The Ramsey Show - App - The Order of Attack for Retirement Accounts (Hour 3)

Episode Date: January 1, 2020

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones as we

talk about your life and your money. It's a free call, 888-825-5225. And some say the advice is worth what you pay for it. Ricky is with us in Fayetteville, Arkansas. Hey, Ricky, welcome to the Dave Ramsey Show. Hey, Dave, how are you doing? Better than I deserve. What's up? All right. So my wife and I have been drilling tents. We went through FPU back in August, and we started with $80,000 worth of debt.

We currently only have $14,000 left. And so we are almost in baby step three and will soon be in four, five, and six. And so I recently found out that... Yes, sir. Way to go, man. You're killing it. Thank you. Thank you.

I recently found out that my work retirement plan, TIA CREF, has a brokerage window option. There's no fee to use the brokerage window or transfer funds there. The current plan that I've been using don't have all the specific types of mutual funds that you recommend. So I currently have about $170,000 in retirement funds. So my question is, should I meet with a smart investor pro and use the brokerage window to invest my current retirement and future contributions? Yeah, to the extent you're going to use your 401K, you're going to use TIACREF, which is fine.

And there's no problem with that. But for your overall investing, your kids' college funds, your Roth IRAs, or any of the old 401ks that you roll over from old jobs into new IRAs, and that way you're controlling all of that and doing that investing, that's what you'd use your SmartVestor Pro for. And they can look over your shoulder and give you some advice about the about your 401k but obviously they're not implementing the 401k that's managed by cref in your case okay okay perfect perfect so i should just stay in the current plan that i'm in

and use the funds that they have there well for their 401k if it's if you've got good mutual fund selections there and if you don't you don't have a if you've got good mutual fund selections there. And if you don't, you don't have a choice. You've got to either go to Roth IRA or your 401K. These are your two options. And does your wife work outside the home? She does. Okay.

And so what does she make? She makes $95,000. What do you make? I make $70,000. Very good. Okay. Well, between the two of you, we've got to take $165,000 times 15%. So we want a total going in of $25,000, basically.

Okay? That's where you're going to end up. Now, how are we going to get that $25,000? Well, you can put it all at your place and all at her place and do some Roth IRAs, and that will get you up over $25,000 probably. So you're probably not going to want to put it all in any one of those places. Does she have a 401K option? She does.

Does hers match? Yes, they do. Does yours match? Yes, mine matches 10% and hers matches 5%. Perfect. First thing we do is take the match. Are either one of them Roth options? Yes, my retirement off is Roth.

Hers does not. Excellent. We'll put yours in a Roth and take it up to the match for sure. Put hers in and take it up to the match for sure. And then look and see how close that gets you to $25,000 because that's what we're trying to get to. To the extent it doesn't do that, then you can look at your Roth 401k and say, are my options there reasonably good?

If they are, you can just finish it out there. If not, you can go do your Roth IRA on your own, and each of you can do $6,000 unless you're over 50 years old, and you can do $7,000 each. But that's still only going to be $12,000, so that's still not going to get us up to $25,000 probably. So you may end up going back to that cref and doing some non-matching there. Or if Hearst has got great options, you may want to do some non-matching. No, you want to do your 401k Roth first.

So, okay, so here's the order of attack. Matches first, Roth is second, Traditionals third. Okay? So that says we're going to do both matches, and then we're going to do either your CREF Roth or Roth IRAs. If those three things together don't get us to $25,000, 15%, then we're going to go finish up in hers because she's got traditional. The only place you've got traditional is in hers.

Okay. Does that make sense to you? Yes, sir, it does. Thank you very much. I appreciate that. Yeah, matches first, then Roth, then traditional. And you'd use CREF only for the non-matching portion, only to the extent it's got great mutual funds.

And CREF has some good funds. Generally speaking, a 401k run by them is generally a pretty good 401k. So you may find good funds in there, and you may not need to do as much in your Roth IRAs, your individual Roth IRAs. But you also have kids' college and other stuff. So, yeah, you'd be meeting with a SmartVestor Pro and help you coordinate every bit of what we just talked about.

And that's what they do. So, perfect question, man. Thanks for the call. Whitney is in Salt Lake City. Hi, Whitney. Welcome to the Dave Ramsey Show. Hi. Hey, what's up?

So, I just have a question. Hi. Hey, what's up? Obviously, we're looking at doing some loans. We have a baby, and so I don't really want to take all of our money and just put it into school and live with no savings. But also, I'm wondering if there's anything we can do with that money while we kind of have it in savings, but still be, like, making more money with it. You know, like, would you recommend putting it into some kind of account? Would you recommend just holding onto it and just having a safety net? Yeah, okay. Whitney, you're new to our program, obviously.

What we teach folks is to avoid debt, period. Yeah. And what we teach folks is to work through a process of getting out of debt and building up your savings to, you know, to put together a financial plan towards becoming wealthy. What's your husband studying for his Ph.D.? Chiropractic. So it's like similar to medical school, not quite as expensive, but we're looking at like $200,000 to $300,000.

Okay. Well, you're going to do what you're going to do. I can tell you that I have counseled in 30 years a lot of chiropractors that really wished that they were not $200,000 in debt because they don't make anywhere near what a medical doctor makes on average. And they take on about the same amount of debt when you're doing that. And so I don't think a chiropractic degree is worth $200,000 in the marketplace because a lot of them make $50,000 or $60,000 a year for the first five years they're out building their practice. And that's not the case with an MD.

And I can't tell you to go $200,000 in debt to do that. As a matter of fact, I think that's stupid. So I wouldn't tell you to do that. I would find another way to get at becoming a chiropractor. I'm not saying no one should be a chiropractor. I'm saying it's not worth $200,000 to be one. Because by not worth it, I mean it doesn't pay enough. Because there's a few of them make $150,000, but it's a handful. The number that make over $200,000 is just none almost, versus MDs. And you're going almost as much in debt as you are for MD. And so I just can't recommend that.

I just made a whole bunch of enemies, and it's just one of my gifts. That's okay. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ

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Mike is in Colorado Springs. Hey, Mike, welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? Hey, I just got a question for you. I'm 60 years old.

My wife's 58. I retired. I have a retirement of $45,000 a year. We have about $50,000 in the savings account. My wife is going to retire December this year. She has a 403B. Six months ago, my wife's employer, basically this is their money that they contributed, was managing her money. But anyway, they had to give it to her, to the employees, and they had to do something with their money.

So we didn't know what to do with the money. I mean, we didn't want to cash it out and get penalized. So we took it to a financial advisor, and I was listening to your program, and you said something about not having the money in the stock market for short-term investments. And that's where a lot of it is, and I was wondering if maybe you can guide me on that a little bit. Why would you consider it a short-term investment? Well, she's going to retire in a year. And, you know, I don't know. We're not

planning on using the money, but we just want to make sure that we have it in the right place. Yeah, I would have just put it, it was part of her retirement plan, and they just issued it to her, right? Yes. And so it's still in the retirement plan in mutual funds? Well, it's in a few different things. We have it with Edward Jones, and they have it spread out in a few different things um we have it with edward jones and they have it spread out in a couple different areas um and part of it is in the stock market i thought i heard you say that you shouldn't have it in there if you were close to retirement no i didn't say close to retirement i said if you're going to use it in three years in five years or less and you're not going to you're not going to use this you're going to roll this to an ira when she retires and uh it's going to be invested long term so you're fine to be in good

mutual funds as a matter of fact that's where all of this retirement should be in good mutual funds inside of her account and uh so edward jones has managed i'm, I do not understand. They gave her a bonus and you took it to Edward Jones? No, it was part of her retirement. But I guess, and I think it had something to do with her employer is a non-profit organization. So somehow all the employees got what they had contributed, the employer contributed. My wife's been there for 40 years, and so they basically had to take their money and do something with it. So I'm assuming you guys rolled that to an IRA probably then at Edward Jones. That's what it sounds like happened already. Well, no.

I mean, because part of it is an IRA. I mean, some of it, I'm looking at the thing now, and it looks like part of it is in mutual funds, some of it is in stocks, and some of it is in exchange trade closed funds. Okay. Here's the thing. All of those are investments. An IRA is how an investment is treated. So if you can have a mutual fund inside an IRA or not inside an IRA,

you can have an exchange-traded fund inside an IRA or not inside an IRA. And so if they gave her this inside of a retirement account, if the Edward Jones guy is doing his job, he didn't take it out of that. He rolled it from inside one retirement account to inside of another retirement account. That way you didn't have taxes on it. No, we haven't had taxes on it. So it will probably be in an IRA with them.

So what you need to do is sit down with your Everett Jones guy and understand what's going on, and if he can't teach you and you understand what's going on, then you need to move it to somebody that has the heart of a teacher, and you can work with them, and they'll help you understand it. You always want an investment person where you know what's going on, and right now you don't. But if you're in a good IRA and good growth stock mutual funds, just because you're coming up to retirement doesn't mean you're going to cash all that out. No, you're in the perfect place.

You would not move that, assuming it's a mutual fund that's a good one and assuming it's inside of an IRA. And I think that's what we're figuring out here. All right, Tommy is with us in Dallas. Hey, Tommy, welcome to the Dave Ramsey Show. Hey, Dave, thank you for having me. Sure, what's up? I have a life insurance question for you.

I was hoping to quickly run down my situation and have you tell me how I'm looking, if I'm on the right track. How much do you make a year? I personally make $80,000, and my wife makes $50,000 to make up $130,000. Okay. How many kids do you have? Two. What ages? My son is four. My daughter is two.

Okay. Do you have a net worth over $2 million? No, sir. Okay. Then you need about 10 times on you on 20-year level term, 12 times on you, and the same on your wife. So your wife needs $500 to $600, and you need $800 to $1 million on you in 20-year level term. Here's our unique situation. My wife is essentially uninsurable at the moment with a couple of medical issues.

We have a little bit of insurance at her employer, about $20K worth. So on my end, I didn't know if I needed to go above the 10 to 12 times my salary in that case. It doesn't help. Well, I guess it could in case both of you were in an accident together. Right. That might offset some of that. That's not a bad thought. I wouldn't go too crazy on that.

What is the nature of her health issue? I don't know how temporary it is, but some high blood pressure issues, and then she's been diagnosed with depression. And we've gone through Xander. We've gone through a few other organizations, including work, and we had a hard time getting anything. Agreed. Do you have a mortgage?

Yeah. Yes, sir. Okay. We owe about $207 on that. Yeah, I might buy mortgage life insurance on her. It's expensive. It's about five times what normal term is, but it would at least pay off the mortgage, and most of those are guaranteed issue regardless if they don't do a medical,

and that's why they're five times more. But you can pick up a couple hundred thousand that way, carry a little extra on you, and then let's just get out of debt and build our wealth as fast as we can and hopefully we can get past her medical issues she can get some distance between her and both of those things that make her insurable five years down the road or something but you're right i think i i think you found correct information from my knowledge of it she's probably not insurable today with the double with the double hit of the two things you mentioned. So, yeah, I would pick up a mortgage life on her to pay off your mortgage if something happened to her, and then I would add a little on to yours, and so we're going to put you

at a million to a million two. It's not that expensive. How old are you? I actually turned 30 yesterday. Okay, and you've priced it out, I assume, since you've been doing all this, right? So, yeah, and based on your advice, I think I'm a little bit high. I actually just signed a 20-year term policy for 1.5. That's okay.

And then I also signed a 30-year 250K policy, a 30-year 250, yeah. Why'd you do that? As an addition? I'm a little high. Yeah, I probably wouldn't have done that 30. You're probably over-insuring yourself here. What'd you pay for that one and a half at 30? Yeah, I can always drop it.

Yeah, what'd you pay for that one and a half at 30? I'm paying right around 60, I think 65 a month. And you got that from Zander? I actually got it through my auto and home insurance. I got a little bit of a discount grouping them together. Oh, okay, cool. All right, and it's a 20-year level term? Yes, sir.

Okay, good deal. Yeah, I think you got too much. That extra 30-year policy, you're overdoing it. Because her situation, as you said said may or may not be temporary in terms of her insurability but for sure you guys are going to be getting in better financial condition over time and the more the more money you have and the less debt you have and the older the children you are the less insurance you need in other words today you probably have the highest need for life insurance that you're ever going to have in your life.

And it's going to diminish, decrease every year. As the children grow older, as you get further out of debt, and as you build more wealth, then your need for life insurance goes down gradually. We don't chop it in a gradual thing, but, I mean, we don't set the insurance. It kind of runs rough. It runs out there 20 years and then just goes away. But your need actually is decreasing daily as you build wealth, get out of debt, and the children age. So, hey, you're thinking about it. You're being intentional.

Very good decisions. This is the Dave Ramsey Show. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. It means even if you mismeasure or you pick the wrong color, they will remake your window blinds for free. You get free samples, free shipping, and with the new promos they run every month, you can save even more. Use the promo code RAMSEY.

Sherry's in North Carolina. Dave, where do HSA accounts fit into the pecking order for investing? Are they considered retirement savings if we don't plan to use them for our current medical expenses or withdraw before age 65? You wouldn't use an HSA savings portion of the account as a retirement vehicle until you've maxed out everything else. Anything that's available to you, and then you'd max that out. You might use the HSA account, savings account, after you have a fully funded emergency fund, and it is not included in your emergency fund,

and it would be only for ongoing and, so to speak, chronic-type recurring medical bills. If you have allergies and you know you're going to spend $1,000 a year on allergies, not out of your pocket, in addition to your medical insurance, your health insurance, then you would run at least $1,000 of your spending through the HSA because the money you put into the HSA is tax deductible, and so you don't pay taxes on that $1,000. So if you bring that $1,000 home, it looks like $700.

But if you put it in the HSA, the whole $1,000 is in there. You can use the whole $1,000. So it's kind of like the government's paying three hundred dollars of your bill you're paying seven hundred dollars of your bill because it's a tax-free medical expense when you run it through an hsa so if you've got ongoing expenses you use the hsa to run the money through because you get the tax break on the spending that's very wise now in your case you're saying we don't plan to use it for current medical expenses which is where the ramsys are. Knock on wood.

We so far have been a healthy bunch. And I've had an HSA since they very first came out. I love them the day George Bush came up with the idea and put them out there. And he was roundly criticized, by the way, by the left when he did this. But it is an excellent, excellent tool. And I've had one all along. The weird thing is I've never used a dime of it. And so I've fully funded the thing every year because I fully fund all my retirement that I'm allowed to put because long ago I was past baby step seven and maxing out everything. And so I've got like $200,000 in the stupid HSA

because it's just funds and funds and funds. I put it in mutual funds. And so it became what you're talking about, an extra retirement account in a sense. But that's unusual. And, you know, you need to get to the point that you're at baby step seven before you start talking about doing that. So the only thing you would use the health savings account, the actual savings portion of it for is medical bills and don't put any more in there than you need to put in there for medical bills

until you get to baby step seven that's the answer to your question but it is a because you have your emergency fund in place you can cover stuff that comes up out of pocket now again whatever your the rhythm of your spending and your family is out of pocket medically, you need to be putting that much in there every year just to cut down the taxes on the medical bills. Roger is with us in Miami. Hey, Roger, welcome to the Dave Ramsey Show. Thank you. Good afternoon.

How are you? Better than I deserve. What's up? Hi. So I'm a 24-year-old. I have about $154,000 in student loan debt. And I just wanted to know if I should worry about paying off my loan as soon as possible. I use some of this time to sort of build up a savings and buy a condo or something

where I get a mortgage that's cheaper than my current rent, and then focus on paying the loan off. Wow. My current rent is about $1,500 a month. Wow. Yeah. What do you do for a living? Well, I'm a pharmacist.

Well, that's good news. Yes. So what are you making? $111,000 a month. And when did you get out? When did you get out? A couple months ago. Good for you.

I know. Well, I'm proud for your income. I'm scared to death for you on these student loans. Here's the thing. Six months ago, you were living like a broke college student, right? Right. Now you make $111,000. Why don't we keep our lifestyle down and pay this student loan off in a heartbeat?

Like two years. Two years two yeah like have no life you remember when you used to have no life remember before you got rich you just got rich right you just you just hit the lotto 111 000 bucks and you you were you were you had you know you were eating ramen noodles before remember that's right yeah so go back to the ramen noodles for two years and be 100 debt free okay okay and oh wait a minute i could just tell by that you ain't doing it so let's keep working on this um the uh uh the other thing is as a pharmacist have you investigated yet how much money you can make on the weekend working at the hospital? No, I haven't.

I've been doing some overtime, though. Oh, good. Yeah, I've been doing overtime and using that money to save. How much does that pay? So if I do overtime on top of my 40 hours, the money comes out to about close to $1,000, $1,000 on my paycheck. A month? A week. Well, a month would be $2,000 with the overtime. $2,000, maybe $1,000 on my paycheck. A month? A week.

A month, it would be $2,000 with the overtime. $2,000 a week, a month. Okay, so $24,000 more. Okay, so here's what I'm doing. I'm looking at your $154,000, and I'm looking at this $154,000 as you have this wonderful story of your life that you've just told me until you told me this $154,000. And it's almost like I've got this healthy young guy who's got cancer. And I'm saying cut the cancer out fast.

Don't play with it like it's a pet. That's what I'm telling you. The shortest distance between where you are with your fabulous income and your great choice of career, by the way, congratulations, well done. The shortest distance between you and being where you are today and being a millionaire is to clear that student loan debt like it was cancer.

I agree. So I guess one of the obstacles I had here is the rent. I feel like I'm paying too much in rent. You are. $1,500 a month. So I either wanted to find a cheaper place to rent or save a little bit, get a mortgage on a home bit, get a mortgage

on a home, and then my mortgage payment, hopefully have that reduced to something like $800 or $700 with all the payments, and I end up owning that condo or whatever I buy. That's really intellectual but not wise. Okay. You've worked that through with your brain, but out here in the real world, that's going to bring a bunch of crap into your life. Right now, today, I'm talking to an excellent, employed, broke 24-year-old. You're $154,000 negative net worth. You don't need to be buying a house. So, yeah, rent the cheapest thing you can or take in a roommate.

You do need to make a move on that. But listen, this is 100% focus on the debt. We're going to clear the debt. We're going to clear the debt. We're going to clear the debt. And then I do want you to go buy something. Miami is a wonderful market to buy real estate in. It's a great real estate market.

It's a great town. It's got a lot of flavor, a lot of spice there. It's wonderful. I love the town. But, yeah, you have the ability to make a lot of money, make a lot of extra money, dial yourself down to nothing, no life, like you used to do when you were studying to be a pharmacist. You had a singular focus, a singular goal. You were delaying pleasure to win.

You were paying a price to be a stud. Now you're the stud. Now pay one more price and clean up the stinking mess you made with those debts. Because, dude, man, if I'm talking to you at 26 years old and you're 100% debt-free and you have the ability to make $150,000 a year, you're going to have so much money. We just paved the road, man. We just paved the interstate and set a Ferrari on it. You're going to be in good shape.

But right now, I set a Ferrari on it, and all I see is speed bumps. So let's get the thing smoothed out here, and that's what I would do. Hold on. I'm going to send you a copy of the book, The Total Money Makeover, that outlines exactly how 5 million people are doing what I'm trying to talk you into doing. So I'll help you. I'll show you what to do. I'm honored to have you in my audience, and great career choice, Roger.

Well done. Well done. Man, that's awesome open phones this hour as we talk to your talk to you about your life and your money man when i first started this show 25 years ago there were zero smart 24 year olds calling me zero now i get to talk to them almost every day the 25 26 28-olds that I'm talking to right now are some of the smartest I've ever talked to in a quarter of a century that I've done this. You people that think these millennials are stupid, they're not stupid.

Some of them are lazy, but most of them are awesome. This is the Dave Ramsey Show. Thank you. Our scripture of the day, Psalms 3311, but the plans of the Lord stand firm forever. The purposes of his heart through all generations. Herb Kelleher said, If you're crazy enough to do what you love for a living, then you're bound to create a life that matters. Start a little thing called Southwest Air, if you're crazy enough to do what you love for a living, then you're bound to create a life that matters. Started a little thing called Southwest Air, if you've ever heard of it.

Yeah, pretty crazy. I love it. Very, very fun stuff. Very fun stuff. So, buying a house can be a huge blessing. But when you buy the largest asset that most of you own, at least in the initial stages of your wealth building, usually your home is your largest asset, and you do it wrong, the mistakes are a lot of money. You need to have the right information. And when I'm going into something that I don't know what I'm doing, I don't DIY it.

I get somebody in my corner that knows what they're doing. We've created a free guide that gives you the steps and the things you need to consider when you're buying a home. Home Buyer's Guide starts by teaching you real estate lingo all the way to what to expect at the closing and what happens after signing on the dotted line so that you can buy confidently. If you're thinking about buying a home this year, check out this guide. It is free.

You can find the right home in the right budget for you and your family, and you'll have more confidence because you'll have more knowledge. DaveRamsey.com slash homebuyersguide. DaveRamsey.com slash homebuyersguide. Faraz is with us in Los Angeles. Happy New Year. How can we help? Happy New Year, Dave.

Good. How are you doing? Better than I deserve. How can I help? Yeah. Happy New Year, Dave. Good. How are you doing? Better than I deserve. How can I help? Yeah, so I have a question about 3B and Baby Step 4. I'm finishing up Baby Step 3 right now. And I'm in no rush to, I guess, save up. Well, no particular emergency to shave up for anything, but I like to save up for a better car because I'm still driving that $1,000 car.

Yeah. But it's still driving well, so at the same time, I'm not really worried about it. But I'd also like to, I'm renting, so I'd like to eventually save for a house. But, you know, I'm finishing up three, my, my company, uh, matches, uh, 6%, uh, for the 401k and they have a Roth option. Uh, the first four, the first 4%, they matches a hundred percent. The second four is at 50%. So I'd have to put 8%. And I was wondering, can I do both, like part investing into my 401k, say 8%, so I could get the full match, and then save in 3B, I guess, so to speak, on the side, or do I have to pick one or the other?

No, you can do whatever you want to. I mean, any of it's fine. Obviously, the more you put into retirement, the longer it's going to take you to save for a car and for a down payment. You don't want to be out of that retirement and miss that match for very long, and you know that because you just outlined the match. You know what you're looking at. Very well done. What's your household income? Last year I made $63,000.

Okay, cool. And so if you didn't do anything, once you finish baby step three, we got to do that before we do anything, you know that, and then you got a horrible car, you need to move up in car, okay? How much can you save if you really lean into it? How much can you save a month towards buying a car? Probably about $2,500. Good, okay. car um probably about 2500 good okay so we can do that for four months and buy a ten thousand dollar car yeah and my car could probably bring about i mean i bought it for a thousand bucks but could

probably bring about 2500 at least okay then do it for three months and buy a ten thousand dollar car with your twenty five hundred500 car sold, right? Right. But, I mean, you see my point. It's not like we're going to do this forever. Just for a few months, and let's get you a car. And then if you want to start doing, at least get up to the match, and then above the match, start saving for your down payment.

Then once you get a down payment saved, then step all the way into baby step four for your house down payment, because that's going to take a little longer. Okay. That's a to take a little longer. Okay. That's a way you could do it, but as long as you're going to get to Baby Step 4 within about two to three years, if you want to put it on hold and just get your car and then save for your down payment completely, that's fine. Or if you want to step in and do a partial for a little while until you get that thing done.

But listen, three years from now, you need to be 15% going into retirement. Gotcha. Either way, no matter what you do. But three months from now, you could buy a lot better car. Right. The nerd side of me wants to keep driving it, even though it's got 260,000 miles on it. No, you need to move up in car.

You reach a point of diminishing returns. It's just part of your story, the journey driving the hoopty. But you don't want to be in a hoopty forever. And I'm not moving you into a $60,000 car. I'm moving you into a $10,000 car. You can get a lot of really fine vehicle for $10,000. It'll have a lot of life in it right right oh yeah yeah and i think i would go that way and and then let's talk about how long we're gonna and how we're gonna do the emergency fund i mean how we're gonna do the down payment

fund from there but you've done a really good job congratulations very well played well played. Well played, sir. Andrew is in Tulsa. Hey, Andrew. Welcome to the Dave Ramsey Show. Thank you. What's up? Well, about two years ago, my wife and I got a house. Really good deal of the house, which is why we got it. Mom's friend selling her uncle's house, offered it to us $100,000.

It was a $135,000 house. Right now we're in baby step two. We have about $39,000 of debt left. But we're contemplating this summer maybe we'll sell the house, take the equity, pay it on the debt. I also have a collector car that could get us the rest of the way. By the summer, we'd probably have about $30,000 of debt, and we're thinking between the sale of the house and the collector car,

that would probably get our debt paid off. What's your household income? About $85,000. Okay. Is there any other reason to sell this house other than the debt? Well, the fact that it's not the house that we shopped for and picked. We like the house. Okay.

That's fine. But for the next two or three years, it's not the end of the world. There's nothing going on here that's like a big driver other than you're just trying to figure out a way to get out of debt. So your classic car is worth what? Somewhere the six to eight thousand range okay and what's the debt on the thirty nine thousand uh majority of it's student loan then there's about twelve on credit card debt and then right now i'm still paying a little bit on five seven years ago a foreclosure that we had to deal with and how much is the balance on that um seven thousand that's actually i'm paying to my parents they gave me the money get the attorney and get everything paid off and i'm paying that to them got about seven thousand pay to them gotcha okay and your household income is what about 85 okay85,000. Okay. No, I'd keep my house, and I'd sell the classic car today.

There's no difference in selling it today and selling it in the summer. A couple of things I want to get sorted on it to get a little bit more money for it. Okay. All right. That's fine. So you're still polishing it. Okay. Yeah, polish it up, but let's get that done before summer,

and let's get that money thrown at this. Because making't making 80 000 you're gonna pay off 30 000 in what 12 18 months what what we've looked we're paying about 1500 a month towards the debt and that puts us at about the two-year range okay plus or minus the car true yeah okay so my 18 months pretty close there you go almost like i've done this before yeah you're you're in good shape no i i don't think you sell this house for this reason if you get out of debt and you have your emergency fund fully funded and you guys decide to trade houses later and you don't take out a payment that's more than a 15 year fixed rate and then you get that paid off and you're never going dead again then that's an okay move. But I think you're just trying to find a way to slip out of this.

And right now you're very, very close. And let's just play through. I'd play through is what I'd do. Hey, thanks for the call. I appreciate you joining us. 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. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.