The Ramsey Show - App - There Is Power in Being Proactive (Hour 3)

Episode Date: November 1, 2019

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Music Music 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 a paid off home mortgage has taken the place of the BMW as the status symbol of choice. Thank you for joining us, America. We're so glad you are here. Open phones at 888-825-5225. That's 888-825-5225. Jonathan is with us in Texas.

Hey, Jonathan, welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thank you for having me on. Sure. What's up? So I had a quick question. I'm trying to follow the order of the snowball effect with a catch. One of my student loans that I had,

I had a moment where I had to get out of that student loan in a really quick manner. So I panicked and I actually pulled out a hardship 401k loan from my investments to take care of that student loan. It was just a little bit of family drama that had to, you know, require that to happen. So now I have three student loans and one hardship loan. It's my, this hardship loan, obviously I didn't do this before, um, listening to your program. So knowing what I know now, I probably would have done it. I would have done things differently. Um, so I'm trying, I'm considering actually about attacking this specific loan, uh, first, even though it's not my smallest debt just because it's it's, so I think after hearing your program, I was just worried about the risk regarding, you know, my employment along with just like how that's just

tied to my investment. So I was just wondering if A, I should attack that first was the first question. No, I would just, I would list, I would work on smallest to largest. How much debt have you got total? Roughly $40,000. Okay. And how much of that is this hardship loan? About 25%. So that's about $10,000. $11,000. $11,000.

Roughly. Okay. And is it all the whole $40,000 of student loans? The remaining, yes. But the interesting thing about this hardship loan is that I can't throw any additional money into it. I know. So let's just – oh, okay, I didn't know that. 401K loans are always that way.

That's the reason why you're where I'm at. 401K loans are all that way. And so what you have to do is when you get to that one on the debt snowball, you have to just pile up cash until you have the balance and then pay it off in one lump. You can pay it in one lump sum. Right. But you can't systematically add extra to it.

They won't allow that. You either pay the regular payment or you just pay it off. Those are your two options. So you have to save up and pay it off. So you have $10,000 on it, and how many loans are in front of it on the debt snowball then? So there's two loans in front of it and they amount to what uh seventeen thousand uh eight thousand on one and then nine thousand on the other i'm sorry okay so it's eight nine ten

yeah eight nine ten and then um about 14 Okay. And your income is what? $80,000 a year. Okay. So how quickly will you pay this $40,000 off making $80,000? Depending on a couple of bonuses that my company usually pays, I would say anywhere between $17,000 to $24,000 a month. I think it's just dependent on a couple of things. I actually just became a father for the first time. Oh, congratulations. say anywhere between uh 17 to 24 months i think it's just dependent on a couple things i actually just became a um a father for the first time so congratulations a couple of uh complexities yeah

that's kind of reason why yeah you got other stuff going on that's good so so does your wife work outside the home uh no uh not at this point okay but we are considering about her you know going back to the workplace that's okay not not requiring it i'm just saying okay so you got enough going on that you're thinking it's probably 18 it's not 24 it's 12 to 18 is what it should be to pay off 40 make an 80 uh you just got a lot of other stuff going on you got a lot of ticky tacky stuff with a new baby and odds and ends that are little budget dingers little mosquitoes flying around the budget that are eating on it but um and that's normal that's okay so yeah the point is you're going to be free very soon either way so if you flip it and paid it first you're you know they're almost equal it's eight nine ten

right and so if you flip it and pay it first it's not that big a deal uh because they're very very close if you want to do that, that's fine. I'm not going to be mad about it. I'm pretty much a stickler of sticking to the debt snowball unless there's a reason. The problem is you're going to have to really work your emotions up and your wife's because you're going to see absolutely no relief until you pay $10,000. Okay. You see what I'm saying?

Yes. It's like an all or nothing because you have to save up and pay the stupid thing. And so if you're paying off $40,000, so it's going to take you like four months. Right. To pay the thing off, roughly, if we're on a 12 to an 18-month schedule. And so, yeah, if you want to go that direction, it's okay. I might – it doesn't matter. The bottom line is you're going to be there so fast that you're not at risk.

Okay. But I like that you're thinking it through, and you're using both sets of paradigms, both sets of decision-making tools. You're saying, I'm looking at the math and the risk, and that's bothering me, and yet I understand the behavior aspects of the debt snowball, and I want to do it that way, but I'm kind of thinking this way. And I like that you're, you know, here's what's happening. You're thinking, this is great news.

That's what happens to most people. What most people's money screwed up, they don't think. They're're not intentional they don't do stuff on purpose stuff happens to them they don't happen to stuff the power of intentionality um the power of proactivity and you've got all of that so our discussion here is minor this these fine points of what we're discussing are minor you're attacking it. You got a baby. I'm cleaning up this mess. I've learned my lesson on making emotional decisions and bailing myself out of weird stuff,

and I'm not doing that anymore, and I don't like what this represents, and I'm getting after it, and I think you're going to be done. You might even be done in 12 months just because you're so focused. You're thinking. You're thinking. You're focusing, and that's how you win. Good job You're thinking. You're thinking. You're focusing. And that's how you win. Good job, man. Thanks for calling in.

Folks, you realize that if you want to win at something, you just concentrate on it. If you want to win at something, you concentrate on it. A lot. And you get better. And you learn. And you get better. And you concentrate on it. And you get better. And you learn. And you get better. And you concentrate on it. And you train.

And you train your brain. And you train your muscles. And you train the people around you. And when you concentrate on something, they go, well, you know, so-and-so's doing that. They're not going to do this. This is what they're doing. That person is known for focusing. They're known going to do this. This is what they're doing. That person is known for focusing. They're known for training. And so, you know, called my son up.

I said, hey, you want to play golf Saturday morning? Dad, I got a Spartan race. You know, I've been training for that. I got to do my runs. I got to do my training. And so, yeah, I know that. I know he's training for something. What you focus on is what you win at.

And you don't go do something that's strenuous. You don't do the big things in life, raising kids and marriage and career success and your spiritual walk and taking care of your body and building wealth. These things are not accidental occurrences. No one becomes successful accidentally. It's an intentional act. This is the Dave Ramsey Show. You know, I get asked all the time, at what age should I buy life insurance? Let me be clear. If you have a family, if there are people depending on your income, now is the time to have term life insurance.

I don't care if you're 20, 30, 40, 50, or whatever. Your age is less important than your financial situation. If you have debt and a lack of savings, it makes no sense to risk your family's financial well-being based on the cost of a term life policy. Term life rates are just plain cheap, even if you're not in perfect health. And the best way to compare those rates is through Zander Insurance. Zander only sells the plans I recommend and shops among the top companies

to find the best rates and the right coverage for you. Call 800-356-4282 or visit zander.com. You got no excuse to put this off, folks. Bad things happen to people all the time, regardless of age. And it's your responsibility to deal with this. That's Zander.com or 800-356-4282. Lee is with us in California. Hi, Lee. Welcome to the Dave Ramsey Show. Hi, thank you for having me. Sure, what's up?

So I have a question. My husband and I bought a house a little over a year ago. We bought it with the intention of having it as a rental property once we outgrow it and then buying a new house. We do have a lot of extra cash every month after our bills, so I'm wondering is it best to pay down this house and then after that, save up for the 20% on another house, or how should we go about that? Okay. Well, the goal before we start taking on any more property is to get the property we have paid off.

Okay? Okay. So where would you start? Which one would you start with? Our existing one, I guess. Yeah, probably. What do you owe on your home? We owe $560,000 on it.

What about the rental? Oh, no, this is our home. We're living in it. Oh, I'm sorry. And so we outgrow it. Oh, I misunderstood. I thought you already had the rental. I'm sorry.

No, we bought it with the intention of it being a rental. Someday. Once we outgrow it and have a family yeah oh okay all right um well it's up to you the only way i would do that would be if you could pay cash if that one was paid off and you can pay cash for the next one which i doubt okay yeah that's very hard in the silicon Valley. Well, it's a very hard period. I mean, it's not a normal process. So, you know, what I have done and what I've suggested people do, regardless of where they live, is get your home paid off as your first big, well, not your first big, but your last big personal finance step. And then if you want to buy rental properties,

save up and pay cash for them. And so the way that probably goes down in your scenario is when you get ready to move, you sell that property regardless of what's owed on it, and you take the equity regardless of how much it is, you throw it at the next deal. And when you settle in that deal, then let's work on getting that one paid off as fast as we can. When it is paid off, then we will save up and buy rental property. But I would not keep the one you left behind and run your debts up. Okay, so don't keep the one we're in, even if it's not going to – I don't know why they're not really appreciating in our area. It doesn't matter. Okay.

I don't want you to have that much debt. You do what you want to do, but you call and ask me. So what I tell people to do is get out of debt and pay cash for your rental properties after your home is paid for. And I've told them that for 30 years, and oh, by the way, I've done that. And the first one you do is really hard. Getting your home paid off is hard. Then paying cash for your first rental is hard. Not nearly as hard to pay cash for the second one because you've got all that money coming in now. And the third one's even easier, and the fourth one's even easier, and the fifth one's even easier.

And, you know, now I've got several hundred million dollars worth of real estate. But that's taken me 30-plus years of living this stuff, and I make good money. So, you know, but that's the process that I would tell you to use, and I have told other people to use. And we have seen that show up time and time again in the data as we study millionaires. They get their homes paid off, and then they have a very high tendency for the real estate that they own to pay cash for it. They hate debt. Millionaires, by and large, are very debt-averse. All right, let's go to Sean

in Pennsylvania. Hey, Sean, how are you? I'm all right, sir. Thank you very much for taking my call. Certainly. How can I help? It's been a rough year. I lost a great paying job, and I'm hustling as much as I can, but I'm making about two-thirds what I used to. I can't keep up my debt payments anymore.

The money I've got coming in covers the budget and a little bit of the debt, but I've got a lot of stupid debt. I still have enough cash to keep paying for a couple months, but do I stop now, hold on to that until hopefully my situation changes? What did you used to make? My household income used to be $140,000. And what is it now? It's under $100,000. Okay, and it's all you earning the money?

No, my wife does work. It's not a high-paying job. She's a children's ministry director at a local church. Making how much? About $20,000 a year. Okay, so you went from $120,000 to about $80,000. Correct. Doing what? What do you do?

Human resources. I was a director in a company, and I have not been able to find an equivalent position. Okay, but you're looking, and you've been looking for how long? A year. The interesting thing is you know how pizza is made, right? Exactly. Yeah.

So it both gives you insight and additional frustration. All right. So what kind of debts have you got? Do I have to air all my stupid on national radio? You wouldn't be the first one, I can tell you that. You wouldn't be the first one in the last hour. So let me just say, oh, Dave, I only found you last week and not a couple of years with the list. No, no, I'm kidding.

Dave, I've got, it's $70,000 in consumer debt. Actually, the last 40 I've taken probably in the last year just to, you know, help keep me afloat. There's more student loan debt in there than I want to mention. Your income didn't go down 40. Did it? There was a period of time when I was completely out of work. Okay, all right. So let's break it down.

What do you owe on your cars? I owe $12,000 on one car. Okay. And you got credit cards? Credit cards and unsecured debt of around $70,000. Okay. And a lot of that has been in the last year by trying to maintain your lifestyle. Okay.

And so how much is your house payment? My house payment is $1,300. Okay. And so how much is your house payment? My house payment is $1,300. Okay. And how much cash do you have left? About $6,000. No, $5,000. Okay. Now, we're going to hold that until we get some of this weathered.

And you have got to cut your lifestyle and get on a written budget. And you still make $100,000 a year. And even if you pick out some things that you just say, all right, I'm not going to pay that credit card. I'm going to let that one go bad. Pick out the big one, you know, or something like that. If something has to be sidelined, but you need a detailed written budget, you guys don't need to see the inside of a restaurant unless you're working there.

You don't need to be on vacation. People make it on $100,000 a year with $70,000 in debt. They make it on that. And so, you know, you guys are part of this. Well, we didn't. Go ahead. Well, we didn't touch the fact that student debt payments are starting, and my total debt payments not counting

the car is $3,200 a month. Okay, I'm sorry. So $70,000 doesn't include student loans? Correct. Oh, how much in student loan debt do you have? It's over $100,000 now. Okay. That goes on hardship deferral for right now. Not paying it today. Yeah. Okay. So you've got to balance your freaking budget. Borrowing to maintain the appearance of everything's okay is not making everything okay. So we're not going to burn through cash, and we're not going to borrow to maintain, to stay current on the payments.

If you have to get behind on something, pick what to get behind on. Take the student loans immediately, put them on hardship deferral, no question about that. But you still need to get on a detailed written budget because you should be coming home with $6,000 and you have a $1,300 house payment. And so you've still got some leaks here. You guys are not making every single dollar scream with your budget and you and your wife are not working together on this at the level that you have to be that's what's going to turn the corner on this and that organization of that money makes

it much more efficient that's why i always tell people you feel like you got to raise when you did it so and then continuing to hunt and pick up extra jobs and continuing to hunt for the new career and all that stuff that's going to turn the corner on this but you can't keep um you can't keep burning cash here whether it's real cash or whether it's debt cash you've got to get this budget below your income. This is The Dave Ramsey Solutions on the debt-free stage, Miles and Erin are with us. Hey, guys, how are you? Hey, we're good.

How are you, Dave? Doing good. Welcome, welcome. Where do you guys live? Odessa, Texas. Oh, fun. Well, welcome to Nashville. And all the way over here to do a debt-free scream. Oh, yes. Very cool. How much have you paid off? We paid off $103,400 in two and a half years.

Good for you. And your range of income during that time? Started off single income about mid-50s, and once Aaron's paycheck hit the bottom line, we're at $126,000. Wow. Cool. What do you guys do for a living? I'm an orchestra director in Midland. Awesome. And I'm a project manager for an oil company. Very good. Good for you guys cool so 103 000 oh yeah what was that on man we were pretty normal like a lot of people um it's all my fault she uh

she brought 400 to the table in debt and i was the rest i was 103 000 and that was a stupid truck that i felt entitled to once i graduated bought a new truck bad decision um it was a stupid truck that I felt entitled to once I graduated. Bought a new truck. Bad decision. It was a $19,000 Wells Fargo private student loan that my dad co-signed for. It was the $19,000 truck and then a $46,000 federal student loan. By the time it matured, we were around $65,000 on it. Okay.

All right. Well, just kind of normal. of normal yeah and how long you guys been married we've been married for two years um i had the privilege of coming into her life a couple years ago and uh get to be a proud step parent to an awesome eight-year-old kid hey when he's my he's my big man all. And then we have two of our own, Hudson and Harper. Ah, very good. Good for you guys. Fun, fun, fun, fun. Okay, so Erin, you signed up for this trip then. Yes.

You knew about all this debt when you got married. Yes. So as soon as you got married, or really before you got married, he had already started on it, right? Yeah. We're avid listeners to the radio of you, so we kind of knew. And I'm the saver. So I was like, you know, he introduced me to the radio show.

I said, whoa, this is actually written down. I just kind of pretend that I'm poor to work with it. At the very beginning, the truck had already been, for the most part, paid off. And that's when we started to get gazelle intense. We went through marriage counseling. Our marriage counselor was like, wow, you guys are on fire. You have's when we started to get gazelle intense. We went through marriage counseling. Our marriage counselor was like, wow, you guys are on fire. You have a plan. You know what you're doing. We attacked my private student loan first. We paid that off real quick to get my dad clear. After that, it was everything that wasn't normal living was going to debt. I

think our smallest debt payment was around $1,500, and everything else was much larger than that. And we cleared it pretty quick and pretty intense. It's just great. I don't even know how to explain it other than that. It's just the best feeling in the world. You really are free. You really are free. Well done, you guys.

Great job. Really cool. What do you tell people the key to getting out of debt is? I contribute it to having an amazing wife who, from the very beginning, even signing up with a man who had so much in debt, being on the same page. From our marriage counseling on, we were on the same page, and we were just gazelle and tense about it the whole way. I think the other part of it is the budget.

But then I like to contribute a lot of it to, you always say there's a good place to go when you're broke and that's to work. And my work family was, they were critical in this for me. I spent so much time at work. My boss, Brandon Blau, he's a great man. The leadership team, Ryan, Cody, Wade, and everybody, they really put their arms around me when it came to that. They gave me a lot of work. I stepped up to the plate and knocked it out and earned every bit of it. I remember having a discussion with my boss, and he said,

I was talking to him about it, and he said, I'm not moving the needle fast enough on this, Brandon. I think I need to get a second job. And he was like, whoa, hold on a minute. Why don't you, all the time that you would spend at a second job, why don't you just work here and work hard? And I did that and he made it worth my time. Wow. Very cool. Started off as just a guy working, you know, in the yard, picking up trash, cleaning things up and got to take over the production and distribution team, leading, leading men, which I have my project lead, Josh.

I've got him hooked on the program. He's knocking things out. And another one, Daniel Martinez, he's also doing it. So trying to get those guys on board with, you know, getting everything in line financially. And it's awesome. Very cool. I attribute everything to him as well. He helped me get through school so we could bump up my income.

We did. We cash flowed her school once we got married. Yep. And then after I started getting paycheck and stopped the slave labor, student teaching, we were able to get there really fast. And so we can't wait for the next step in our lives. We just had our baby girl two months ago. Wow.

And so. The stupid truck got sold. We bought an awesome minivan for cash. Love it. Got $8,900 for the truck, and then she had $10,000 cash. Like she said, she's the saver. She's really taught me. She's brought me to the table and said, hey, this is what we're going to do as far as saving goes. Get on board.

I said, okay. We took the sale of the truck, put it with her five grand cash bought a minivan and life is good wow well done well done very good you guys great job very proud of y'all thank you you killed it absolutely so you brought the kiddos with you to do the debt-free scream we did all right we very cool this is baby harper and then we have haywin and we're well past nap time on our two-year-old. So he may or may not make it. Here he comes.

He's going to try it. Oh, hey. There you are. Come here, Bubba. He's trying it. All right. Good stuff. Say hi.

You see there? All right. Hey. All right. So $103,000 paid off in two and a half years, making $50,000 to $126,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free. Love it. Way to go, you guys. Very well done. We've got a copy of Chris Hogan's's book everyday millionaires for you that's the next chapter in your story for sure and we want to hear from you when you hit that status as well so keep on the journey very well done beautiful family that's how it's done folks that's how it's done this is possible the reason we do this is to give you a place to celebrate but as you're

celebrating you're telling millions of people that it can be done. You're spreading hope with your debt-free scream every time you do this. So very, very cool. Very well done. You know, when you first start doing anything, I remember the first time I got behind the wheel of an actual car. Now, I had driven trucks and tractors and stuff out on the farm, but I got behind the wheel of an actual car. Now I had driven trucks and tractors and stuff out on the farm, but I got behind the wheel of an actual car. Now our driveway was a gravel driveway and my dad was sitting, bless his heart, in the passenger seat and he, you know,

it was kind of on a little bit of a hill, so I put it into reverse to back up the hill on the gravel driveway. And, of course, I thought you pushed on the gas. So I pushed on the gas all the way to the floor. Pretty much dug a ditch up the gravel driveway with those tires spinning and throwing gravel everywhere until he stopped yelling and I took my foot off the gas. I had no idea, of course, how sensitive an accelerator is on a car i just thought you pushed on it and it went that's all i knew and um because with a tractor or a lawn tractor or a any kind of farm thing you're doing out there it's always that way you just step on it because it's not got that but that car man it went nuts you know sometimes but then you know of course

now what do i do i can check my email like anybody else or eat and everything else going down the road driving right so you but the first time you do something you don't know what you're doing that's everybody and there's no shame in that you just have to to learn. You learn to drive a car. You learn to ride a bike. You learn this. You learn that. I mean, the first time you do something, you need someone there to show you how to do it and to teach you how to do it. Investing is the same way. And some of you, when you get to baby step four, you're like, oh, well, I think I'll walk instead of drive a car.

No, you need to learn how to drive a car. You need to learn how to invest. It's not really rocket science. Driving a car is not that hard, but it's kind of hard when you've never done it before, so you need someone to show you where to start because you have no idea where to start. And there's no shame in that. So sit down with a teacher.

And that's what our SmartVestor pros that we recommend are. They're not salesmen. They're not trying to sell you something to make a buck. They want you to know how to drive the car. They want you to know how to invest. So don't sit around twiddling your thumbs wondering if you're going to retire wealthy. Learn about it. Do something. Click at DaveRamsey.com. Click SmartVestor. A list of the SmartVestor pros in your area will drop down when you fill in your info. You choose which one you want to work with. And they'll teach you how to drive the car so you get to be a millionaire.

This is the Dave Ramsey Show. Our scripture of the day, 2 Chronicles 15.7 But as for you, be strong and do not give up, for your work will be rewarded. Zig Ziglar said, you get by achieving your goal. What you get by achieving your goals is not as important as what you become by achieving your goals. Now, it's kind of true about those debt-free screams, isn't it? You become debt-free, but what you become in the process of becoming debt-free is actually more important. What happens to your marriage? The fact that you learn to attack a big problem and work it together?

And the transformation to your marriage? The transformation to what happens inside of you? The confidence that is built? What you become as you're hitting the goal is actually probably more important than the actual goal. Isn't that interesting? I always sign my total money makeover books with Romans 12, to be not conformed to this world, but be transformed by the renewing of your mind.

Transformation. Become something different tomorrow than you were yesterday so that your future is brighter and that's a choice isn't it it's a dadgum choice i love it katie is with us in ohio hi katie how are you i'm good how are you dave better than i deserve what's up so i am a graduating college senior what's your degree in yay uh communication good um in may with and so i've been taking out student loans and i'll be in a total of twenty seven thousand dollars in debt when i graduate and i but i don't think the payment starts until six months after um but i'm just wondering what you think i should do to pay it off as soon as

possible while still hopefully trying to save money and then i wouldn't save money i would just pay it off as soon as possible just put all the money that i make towards it yes everything live like a live like a college student. Okay. Like you're broke. Not like you're a newly graduated, very cool young adult with a cool new job. Don't act like that. Okay.

Act like you're a stupid but broke college student. Don't spend any money. Do you have any idea what you're going to do for a career? I want to work in marketing. Okay. Any ideas? Have you looked at jobs or anything yet? I started looking.

I'm currently interning at two different places right now. Any guesses on what you think your income is going to be on an entry-level marketing position? The hope is $40,000. Okay. All right. And what did you make this year um this year total i just started i started it during the summer um making like 19 hour at one internship and then 15 at the other okay and you're working like 20 hours or something yeah

yeah okay so this year this year you made like um twelve thirteen thousand dollars right um it will be yeah yeah okay so if you lived on twelve or thirteen thousand this year and you make forty thousand next year and you live like you live this year you can pay off $27,000 real fast. You see how I did that math? Yeah. Your income goes from $13,000 to $40,000, but your outgo does not because you don't change your lifestyle. Gotcha. You live like a broke person. Okay.

Not a person with a new job and newly graduated from college. Let me tell you what people do. When they graduate from college, they think they're making $ they're making 40 and they act like they're making 80 and they go buy a new car and rent an apartment they can't afford and fill it up with brand new furniture from rooms there they went right don't do that crap okay get you a nice leather couch from a used used one from a garage sale in the rich end of town for 100 bucks or 50 bucks and load that thing in there and get you a cheap little refrigerator and don't you have a life for the first year and you probably can pay off these student loans in the first year in one year yeah

wow okay should i start paying it off while i'm in college no just let's get it don't add any more debt while you're in college yeah finish if you got one goal let's do that that is your first goal okay but here's the thing okay forty thousand dollars a year is um thirty five hundred bucks a month okay right and if you put two thousand dollars a month on a student loan, it'll be gone. $2,000 times 14 is going to be $27,000, $28,000. Okay. So 14 months later, if you do $2,000 a month, that leaves you $1,500 a month to live on. Cheap rent, cheap everything, no life. And 14 months later, you're not cool, but you're freaking debt-free.

Which is cool, I'm mad. There you go go now we have a whole new definition of cool i think that that means that you're a grown-up if you have a right definition of goal cool good job well done now i mean i meet 54 year olds who aren't grown-ups by the way and their definition of cool is driving a car they can't afford going on vacations they can't afford, so their friends on Instagram are impressed. And they're 54 years old making $110,000 a year and freaking broke. That's not cool. That's lying. That's putting forth an image that is fraudulent.

It is not true. So you can do this. You can do this. You can do this. I'm proud of you. I think you're going to do this. Give her a copy of Total Money Makeover. Show So you can do this. You can do this. You can do this. I'm proud of you. I think you're going to do this. Give her a copy of Total Money Makeover. Show her how to do it.

Call me back and do your debt-free scream when you get out of debt. I want to hear from you. Frank's in Ohio. Hey, Frank, how are you? Hey, Dave. I'm doing well. How are you? Better than I deserve.

What's up? Awesome. Hey, so I've got kind of a more of a moral question here. So I recently graduated college. I've been out for about a year and a half. I've been working with a great paying job, living at my parents' house. They were nice enough to let me come back home and save up some money, trying to reach my goal of putting 20% down on a house within the next three to five years out of college. And they've given me the gift of my college education, all of my loans that they're paying for, all the things associated with college as well. I've kind of built myself a nice nest egg.

And my question is, should I step up to the plate and offer to take on the student loans for them in my name? Okay, so the student loans are in your name or they're in their name? They're in my name, but the payments are made by my parents. And how much student loan debt do you have in your name? If I had, I don't know the exact number. If I had to guess, it's probably somewhere in the neighborhood of forty to fifty thousand dollars and what do you make a year sir a little over seventy thousand and what's your nest egg built up to i've got twenty thousand in my 401k

thirteen thousand in a rough ira,000 in a brokerage account, a mix of mutual funds and stocks, and then $2,000 in an emergency fund. Okay. I don't know if it's a moral question or not in my mind. It might be expediency. But here's the thing. If your parents, for any any possible reason they lost their health they died in a car wreck they lost their business they lost their jobs whatever they got sued by

somebody for half a million dollars and took their income away I don't know for any possible reason it would probably be a fairly bizarre reason all of those examples are fairly bizarre but if if they do these are your loans if they simply don't pay them on time because they're disorganized they these are your loans they're going to damage your credit not theirs. And so as a matter of practicality and expediency, and it has the nice byproduct of getting the weight off of them, I'd clean out that brokerage account and pay off these student loans. Okay. That's what I would do.

And then I'd go get me an apartment and start saving money and get out on your own and start saving money for a house again because you've done a great job of building this up and i'd stop your 401k until you're out of debt have an emergency fund and um um stop building up brokerage accounts and stop building up all this stuff until you see you're out of debt and have an emergency fund clear up any debts that are in your name now if they took out parent plus loans that are in their name. Now, if they took out Parent PLUS loans that are in their name, that's a different issue. If you did not promise to pay them, and they promised to pay them, and they want to pay them, then I'd let them pay them. But the loans that are in your name, I'd knock them out.

There you go, dude. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Blake Thompson, Senior Executive Producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.