The Ramsey Show - App - There's Dignity in Moving Out of Your Parents' House (Hour 1)

Episode Date: January 21, 2019

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🎵 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'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call. Robbie is with us. Robbie is in St. George, Utah. Hey, Robbie, how are you? Doing great, Dave. How about yourself?

Better than I deserve. What's up? Okay, so I'm 21 years old. I'm recently married. I've been married now for three months. Congratulations. Oh, thank you. I'm still about $4,000 in debt. I'm a pretty new listener and so I'm just going through the baby steps. But my question is what is

the best way for me to save as I'm a full-time student and all the listeners that I've listened to and how they're in student debt, obviously that's the way I don't want to go into. I mean, what's your advice, the best way to be able to go into school so I don't have to take out student loans? Gotcha.

How much do you like finishing? What's that? How much time does it take you to finish? So, fortunately, I have parents that are going to help me with my associates, and then after that, I want to be a chiropractor. So I have another four years after that. So, I mean, I got another six years total. Okay.

Um, and you're talking about spending how much money to become a chiropractor? Um, so, I mean, I'm looking in between 120 and 180 yeah okay and what do you make you're a full-time student now uh i'm part-time right now so i'm working and so we're my wife we make about 40 40 a year together okay all right um, the only way I know to do that is there has to be a dramatic income change or there has to be some kind of cash from outside coming at you. That would be like scholarships or something along

those lines. I am not personally familiar. I am not sure it doesn't exist, but I'm not personally familiar with scholarships for chiropractic. I've never seen them they may exist i just don't know and so if i'm in your world um if i've got you know i got to figure out a way to get my income up or find 180 000 worth of help from somewhere to keep me from

going into debt to do this right and um or it becomes the problem because here's the issue a lot of chiropractors make 45 to 60 000 a year yeah a lot of them and so unless you learn something along the way that allows you to be one of the chiropractors that makes 150 a year which they are out there uh there is no possible way it is worth $180,000. So you've got to look at that part of the equation, because for the money you're spending, you could be an MD. Yes. I mean, real close, depending on where you went to school and so forth.

And that's something to study. So I want to study what I'm going to do when I get out that allows, what are the chiropractors doing that are making six figures, the ones that are winning? Because I'm telling you, man, in the last 30 years, I have met with a disturbing number of them that don't make the money to pay their student loans. Yeah. The ROI on it is a lot different than other things because it comes down to how well you can market, how well you can run your practice, the supplements you sell, other things you

get involved in inside the business. I mean, I know very successful chiropractors, but I know way too many to suit me that don't make enough money to have justified spending that kind of money. So you've got to know that you're going to be one of those that makes good money as a result of this, and then you've got to figure out where the money comes from to go. And I wish I had a good suggestion for you. I will tell you, there's no possible way were I in your shoes that I would go $180,000 in debt to be a contractor. Not in a thousand million years.

Never would I do that and uh because i wouldn't go into i don't tell you to go into that for anything but there's just no possible way i would do that so you've got to figure out a way to get this funded if this is your dream and while you're doing it make sure that you've got the ability to become one of the high producers. Alexandria is with us in Atlanta. Hi, Alexandria. How are you? Hi, Dave. I'm good.

How are you? Better than I deserve. What's up in your world? Cool. Okay, so I just have a quick question. So I'm 23 years old. I'm currently working the baby steps on step number two. Good.

I'm just trying to figure out if I should slow down on baby step number two to save up to move out. How much debt do you have? Pretty much $43,000. Okay, and what do you make? I make $35,000. Okay, and how long have you been out of school? Two years, just about. Okay. So you've been living at home for two years since graduation? Yes. And you said you're 20? 23. 23. Okay. All right.

Yeah, I would. I would. Okay. It's going to slow down your debt snowball when you move out as well, because obviously you're going to have expenses that you don't have now. Okay. It's going to slow down your debt snowball when you move out as well, because obviously you're going to have expenses that you don't have now. Yeah. And the only possible explanation for me telling you to do that is what it does for you as a person, not what it does to your baby step two. Because I found as mine were your age, they would, you know, come home,

some of them, and spend a little time at home while they kind of got situated. They didn't have student loan debt, but while they got situated. And then when they moved out and had their own apartment with roommates or a house or whatever, and they were splitting up bills and they had to go buy groceries and it was a different thing, something happened in their emotional maturity. And they were already smart and advanced and like you are and articulate i mean you just called a radio show with 14 million listeners you're pretty poised you know so um you know i mean that's pretty cool so you're not you know

you're you're not some backward kid or something you know so i really think that you're still gonna see this leap in your view of the world, your emotional maturity when you do this. And I don't know how quickly that will turn into income, the benefits of having moved out, how quickly that will turn into income. But I know it will long term. And so it may mean you'd pick up an extra job in order to pull off some of these things and get that budget on paid off. But yeah, I would set you out just for your sake.

You didn't tell me your parents are bad. You didn't tell me there was conflict. I didn't hear any of that. And so I'm not even reading that into it. I'm just saying there's something that happens when you're on your own. It just changes things. You got to get your own mail out of the mailbox, you know. I mean, it just changes things. You've got to get your own mail out of the mailbox. You know?

I mean, it just changes things. And all for the good. All for the good. There's a dignity in that that changes who you are. And I just, yes, if you were my own daughter, I would recommend you move out. And I have done that. Actually, they were dying to get out. But we loved having them there we we did i mean we our kids we get along with our kids and we did when they were at

home and they come back home for a little while and they're just easy to get along with it was fun it was a fun time we didn't want them to go but yeah it's good for them it's good for them hey thank you for calling in. Appreciate you joining us. This is the Dave budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees. And if you're thinking our low cost means less coverage, think again. Our voice and data service covers 99% of Americans.

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Brett is with us in Baton Rouge, Louisiana. Hi, Brett. How are you? I'm not doing as good as Dave Ramsey yet, but I'm on my way. How are you, Dave? I am better than I deserve. How can I help? So I had some questions about some debt that I have, my wife and I, with a car loan and also student loans.

So we heard about Dave Ramsey a while back, and after starting kind of listening to some of the teachings, I realized I'm kind of working the baby steps a little backwards as far as the way I'm saving for retirement and also my son's college fund, we have our emergency fund in place, and I was wondering if maybe I just need to shift back in retirement a little bit and use the emergency fund that we set in place to try and pay off most of the debt and then work the debt snowball from there, or if we should just start working the debt snowball from where we're at now and leave the emergency fund in place.

Right. Okay. Well, how much debt do you have, not counting your home? Right now we have $14,000 in a student loan and $17,000 in a car loan. $31,000. How much is in your emergency fund? We have right at $20,000 saved up. All right. And what's your household income?

This year I made $130,000. I don't know if I'll quite make that much next year. Well done. And then my wife makes $135,000. And how't know if I'll quite make that much next year. Well done. And then my wife makes about $35,000. And how much money? Oh, she makes how much? She makes right about $35,000 a year. Okay.

So you've got like a $165,000 household income. All right. And do you have any money invested non-retirement other than this emergency fund? Any other savings? No. Non-retirement, other than this emergency fund, any other savings? No, other than this, no, just my two retirement accounts. Right, yeah, non-retirement is what I'm talking about. Okay, good. All right, here's what we have discovered in 30 years of doing this, Brad.

People win most often with money when they get control of their most powerful wealth-building tool, which is their income, instead of sending it to other people. Right. Called debt. Okay? And so debt slows down your ability to build wealth. It is the enemy. It's the acid in your checkbook.

It eats your money. It runs things the wrong direction if we're trying to build wealth. And so what we have figured out is that if you will lay the foundation of being debt-free other than the house and put your emergency fund in place, then start your long-term investing, you will be able to do the long-term investing properly, consistently, and that would include 401k and college, then begin above that to work on your house. So that's how the baby steps that we talk about evolved. And of course, the baby steps are there.

You referenced them to tell you what to do in what order. $1,000 save first. Second is be debt-free, but the house. Third is the emergency fund. Fourth is retirement. Fifth is college. Sixth is pay off the house early. Seven has become very wealthy and give a bunch of it away okay enjoy you know live like no one else so later you can live like no one else now how does that

then parlay into the technical tactical application of where you are today what we would tell you to do because of those reasons that we just outlined because we think it's the fastest way for you to become wealthy, and that's the goal of these discussions here, so that you can change your family tree, so that you can be more generous, so that you can do whatever the things are that you're able to do when you've got more rather than less, is we're going to use every dollar that's non-retirement to become debt-free as fast as possible. We're going to completely focus on that in Baby Step 2 until we're debt-free. Then we're going to build an emergency fund. And so I'm going to take $19,000 of your $20,000, and I'm going to apply it, and I'm going to pay off the student loan and $5,000 on the car. And then with your huge, wonderful income,

I'm going to pay that car off in just a few months. then just a few months after that i will have rebuilt the emergency fund right okay yeah you're not going to be down to a thousand for very long by christmas you're going to be largely back okay if not back all the way to an emergency fund, but with no debt except the house. Then and only then would I restart my 401K. I would temporarily shut it down. Because what you focus on is what moves. The problem with what you've been doing, and the reason you've not been getting traction, is you're trying to do six things at once and none of them are moving. Right.

And you can't get... Yeah. What we focus on is what moves and so focus on one thing then focus on the next thing then focus on the next thing so shut everything down temporarily clean out that emergency fund down to a thousand throw it at the pay off student loan today then throw the rest of it at the car and let's knock that car out really really fast then that takes us to baby step three, rebuild your emergency fund. Once the emergency fund's rebuilt, then restart your 401K.

My prediction is you're going to do that by Christmas a year from today. Those numbers work with your income. And that's how you would apply what we teach and why you would apply what we teach. Not just because it's a Dave system. There's a reason we do this stuff, and that is when you don't have any payments but a house payment, you're easily able to put 15% into your 401K. You're easily able to properly fund your kid's college,

and you're going to find even more money to throw at and pay off your house. The average person listening to this show doing this stuff that follows the freaking plan and doesn't make up their own plan pays off their home in around seven, eight years. And as we're doing this millionaire research, we're finding the typical millionaire is paying off their home in 10 to 11 years from the time they start the process. Now, that includes getting out of debt and everything else. But, I mean, that fits right with what we're finding,

that a lot of these people are tracking towards millionaire status and certainly you are too at that point so that's how we do it brett thanks for listening in baton rouge uh ij is with us in illinois hi ij how are you hi i'm great how are you dave better than i deserve what's up well i've been asked to help mentor some people at a homeless shelter and help them with their finances. Great. And it seems to me like, you know, the more I think about it, it's hard for me to relate to what their particular needs would be versus what my needs would be. Oh, definitely different.

But the principles still apply. You just apply them more primitively. We've done a bunch of stuff with the homeless shelters over the years and it's really enjoyable their eyes light up when you take them this subject man i'm so glad you're doing it what a great thing to do so here's what we're doing we're just starting at real primitive basic level okay it's income it's income and it's outgo might not even have a checking account a lot of times don't okay and so the envelope system that we talk about where you say okay you're gonna go make some income and then you're gonna write down where the money's gonna go before the month begins how much you got coming in and then

you give every one of those dollars an assignment before it leaves you cannot impulse with any of that money you can buy food with it you can can buy whatever you're going to buy with it. And, of course, one of the envelopes is saving towards, you know, getting towards housing. Getting a real place, right? I'm saving up for my down payment. I'm saving up for a deposit so I can get an apartment. I'm looking for a job. You get the income side of the equation going.

You get, you know just food shelter clothing transportation and utilities are your main things and you know you're usually not even dealing with most of those so i just assign envelopes hand them a handful of envelopes and say write on this what you're going to spend the money on and do five different categories and whatever the category is i don't care what you're going to spend it on. Just do it on purpose because you have to be intentional with money and you have to stay out of debt and you have to live on a budget and live on less than you make to make progress regardless of where you start. And starting, you know, rock bottom like that, you know, you really.

But if they start to see, man, I'm putting 20 bucks a week back towards getting an apartment with a deposit. The hope just lights up. And the sense of control, in their world, there's so much out of control. And the sense of control is so empowering. It's so good. What you're doing is absolutely wonderful. You let us know if we can help you, man.

Very well done. This is the Dave Ramsey Show. I had a conversation with a friend recently, and he told me about a young man in his late 20s who died suddenly with no life insurance. Now, I don't want to sound unsympathetic, but this drives me crazy. What are people thinking? I don't understand how taking care of your family isn't a top priority. Most of you probably just spent a bundle on Christmas on things you didn't really need, and now you're making New Year's resolutions that are focused

on yourself. But have you taken the time to do something really important like protect your family? If you want to use the New Year as a reason for doing something right, then do it. Term life insurance is something every family needs, and that's why I talk about it every day. It's not complicated, it's not expensive, and you need to do this right now. Zander Insurance is the only place I recommend. Visit Zander.com or call them at 800-356-4282 please learn from other people's mistakes and get this

taken care of zander.com Thank you for joining us, America. We're glad you're here. Ronisha is with us in Lynchburg, Virginia. Hi, Ronisha. How are you? Hi, Dave. How are you doing today? Better than I deserve. What's up? Well, I'll just lay it out for you. My husband and I are on steps four, five, and six. We are looking at doing a career change around May or June time frame after my husband has a

chance to work a ton of overtime. And we're really looking for wisdom. We're asking a lot of people in our life that we respect, and we have the opportunity to ask you. So, you know, it'd be a career change. He's just so zapped in his job, and we're just looking for option C, a job that he loves and can make a lot of money at. And we are sensing the Lord leading us to more like an insurance adjusting field. He currently is in the nuclear industry. So I thought is around May or when we come back from going out of town for overtime,

he would kind of do both to bring the boat up to the dock. He would be working from like independent local claims, and he has a couple of contacts that can get him into that field. And in the meantime, we're going to collect the overtime and collect a couple of bonuses that we know are coming and then use that money to transition into insurance adjusting, whether that's finding a staff job or doing independent catastrophic claims across the nation, that's still to be determined. However, we would like to know your feedback, especially in terms of insurance.

If we do go an independent route we would need to buy insurance from a private market we've started to price that um so we were just really just um kind of hearing our situation we would love to know like what your feedback is on that and kind of any advice you may have it sounds like you've walked the critical thought process through you're not jumping you're going to you said, pull the boat up close to the dock, like I always say. You've obviously heard me say that, meaning you're going to get the business started

before you leave the other business. Now, your guess, it is a guess, but I mean, or your research shows you that when he's in the adjusting career, what will he be making? Well, that's the thing. Actually, my dad and my cousin, my dad used to do this stuff. My cousin currently does it. My dad says there's been times he's made as much as $80,000 a month.

It just depends on the hurricanes or what have you. My cousin, him and his family, they travel the country, and you just have months that are really good and then months that you have nothing. So we would establish a Hill and Valley account. We've already determined the amount. Yeah, but what kind of money do you think you're going to make a year? It's a simple question. Um, I mean,

I don't know, 60, probably gathered 60. And what's he make now? He makes about 50 now. Okay, so you're going to make, you think you're going to make more money. He thinks it's going to be doing something he likes better, correct? Or is he just doing it for money? No.

He is saying in terms of this particular decision, although money is kind of second to just getting out and experiencing more, I guess, freedom in that aspect of his life. So we are anticipating it to be more money, but it's just really just to get out of the toxic environment he's in. Okay, and control his destiny. Well, I mean, you do want to leave the toxic environment, but you want to make sure you're not running from something. Instead, you're running to something. So if this is just there because your dad did it once and your cousin did it is that really what he wants to do or is he just trying to find anything to get away from this crap that he's in now and that scares me a little bit the

way you've the way you found this um and i'm not sure we can blame god on it i mean your cousin and your dad introduced you um and so it was right there in front of you. And if they were not in the business, I don't know if he'd be looking at this. That's a fair point. Yeah, so I, you know, if we could go, I'd like to take one more step back. It doesn't sound bad. I mean, it sounds like it's fine to go ahead and do. But I would take one more step back,

and let's try to get the whiteboard a little cleaner this time that you're that you're dreaming on and say if money and time were no object if i could do anything i wanted to do and i could make eighty thousand dollars a year doing it if i could make it do anything i wanted to do what would i do and um you know going fishing is not one of the answers okay but i mean his heart and passion is in woodworking he loves it um he's thought about how he could try to make money at that and maybe that's something we need to re-explore i would i would i would it doesn't hurt anything to continue to re-explore. I would. It doesn't hurt anything to continue to re-explore that. You may decide that we're going to go this other

direction because it's responsible and you make money doing it and he gets away from the toxic environment. It's not a bad thing you're doing. But if you can find that thing that makes you smile every morning when you get up. I mean, I got up this morning. I've been doing this show 25 years and

I did not dread coming down here today i enjoy looking for yeah i enjoy it and if you're just doing something to get away from a toxic environment because my father-in-law used to do it and he made some money and i'm kind of pushing back here if that's the only thing he's gonna get tired of it it'll get it'll get old fast and even if he's going to get tired of it. It'll get old fast, even if he's a guy that sticks with things and isn't a quitter and all that kind of stuff. But if you can find something that – and here's another question. It's not necessarily woodworking. It's what is it he's doing that makes him feel good when he's woodworking.

He loves creating things with his hands. He loves working with his hands. He likes the process of starting with a lump of clay and knowing that inside of it is a statue, so to speak. The old saying of, you know, what Michelangelo said, when he walks up to a chunk of marble, he could see David in there. And he would chisel out until David was set free, that kind of a thing. Is that what's happening? And then that changes it. Maybe it's not necessarily just wood.

Maybe it's something else. Is it the creative process? Is it being self-employed? I think self-employed is part of this equation. You guys love the idea of controlling your own destiny and not working for someone. And I think that's an okay thing. So just keep pushing on this a little bit. But I think you can use the thought process that you used, which, by the way, was excellent.

Your critical thought process was excellent on how you were making the decision. I'm just going to push back one more time before you pull the trigger on this and say, is there anything else that could jump up on that whiteboard that could answer those same questions, even in a better way before you make that decision but yeah i think you go in that direction and of course you've got to get it working before you can quit the other thing you really can't just go okay we're doing it we got a bunch of money in savings and we made four dollars now i'm gonna quit my job no you need to get your income up to forty thousand bucks000 before you walk out of a $50,000 job hoping to make $80,000.

And then you're putting yourself in a position to do that. All right, up next on line four, how do you pronounce this, Kelly? Yeah? Oh, you just spelled it wrong. Okay. Jamie. Hey, Jamie, how are you? She had an O in front of your name, and I couldn't figure out what O'Jamie is. So, all right. O' Jamie, how are you? She had an O in front of your name, and I couldn't figure out what O Jamie is.

So, all right. O Jamie, how are you? I'm good. How are you? Better than I deserve. What's up? Great. So me and my husband are on baby step two, and we went through infertility, and we have two frozen embryos, and we have a daughter right now.

We're wanting to transfer those. However, we're in baby step two, and it's 10%. We have to cover 10% of the overall cost of the transfer. And to keep them in the freezer is $500 a year. So I'm trying to figure out, like, which, do we transfer now and pay the 10% or do we keep them in the freezer and pay the $500? I'm sorry, I don't know the terminology. Does transfer mean that you're going to have another baby? Correct. Okay. That's okay. I just wasn't up on the vernacular of this. Okay.

All right. So you're ready to have another child, and the cost of the transfer for you to have another baby is what? So if it goes like it did last time with my daughter, it's $20,000 is the overall cost. We pay 10%. $2,000. Right.

And your household income is what? $2,000. Right. And your household income is what? $65,000. And how much debt do you have, not counting your home? Oh, $80,000. I hate to answer that question. And how much of that's cars? Actually, we just sold one car to get rid of that payment, where we have one other car, which my husband... All right, I'll tell you what, hold on. We're going to talk about this after the break.

This is too important to answer in four and a half seconds. I'll be right back. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. You jump in. We'll talk about your life, your money. Natalie's with us in Providence, Rhode Island. Hi, Natalie.

How are you? Oh, wait a minute. I am talking to Jamie. I'm sorry. I goofed up. Let's see here. Where are you, Jamie? I told you I was going to hold you through the break, and I just ran off and left you.

Okay. So you have a $20,000 expense with $80,000 in debt, and your household income is $65,000. But it's not a $20,000 expense. It's only 10% of that, which is $2,000 expense, in order to have your next baby. And you're thinking about doing that instead of spending $500 a year to store the embryos. Is that correct? Correct. Have I got that right?

You got it right. And you said you just sold a car. What is the $80,000 in debt? Tell me more about that. So basically, it's student loans, one car. How much is the balance on that car? How much is the balance? It's $12,000.

On that one car. So most of this is student loans? Correct. Okay. And then there's a little bit of credit for about $15,000 in credit cards on that. Break your incomes down. Of the $65,000, how much do you make? How much does he make? credit for about uh 15 000 in credit cards on that break your incomes down of the 65 000 how much do you make how much does he make um so it's mainly my husband he makes about 55 of that i run

an in-home daycare uh we just started that whenever i had a child and figured out that the income that i was making versus the amount we would pay for daycare didn't add up. How much is your household in? I mean, how much is your house payment? We rent, and it's $550. Okay. All right. Well, let me kind of tell you why I'm asking all these questions. My general principle is if someone says,

should we wait until we get out of debt to have babies, my general answer is no. You just have babies whenever God tells you to have babies, right? And we work our way out of debt. That's my general principle. When you start talking about infertility and you're talking about $15,000 out of pocket and the treatments and all the other things, sometimes folks have to wait because the math just doesn't work although i'm i'm pro baby i love babies um grandbabies are even better by the way if i'd have thought if i

don't know how great grandbabies are going to be i'd been nicer to their parents but um so but the uh uh you know so you're kind of in the middle i mean you have a 14 000 because you're kind of in the middle. I mean, you don't have a $14,000 because you've got most of the work, the cost behind you, and you've only got this $2,000 cost, which is really minimal. I mean, if you had a baby with normal labor and delivery, you might have $2,000 out of pocket. Right. And so is the $2,000 out of pocket is the whole thing, or is that plus labor and delivery? That's the whole thing because it includes my deductible and my insurance. Okay.

So as long as we transfer, you know, in the beginning of the year and have the baby before the end of the year. And you guys are on a budget and you're working the debt snowball with Gazelle Intensity, or what? You betcha. We've been doing FPU for, well, we've got FPU done. We've been doing FPU for, well, we've got FPU done. We've been doing the budget since December, and we've already paid $3,000 down. And you've already sold a car. And we sold a car, yeah.

What was it? How much did you own it? Let's see, $14,000. Okay. All right. So, yeah. If I woke up in your shoes is how I answer questions, yes, I would go ahead and have the child. Okay. Yeah, I would.

Okay. If that's the – and I'm not doing it because of the $500 rental versus the $2,000 expense. I'm just – I'm assuming that I'm hearing in here you all also are ready to have a child correct yeah yeah we love babies too but i mean if you're like well we don't really want to right now but we just don't pay the rental fee that would be a different answer but i didn't think i heard that no no no no we've been trying to have babies for five years so we're ecstatic that we have one and we're ready for another yeah i'm with you yeah i mean this is more i think we're going to put this under the category of a uh you know a more normal normal that's a bad word in

this case but a more traditional would be a better word i guess right when someone just calls and says uh hey we're thinking about having kids i'll just go i don't put kids in the debt snowball they're not in there you know so whenever that happens it happens, it happens, and, you know, it might not happen or it might happen or whatever, but in your case, you've got a little different scenario. But still, I'm doing it. Yeah, yeah, yeah, yeah.

Yeah. You see how I got there? Now, I will tell you, if the answer was $22,000, I would have to say, I don't know if that's responsible or not. Right. You've got to do some more cleanup

before you do that. That's a lot of money but it's two thousand dollars so it does change it because it puts you kind of in a different category of answers if you will so i hope you i want you to get with get with and the listener too to understand the critical thought pattern that's going on here so you guys can replicate this because you don't want to do stuff because dave ramsey said do it you just want to learn how to think through these things. That's all. And that's all I'm doing with all of you guys.

It's not like you need my permission to do something. Geez, I mean, I'm just a hillbilly on the radio. All right, open phones at 888-825-5225. Now it's Natalie's turn. Hey, Natalie, how are you? I'm great. How are you? Better than I deserve.

What's up? I am recently coming into an inheritance, and I'm trying to figure out the best place to put it. Okay. I'm on baby step three right now, and I have about $250,000 coming in an inheritance. Wow. We owe, yes.

Who passed? My grandmother. Oh, I'm sorry. Okay, so $250,000 is coming in, and you owe what? We owe $219,000 on our house. But I know that baby step is further out than setting up our child's college funds. I have two children, six and seven. I was thinking about putting about $45,000 in each of their accounts.

And what's your household income? About $125,000. Okay. All right. Well, baby steps four, five, and six run simultaneous. Okay? Baby step four, as you know, is 15% of your income going into retirement. Five simply says college funding because college funding is so nebulous,

meaning you may not have kids, your kids may be grown. It's different if you're saving for a 2-year-old than if you're saving for an 18-year-old. And so there's no set formula that we can throw a percentage around and throw on there. So we just say college funding, okay, just address the issue kind of thing. And then simultaneously, anything above the college funding, whatever it the issue kind of thing and then simultaneously anything above the college funding whatever it is in your world plus 15 of your income anything else you find you throw at the house and that's maybe step six until the house is paid off and then we come back and max out everything else so uh what would i do if i'm in your shoes i am probably going to use my

cash flow to fund their college i'm going to be be debt-free. I'm going to pay off this house. Okay, that's kind of what I was feeling, too. Yeah. And it's not inconsistent with the baby steps. It's not like we're skipping college funding. I mean, number one, you've got $31,000 to throw towards the kids after 250 minus 219, right, that you could throw in there and get them started and then just sit down and go, okay, and, you know, next year we're going to throw $5,000 more in, you know, next year we're going to throw $5,000 more in there,

and the next year we're going to throw $5,000 more in there, and then we're done. Because you can add up with your SmartVestor Pro or whoever's doing your investing with you. You can get the financial calculator out and figure out how much you need, and once you get a certain lump sum in there, it will grow to enough to be what you need, right? Exactly, yeah. As young as your kids are, you know, $30,000, $40,000 in there, you're going to be done per kid, you know. That kind of a thing is going to grow to enough to send them to a school by the time they're 18.

So that would be your next goal after the house is paid off. But with no house payment, see, you can reach over with putting 15% of your income into retirement and then just really focus on finishing college as defined in your situation, you know. And then once that's done, then you're at baby step seven. Great. Because then baby step four goes away, and it's just save all you can, invest all you can, and give all you can outregisterly, build wealth and give.

So we max out. We don't do 15% of retirement at Baby Step 7. We max out all the retirements, and we max out everything. But college is behind us, and the house is paid off at that point. So that's what I'm going to do. I'm going to throw 31 into college, 219 on the mortgage, and go from there, and then try to finish up college in the next two, three years, and then that puts me officially at baby step seven.

Good question. Thank you for calling in. And I think that'd make your grandma smile too, which is always what I want to know, how I know what to do with an inheritance. If I'm spending it in a way that the person that left it to me is in heaven smiling. Ah, proud of Natalie. She just pulled off her house. Ah, proud of Natalie. She just pulled over her house.

That was kind of smart. There you go. That puts us out with The Dave Ramsey Show and the books. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped Dave Ramsey Show app from the App Store. We're always listening to your feedback and adding new features to make it even better. Check it out.