The Ramsey Show - App - The Order of Priority for Retirement Accounts (Hour 2)

Episode Date: November 21, 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. This is your show. Thank you for joining us. It's all about you. The phone number is 888-825-5225. Devin in Tampa starts off this hour. Hey, Devin, how are you?

Hey, good. How about you, Dave? Better than I deserve. What's up? Awesome. All right, so I'm in a bit of a pickle right now. I'm 22, and so let me just tell you this story. So long story short, I thought I had gap insurance on my previous car. It was a Lexus size 250. I got completely butchered on my interest rate when I bought it, pretty much valuing it at $21,000, and it was really only a $14,000 car.

Anyways, long story short, I didn't have gap. I got into a car accident. I didn't get paid out for the full amount, so I still owe $4,500. The issue now is I also have a closed credit card, which affects my credit score significantly, so I can't really get approved for many loans. So I'm trying to get advice from you on what I should be doing. I think it's awesome that you can't get approved for any more loans because you pretty well suck at this yeah yeah every time you've touched debt you really blew it up didn't you yeah yeah yeah so don't do it so hey listen wait a minute seriously

all kidding aside it ain't working dude stop it so what do you make uh i make around 5454,000 a year. Cool. You living with roommates or at home or what? Yeah, so actually when I had good credit, before the credit card closed, I did buy a home about two years ago. And what I do is I just rent the rooms out and I live there, so I don't pay any mortgage, no utilities or anything.

Okay. That's good. Good. Assuming everybody pays pays that works out good and uh you're 22 and you make 54 000 yes and you don't have a dime um i do i actually have i have four grand and i owe four grand on that previous car so perfect but do you have a car no i don't that the issue. I don't have a car right now. Okay, buy a $4,000 car. I have five days to pay off the Lexus financial, that loan. Or what?

To get sent to the credit. Or what? Or it hits my credit. Oh, well. You ain't getting credit anyway, dude. You ain't getting credit anyway, dude. You ain't getting credit anyway. Your credit sucks. Yeah.

I believe it's 580. They gave me an option. I was asking you. They gave me an option to do a payment plan with them, which would be over my previous payments. It would be, it has to be over $350 a month. That'd be awesome. On top of that. That'd be great, as long as they don't report on your credit.

That'd be great. All right. Okay. So I can take that. So stop report on your credit. That'd be great. Right. Okay. So stop, stop, stop. Listen, listen, listen. Let's just follow this through, okay? Let's blow this through carefully. Number one, we're going to write a check and buy a car. Probably really about $3,000 because I want

you to have at least $1,000 in your account. Right. Okay. Then you have one debt to your name. Is that correct? Yeah, yeah, other than the credit card debt. Oh, I'm sorry. How much credit card debt is there now? It's 3K, and I have a payment plan set up with Wells Fargo.

Okay. Let's stop there. Let's listen to this. You have $4,500, and 3 is $7,500. You make $54,000 a year. You have zero housing cost. You need to be on a budget and stay

out of the bars on the weekend. Right. You're partying and spending all your money and you're broke. You can clear $7,000 in no time. You're bringing home $4,500, $4,200, $4,300 a month, aren't you?

Yeah, $4,300. So how much of that can we put on this debt? Let's say it was $2,000. You'd be debt-free in four months. Credit card and Lexus is out of your life. You've got a paid $4,000, $3,000 car. Then we build an emergency fund of three to six months of expenses. You're sitting there with $10,000, $12,000 in the bank at that point

only for emergencies because you've seen some emergencies, so you know you need this. Then once that's there, then we're going to save up and move up in car because you're driving a piece of crap at this point, right? Right. Yeah, yeah, yeah. You're going to do this? Yeah. Yeah, absolutely. Four months, you're debt-free.

Okay. Six months, you're debt-free. Okay. Six months, you've got money in the bank. Nine months, you're paying cash for a better car. A year from today, your life is going to look completely different. You're going to be driving a $10,000 paid-for car. You're going to have zero debt and $12,000 in the bank one year from today, if you follow what I'm teaching you. Yep, absolutely. And that will get the stress out of your life man but you're going to have to

concentrate and focus every one of those dollars on those goals and not on a bunch of other goals you got one thing to do dude debt free build your emergency fund pay cash for your car put stupid lexus credit on a payment for the gap and then never do that again never do it again learn your lesson you will never need gap insurance again you know why you will never have a car payment again if you get rid of car payments you have a real shot at building wealth you're a hustler. I'm not in a bad sense. I mean, you know how to hustle and grind. You're out there pushing things around. You got a lot of energy. You got 63 ideas going in this one conversation. You know, you've just been really impulsive and disorganized. So now it's time to just grow up and fine tune this and you can do

it. And if you're 52 or you're 22, the advice is the same. It's not an age thing. So you can do this. You can do this. Hold on. I'm going to give you a copy of the book, The Total Money Makeover, and show you exactly, step by step, point by point, what to do and how to do it. And it will walk you through what we were talking about here. You can do this.

Courtney is with us in Spokane, Washington. Hey, Courtney, how are you? Good. How are you? Better, how are you? Better than I deserve. How can I help? Hi, so I'm calling because my husband and I recently got married about two months ago. Congratulations.

We are on. Thank you. We are on baby step two, tackling our debt together. Great. And he has talked about potentially getting a second job to help pay for some of that debt. My concern is I'm already working about 60 hours a week while going to graduate school, and I'm concerned about him working so much that we never see each other and sort of tank our marriage before it begins. Oh, you're newlyweds. You'll find a way.

Even with him working a second job? Yeah, you'll be all right. You just schedule time together. You just watch what you're doing, watch your schedules and overlap. How much debt have you got? $80,000. $80,000. How fast will it be paid off if you guys really get after it?

Well, currently I make $25, 000 a year on my own but i'll be finishing up my degree in a little over a year and a half great and i will have a phd great and what criminal justice great and what what will he what will you be doing with a phd in criminal justice uh working as a professor at a university teaching and doing research great good for you and what does he make uh he makes about 35 grand a year great okay so try the part-time job if your marriage starts struggling because of that one thing which i doubt but if it does he can quit the part-time job it's not a lot like a big life decision we're not chiseling this in stone. Go make a little money. See if that doesn't help. Sometimes debt's a bigger stressor than working.

This is the Dave Ramsey Show. If you've turned on the TV, read a paper, or been on the web lately, then you know this country's in the midst of an identity theft crisis. Equifax is attempting to settle with its 150 million breach victims. Now that's a joke. And Capital One exposed the records of over 100 million Americans. These are just the breaches making the news. You can't possibly still think you don't need identity theft protection. Folks, this problem is not going away. The only way to fight We'll be right back. gets hacked they also cover kids for free on their family plan id theft is a nightmare and you need Thanks for joining us, America. James is with us in Youngstown, Ohio. Welcome to the Dave Ramsey Show, James. Hi, how are you?

Better than I deserve. What's up? My brother left me $12,500 when he died. But he did not leave it to my mom, dad, my sister, or any of his kids. And I'm seeing what I should do with the guys I'm in baby step two. Why did he leave you the money and no one else? He wasn't talking to them when he set this up to my parents or my sister. Was he when he died? Yes.

And he never changed it. Okay. Well, it's not a lot of money. It's not $1,250,000. It's $12,000. No, no. It's $12,000. Right. So, obviously there's conflict and strife in your family.

So I'm guessing everyone has a big opinion about this, don't they? They don't even know about it yet. They have no idea that it has been left to me. When did he pass away? In September. And how did he leave it? In life insurance or a beneficiary or something, or what?

In a 401k. A 401k beneficiary. Okay. Yes. All right. Well, you understand that's taxable when you take it out. Right. And since it was left to you, you're going to pay

the taxes on it. Okay. And so it's not $12,000. I don't even know if I should roll it into something. Even if you do, it's an inherited IRA is what it turns into when you roll the four.

That's what you can do. But even then, it's taxable when you take the money out. So if you take the money out and give it to them based on $12,500, you will have paid taxes for them. Okay. So we don't want to do that for sure. That's not right but if you want to cash it all out and pay your taxes and after taxes divvy it up you're you can do that there's nothing wrong with that um and i i you know i don't know i mean you got to look at your family situation and say what is the right thing

to do here i guess the main thing that matters is i guess two things well main thing is what would your brother want you to do um he should have gone back and changed it it sounds like because it sounds like he was back on speaking terms with his kids and his parents right right and he didn't do you think he'd want you to divide it up um i think with the kids my parents are pretty financially stable and he would have hiccups with my sister quite a bit okay so you can just make a decision say i think this is what he'd want to do it was all left to me and i don't know what to do but this is the best i can come up with i'm going to give some to the kids. I mean, you could do that, right? But your sister's going to be all twisted anyway, isn't she?

Right. I mean, she never really got along with the money that I gave her beforehand. Yeah, and your parents don't need the money, so are they going to be upset about this? No, they're not worth over $3 million. Okay, so your sister's upset about everything anyway all the time, so we're not going to worry about her because you're not going to make her happy no matter what. Right.

Yeah, okay. And if you want to give some of the kids, that's fine, but here's the deal. Cash it out and set the taxes, and then after tax, give them money, not out of $12,500, but more like out of $9,000. Okay. What would you put it in? Because they are under $18,000. Oh, geez.

How old are they? Two, six months, and seven. How are you not speaking to a two-year-old? He was talking to the kids. He wasn't talking to the parents, my parents. Oh, okay. I thought you said he was estranged from his kids.

No, not from the kids. Okay. Why did he not have them as the beneficiary um i don't know he set this up before they were born and okay what do you make a year i make 50 okay and my wife makes it's 104 together if i were in your shoes what I would do is sit down with a smart investor pro and I would open three accounts in the kids' names called custodial accounts, mutual funds in the kids' names, and you're the custodian. You watch over the money for the good of these kids on the behalf of your brother.

He should have left this money to his kids, not you. And that's what I would do. I wouldn't keep any of it if I were in your shoes. These are little kids. They have nothing to do. I thought these were grown kids that were mad at their dad, the way you were talking about this earlier. But this is a little two-year-old kid. They don't know anything. And so, yeah, I'm going to roll this into an inherited IRA and manage it for them. You can let somebody know that it's in your name, but you're going to take

care of it for the kids. And if anybody doesn't like that, they can bite your ankle. You know, it's yours. You can do with it what you want. But I would set it aside in an inherited IRA, let it grow. At some point, you could roll it into mutual funds in the kid's name and with yourself as a custodian. But in my mind, if I'm you, I'm going to keep control of this money and manage it for these kids, and I'm going to give it all to them at some point. And I'm going to manage it for them. That's what your brother should have been doing anyway. So, good question.

Thanks for calling in. Dylan is with us in Grand Rapids, Michigan. Hey, Dylan, how are you? Hi, David. It's an honor to talk to you. You too. What's up? So I am actually recently married to my high school sweetheart.

I'm 25. We were just married last month. Wow. Yeah. And so now I have a question. She had no debt prior to the marriage. I have student loans is all, $20,000 of which is not accruing interest right now, and $9,000 is.

I'm wondering what your recommendation would be for the best way for us to tackle those. Well, I would list your debts smallest to largest. I would pay minimum payments on everything but the little one, and I would attack your smallest debt. And so break these apart regardless of if they're accruing interest or not. Let's just knock them out. How much do you make? I'm actually finishing up school right now. I'll graduate in May from pharmacy school.

Good, good. And my wife, she's a nurse. We probably together, because I'm still working, I just don't have as much time. Together we probably make about $60,000. Yeah, but it will be $160,000 next year. Mm-hmm. Right? That's the plan, yeah.

If you pass your boards and you're a pharmacist, you're making six figures. You should probably be making $60,000, $70,000 as a nurse in Grand Rapids. Well, part of it is I'm considering residency, which pays considerably less. We have right now saved up probably about $24,000. And so I guess my question is should we pay that on the $9,000 right now? No, I want you to get out of school first. Okay. Let's get out of school with adding no more debt. No, I want you to get out of school first. Okay. Let's get out of school with adding no more debt.

Don't borrow another dime. That's your first goal. So I didn't know a pharmacist had to do a residency. They don't have to. It's kind of depending on what your career path is, you like to follow. So I'm really interested in, like, health system administration, management-type things, and those generally, to get in a hospital, roles like that do require at least a one, maybe two-year residency.

And what does that pay? I'm in the application process right now. No, no, not the residency. What's the career field pay if you go that route rather than a pharmacist? I would say about $150. About the same thing. So why would you do that? Job satisfaction.

Okay. And as a resident, you'd make $24? About $50. Oh, about $50. Okay. $40 to $50, yeah. All right. Well, then have you got the money to finish school and then decide whether you're doing the residency or not?

Through May? Yeah. Okay. All right, ladies, as long as you've got the money, make sure you're finishing with adding no new debt. And then aside from that, beyond that, list your debts, smallest to largest, and pay them off in that order. And start now. And work it as hard as you can work, residency or not. Part-time job now or not,

together as a household, attack the debts in that order. Hold on. I'll send you a copy of the book, The Total Money Makeover. We'll show you how to do this. Our wedding gift. We'll be right back. Claire is with us in Chapel Hill, North Carolina. Hi, Claire. How are you? Hey, Dave. I'm doing good. How are you? Better than I deserve. What's up? So, my husband and I just last night, thank you so much for your program

because we ended up just paying off the last of our loans. Woo! Yeah, we are super excited about it, too. So we're technically on baby step number three now. We had a question about baby step four just looking forward, though. We work for a company that matches what we put in for retirement. And so we're wondering on step four when you increase what you put into your retirement to 15%, does that include what our company matches?

No. It's what you put in 15%. The match is just gravy on the biscuit. That's that much more. Perfect. And your rule of thumb is you do match before Roth before non-Roth. Okay. You have a Roth 401k at your company. Before Roth, before non-Roth. Okay.

Do you have a Roth 401k at your company? We have a 403b. A 403b. Do they offer it as a Roth? They do not, no. But we did. Okay, then what you'll do is both of you at the same place? Yes.

Okay. Then you do up to the match. How much is your match? 6%. First 6% is matched one to one? Yes. Okay. So that takes care of 6% of our 15, because both of you are doing it, so we know that. Okay?

And just take your total income times.15, and that's the dollar amount we're trying to get to. But we've got 6% of that done at the match. Then I would do Roth IRAs next because that's better than non-matching traditional, which is what your 403B is, okay? But the matching is 100% rate of return before you do anything. So you definitely do that. Then you do two Roth IRAs, and that would be $11,000 if you're under 50. Are you all under 50?

Yes. Okay. $5,500 each is $11,000 more on top of that 6%. If that gets you to 15%, you're done. If it doesn't, then you'll bleed back to the 403B and put some more in there until you get up to a total of 15%, including the two Roths. Does that make sense? Okay. Yes, sir.

You see how I did that? I did. Match first, Roth second, traditional third. Yep. That's your order of attack. Well done. You're going to be rich. I love it.

Kevin is with us in San Francisco. Hi, Kevin. How are you? Oh, I'm all right, Dave. I San Francisco. Hi, Kevin. How are you? Oh, I'm all right, Dave. I'm much better than I deserve. How are you? The same. How can I help?

So my wife and I, we had a baby this year. Yay! Oh, thank you. So we're modifying our estate plan, and we're having trouble selecting a guardian and a trustee. And, you know, I was just wondering what criteria you would use for both picking a trustee and a guardian for our baby. With rare exceptions, I want them to be separate, two different people. Yeah. The trustee would be someone that's going to, A, follow my wishes, and B, has a bit of an administrative or money flair. They're fairly good with taking care of business.

They've got a little business acumen. They've got a little bit of ability to get things done. They're organized. They're not flighty, irresponsible, obviously, that kind of thing, right? The trustee is to execute your wishes. And so if you died, I'm assuming you're naming your beneficiary on your life insurance to be a trust formed at your death for the good of your children, right? Yes, we're doing the springing trust. Okay, good.

And, yeah, so you name a trustee, and you name in there in detail what you want the trustee to do, how the money is to be handled. But as far as the guardian for the child, it's a different criteria, obviously. It's who's going to raise this child the way I want them raised. Yeah, that's the hard part, and it's also a problem with the trustee, too. You know, we would like family to be the trustee instead of a corporate trustee, maybe a corporate trustee in conjunction with family. But our families on both sides have had some issues with money and boundaries, and they don't really handle money the way we do. Well, here's the thing. Even if they don't handle money the way you do,

are they honest and smart enough to follow the law? Now, some families are dysfunctional enough, they're going to not follow the law. But the law is they have to follow what the document says or they could get their butts sued by your kid when they grow up. Right? But people misbehave all the time in these situations. So if you can trust them to do what you say in the document, then that's okay.

Because you're going to tighten the thing up. You're not going to leave them a lot of leeway. I mean, we're definitely going to. The way we're writing it is to keep it as specific and tight as possible. It's just, you know, when someone has access to a few million in life insurance and about a million in assets, it's very tempting. We're super worried about it. I don't blame you. You're very wise to be concerned about it.

I probably, it sounds like you need very wise to be concerned about it. I probably, it sounds like you need to use just a professional trustee. I'm not a big fan of those, but I'm a bigger fan of them than I am dysfunctional family. Yeah, yeah, definitely. I mean, it's not my favorite option, but for a lack of better options, I think that's what we're going to end up doing. Yeah, yeah. And, you know, the other thing sometimes you can do is if you had a close friend that would be willing to take it on we thought about that that actually might be a better idea yeah they'd be willing to take it on and even the guardian thing sometimes people do that um we had some friends uh it wasn't us but

we had some friends who named a a family that was having trouble having children as the potential guardian. And they were very, very, very close friends, obviously, but they named them as the guardian. They were having infertility issues, and they named them as guardian. They didn't die, so the transfer never happened. But that was just an interesting way of looking at it, you know, a little different thing. And it was somebody, you know, in their church that had the same Christian values that they had and shared in that kind of a thing. And that's really what Sharon and I were looking for for a guardian in our case. We had family that we could do that with in our case.

But obviously our kids grew up and explore yeah yeah and and our kids have little kids right now like you do and so our grandkids and they're looking at the exact same kinds of issues as um you know do you want the grandparents to step in and do you want the another brother or another sister to step in and that kind of thing. And, man, it's a lot of things to think about, but you're very, very, very wise to be thinking about it. You're going to do very well with money, and you're going to be a great dad because those are the types of things that great dads do and great moms do and people who are good with money do is they're diligent on things like

estate plans wills life insurance and all that kind of stuff and so very very good and then the thing you're going to find is you end up updating it you know over the years things are going to change and you update things are going to change and you update in our case we end up updating ours not major moves but we we fine tune it every year and i and my personal estate plan because it's gotten so stinking complicated so but anyway hey thanks for the call we appreciate you joining us open phones at 888-825-5225 erica is a member of our facebook private private Facebook group. You can join it. It's called the Ramsey Baby Steps Community. If my job offers a complimentary two times my income in life insurance,

do I just get my own eight times in personal life insurance to make up to the ten times my income, or do I still do ten times in case I lose my job? Well, we always say ten to twelve times my income or do I still do 10 times in case I lose my job? Well, we always say 10 to 12 times your income. So you might do 10 times instead of 12 times. But what you got to keep in mind is if you'd lose your job, obviously you lose the life insurance. And if you became uninsurable while you were working there and then lost your job, you're not getting any more insurance.

So if you had a cancer scare, a heart scare, diabetes, something like that, you might not be able to get insurance if you left your job. Because life insurance is almost never portable. It almost never leaves with you. And so that's why, you know, it's nice to have it as a benefit, but it's kind of gravy on the biscuit. And I probably would have the meat and potatoes in there that you personally own 10 to 12 times yourself. 10 times is fine.

10 to 12 times is the rule. Rachel's with us in orange county hey rachel welcome to the dave ramsey show hi there how are you doing better than i deserve how are you just the same thank you so much for taking my call sure what's up i have a question about um school it's kind of uh changing my family tree a little bit by being the first one to want to go to college. Good for you. So I've been in the extended community college program for about five years now. Wow. Finally decided that I wanted to be a veterinarian.

So I've been saving money pretty diligently, uh, pretty diligently saying no to a lot of things that people my age, I'm 24. A lot of people are doing other things, you know, but I'm just trying to save and, uh, working in orange County and stuff. And I honestly, I need some guidance about what to do because I have some pretty big goals and not that much money saved up. I don't have any debt right now. You know, in between baby plans, and I just need to have some guidance here as I'm applying for universities right now. Okay.

All right. And what is it you need guidance on exactly? So I don't, you know, I want to save money while doing it, and then, I mean, like work at the same time, or I could do full-time, but only probably for a year with the money that I have saved right now. And should I be saving for retirement at the same time? It's just there's a lot going on. Okay, no, you should not be saving for retirement.

As far as your money goes, I would exclusively focus on your goal. Because a better investment than retirement is Rachel. If Rachel gets her DVM, she is going to make a lot more money. Okay. If you apply yourself and, you know, you do a good job with your practice and so forth and building your veterinarian practice. I know several vets that make ridiculously good money. It's wonderful.

It's a wonderful field to be in financially, and so you're heading the right way. That's what I would do is completely focus on you. The second thing is, with very rare exceptions where you go to school doesn't matter okay okay do you have an animal that you've ever taken to a veterinarian i i do i work i've actually been working in a as a technician for seven years okay so i mean have you ever had anybody walk into the veterinarian clinic and leave because they didn't like the school the vet went to? No. That's absurd, isn't it?

Yeah. I don't even know where my vet went to school. Well, actually, I do, because he went to my school, because we talk football. But other than that, I wouldn't have known where he went to school, because I don't go in and interview the vet and say oh no you went to that veterinarian school i'm not taking my dog over there that just doesn't happen and so if you pay twice as much at school a as school b to make the exact same money that's dumb you follow me okay yes. So on that note, then, should I be, because I need to get, I guess a bachelor's, I need to take upper division courses probably another year before I apply for vet school. Right. So considering out-of-state and in-state tuition, should I be looking?

In-state only. Okay, okay. Because there's no value to being out-of-state. It doesn't add value to the proposition. It doesn't add value to you being a vet. It's just as across the state line is all. Yeah, yeah. You want to go as cheap as you can go and still get in vet school.

You want to go to the cheapest vet school you can go to and still learn how to help animals. Right? Okay, yes, yeah. Because that's where you're going to get the most. A, you're trying to work your way through, which is brilliant on your part. Now, what I want you to do, too, is I want you to go back in those vets you've teched for. Have you teched for more than one veterinarian? Yes.

There's been three. Yeah. I want you to go back and talk to all of them and ask them who they know that can pay for your school. Because I've got to tell you, the drug business, you've been around the business, right? The drugs, it's like human drugs. I mean, it's hugely profitable. The drug companies that sell drugs to veterinarians, big time, right? Yeah, oh yeah.

Big time business. I bet you a few of those might have scholarships. Huh, okay, I'll look into that. Thank you. Big time business. I bet you a few of those might have scholarships. Huh. Okay. I'll look into that. Thank you. Yeah. I bet you that, you know, you look for industry-specific things.

Who are the suppliers of the equipment, you know, that you use? The surgical equipment or whatever that you use. All that kind of stuff. And you just, you know, you keep working all those kinds of angles and look for scholarships. And even if there was a company that hires veterinarians and they would pay for your scholarship, if you work for them for a couple of years after you got out before you went out on your own, you promise to work for them with kind of an indentured servant program. You know what I'm saying? That kind of a thing.

So kind of start searching around and poking around on that. But sometimes what happens in families where you're the first one to get an education is they are in awe of education it's like this mythical thing up in the clouds you know what i'm saying it's mystical and and so they're willing to pay too much i find people in your situation pay too much for their education more often than people who uh you know like me uh you know my kids going to school i have a college degree i'm out here working with a college degree so when my kids get ready to go to school i know exactly what i'm willing to pay which is you know the minimum to get the degree

it changes the whole deal and so that's what you aim at. And that's the way I would look at it. Hey, you're a rock star, kiddo. I think you're going to do great. And if we can help you, you let us know, okay? Open phones at 888-825-5225. That's 888-825-5225. You jump in.

We'll talk about your life and your money. Joanna is with us in Sacramento, California. Hi, Joanna. How are you? Good. How are you? Better than I deserve. What's up?

Perfect. Thanks for taking my call. Sure. How can I help? I just need some advice. So my main question is, should I stop my 401k contribution and my student loan payments for a year, about a year and a half, to focus on my credit cards? That's what we teach. Right.

We teach you to do that. Do you know why I teach you to do that? To be debt-free. Well, yeah. But, I mean, you could be debt free the other way hypothetically right it would just take longer because you'd be putting money into your 401k that you could have been putting on the debt right right so i'm 34 and i've been working for six years and i only saved um to my investment 401k 401k, about $30,000. That's because you got debt. So my concern is with stopping the contribution is that I'm not saving for retirement.

For a whole year. Right. And in six years, you've not made any progress because you're not putting enough into 401ks. Why are you not putting enough into 401ks? Because I got debt payments. Right. So when you get rid of the debt payments, you can get your 401k contributions way up and you'll be a millionaire.

Right. So my company contributes also, so definitely I don't want to miss out on like the percentage. Yeah, you're only going to miss out on it for one year. Right. It's one whole year. Okay. Okay. So I'm actually moving just so I can put more because I have $30,000 credit card debt.

Have you cut up the credit cards? And there's nine of them. Have you cut up the credit cards yet? Sorry? Have you cut up the credit cards? No. Okay. Do you have them near you no no not actually okay i want you to cut them up by by the time before you go to bed tonight you have to cut them up okay okay you're not going to get out of debt if you keep them around

right you have to decide where are we going to do this burn the boats we're staying staying we're staying we're not going anywhere we we going to do this? Burn the boats. We're staying. Staying. We're staying. We're not going anywhere. We're going to get out of debt. That would be really hard. Yeah.

Stop all your... Listen, here's what happens. The things you concentrate on, the things you focus on, are the things you win at. Mm-hmm. And when you focus... If you're willing to move to get out of debt, then be willing to cut up the credit cards to get out of debt, and be willing to temporarily stop your 401k to get out of debt, then be willing to cut up the credit cards to get out of debt and be willing to temporarily stop your 401K to get out of debt. Why? Because when you're out of debt, you have control of your largest wealth-building tool,

which is your income. You'll get out of debt faster, and you'll have a higher probability of getting out of debt when you just come completely. It's like, I don't care what anybody thinks. I don't care. I'm not doing anything else. This is all I'm doing. I'm getting out of it.

Complete laser focus light dispersed merely lights a room light that's focused is caused called a laser and it will cut metal or do surgery be the laser completely focused this is the Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-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.