The Ramsey Show - App - The Psychology of Cash vs. Plastic (Hour 1)

Episode Date: January 15, 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. This is your show. Thank you for joining us, open phones this hour, as we talk about your life and your money. It's a free call at 888-825-5225 that's 888-825-5225 sarah joins us to start off this hour in cleveland ohio welcome to the dave ramsey show sarah hello hi what's up So we have two leased cars and we pay way too much money, like $775 a month for the two of them. My original thought, of course, was to pay them off or sell them. But

since we have like 20 months left on them, I'm trying to decide, like, should we take our extra cash and pay the cars off early and then get rid of them?, should we take our extra cash and pay the cars off early and then get rid of them, or do we take that extra cash and we save it for when the leases are up so that we can actually purchase cars? Well, the idea would be, so you're not going to keep these at the end of the lease, is what you're saying. You're not going to have the money to pay them off at any point in the process. No.

Okay. No. them off at any point in the process okay so what you do is you find out what the uh what the buyout number is at the end of the lease yes so i did that how about did you find out the buyout now yes so we're upside down on both of these cars about six thousand dollars sure that's not the point okay so the point is that you're going to write it. If you sell the car today, did you found out what it's worth today and what it would take to pay it off today? Correct. Okay. What's in that difference of $6,000? Correct. Okay. 20 and is it $700 a month each? No, altogether. $775. Okay. What is, what is one of them? them one is 400 and one is 375 okay so 400 you know

basically we're comparing if you keep it for 20 months what it costs you and then you turn it in right or if you sell it today we know what it costs you if you sell it today it costs you six thousand dollars right right okay if you keep it 20 months, 400 times 20 would be $8,000. Right. And so, but you get the use of the car for $2,000 for 20 months. So, it's kind of on the bubble. I'd probably sell it. Okay.

Now, the other one is how much? It's $375? Mm-hmm. And 20 months left on that? Yes. And is it $6,000 other one is how much? It's $375,000 and 20 months left on that. Yes. And is it $6,000 in the whole, too? It's about $5,000. Okay.

So it's on the bubble, too. Same equation. $375,000 times 20 months is going to be more than $5,000, but not a lot more. It's probably going to be $7,000 or whatever. I haven't done it yet in my head or put it the calculator but you see what i'm doing so um i think the advantage to you is to be free of this mess and that might be worth a little bit of money uh for sure you're saving money the only question is by selling the mail the question is are you saving enough to justify the loss of the car for 20

months? And that's the part that's on the bubble. But you've got such a mess, you probably just need to dump both of them. I agree. Okay. So get rid of them. It's that simple. Get them sold. Borrow the $6,000, the $5,000. That's $11,000. And you've got to probably borrow a little bit more to get a little bit of, get you a couple of beaters to drive around while you clean this mess up. And the good news is that once you're done, you're done. It's over. You don't have to do this like 20 times. But if you'll drive like no one else later, you can drive like no one else.

We don't tell people to drive junk cars their entire life. We tell them to drive junk cars when they're broke. And then when you're not broke anymore, get you a better car. And then when you're a millionaire, if you want to get a new car, get a new car. But pay cash for it all along. Don't be driving stuff you can't afford. And by the way, the definition of driving something you can't afford, partly, is you didn't pay for it.

You have payments on it? By definition, you couldn't afford it. I got the money in the bank to pay it off, then pay it off. But 99% of the people say they have a payment, means they bought a car that they couldn't pay off doug is with us and i couldn't pay for couldn't afford doug is in tulsa oklahoma hi doug how are you hello dave i'm finishing financial peace university next week and i'm very grateful for your work uh thank you sir i'm calling about a 10-year-old debt. This is an auto repossession from 2008.

It's our last commercial debt. I owe about $3,000 on it. I don't contest its validity. However, it's 10 years old. I've been received some counsel by some friends who, I don't know if they know what they're talking about or not, but say I'm not legally or morally responsible to pay that debt to a debt agency that bought the debt. And no one I'd rather talk to than you. Okay. Well, there may be a statute of limitations

that is run in your state to where you're not technically legal, but I got to tell you, it's going to be a thorn in your side side and they're going to be a problem in your life until you clean this up morally they lost money on a car you promised to pay for that you didn't pay for so i disagree morally you do owe some money um now the question is what and what is reasonable and what is reasonable in your situation okay um number one have you talked to them? Yes. Okay. I've already paid $1,000. The original was $4,000. And you've already given them $1,000? You've already given them $1,000?

That's correct. When? Within the past 45 days. Okay. All right. So the account's active again now. Yes. And are you able to just write a check and pay the three no okay all right well i mean it is very reasonable to make them an offer and say i don't have three i have one and if you'll settle this three for another one we got a deal if you don't then i'm not giving you any money right now until i have some

more money okay and so to settle it for less than the full amount given that you don't have any money if they chose to accept that there's nothing wrong with that now if you call me up you say got a hundred thousand dollars in the bank and i owe four thousand dollars on this i'd say write a check you owe the money but when you don't have the money, there's nothing wrong with offering them a settlement for money you do have. Then if they take that, then that was their choice. So you've not ripped somebody off. They made a decision.

You know, I have a company that owes me $40,000 that has not paid me for 15 years. I will never see that $40,000. If they call me up out of the blue and offer me $4,000 for that 40, I would take it in a heartbeat because I just figure that's a bird in the hand and I am never even going to see this bush. I mean, seriously, you know, these people are never going to pay me. It's gone. And I'm not bitter about it or anything.

I just think about it every morning. But no, I'm kidding. But you see what I'm saying? So, you know, that would be on my part though if i said no you still owe the money you know because you owe me you know then you still owe the money morally you follow me so if you want to make them an offer and they don't take it that's fine i don't have three thousand dollars right now and i'm not sending you payments i'm gonna save up money and make you an offer and if you don't have $3,000 right now, and I'm not sending you payments. I'm going to save up money and make you an offer.

And if you don't take that, I'm going to make you another offer. And if you don't take that, someday, maybe I can pay you. But if you want the money right now, we can wrap up the account for $1,000. If you scrape together $1,000 and settle that. Get it in writing. Be sure you get whatever you do with this company on this hold of debt in writing so that when it's settled or when it's paid, it's gone forever. You don't want them coming back even if you pay the whole $4,000 and say later, oh, we forgot about the fees.

There's another $7,000 in fees. We forgot to tell you. No, you need in writing that this wraps up the account, concludes our business. This is The Dave Ramsey Show. You need in writing that this wraps up the account, concludes our business. This is the Dave Ramsey Show. Okay, I need you to listen to this. 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 search that you're doing online.

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Just search CyberGhost on iTunes or Google Play or go to CyberGhost.com. Thank you for joining us, America. Sarah is with us in Branson, Missouri. Hi, Sarah. How are you? Hi, Dave. Thank you for taking my call. Sure. What's up?

I feel like my budget is suffering because of this one piece of puzzle that I can't figure out. The envelope system. How do you manage doing the envelope system if you pay everything online? Like everything's auto-paying and you do a lot of online shopping and you don't carry cash on you. Mm-hmm. You don't go to a grocery store? I do, but I pay with my debit card. Okay. That's not online? Mm-hmm.

Okay. So the way the envelope system works is when you're physically in a store, you have an envelope that is marked for a category that has money in it that is in that category from your budget for instance food at the beginning of the month or at the beginning of your pay period one of the two you say in the grocery stores we're going to spend 200 bucks in the next two weeks on food 400 bucks in the next two weeks on food and you put four hundred dollars or whatever the number is in cash in an envelope and when you go to the grocery store you use the cash out of the envelope to do the purchase not your debit card that's how it works same thing for clothing in the clothing

store same thing for a better deal online though if you you are buying something online, it's difficult to use cash. Hello? You're going to use your debit card there. I'm talking about when you go to a store. But if you're going to buy, if you put $500 in your clothing budget and you spend $250 or you spend $300 online, then you would only put

$200 cash in your clothing envelope to physically go to the store with. Okay? So you've just got to decide. The thing is, when you are out and about making purchases, then you will spend more if you are using your debit card or a credit card particularly than if you use cash.

Tons of research says that. So the number one impulse location in the world is the grocery store. They are the best merchandisers of all retailers. They do an excellent job shelf positioning, color coordinations, store design. Everything is designed to cause you to walk past more things than you have to in order to have an opportunity to impulse. People impulse their butts off in grocery stores. Okay?

It's designed for that. And so you spend more there if you don't go in with a list, if you go in hungry, and if you don't go in with cash. Those are the three things that will help you with your grocery spending. But if you're buying something online, then you just reduce that category. So what you may want to do, for instance, if you're buying clothing online, okay, you may want to have an online clothing budget and a separate in-store clothing budget. Two different categories, online and in-store. The in-store goes in cash in an envelope.

The online does the other. Now, you need to realize, too, that when you're purchasing online, for instance, Amazon Prime, people impulse their butts off there too because they don't even think about what they're buying. They just click here and it's delivered to your door in a few hours, right? And that's called, in the Internet world, that's called friction. The harder it is to purchase something, if a website makes it difficult for you to purchase something,

that's higher friction and their sales go down and your impulsing goes down. Amazon prime is one of the lowest friction purchase points out there. So people spend their brains out on Amazon prime and they don't know what they don't cause. They don't watch what they're doing because it's very, very, very easy to purchase stuff quickly and easily and very convenient. It's a nice feature,

but it causes you to spend more. You have to be very, very careful because their job is to get your money, and they're better at their job than you are at yours. Do you suggest that at the end of the week I take out so much cash and then leave whatever I know I'm going to spend online in the bank account? Do it that way? Divide it? Yeah, that's what I just said.

You need a separate category in your budget for online purchases that stays in your account. And the other category is your in-store purchases comes out of your account in cash and into an envelope marked for that category, for instance, clothing or grocery store or entertainment. Sharon only carries about three categories now in envelopes. I think we've got four categories in envelopes total. We've got she does clothing and entertainment and grocery stores these days. That's the only three we personally use.

And then I have one called GEM, which is Gas Entertainment Miscellaneous, G-E-M. And that's in my front pocket. That's my envelope. It's my wallet. And so it's taking care of odds and ends that I'm going to do. But it's got my redneck emergency fund, which is three $100 bills. And in addition to that, my, um, my miscellaneous spending, which 90% of my gym goes to tipping these days when I'm going somewhere, cause I'm a, I love the tip. And so, um, valets are working hard in the sun and the rain, right? People waiting at table

are working hard. And so I, that's one of my favorite things to do now. So you just, you decide how you're going to spend it, but just keep in mind, if you can set systems in place, like the envelope system that cause you to handle cash, you're much more aware when you're spending, it creates emotional friction is what it's called. And it makes you have an ouchie moment when you're spending. And, um, makes you have an ouchie moment when you're spending and if you have an ouchie moment you spend less when you lay a hundred dollar bill on the table and uncle benjamin franklin is crying as he looks at you because he's leaving because you're putting him out for adoption with someone else you realize you spent money when you hand the plastic to to

them they hand it back to you. You ever thought of that? When you hand money out, it doesn't come back. When you hand plastic out, it comes back. So it's interesting. You hand money, you trade that piece of paper for an item. When you hand plastic, you give them the plastic, they give you the plastic back and the item. There was no trade. There's no visual trade.

See what's not activating in their psychology? If you traded, you know, if you were a kid and you traded a toy with another kid, we're going to trade you. You give them a toy, they give you a toy. There's a trade. There's a transaction going on. And that's what happens with physical paper money. There's a transaction you're

handing them money they keep it they hand you the item or the service and you get to keep that there was a trade but when you hand them plastic they give you the plastic back i understand that they're supposed to you don't want them to keep your card i got that okay but you need to realize what's happening psychologically there was no trade there was transaction. It's like you left with everything. You got to keep your plastic and you took their stuff. Wow, what a great trade. See how that works emotionally. It changes everything.

So and it's really, really bad online. And stuff like Apple Pay and PayPal, man, when you can just not even see a piece of plastic, now you just pull out your phone and wave your phone around and half of Home Depot lands in your pickup truck. Good Lord, you know, that's a problem. You got tools, you don't even know what they do, but you got them, baby. You know, I mean, you can impulse your butt off in there. And, you know, I'm not against Home Depot. I like Home Depot. I shop there. But the point is, you really can create a mess in these situations. So really good question, Sarah. And that's why we still use something as primitive as the envelope system for a few categories. And

it's all categories that happen when you're not at home. You're out in a store. You're on vacation. Take your vacation envelope, and you can break your vacation up into restaurant spending. You give the kids a certain amount to spend in the theme park, right? How many pairs of ears can you buy, you know? But not many if you don't have a lot of money. So there you go. It's a thing. So you just, again, a transaction needs to occur. You need to realize the easier it is to purchase, the less steps there are, the less you feel it emotionally, the more you're going to spend. We all do that. Anytime someone says, oh, we're a cashless property, just use your room key. Yeah, it's because you

spend more. That's why they do that on a cruise ship and so on. Think about it. This is the Dave Ramsey Show. We'll see you next time. Based on New Testament principles, Christian Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills.

To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. In the lobby of Ramsey Solutions, Sean and Paige are with us. Hey, guys, how are you? Great. How are you? Better than I deserve. Welcome, welcome.

Where do you two live? We're from Owensboro, Kentucky. Awesome. Love that town. Great town. We've done events up there. It's been a few years back, but there's a great little theater there. We did some events in it many, many years ago.

Good to have you all. So all the way down to Nashville, just a couple hours, actually, to do your debt-free scream. How much debt have you paid off? We paid off $87,000. All right. In 17 months. Good for you. And range of income during that time?

We started at about $105,000 and capped out at about $117,000. Way to go. What do you guys do for a living? I'm an accountant. And I'm a physical therapist. Very good. What great careers. Well done, you two. So how long have you been married? I don't know. 17 months? No, a little bit longer than that, about 20. 20 months? Yeah. Oh, okay. So this all started with getting married then. What kind of debt was the $87,000?

Student loans and car. Ah, most of it student loans. Of course. Okay, so I'm guessing you're probably not that far out of school then. How old are you? I'm 26. I'm 25. Yeah, there we go.

All right, so out of school, got the student loans, got the car, get married, game on. Tell me the story. How'd this happen? So what kind of happened was growing up, I knew your name, your household name. My parents went through your program. So I always knew that credit cards and loans were evil and I should never have them. So when Sean and I got together and sat down and had the talk, I told him I wanted to get out of debt. And he, of course, agreed because he wants to be in debt. But I don't think he realized that I wanted to get out of debt like tomorrow.

More like a five-year goal. More like a concept, not a thing we're doing tomorrow. Right, yeah. He agreed with everything I said at that point. So when we got home from our honeymoon, we sat down and did the budget for the first time. And I just remember feeling nauseous and sick to my stomach because I saw how much debt we had and we were 25 years old we were barely old enough to

rent a car so um from then on it was game on for me Sean took a little bit more convincing um I had he didn't know what he'd signed up for no no He was still kind of blinded by love a little bit. Yeah, exactly. So I knew that he needed some more convincing. So we actually had our in-laws give us Financial Peace University for Christmas. So I knew he couldn't reject a gift. So he went with me that first time. And afterwards, he was committed.

He saw how realistic this goal was and that i wasn't crazy and so from then on it was game on slashing budget picking up extra jobs and just doing anything we could to get out of debt as fast as possible now once you saw it your math brain kicked in sean i mean your brain works this way right i mean you're an accountant right so you this you this became second nature like in about 30 seconds once you got a hold of it with your brain. Right. Yeah. And especially once we started putting it down in the budget and learning everything out, you really see projecting 20 months is what we originally said. I think 22 months. Yeah. But then as we kept, you know, being a gazelle intensity, kept looking at it and working it. You know, we kept knocking it down closer and closer to 17 months.

But yeah, putting it into the budget really helped my mind. Kept looking at it and working it. You know, we kept knocking it down closer and closer to the 17 months. But, yeah, putting it into the budget really helped my mind. Yeah. We probably need to have these financial peace babies give a better disclaimer before they get married. Because you don't know what you're getting into. I mean, she was like, all of a sudden, all the stuff from her childhood just rose up. I love it. That is awesome. All right.

So who had the student loan debt and who had the car debt we both had student loan and sean had a car okay and he bought the car he actually bought it when i was out of town he was really smart about that so when we were dating he bought it when i was out of town okay all right that's fun well way to go you guys thank you i mean this is uh your your mom and dad have to be proud for sure. They are. In both cases. Yeah.

They're looking at you going, wow, this these guys are sharp because I mean, you hear all this news stories about people your age who are victims of their student loans. They can't get out. They're stuck. They can't have a life. And millennials are delaying their lives and they're delaying having kids and they're delaying buying houses and they're delaying everything else. And you didn't.

You just went and got out of debt. Yeah just like that i mean not hard at all yeah really really hard well tell me what was what did you do what do you tell people the key to getting out of debt is you go ahead getting on the same page is is the biggest thing and really making sure that your goals align and you agree what was it in financial peace university when you went in there that made it click for you, Sean? Because she's yapping at you, telling you all this stuff. And then you go into that class and you're like, okay, I get it. What was it that did that? Honestly, seeing how many other people were also attending the class

and had the same goals that we did, it made me feel like it wasn't really that crazy. It's not a complete cult. If it is, it's a large cult. Yeah, at this point, yeah. Okay, very cool. Well, congratulations. Thank you. Did you have people cheering you on or telling you you're crazy?

Mostly cheering people on. I really don't recall anyone thinking we were too crazy. And if they did, I didn't hear them. No naysayers. It's a lot of family backing you for sure. Oh, yeah. They're buying you the kit. They're buying you the class

and getting you in the membership for financial peace and everything. Well done, you guys. Very well done. Thanks for coming down and sharing that. That's so encouraging. A lot of young couples out there need to hear that it can be done.

And you just told them that with your life. Exactly. With the way you've lived. So very well done. Got a copy of Chris hogan's book for you number one bestseller retire inspired and that's the next chapter in your story for you to be millionaires and outrageously generous along the way and you will be yep you will be you are on track you're making really good money you got no payments how's that feel to have no payments amazing it's such a free feeling yeah i sleep really good at night there was months so 17 months i never slept really well and it's

once i was gone i slept so much more peacefully you know that's what financial peace is it's peace and it's true 87 000 that's a lot of peace to get around that's what works i like it and you do you can do this you know now you can do anything right that's right proving it to $87,000. That's a lot of peace to get rid of. That works. I like it. And you can do this. You know now you can do anything. Right. You've proven it to yourselves. Well done.

Sean and Paige, Owensboro, Kentucky, $87,000 paid off in 17 months, making 105 to 117 second-generation financial peaceers. Count it down. Let's hear a debt-free scream. One, two, one. hear a debt-free scream one two one we're debt-free well done you guys well done i'll tell you what you listen to this show you won't allow people in your presence anymore to run millennials down because i'm running into too many of them that are rock stars like those two man oh man oh man they got a great life ahead of them hey there's a whole bunch of xers and wires and baby boomers wish they had their act together like that at 25 years old they just

knocked it out man there's no victim there they got her done that's simple that's beautiful stuff kevin's on twitter he says dave what's your opinion on having a credit card for online purchases only i would pay it off immediately kevin just use your debit card son i don't own a credit card i'm scared to use my debit card. That's the playing. I disagree with Dave Ramsey. I don't want to worry about security issues with my debit card. Well, let me help you with that. Go to visa.com, go to the website for visa, the home office of visa look at it. Read their security briefing. They have a zero-risk policy for all credit card users and for all debit card users. It's the exact same protection in the event your card is used for fraud.

In other words, if someone uses your credit card number and it's fraudulent online, the charge does not count. In other words, if someone uses your debit card and it's fraudulent online or otherwise, the charge does not count. Now, the only downside is the money could come out of your account and it may take you a little while to get the bank to put the money back but 100 of fraudulent charges are covered on credit cards and on debit cards both Both. I buy things all the time online with my debit card. All the time. And I buy things checking into hotels with my debit card. All the time. Got the same protection you got.

I don't have a credit card. I wouldn't tell you to get a credit card under any circumstances. This is the Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven,

well, it's time to enjoy some money. And the perfect place to do that is on board our first ever live like no one else cruise in March. That's right. Just a couple of months away. But get this. It's not too late to book your cabin. So don't miss your chance. This Caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat.

Head over to RamseyCruise.com today to reserve your room. Larry is in Amarillo, Texas. Welcome to the Dave Ramsey Show, Larry. Thank you very much, Dave. Thank you for talking with me here. Sure. How can I help? Well, what I've got, where we're at is we lack about 100,000 paying off our house.

Everything is all paid for. I've been in the contracting business for nearly 45 years, and we've got all our business expenses paid. We put all our money towards this home that we are turning into a wedding venue. And I am getting within two months now of being 62. So I guess one of my questions is, is it better to take the Social Security benefits at 62 or should we wait until full benefits at 65 or 66, whatever that may be? Well, the way you can do the math is you can pull your benefits up and say, what would I get now at 62, and then what would I get at 67?

And you multiply the difference, the amount you're going to get today times five years, 60 months, and you would put that into an investment, say, and then you would use that investment to pay you that extra money that you would have gotten were you waiting until 67. When you do that math, you're going to find it comes out better to go ahead and take it early. Now, if you take it early and just consume it, lose the money, then you're, you know, eat the money or whatever,

then you're going to end up not coming out ahead long term. In your case, it sounds like you're trying to reduce the mortgage with the money, and that would be fine. You'll come out fine that way. And then the other questions are, you know, how are you going to eat going out there all the way out there? Have you got other money other than Social Security coming in that you can live on, so that this becomes just more of a mathematical discussion rather than a survival discussion. But if you've got the money to live on, then you're better off to take it early and invest it

or take it early and do something like pay down on the mortgage. Either one of those would be fine with me. So it sounds like that's where you are, and you're probably smart to go ahead and take it. Let's throw every dime we can get our hands on at this mortgage, get that stuff cleared up so that as you head into your retirement years up into your 70s and stuff, this thing's paid for and you've got the wedding venue working and creating income for you without any debt payments. Devin is in Seattle. Hi, Devin. Welcome to the Dave Ramsey Show.

Hi. Hi. How can I help? Well, so my wife and I, we are receiving a rather large sum of money this year. And it's like we want to buy a house, but our family and friends told us that that's what we should be doing. But the problem is, is that we live in a very expensive area and we really love where we are. The schools are great. We have a lot of friends here. Our church is great here. And if we were to want to buy a house, we'd have to move somewhere if we

wanted to buy a house this year. So we're wondering, are we insane to wait a couple of years and try and save more money so we can buy in the area that we currently live in? Because the rent here, we can afford that. But housing, actually buying, that's not something we can do right now. Okay. Yeah, no, that's not insane. It's your goal. It's your life.

It's where you want to live. It's not where your friends want to live. They can live wherever they want to live. Your family can live wherever they want to live. It's where you want to live. It's not where your friends want to live. They can live wherever they want to live. Your family can live wherever they want to live. This is where you want to live. And in order for you to buy there, you're not ready is what you're saying. Yeah, yeah. I mean, there's been a lot of talk about, like, the housing market.

Is it going to go up? Is it going to go down? And that was kind of the thing where we were a little struggling. Pretty sure the housing market's going to go up and the housing market's going to go down. Interest rates are going to go up and interest rates are going to go down. But I don't think it's going to ruin your life. Okay. You know, I mean, you're just not ready to buy a house, so you don't buy a house.

You don't run by a house out of fear of what might happen in the future. That doesn't make sense at all. So how much money are you receiving? About $460,000. Rowdy. Good for you. Very cool. And you're debt-free? Yeah. Good. And what's your household income?

About $200,000. Very good. And so what's the price range of the homes in your neighborhood that you want to live in? The neighborhood that we currently live in, if you want a four-bedroom, they range from $850,000 to $1.2. Okay. And if you put $400,000 down, you can't afford that on making $200,000? Well, property taxes here run about anywhere from $800 to $900 a month, and that's what messes it up. If the property taxes weren't so high, we could definitely afford here.

But we're trying to keep that within that, you know, 25% range. That's $10,000 a year. Uh-huh. That shouldn't mess up everything. I don't know. I mean, it sounds like you're pretty close, but if you put it on a 15-year fixed, you calculated it up, and it's more than 25% of your take-home pay.

Yeah, yeah, exactly. Like the maximum that we're at right now with what we have by the end of the year, we're looking at about $700,000 would be our maximum right now with about three. Well, because like that $460,000 is going to have a lot of taxes on it. Oh. So we're looking at putting about $350 down. Oh, okay. Because it's actual income.

Okay. So that's why this is. Okay, cool. So where did the money come from? What was the event? It's actually our company got acquired, and so it's stock and stuff like that from there. Wonderful. Okay.

Any more coming or any other? Yeah, the next two years we'll receive about another 300 000 oh well wait and do it then yeah you're right okay now that i'm getting a complete picture i completely see why you're tapping the brakes we're just going to sit here but i mean and so the market's not going to shoot up 300 grand in two years yeah that was our thought so It hasn't in the last two. Yeah. And so, I mean, Seattle's a good market.

It's a great market. And obviously you're in a nice neighborhood with those prices. But no, no, no, no, no. I'm going to do exactly what you're talking about. I think you totally got this figured out. And no, you're not crazy. I think you're being very wise. Good question.

Thank you for joining us. Open phones at 888-825-5225. This is your show. Phillip is in Orlando, Florida. Hi, Phillip. Welcome to the Dave Ramsey Show. Hey, Dave Ramsey. How you doing, sir?

Better than I deserve. What's up? All right. I have kind of a car problem basically um i still like um okay you're not speaking directly into your phone you're gonna have to do that i can't hear you okay i still owe like almost 15 000 on my car but i'm but i'm upside down on it so it's only worth like a private sale is probably like $10,000. Okay, so you're five in the hole.

I got you. Yeah. Okay. And what do you make a year? I make 15 hours, so probably close to 30 maybe. Mm-hmm. Okay. What do you do?

I'm a department manager at Walmart. Okay. Good for you. Okay. All right. Go ahead. I'm just trying to see what would be the best thing to do to get out of this car loan. well i mean it's it's a lot of car for your income um it's a lot of debt for your income the car itself probably not that far out of line we don't want to own a the total of your vehicles things with wheels and motors and there'll be more than half your annual income because of that so uh can you pick up more hours or pick take a side hustle and get your income up yeah i'm pretty sure i can i can get me a second job okay all right yeah i mean um ubering delivering pizzas something like that i mean you start making another 1500 a month you can pay this

car off in what less than a year though all of that right you know 1500 a month 10 months you'd be done right right just pay the whole thing off and keep it unless you just hate the car. And otherwise, you pay it down and sell it if you don't like it. But let's get it where it's right side up. But, yeah, I think another $1,500 a month and live on your $30,000, live on your $15 an hour deal. And pick up some PT and just attack the thing with that. Some part-time work, some overtime, something along those lines. I think that'll be a great way for you to do this.

So, hey, really good question. Good job, man. You're thinking. You're focusing on it. Very well done. You're going to win. That puts us out of the Dave Ramsey Show and the books. Our thanks to James Childs, our producer,

and Kelly Daniels, our associate producer and phone screener. I'm Dave Ramsey, your host, and we'll be back. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.