with us in St. Louis. Hi, Ann. How are you? I'm so on top of the world. Good. How can I help? Well, it's not necessarily helping.

I just want to get it straight from the horse's mouth because I have a good idea what you're going to say. Okay. I'm involved in this organization called Neurofibromatosis. It helps people with this medical condition, and they're going to have a call for charity, which is fine. And they are saying, however much you want to put in for every birdie, and let's say you're the highest one, they give you the privilege of having a two-year lease on a lexicon. I know, I know. I know what you're going to say. My father-in-law's best friend started something like this.

It's not a blessing. It's not a blessing. It's not a blessing. You didn't win anything. You won a curse. I know. I know. And I looked up what a Lexus could cost, and I also looked up a used one. I could get one for two grand.

Yeah. Depends on the value. I mean, you know, they're obviously not leasing you a used one. No, no, no, no. This is not something I would sign up for. No, I'm not signing up for it. I'll donate money, but I'm not signing up for stupid. Yeah, there you go.

If you hit the birdie and you win it, just let them keep the car. Or ask them to write you a check for whatever they think it's worth since you're not taking the car. Thank you. See if you get any money. Probably not. Yeah, you get it from the horse's mouth or the other end, whichever one you want when you call here.

The phone number is 888-825-5225. Stephen's with us in Athens, Georgia. Hi, Stephen. How are you? I'm doing great, Dave, and yourself? Better than I deserve. What's up? Well, I had a car accident back in May and got a settlement of $5,200,

and so that leaves our family going down to one car. For the value of the car? Wait, wait, wait. That was the value of the car? $5,200, yes, sir. Okay. So why does that take you down to one car? Why can't you take $5,200 and buy a car like you used to have? Well, I really don't have a good answer for that, Dave.

I guess our family is looking. We have two small children. We'd like to get a nice vehicle so that we can be safe with our kids. Our other vehicle has 162,000 miles on it. You were driving a $5,200 car before the accident. Why have your demands of vehicle needs changed? I guess because just my... To me, they haven't.

Okay, it gave you car fever or gave her car fever. And no, you don't need to move up in car. Do you have the cash to add to the $5,200 to move up in car? I do not. Okay, then buy a $5,200 car. Okay. Or be down to one car, whichever one you want to do. I don't care. Well, the other thing is my in-laws have allowed us to use one of their vehicles until we can make a decision on this.

Do we offer to buy that vehicle from them at maybe $2,000 or $3,000 and then save up for the larger vehicle that we want? You can if you want. What's your household income? $60,000. I make $60,000. Is that your household income? Well, no, sir. My wife teaches kids in China

on the internet, and she makes about $900 a month doing that, but we try not to budget that into our income because it fluctuates. But it is money that you could use to buy a car. So, I mean, if it comes in, it's real money there in your checking account, so we don't have to ignore $12,000 a year, but either way. So how expensive a car is it you're thinking of buying if you had the money? Between $20,000 and $25,000.

Okay. That's a big car. That's a big jump. Big jump. No, I would not do that. I would buy a $5,200 car, and then I would begin to save aggressively, and I'd probably make the jump up to about a $15,000 car, but do the difference with cash,

and that will take you a little while to save that extra $10,000 with your situation. Do you have any other debts? We have a $1,000 medical bill that we're paying off at the end of this month. Okay, good. Well, you're in good shape there. That's good news. So, yeah, don't go in debt, man. Don't use a car wreck as a reason to go into debt.

It doesn't make sense. But it is okay to move up. The maximum dollars you need to have tied up in vehicles, cars, boats, motorcycles, lawnmowers, all the things that have an engine in them, add it all together. It never needs to be more than about half your annual income. Otherwise, you have too much invested in things that are going down in value. And that's why I went, whew, when you said $20,000 with a $60,000 income. This is The Dave Ramsey Show. The Equifax breach is being called the worst data breach in history,

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zander.com or call 800-356-4282. It's really not a question of if it will happen anymore, but when. That's zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Andy and Whitney are with us. Hey, guys, how are you? Hi, Dave, how are you? Welcome, welcome. Where are you all from? Tampa, Florida.

Oh, fine. Welcome to Nashville. Thank you. And all the way up here to do your debt-free scream. Yes. I love it. How much have you paid off? We paid off, oh, gosh, $39,000.

Okay. And how long did that take? 18 months. Yeah. Say again. 18 months. 18 months. And your range of income during that time?

We went from about $63,000 to $90,000. All right. Very cool. What kind of debt was the $39,000? Mostly student loans. My student loans. Oh, okay. Very cool.

So tell me what happened 18 months ago that put you guys on this path. Well, we got married and we started to take a really honest assessment of where we were and where we wanted to be and realized that we had to straighten a lot of things out. Mainly kind of get the student debt under control. And also I didn't have a bad credit card habit, but it was like their present in my life where like before I met Whitney, I would see something and kind of go, Ooh, swipe. And now we kind of like, we had financial meetings and she's like, no, no swipe. So just pay for it with cash. So we took FPU right after we got married. Oh, cool.

Yeah, so he was on board with that. And then really after that, we were on the same page. Oh, that did it. It got you lined up on the tracks together. That's a good way to start your marriage. Absolutely, yeah. Have a success in an area that causes most people such pain. Yep, absolutely.

Way to go. So what do you tell people the key to getting out of debt is? This is successful well done thank you um i would say the budget we use every dollar oh did you yeah yeah right so using every dollar was key for us to kind of rein everything in and i was skeptical at first i'm the free spirit we need more of the planner the number cruncher. So initially I saw it as kind of like, um, kind of confined, right? So looking at, I'm like, well, man, before I could just like spend and spend and then I would get down to about like the amount that I needed for rent and then I'd have that left. But when you think about having a budget and the amount of freedom it offers you and autonomy when you don't have this thing hanging over in your head and i remember the most amazing thing was when we really got

into a rhythm of seeing the stupid student loan number go down and down and down and then finally we got into like the four figures and we had like an evening of like oh my gosh we're gonna actually do this like it's gonna be out of our life forever. So it just made it worth it. And I'm like a big advocate. So for anybody that wants like that sense of freedom in their life, do it. Get it out of here. You know, you don't need the debt.

Change your whole life. Well done, y'all. Very well done. What about you, Whitney? What do you say the key is? I think the budget and just communication, too. And we had a small amount of spending, like $50 for us to just spend. And so there was a little bit of, like, he didn't feel like he was on a leash.

He didn't have to, like, ask me. It was like, this is if you need to go out to lunch or a little bit here or there. Just enough that it wasn't. But he was in on the decision. Oh, yeah. We would talk about it. If it was a leash, it was of his own making. Absolutely.

Because I'm the number cruncher, so I would be like, hey, this is what we're doing. And he would sign off on the budget. Kind of like how you talk about the nerd gets the budget ready and then kind of presents it. And then we're on the same page. So it helped me to not be a nag to him doing yeah very cool good and i went from being hesitant about the whole you know budget the whole system to then i was fully for it i was like oh my gosh yeah so then like the roles kind of got reversed where i would be the one that would be like oh man we could do this if we really

buckle down we can make this happen and then would, it's almost like the meeting chairs got switched around. Whereas before she'd be like, all right, let's draw everything up. Let's get the Excel spreadsheet. And I would roll my eyes and be like, do we really have to do this? And then later on, I'm like, okay, so if we look at the spreadsheet, according to this, if we kind of, you know, go without a few things, uh, we we can we can make it faster very cool yeah the free spirit when they get on board become the cheerleader all right yeah that's very good good yeah you drive the horse that way that's awesome man well done good job you two thank you got it how's it feel to have no payments now amazing yeah the coolest thing was

uh we could start putting into our ross again we kind of put that on hold and uh it's so funny because you kind of feel like a geek when you get all excited about that we're gonna start putting into our roth and your friends are like oh and we went great so exciting yeah the big reward was hawaii we went to hawaii also all right that was awesome that was the reward huh yeah? Yeah. Nice trip. Well, he used to live there, so I told him he had to stop talking about it until a week ago. Yeah. So now he can talk about it again.

Right. I love it. Way to go, you two. Thank you. Very well done. We've got a copy of Chris Hogan's book for you, Retire Inspired. That needs to be the next chapter in your story. Be millionaires. Beautiful.

And outrageously generous along the way. Yeah, you guys are incredible. You've got a great start on your marriage, a great start on your life. Very well done. Very proud of you. Good job. millionaires beautiful and outrageously generous along the way yeah you guys are incredible you got a great start on your marriage a great start on your life very well done very proud of you good job all right it's andy and whitney tampa florida 39 000 paid off in 18 months making 63 to 90 count it down let's hear a debt-free scream, one. We're debt free. That's how it's done. That's how it's done right there.

Well done, well done, well done. Man. Perfect. That's good. Open phones this hour at 888-825-5225. Well, you heard him say it, every dollar. Millions of people. It's over 3 million people now using every dollar.

It's crazy. And if you're not using every dollar, it's our free online budgeting app. You can get it for your desktop at everydollar.com, or you can download it free for your iPhone or for your Android, either one, whatever you want to do. And it's all there. It's completely free. Did I mention it's free? It takes you about 15, maybe 20 minutes to build your budget out.

And then you and your spouse can track and stay with each other. You can tell right what's going on. You singles, you've got control of your life in the palm of your hand. That's very cool y'all i mean we started this stuff we did the budgets on a piece of paper and a yellow pad you know nowadays you just look down at your smartphone and tell exactly where you are using every dollar be sure you check it out every dollar dot com all right karen is with us karen is in Dayton, Ohio. Hi, Karen. How are you? I'm blessed. How are you?

Better than I deserve. What's up? Well, I have a question. My stepson had a stroke last year. He has about $115,000 in student loans. And, of course, it's in forbearance right now, and it's gaining about $1,000 every quarter or so. And we were just curious. I ran across a website called United Student Loan Aid. And just out of curiosity, I called them, and they said they could make this go away for around $600. And I said, this sounds too good to be true.

I'm going to talk to Dave Ramsey. Well, it doesn't cost $600. Has he been declared permanently disabled and getting Social Security? Yes, he is getting Social Security disability. Okay. And I don't anticipate him making any great amounts of money. If he has been declared permanently disabled in order to get Social Security, and these are federally insured student loans they are 100 forgivable okay and the only the only thing you pay six hundred dollars for is someone else to do

all the work to get the government to forgive them now i gotta tell you it is a pain in the butt and there's a lot of paperwork but you need to get in touch with each one of them and provide the documentation of uh you know the same stuff you provided to social security in order to get in touch with each one of them and provide the documentation of, you know, the same stuff you provided to Social Security in order to get him signed up for that, right? I assume you're helping with the paperwork and all since you're doing this, right? Yes, I've been doing the paperwork. I'm trying to get all of his bills taken care of and everything, because he was not very responsible over the years.

And he's 50 years old now, and hopefully he's learned his lesson but well uh yeah just jump jump on and talk to the each one of the how many student loans are involved well it's all consolidated under navient okay we'll just talk to navient then and the problem is you're going to find you're not dealing with very smart people they're kind of a pain to work with but the law says and you just need persist, that when he is declared permanently disabled, that federally insured student loans are 100% forgivable. He owes nothing. You've just got to crunch the paperwork through.

And you'll have to do, you know, how big a pain it was working with Social Security to get that through. This is just as big a pain or more. But it gets rid of $110,000 hanging over his head, and so I would do that. This is the Dave Ramsey Show. Hey, this is Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another. That's nothing to be ashamed of. It happens. And many of us know the embarrassment that comes with those harassing calls from collectors. Some of these guys are just scum. But then there are the

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John's in Nebraska. My wife and I are starting Baby Step 2, which means they're working on the debt snowball to pay off everything but their house. We are both teachers and must pay dues to be a part of the teacher's union. Is this something we should stop while we're paying off debt? It's a decision you can make. You know, what benefits do you get for being in the teacher's union and is it worth the dues um that's a decision you make really independent of this decision you know it's not

like something if it's a quality process but if it's just something you were doing just to give them a salute maybe it's something you need to stop permanently or on the other hand if it's just something you were doing just to give them a salute, maybe it's something you need to stop permanently. Or, on the other hand, if it's something that you value greatly, the union, and what it does, and you want to participate in that, then that's not something you would stop while you're doing your debt snowball. But that's just the way you look at it. I've talked this through with a bunch of teachers, and the teachers' union doesn't like me much because I don't hear much benefit that you get.

Most teachers are in pretty good shape, as good a shape as they're going to be. I'm not saying they couldn't be paid more. They could be paid more. But most teachers look at me square in the face. They go, I kind of feel like I'm blackmailed by the teacher's union. I really don't want to be a part of it. And see, I don't play that kind of stuff well personally. So I just look at them and go, if that's how you feel, why are you giving them money?

I mean, I'm not doing that. But on the other hand, if you're a big union person and you love the union and you think it's great and it's worth the value and you can show the actual value, then it's because it's something you're purchasing. You know, it's like you're going to join a country club, you know? Actually, that's something you would probably cancel unless there was some kind of huge entry fee you were walking away from or something. Were you getting out of debt? I mean, if you're deeply in debt and you belong to a country club, something's wrong with that.

Anyway, side issue. All right, let's go to Chris in Wichichita kansas hi chris how are you hello sir thanks to my father and you i've been blessed with financial stability somewhat but my question is i have roughly four full-life policies And two of them have several thousand dollars cash value, about $12,500 each. The other one's about $5,000. I'm listening to you. You know, you say whole life isn't a good product.

I'm 46 years old, own my own business, again, thanks to my father. And I just wanted to know if i should roll these over into an investment type plan or can i do that technically it's not a rollover but you can cash them out and use the money for whatever you want to use it for and you certainly can get a better investment rate of return than you're getting in whole life i have roughly 75 000 or so in you know in 401k and off investment so far but i just i didn't know what to do with these exactly well i would use the money for wherever you are on the baby steps are you out of debt except your home pretty much no that's not there's not a pretty much you either are or you aren't.

Yeah, all I have is my house payment. Okay, that's the only debt you have. Yeah, and I've got about $9,000 in cash. Okay, in your emergency fund. Yes. Okay, that's your three to six months of emergency fund is what you're saying. Then that moves you to baby step four to be investing. And, yeah, I would cash this out and put it into good investments

and good mutual funds. It'll make a lot better rate of return. Here's the problem. When you die, they're going to pay the face value, and they're going to keep the $20-something thousand you have in these policies. That's not a good investment that when you die they keep your money. So I'm getting out of there. And, you know, I'm going to have the proper amount of term insurance in place on your life first before you do anything

and then cancel this stuff and then take that money and get with a smart investor pro and do some good investing that's what I would do if I were in your shoes. Bill is with us in Columbus, Georgia. Hi, Bill. How are you? I'm doing okay, Dave. How are you doing today? Better than I deserve. What's up? Well, I've been going through the Social Security Disability process for a little over, well, right at two and a half years. It'll be three years in August. So we've kind of burned through all of our savings,

and now we're looking at using some money I have saved up and invested in a brokerage account that's currently earning me some dividends. And I'm not sure whether or not I want to pull from that and like pay off my $7,500 car loan and maybe one credit card which would free up about $550 a month versus being basically a zero balance of what's coming in and what's going out. What's the balance on the investment account? It's right at $10,000. Okay.

And so that leaves you with virtually no money then? Well, yeah, pretty much. Well, as far as the brokerage account, yes, my wife does have some IRA money, you know, over on the side, some of it in cash, some of it that is being invested already. So, you know, that's pretty much, you know, pull from one, not from the other, and then try to free up some money versus being a zero balance every month where she's working a full-time job

and a part-time job cleaning doctor's office to make some extra money per week. And you all aren't able to live on her income. We are living on her income, and that's what we've been doing for the last two and a half years. No, you haven't. You've been draining your savings. Well, yes. So what are you going to do when you run out of money and you're not able to live on her income?

I'm sorry? What are you going to do when you run out of money and you're not able to live on her income? Well, that's where I'm at right now. We've been out of savings for about six months, so we've been living that zero balance every month for the last six months. Yeah. What is she making?

What kind of monthly income? It's around, let me see, $1,213. It's around $2,000 a month between the two jobs. Okay. It's around $2,000 a month between the two jobs. Okay. And this gets rid of $500 if you do this worth of bills. Can you live on her income if you do this? Oh, yes.

So your budget, you can make it on $2,000 if you didn't have these two payments? Yeah, that would, you know, it's basically a surplus of $500 a month. No month no it doesn't well towards they're going towards other debt but yes yeah all right um going towards your monthly bills can you live on two thousand so you've been going in the hole about 500 bucks a month you're not doing a written budget bill okay you guys need to get on every dollar i can tell by the way you're interfacing with me, okay, the way you're talking to me. You don't know what your numbers are. You guys need to get on EveryDollar.com and start using that free budget app and get yourself on a written plan where you know where every single dollar is going. And then, yes, I probably would do this.

What's the nature of your disability? It's pretty much physical. I've had three surgeries in my left shoulder. You know, in the previous two years, my back's checked up. Both knees are screwed up. I'm a disabled veteran, so. Are you getting a check from the VA? Yes. That is covering all of basically the debt.

My check is covering all the debt from credit debt. How much other debt have you got other than these two debts you talked about? I think there's just two other credit cards. One's like $15,000 and the other one's... There's way too much I think I sort of it's about going on in your discussion. You don't know what's going on with your numbers, dude. So that's going to help you when you get a hold of your numbers. Hold on.

We appreciate you serving your country. And we're going to give you Financial Peace University to go through the class. You and your wife go through this class and learn how to handle money. That's going to change everything more than the other stuff you and I are talking about. A lot more. If you want to go, we'll pay for it. Hold on. Hey guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.

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