The Ramsey Show - App - The Worst Possible Kind of Debt (Hour 1)

Episode Date: July 4, 2018

The show about you

Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. 888-825-5225. Starting off this hour is Elizabeth in Orlando.

Hi, Elizabeth. How are you? Hi, Dave. I'm great. How are you? Better than I deserve. What's up in your world? Okay.

Well, first of all um thank you for taking my call um my fiance and i have been followers of you for a year and a half we've gone through financial peace university and um you're on a first name basis in our household good thank you with that said um i'm in a bit of a shock right now, one because I'm talking to you and the other one because of what I just found out. So we've been on this plan together, but separately, obviously, because we're not married yet. In that time, we have a nine-month-old daughter. It wasn't necessarily planned, and I know you would say we should have been married a long time ago, but I wanted to basically, we just wanted to wait.

So we're set to get married in October, very small budget, $4,500. We knew he had some back taxes from a job years ago, and he had some money set aside. But when he finally got that taken care of, he could just, you know, pay it off. Well, I told him our wedding's coming up and I want to make sure this is done with a clean slate. So even if we owe more than we think, you know, I want everything out in the open before we get married. So he met with him today and basically the best case scenario would be about $25,000 to $35,000. So this is huge for us.

Wait a minute. Whoa, whoa, whoa. I'm sorry. The best-case scenario, he hasn't filed his taxes. No, he just went and talked with his tax guy. Now, he's caught up like he filed last year. So he doesn't have back taxes. He hasn't filed his tax return.

Right, yeah. For what year? He didn't file. It was a four-year period um the last time so he's filed the last two years but before that for like four years he did not file okay and what did the tax advisor say um he said he needs to because has a paperwork, but he needs to figure out like the precise mileage logs. Cause he had the fuel, fuel logs and everything like that. But his tax person said, you know, for itemizing, he really needs more like precise, um, uh, mileage logs versus fuel logs. So he said, you know, basically he needs to get that paperwork together

and we need to file and so for four years it would be about $8,500 a year that he owed that was a guess because we don't have the information yet I know I know

and can I just tell you, he's a wonderful man. This is something, obviously, since we've met, like, things have changed financially. We both got, I got on this path, and literally a couple months later, he's like, you know what, I'm going to join you. And so we've learned together. He's sold the Mustang. Like, we're on this path, and this is something that is just, like, a complete disregard. It's something that he put off in his mind and forgot about it. So what's your question? I guess my question is, I feel like I know what you're going to say, but do we, okay,

so we have about $17,000 saved up together for, you know, to be ready to go when we get married. Pretty much our three-month emergency fund, we've been putting money together. So do we start over? Do we go down to our $1,000? Sure. I mean, I know what the baby steps are. Sure.

But I'm scared because now we're starting over plus even worse. Sure. Yeah. You don't have a choice. You have to get rid of the IRS. It's the worst possible kind of debt to have. They're all powerful and they're very expensive. Okay.

So, A, you need to get this filing done within three weeks. Okay. This is an emergency. I know. weeks okay this is an emergency i'm not paying taxes is not a criminal charge not filing check taxes is a criminal charge i know i've heard you say it and i cannot believe the tax advisor did not light your fiancee up and say get this stuff done yesterday. Yesterday. Get it filed. Even if you can't pay it all, get it filed. And then pay the years that you can pay out of the 17, getting back down to 1,000.

And then let's get in attack mode and knock the rest of it out. So, I mean, let's pretend it's 24 and you pay out 17. You got $7,000 in debt. That's not the end of the world. You can get there. there you knew you had this you just didn't know how much it was what do you think four years was going to be four thousand dollars i have no idea yeah he thought it was because he did one year he did one of them i guess i don't know and it was like eight hundred dollars so either that tax guy did something i don't know and it was like eight hundred dollars so either that tax guy did something i don't know like this is something go to yeah go to dave ramsey.com and click on elp for

tax advisor for one of our endorsed local providers they'll sit down with you but the main thing is to get filed and properly as soon as possible the second thing So you know what you're dealing with then. Then you're going to have penalties and taxes, or penalties and interest on top of the taxes that are owed over that four-year period of time up until now. You're going to take the $17,000, and your tax advisor is probably going to tell you to pay off the oldest year first, the furthest back first, because that will limit the damage to interest you to pay off the oldest year first, the furthest back first, because that'll

limit the damage to interest and to penalties. I'm thinking they'll go oldest to newest. I don't know that it matters. But get some professional tax advice and get this done. Quantify exactly how much it is. It's still a question mark. And then let's get it paid. Yeah, you got to clean these guys up they're not going away

this is not going to get anything but worse quickly and you don't want this hovering around with a nine month old that's daddy may go to jail because we don't do a filing you've got to do the filing and you get it done yesterday if you go to them very seldom do they press criminal but if they come find you for failure to file that's you know 2,500 people last year went to jail it's not it's not a game this is a federal law so um you need to get this done and get it you know get it quantified so you know what it is and yeah you're going to spend your 17 grand likely and then some likely i don't doubt that a bit but you got to find out exactly what you're dealing with right now you're going to spend your $17,000 likely, and then some likely. I don't doubt that a bit. But you've got to find out exactly what you're dealing with.

Right now you're just dealing with a concept, and you're panicking. All right, let's go to Paul in Myrtle Beach, South Carolina. Hey, Paul, how are you? Very good. Thank you very much for taking my call, Dave. Sure, what's up? My family has a beach house by the ocean, and we've been buying flood insurance every year. You need it.

And it's coming up for renewal, and so we can only purchase $250,000 of the flood insurance, and it's very expensive. It's $6,500 a year. And every year I say, should I not buy it this year? Listen, if a hurricane hits, it does not cover flood. You would think it would. You would think it would. You would think it would. But the people in Katrina learned the hard way all along the coast of Mississippi and New Orleans and Louisiana

that Katrina State Farm broke a bunch of people. And they were actually taken to federal court and they won, saying that they didn't pay for the flood that was brought on by the hurricane. But they pay for the hurricane, which is inconsistent in my mind. But you need flood insurance, dude. You desperately need flood insurance. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life.

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How are you? Hi, Dave. I'm great. Thanks for taking my call. Sure. What's up? I'm kind of looking for some motivation. My husband and I did a plan and got debt-free except for the mortgage.

And his friend did the opposite and bought a very big house, didn't pay off his debt, and now has a big mortgage, but the house is appreciated. And he said to me that basically he did what hedge funds do. And so they now have, according to him, like $750,000 in equity in their house just from the market appreciating. And I'm kind of looking to see what your thoughts are on that. I'm wondering, did my husband and I do the wrong thing? Should we have bought a big house and then sold it and made some money that way

instead of paying off the medical school loans? Do you know what a hedge fund is? Sort of. Not really. Okay. It's an ultra-high-risk play for wealthy people. So the statement that he borrowed money on his home up to his eyeballs in order to make money on his home leveraged into it is an ultra high risk play that uh only really rich people might do or be able to survive if they did it. So his statement is absolutely ridiculous.

It's moronic. You wouldn't ever model personal finance after a hedge fund and call that intelligent. That's moronic. You follow me? Because of the risk of him being unemployed? No. A hedge fund is an ultra-high-risk play. They invest in ultra-high-risk things.

It's like playing dice in Vegas, okay, in the investment market. That's what it's for. And it is not something that the consumer would ever invest in and so for him to compare himself to a hedge fund strategy is moronic do you follow me i do it's kind of like him saying okay me buying this house is is like the world-class gambler playing poker in vegas okay that's kind of dumb know, to compare yourself to that, number one. So is he winning? Yeah, you can win borrowing money in the short term, but borrowing money always increases

risk, and the more money you borrow, the more risk you have. Would you agree? Definitely. And so he has taken on a lot more risk than you have. And when the market turns or when life turns on you, not having any payments is a whole different place to be than being leveraged to your eyeballs. People like this guy, they shoot straight up, and when they crash, they crash hard. Okay. So when he loses his income, and he will, when there's something that happens in his life,

and something will because it does in all of our lives. We all have bumps in the road. Then this is going to, you know, it's going to reveal the stupidity of his strategy, the fact that he's completely ignored risk in his strategy. Okay. You follow me? I do. I feel better.

An example of that. When I was talking to him last weekend, I felt terrible. It's like we've done the wrong thing. No he's the idiot not you um okay so i mean warren buffett says it this way you know warren buffett is oh yeah okay warren buffett does not believe in leverage he says so in his annual report and the way he says it, he says that you can tell who is skinny dipping when the tide goes out. Does that make sense? That's funny. Yeah, that's a great metaphor, a great visual for, you know, the risk is exposed,

the stupidity is exposed when hard times hit. So being debt-free in good times causes you to not have your cash tied up, meaning you don't have any monthly payments. So your most powerful wealth-building tool, which is your income, can be used to build wealth in good times. In bad times, what being debt-free does is it gives you the power to stay and not lose everything. I'll give you another example. I own a ton of real estate. I own tens of millions of dollars more real estate than the guy we're discussing.

Okay? All of it's 100% paid for. The building that I'm sitting in is worth almost $20 million, and it's paid for. Okay? Just as an example. All right? Now, when the market turned down,

you remember when real estate went in the hole, what, three years ago, right? Well, it's longer than that now. What, 2008, right? Right. And everybody was jumping off of buildings and the world was coming to an end and real estate people were going bankrupt

left and right, all over the place. All these brilliant people that borrowed money. You know how much of my real estate I lost? You know how much money I lost during that time? Zero. You know how much money I made? Tens of millions of dollars. You know why?

Because I had cash laying around, and I bought more real estate while it was cheap. I bought a property for a million and a half that I sold two weeks ago for $4 million during that downturn. All because I was debt-free. Okay? Now, I'm not bragging on me. I'm saying the concept plays through in good times and in bad times. And I'm giving you an example that makes your friend look like small potatoes because he is. Right.

Okay? I hear you. I'm trying to encourage you with this, not brag hope you hear the difference and so yeah so you're going you know here here's the thing that those guys can they're it always looks fun and sexy in the short term when you ignore risk but but when you ignore risk and you get old you have scars so you guys are right on track carol carl you're doing the right stuff and um i feel sorry for this guy because he's his risk meter is broken and you're going as his friend you're going to have to stand back and watch him hit the wall when he hits the wall it's going to destroy everything and he's going to have you can be there and pray with him

and hurt with him when he picks up the pieces, and hopefully you'll learn his lesson. But I've been around guys like that my whole life. As a matter of fact, I was that guy. That's how I went broke in my 20s. And that's how I learned all of this the hard way. I was that guy on steroids. I mean, I had $4 million worth of real estate, and I had $3 million worth of debt.

And I was convinced that I was a millionaire because I'd borrowed my way into it. And you know what that I was a millionaire because I'd borrowed my way into it. And you know what? I was a millionaire because I'd borrowed my way into it. I was exactly right. But I'd also built a house of cards. And so as soon as the banking climate changed and the economy changed, it brought me to my knees. We lost everything because of leverage

and because of the debt. Well, Dave, you're just scarred. Yep. What that means is I learned my lesson. I'm not stupid. I don't have to learn it over and over again. I learned it the first time. It was painful enough.

It was a thorough teacher. Great discussion. Thank you for calling me with that. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Callie is with us in Fort Lauderdale. Hi, Callie.

How are you? Hi, Dave. It's such an honor to talk to you. You too is with us in Fort Lauderdale. Hi, Callie. How are you? Hi, Dave. It's such an honor to talk to you. You too. What's up in your world? Okay, I have a question. We're on baby step number two, and we owe about $40,000, and $33,000 of that is a big truck that we have.

And we had horses and everything, and we really don't need it anymore what is your household income 110 000 a year okay but you don't want the truck or you don't think the truck's something that fits in your life well we had we used to have a big horse trailer we sold it so i don't really need it anymore okay so you're going to sell it i I want to, but my problem is that I owe what it's about worth, so like within $1,000. Okay. But my husband is a little hesitant because he doesn't want to go buy a $3,000 car and worry about us breaking down and stuff. So would it be really dumb if we took out like a $5,000 to $7,000 loan and got something a little more reliable? Well, that would be, here's the thing.

You're not going to be driving whatever we're talking about with your income very long. Okay. Let's say you sold the truck and bought a $3,000 car. Okay. You make $100,000. How long are you going to drive that? You're going to save up some money and buy a $10,000 car pretty quick, aren't you? Yeah, yeah. I mean, how long would it take you to do that? A're going to save up some money and buy a $10,000 car pretty quick, aren't you? Yeah, yeah.

I mean, how long would it take you to do that? A couple months? Three months? Yeah, probably. We're talking about three months driving this $3,000 car, not driving it for 10 years. Okay. That changes the equation for me. Because your income's big enough, you can solve this problem real quick.

So I would make it a two-step procedure, personally. I'd get rid of the truck, get your $3,000 car, pay cash for it, save up after you get debt-free, which will be there soon, and then about six months from now, buy you a $13,000 car you pay cash for. That's what I would do. 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? Based on New Testament principles, Christian Health 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.

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sponsor of Dave Ramsey Live Events Jason and Shannon are with us. Hey, guys, how are you? We're doing great, Dave. Welcome. Where are you from? We're from South Carolina. Pretty close to Augusta, Georgia, Aiken, South Carolina. Gotcha.

Okay, cool. Welcome to Nashville. And, Sean, you're here to do your debt-free screen. We are. How much have you paid off? $203,747. I love it. How long did that take?

Took us 11 years and 7 months. Okay. All right. And your range of income during that decade? We started out around $75,000 combined up to around $110,000 and then down now about $65,000. Okay. What do you guys do for a living? I am a graphic artist.

I'm a writer and a photographer. Oh, very cool. Good, good. Excellent. So what kind of debt is this? Is this your house? It is our house. You paid off your house?

We paid off our house. 100%. Everything's gone. It's gone. No debt of any kind. We booted it out. I am looking at weird people. I love it.

Congratulations. Yeah, thank you. Very well done. Very well done. Man, you guys are awesome. All right. So not only the house, but about 12 years ago, I went through a divorce. Left me about $65,000 in debt.

Found your book, read it over a weekend, and plowed through that debt in about two years. Wow. Very cool. A few years later, I bought a house, and ended up meeting this beautiful lady here. And we got married, and we started plowing that house down. Okay. Went ahead and knocked it out, too.

Excellent. Wow. How old are you two? I'm 41. I'm 35. And you have a paid-for house. And we have a paid out, too. Excellent. Wow. How old are you two? I'm 41. I'm 35. And you have a paid-for house. And we have a paid-for house. I love it. What's this house worth? A little over $100,000.

Wow. Excellent. Congratulations. Thank you. How does it feel to not have a payment in the world? Oh, it's awesome. You just can't describe it to people that aren't there yet. It's just an amazing feeling. It's just the freedom that comes with it. We know it's ours now. It's great. Yeah, excellent. Congratulations, you guys.

So what do you tell people the secret to getting out of debt is when they hear that you don't have any payments, even a house payment? Oh, go ahead. To me, the secret is that we focus on what's right for our family. We don't try to keep up with what other people have. We don't try to impress other people with stuff. We love to get amazing deals and pay cash for everything, whether it's our van or vacations, everything we pay cash for.

And we're very proud to be the cheapest people that we know. I love it. Well, congratulations. Thank you. So what do you tell people the key is, Jason? You know, you've got to have a plan. Put your big boy pants on. Be a man.

Grow up. Get a plan and stick to it. You've got to be willing to work hard. And it really helps a lot to have a, if you're married, to have a spouse who's got the same vision and goals as you do. Amen. It sure does. Very cool. So you did all of this off the Total Money Makeover book? Originally off the book. That's where I got out of the $65,000 early on. And we used those principles to start paying down the house. About two years ago, we started getting serious about having a baby. And so we knew that if we did have a baby, I wanted to be able to stay home with the baby.

That's the drop in income. Yeah. Okay. Right. So we got serious, started getting a little more intense about paying the house down so we could have that out of the way. We wanted Shannon to stay home with the baby. FPU course opened up at our church.

Oh, about that time. Okay. Yeah. So you're going for a refresher kind of. Yeah. Well, we had never taken it and I'd always wanted a reason to. So now we, you know, the house was our reason to get intense about it. Yeah.

And we took the course, and it was awesome because it really, you know, we shared a lot of the same ideas and dreams before, but this really helped us come together and get on the same page with that. Gives you a shared language, too, in your house. Exactly. Exactly. It took Dave from being a cuss word in the house to, you know, to she was on board with it. I love it.

Well, congratulations, you two. Thank you. Very well done. Very proud of you. So did you have people telling you it couldn't be done as you were going along, people that were detractors? You know, I don't remember that, but I do remember having a lot of, you know, people that were actually proud for us or happy for us that we were attempting to do it. But it seemed a lot of, well, that's great for you guys. I don't think we could ever do that.

But we're excited for you. Yeah, we hope you can, but we don't believe it's good. Right. We don't believe it's possible. I don't think a lot of people made fun of us or detracted, but it was just more of, you don't go out to eat. You're missing out on this. You're not going to go on this vacation. But we really had to keep our eye on the prize.

And now we're living the dream of being debt-free, and I get to stay home and raise our baby. And that's something that we wouldn't have been able to do. I'm not trading that for going out to eat. No, not at all. It's a good trade. You made a good trade. Absolutely.

And I do want to say, after taking FPU, we had really saved up money to help pay this house off, I was a little trigger shy about paying the house off. And once mom and baby came home and everybody was safe, I called up one of your smart investor pros. Being the cheap guy, I don't like the idea of paying anybody to help me out. So I went ahead, called them up, met a great guy over in Augusta, Georgia, and one of your smart investors. And after looking over our financial, they were like, why don't you pay your house off?

I don't know. I guess I'm just a little scared to do it. Go for it. And we did. Cool, that last little push. That last little push, and I don't regret it at all. Good. Very cool.

Well, if you do, you can always go get a mortgage. Or not. Not likely to happen, I'm not thinking, but yeah. Not at all. Well, good job, you guys. Very, very well done. We got a copy of Chris Hogan's book, Retire Inspired. Oh, and baby's with you.

There we go. Okay. And your child's baby's name's what? Heath. Heath. Heath. Heath. All right, big man.

Here we go. All right. Chris Hogan's book is here for you, Retire Inspired. That's the next chapter for you to be millionaires and outrageously generous along the way. Jason and Shannon and Heath, Columbia, South Carolina, $204,000 paid off over 11 1⁄2 years. That includes house and everything, making $75,000 to $110,000. Now back to $65 to 65 moms at home. Count it down.

Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! Love it. Well done, you guys. That is fabulous. That's exactly how you do it.

All right, Kyle is with us in St. Augustine, Florida. Hey, Kyle, how are you? Doing great, Dave. How about yourself? Better than I deserve. What's up? Well, I tell you what, I just stumbled across your radio show on Monday of this week. I'm a sales rep, and I travel around and just listen to the radio.

And I tell you what, I have listened to every single day this week, and then even to past radio archives that you've had. Thank you. I sat down and talked with my fiancée the other night, and since then we have downloaded the EveryDollar app. Wow. We have went over our budget for the first time of dating for, well, we've been together for about four and a half years now. Uh-huh.

Getting married this January. Congratulations. And we decided that it's really time to sit down and get a plan. Awesome. Cool. Yeah. And we decided that it's really time to sit down and get a plan. Awesome. Cool. Yeah. So we are currently renting right now down here in Florida. You know, we've got about another 11 months on our rental and, you know, trying to think about buying after this rental agreement's up. However, we have about $110,000 in debt between student loans, cars,

and just a little bit in credit cards, not very much at all. We actually cut them all up last night. Wow. As we were sitting down talking about everything. Wow, you guys are on fire. Yeah, we're all in, to be honest with you. From everything I've heard and hearing stories like, you know, past people doing the debt-free stream and everything like that, that's where we want to be.

And, you know, after taxes, we bring in about $104,500 a year. Well, you've got a good income. Let's do this, Kyle. I want to hear the rest of your question. We'll put you on hold through the break, and we'll come back and get to the details and see if we can help you. This is the Dave Ramsey Show. For years, I refused to endorse any company that claimed to get people out of timeshares. I told my listeners it's a horrible product and that, unfortunately, they didn't have a lot of options.

Then a few years ago, I sat down with Brandon Reed, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry, and I learned that you can't sell them, and you can't even give them away and then we talked about timeshare exit teams process every ownership situation is different which is why they have more solutions than any other company and that's when they earned my respect don't call any of the imposters out there and there's a lot the only timeshare exit company i stand behind is Timeshare Exit Team. They have exited thousands from their timeshare burden this year alone. Yes, you will write them a check, but they stand behind their guarantee. They will get you out or they'll give you a full refund.

Call 844-999-EXIT online at timeshareexitteam.com. All right, we're talking with Kyle in St. Augustine, Florida. I just started listening and has gone in, jumped in the deep end of the pool, man. Cut up the credit cards, got the fiancee on board, got $104,000 income, over about $110,000 in debt. They want to buy a house, they're getting married, lots of stuff going on. Is that a fair summary of what you told me so far, sir? Yes, sir, you got it.

Cool, all right. And so what's so far, sir? Yes, sir. You got it. Cool. All right. And so what's your question, sir? Well, basically, I was in the Air Force for about five and a half years, and so I qualified for the VA loan where you don't have to have any money down to purchase a house. However, as I've been listening to your show and the questions that you answer, I was talking to my fiancée last night, whether it would be smart to just rent for another year, get out from as much debt as we can. No, you need to get out of debt.

Listen, I recommend you buy a house. I want you to get a house. I want you to have a home. I want you to set up, get married, do all the stuff you're doing. That's all awesome. But here's the problem. If you buy a house while you still have debt, you're asking for problems. Murphy will move in your spare bedroom, bring his three cousins, broke, desperate, and stupid with him, and you're going to have a problem.

So what we recommend is you get out of debt, build your emergency fund, then build your down payment. I appreciate your service a lot to our country. Thank you, sir. The VA does not because the VA loan is more expensive than a conventional loan okay it's the most between fha fannie mae or va va of those three is the most expensive it's a higher interest rate higher fees higher everything and so i just don't recommend the va the only reason people use it's because they're broke don't have any money to put down it's the only reason people use a va because when you broke and don't have any money to put down. It's the only reason people use a VA. Because when you compare them, they don't

flesh out. So you were on the right track. I would take another year of renting, and you've got about 18 months to clear up that $110,000. You're going to have to go all in and be scorched earth on the lifestyle. It sounds like you guys are doing the right kind of stuff, though. You're already excited. You're believing you can do it. And that's all the stuff that you need to do. I want you to go to Financial Peace University as pre-marriage counseling, and I'm going to pay for it, our nine-week class. If I give it to you for free, will the two of you attend together?

Oh, hands down, sir, hands down. Absolutely. The only request I have is that you make every class, you don't waste it, and someday when you're rich and doing really well, you find some engaged couple and you give it to them and pay it forward. That's all we ask. So you hold on. Zach will pick up.

I would delay the home purchase until you get this cleared, but you're going to get it cleared really fast, and I'm going to show you how, Kyle. So hold on. Zach will get you signed up for the class, and we'd love to have you guys. And call us back when you get out of debt and do your debt-free scream, man. We'd love to have you do that. See, there's a high correlation between the debt-free screams and the people that go through Financial Peace University.

Have you noticed that? See, these are not broke people that are going through Financial Peace University. They're people that just want to get out of debt completely so that they can build wealth, so they can change their family tree and increase their generosity. That's the deal. And it enables you to do that when you get control. You learn how to invest. You learn how to handle money. You learn how to get on a budget. You learn how to work together. And it changes everything. Financial Peace University is the plan. The average family going through it pays off $5,300 in debt and saves $2,700 in the first 90 days, an $8,000 change in position.

That's the average, which means some people do less and some people do more. But that's a lot. It'll change your future. And the reason is not the content. I'm a great speaker and a great teacher, world class as a matter of fact. But that won't change your life. The weird thing is that being in the class or something about sitting with other people who are doing the same kind of stuff that are encouraging you, that changes everything. It's almost like a kind boot camp for money.

It makes you do it in a good way, you know, and you get the knowledge and you want to do it. It's not that painful, but because you're making the decisions, you're the grown-ups. You know, that's what you do. You want to check out Financial Peace University, check it out at DaveRamsey.com. There's 10,000

classes operating. Almost 5 million people have been through it. It's been going a long time and uh you can just check it out again davramsey.com or call 888-22-PIECE 888-227-3223 greg is in idaho falls hi greg how are you good how are you doing better than i deserve what's up so just have a question for you. I started listening to your show a couple months back. Started hearing a lot of things you're saying, and they seem to make sense.

We have been, my wife and I have been fairly, the last 13 years of our marriage, have been fairly good on our finances, at least we thought we have been. We've been trying to stay out of debt and not make dumb purchases,'t really bought any toys you know atvs anything like that um so where right now we're at a point where besides our house we owe about fourteen thousand dollars on our last car um last year though we kind of made a little bit of an impulse buy and we went and bought a ski boat we got the boat paid off in about nine months and started doubling up our payments on that car again problem is i just finished your total money makeover yesterday and i keep hearing about these people that are gazelle ready

and are gazelle gazelle intensity about doing stuff how they're selling both the stuff and i'm just curious what your opinion is we've we've this boat. It's paid off. I expect to have my car paid off by next spring. What's the balance on the car? It's $14,000. You told me that. I'm sorry. And what is the boat worth? We bought it for $12,000.

The book value says it's $17,000. Okay. And what is your household income? I make $, and my wife, she's a stay-at-home mom who's also self-employed, and she pulls in around 15 to 20,000. I guess in my mind, I think that on paper, it makes sense to sell the boat, but I've got four kids, 10 to 2, and we keep justifying it, saying the memories will build with them and stuff, and I'm just curious how you view this. Well, I'm a boat guy.

I'll leave here in a few minutes and go to my lake house for the weekend. There's two Mastercrafts sitting on the dock, dude, so you've got a sympathetic ear, right? Yeah, that's what I bought was a Mastercraft. I've been wearing my kids out pulling tubes and wakeboards and surfing and everything for decades. It's gone on forever. Now we started the grandkids. So I'm with you on all that part. You can't use that to make unwise financial decisions, but let's just think through the math here.

Okay? That's your only debt is $14,000. Besides the house, yep. Okay. Then what I'm going to say, if I'm in your shoes, we really value what this boat does in our family. Okay? We value it so much that we're not going on vacation. We're not going out to eat. We're going to cut other areas with gazelle intensity very deeply so that we pay this car off very, very, very fast.

Next spring is unacceptable. You need to dial that up, like Christmas. Like you take an extra job in order to keep the boat, or you sell a bunch of stuff on eBay or Craigslist, or you have a garage sale or six. I mean, you start thinking that way what are we what are we willing to give up time money other things cutting in lifestyle because it's unwise to keep a car payment with that boat sitting in the driveway for very long so what if we're going to fight how hard are we willing to fight for this boat and if it's me

if it's me i gotta tell you i'm gonna do a lot of stuff to fight for this boat? And if it's me, if it's me, I've got to tell you, I'm going to do a lot of stuff to fight for that boat. Now, if you gave me these numbers and it was going to take you three years to get out of debt or keep the boat, I'm sorry, the boat would be gone. But we're not talking three years. We're talking about the difference in

you kind of have a nine or a ten month plan. I'm saying we need to dial that up and let's make it a six- or a seven-month plan and let's cut deeply in other areas to say to the family, hey, you know, we're going to bust it so that we keep the boat because we value the boat. That's what I would do. Okay. If you're not willing to do that, then you should sell the boat.

Sure. Does that make sense? Yeah, perfect sense. Okay. Like, you don't need to see the inside of a restaurant between now and the time this car's paid off unless you're working there. Okay. That's what I'm talking about.

That kind of thing. You following me? Yeah. Yeah. Yeah, for sure. Hey, that's what I would do. But, you know, you got the same boat sitting in your driveway sitting in my lake house. Or same brand, anyway.

I don't know what the years are. I guess mine's probably a little bit newer than that based on the value. But, anyway, you know, great boat. And that's, you know, how much are you willing to do it? And can you do it in a short period of time? And that's where the gazelle intensity transfer is in this conversation, Greg. Good question. And that puts this hour of the Dave Ram that's where the gazelle intensity transfer is in this conversation, Greg. Good question. That puts this hour of the Dave Ramsey Show in the books.

Thanks to James Childs, our producer, Blake Thompson's our senior executive producer, Zach Bennett is filling in for Kelly Daniel on the phones. This is the Dave Ramsey Show. Hey guys, this is Blake Thompson, chief production officer for the Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live. Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern.

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