The Ramsey Show - App - They Have $2000 a Month in Car Payments! (Hour 1)

Episode Date: August 25, 2020

Education, Retirement, Savings, Debt, Business, Career Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dunk, 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. My co-host today on the air, Ramsey personality, number one best-selling author, Anthony O'Neill, is with me. We're here to answer your questions about your life and your money. Open phones at 888-825-5225. Rochester, New York, Margaret is going to start us off. Anthony, hey, Margaret, how are you? Hi, I'm good. How are you two? Better than we deserve

how can we help great thank you so much for taking my call i have a quick question about supply chain degrees you always seem excited when someone says that's their major you expand a little bit on them and what kind of characteristics would be a good candidate for that degree okay we used to in the old days call it it logistics, a logistics degree, but it has to do with, you know, everything from transportation to purchasing. Like, for instance, I've got a couple of supply chain guys on my team, and so they'll help us source the vendor, negotiate with the vendor to produce, like, the Rachel Cruz wallet. Okay?

And then we've got to get it produced. We've got to get it delivered at a price point that we can sell it at. And it's got to be here on time. And so it involves getting it from another country. In that case, I think they're being made in India or something this time, if I remember right. And so, you know, negotiating with that vendor and getting to know that vendor, making sure they're behaving, you know. And so it's almost as if they're the producer of a product and the delivering of a product. Does that make sense?

Yeah. Yes. And the reason I'm excited is young people are coming out of school with a four-year degree in supply chain, and they're landing jobs at $80,000 a year. Okay. Which, to me, blows my mind. I mean, that's a pretty cool four-year degree starting salary. Yes, I agree. Okay, well, that's all I wanted to know. You guys have a great day.

Hey, thank you, Margaret. We appreciate you listening. That's pretty cool. I mean, there's a lot of degrees you come out and you're making. I mean, you get a marketing degree. If you come out and make 45 or 50 at your entry level, that's not unusual at all. It's really not unusual. But I like that.

I mean, I think that's a degree that would definitely grow with you and even expand with you. Yeah. I mean, like I remember, I think the first time I took note of it was when my son Daniel, who's 28 or so, he's been out of school four or five years. When he was coming out, one of his buddies that was one of his roommates in school that was a family friend was a young man that we knew. He comes out and he's making, I think, $78,000. And I went, what? You're kidding. And then I look up a couple of years later and he's making i think 78 000 and i went what what you're kidding and then i look up a couple years later and he's making like a couple bills he's making a couple hundred yeah and he's not even 30 years old so it's a pretty stinking lucrative field to be in and it's not

a field for everyone but you know when you're talking about student loans or you're talking about talking to college students we're always saying you know get a degree where you can get a job because of the degree and not just a job but it's a career field that will grow with you financially it's not just something once you get it you're at forty thousand dollars for the rest of your life get it get a good degree get a good job that you can earn your way up and get some more money. Yeah. I mean, to me, you know, I understand the calling to social work. But if you go to work for the state as a social worker, you're making $35,000 or $40,000. That's it.

And you got a master's degree. And you can make $35,000 or $40,000 with a high school diploma. Yes, sir. In almost every case. You can make a lot more than that with a high school diploma. Yes, sir. In almost every case. You can make a lot more than that with a high school diploma if you get in the right field and do a lot of things. College is not required for everyone. But I'm always just encouraging parents, particularly, to not be a dream killer, but just be thoughtful about what are you going to spend this money to put tools in your belt of knowledge in a certain area?

Is it going to lead you to something where you can make a freaking living? If my son is going to say, Dad, we're going to pay $100,000 for my education. I'm like, okay, what are you getting from that? Exactly. So $100,000 with a $35,000 or $40,000 a year return. I'm not a huge fan of that. But I agree with you, Dave. If you feel as if you've been called and that's what you have to do, go that route.

But for me and for my house, if we're going to spend that much money, I want your salary to eventually at least be $100,000 or a year minimum down the road once you work your way there. I want to have an upside to this, and I want to have a good starting position. Yes. You know, as well. But you don't pick something you hate. No. Pick something you don't want to do with your life. It's not being a dream killer, but sometimes if you do your dream the wrong way,

it's known as a nightmare. Yeah, absolutely, absolutely. Good question, Margaret. Very good. Matt is with us. Matt is in Danbury, Connecticut. Hi, Matt. Welcome to the Dave Ramsey Show.

Thanks for taking my call, Dave. Sure. What's up? All right. So a little background. I'm 34, single, no debt, and I've been able to save around $30,000 in cash. Now, I know that I should probably move that into my 401k, but psychologically, I'm just having a problem taking that money from my checking account and putting it into my 401k.

And also, I know you're not supposed to do this and measure yourself against other people. I'm just, I don't feel confident in my financial situation currently. I know it probably doesn't make any sense, but that's where I'm at. Why, Matt? I mean, for one, let me help you understand this. You can't take your $30,000 and put that into a 401k. 401k is going to be pre-tax. But not all of it. Yeah. Well, you can't take none of it.

You can't put it into a 401k. That has to go through your job, through your paycheck. Now, you can put that into a Roth IRA, but we'll talk about that a little bit later on. But let me ask you this question. Why? Why are you having a problem investing into your future? I don't know. It's it's like a psychological issue where I just have that cash available to me if I need it. And I'm just having a problem moving that just cash into something where I can't touch it if I needed it. Do you not have the psychological issue that you're not saving for your future? You're two years younger than me.

Does it scare you that I'm not doing anything to protect my 50-year-old, 60, 70-year-old self? I guess it should. You're right. Yeah. So I get you on the fact that, like, hey, I have $30,000. I'm scared to move it. Okay, cool. Here's the thing.

You got to move some of it because we want you to keep at least six months into, three to six months into your emergency fund. But at the same time, I want you to go on ahead and to get some type of investment to your future because your 56-year-old self will say, man, you weren't thinking about me back then. You was only thinking about yourself. I hear you. So what's your household income? By the end of this year, I'll probably end up making around $80,000.

Okay. And so what do you think three to six months of expenses as your emergency fund should be? Probably about $12,000. Yeah. Let's make it $20,000. Yeah. Okay.

And just fund your Roth IRA, and let's get started after that, then putting 15% of your income away into your Roth IRA and whatever your 401K at work and those kinds of things like we talk about. Maybe step four is where you should be. Let's set $20,000 aside. That gives you that comfort. You've got an extra big emergency fund that way you make an 80 that's a fourth of your income that's not bad and um then you know let's get a roth ira open um you can drop that 6 000 in there and not think anything about it and sit with your smart investor pro and they'll

help you get started with all that. You can walk before you run. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents.

It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps. That's Zander.com or call 800- my co-host today here on the air. Open phones at 888-825-5225. Christine is with us in New York. Hi, Christine. Welcome to the Dave Ramsey Show. How can we help? Hi, so excited to talk to you

guys today. Thank you. So just a little bit of a background. I recently graduated from college. While I was in college the last year, I started an online business. And after graduation, I just decided to run with it and go all in. And the last three months, it completely took off. And it's overwhelming. It's amazing. But a few questions.

So I have debt, and I was wondering if I should pay it all off because it scares me because potentially next month I could have no income or my family besides my husband thinks I should get like a real job and just like consistent money, but they also don't know how much I'm making. So hopefully that was a few clear questions. Wait a minute. You said your husband? Yes. Your husband thinks you should get a real job

and he doesn't know how much you're making. Is that what you said? Sorry. No, my family doesn't know how much you're making. Is that what you said? Sorry, no, my family doesn't know how much I'm making. My husband thinks I should continue with online business. Okay, good. Well, your family doesn't get a vote. Yeah. Yeah.

They don't get a vote. They just are loving people in the distance. Yeah. They just wave at you and smile. That's all they get to do. So your husband and you make the decision on this. So how much debt have you got? We have, I guess, $17,000 off in two months, which is exciting.

Right now we have $30,000 in a, he bought a machine for his business, and I have $13,000 left in six months. So $43,000 clears it? Yes. And how much money are you making? Last month I made $20,000, and this month I made $67,000. $67,000? Yeah.

Way to go. Let's go. Yeah, I'll pay off the debt. Why haven't you already paid it off? Right. Because it's scary. I don't know. I feel like it could just all of a

sudden you know it's your own business so it could have no income next month potentially good but it doubled last month so and is your husband working right now yeah yep okay what does he make a year um he also owns his online business so i want to say this year already he made 30 000 okay yeah so chris hey cut the check okay this is ridiculous yeah hang up the phone what makes you think it's going to go away in one month what's the probability of that being an actual thing other than just some dark cloud hanging over your head i mean the i don't hear anything that you didn't tell me anything that makes me think there's any probability that your income just dies suddenly yeah you sound like my

husband well it's not logical yeah if there's a logical reason that you haven't told me that you think it might disappear tell me the logical reason what is your product online so i sell educational tools for nursing students and i think nursing school starting next month and so i guess i'm nervous they're gonna start school and stop buying oh stop buying no will you see a decline in sales yes but at the same time you know reminds me dave of our education solutions here like you're you're not going to do nothing yeah you're going to make something yeah and so pay off the debt yeah just pay it off you're doing it yeah i don't know i have no you may be in a seasonal business that is logical yes okay it could be seasonal and so there might be

that might have been the hottest month ever this month when you made 67. Right. Right. But but past that. And you're you're always going to have something coming in. It's not going to it shouldn't go to zero because there's always going to be somebody at some stage of nursing in this, even though school has, quote, started back, unquote. But now, congratulations. I'm so excited for you. You're killing it. But entrepreneurship, Dave, it is like a roller coaster in and out. You're going to have good months. You're going to have low months. You're going to have real, real good months. You're going to have low months.

That's expected. Yeah. And so, I mean, I don't know. But if you make that kind of money and you only have $43,000 in debt, you knock it out. And then it helps you stabilize, you know, pass from that. I mean, if you do have a down month, you don't have any debt. Yes. So it gives you stability in that sense.

Yeah. Way to go. Excellent. JP's in Dallas. Hey, JP, welcome to the Dave Ramsey Show. Hey, Dave. Hey, Anthony. Thanks for taking my call.

Yeah, man. How can we help? So I've been very fortunate over the last couple years in real estate and over the past year I've been able to make about $200,000 payments towards the principal on my mortgage

and we started the mortgage about three years ago and this is a topic that I haven't really heard discussed a lot but I know I just feel like it's something that would be super helpful and just want to get Dave your thoughts on it Anthony you too but the amount of interest that we have been able to save by making those payments early I was just talking to the bank and you know when they give you an amortization schedule they show you kind of how much interest you pay at the beginning of the note versus how much you pay at the end of the note. And I was blown away. Like already we've been able to save almost $220,000 in interest because we've made those payments towards principal early in the loan versus late in the

loan. Just wanted to get your thoughts on that and maybe why that's – do you think everybody knows that and how important that is versus trying to pay it off near the end of the note where they taught us that – or they told us that you would pay very little of your interest off if you waited kind of towards the end of your term. So I just wanted to get your thoughts on that. Well, there's no magic to it. I mean, if you have an outstanding balance, the interest is charged on the outstanding balance.

When you reduce the outstanding balance, you get charged less interest. That's how it works. And it's calculated like simple interest is how it's calculated. It's not technically simple interest, but it works mathematically exactly the same way. And so I think the misnomer that's out there that people believe sometimes is that they think because if you look at an AM schedule at the beginning, like you're pointing out, JP, if you look at an amortization schedule, you see that the vast majority of your first payment goes to interest. And of course, your last payment, the vast majority goes to principal.

But that is not. And so then they start to think, oh, I've already paid all the interest. I might as well keep the loan. Well, you're not prepaying any interest on a mortgage. It's all being charged on what is outstanding that month. And so what you're experiencing when you do the principal reduction is you're sliding forward in the amortization schedule so instead of this being payment number 10 because you reduce the debt you reduce the debt by ten thousand dollars it's more like payment number 29 and so more of your payment is going to principal than it would have and you slide forward it's because it's calculated based on the outstanding balance and so um yeah I think that's what people don't understand sometimes.

I always hear, well, I've already paid all the interest. I might as well keep the mortgage. No, that's not how it works. So you've honed in on it, JP, correctly. And the point is the faster you pay off the mortgage, the less interest you pay. The faster you pay off any loan, the less interest you pay, right? It's blowing my mind, and I'm thinking, I mean, this is really as good as any kind of mutual fund or stock that you could possibly be involved in if you can do it early, because it's amazing how many of those interest payments, large interest payments, because it's the beginning of the note, that you get to avoid.

So it seems like even though my interest rate's four and a quarter, it seems like I'm able to skip all of those. You're not. You're only saving four and a quarter. Yeah. It's only four and a quarter. That's all you're saving. And, again, it's because your interest is calculated at four and a quarter on the outstanding balance. There's no magic pill to this.

It's not like you say, like the big chunk on the front or something. That's not there's no magic pill to this it's not like you you know like you say like the big chunk on the front or something that's not correct and so it's not better than a mutual fund mutual funds paying 10 12 15 whatever it's paying and that's a lot more than four and a quarter but uh but you do want to clear the mortgage debt as soon as possible like you want to clear any debt as soon as possible because the interest on my mortgage is zero because i don't have one so that's that's advantageous right there dude and that's what you want to work towards i love it dave i love how you said that in there this is the dave ramsey show We'll see you next time. Anthony O'Neill, Ramsey personality, number one best-selling author, is my co-host today here on the air.

This is the Dave Ramsey Show, where we talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Corey is in Jackson, Mississippi. Hi, Corey. Welcome to the Dave Ramsey Show. Hey, Dave. Thank you for taking my call.

I'm over here heart-throbbing, excited, and I'm ready to go. My question is, I will be graduating college this December 2020, and I'll be graduating debt free and i will just i guess like to know be pointed into the direction of what's next what to be prepared for financially next congratulations what's your degree in mechanical engineering all right well done yeah well done well done let me ask this question, Corey. How much money do you have saved up right now? In just my bank account, it's kind of my savings to get through school. I have just a little over $10,000.

Okay. I have, I want to say it's right at $2,000, and then I already started. Okay. And then I have about $5,000 total that's in stocks. Man. All right. All right. And you graduated with no debt, correct?

No debt, yes. How'd you do that? Well, I started off in junior college, and while I was going through there, I searched for every possible scholarship or grant that I could find to help get me to the university. Wow, wow. You went the route that a lot of people say is impossible to do. So you went, you went the unattractive route, but now you're, you're graduating very attractively, no debt, a little bit of money in the savings account. Um, and I'm proud of you for that.

So here's, here's what I'm going to recommend that you do. Right now you're graduating in a interesting season. So the very first thing I want you to focus on is control the things and focus on the things you can control. So you can control what you can control and don't worry about the things you can't control. All right. That's what I want you to worry about. You can't control how the world's responding to COVID. You can respond how you're responding to everything right now. So make sure your resume is updated. I'm going to recommend that you go to KenColeman.com and download his resume builder.

Go ahead and get that resume polished and present this to every field as possible. Have you landed a job yet? So I have an offer that was with a place that I interned with, and I haven't completely accepted it yet because while I enjoyed that job, an offer that was with a place that I interned with. And, um, I haven't completely accepted it yet because why I enjoyed that job. It wasn't what I truly wanted to do. And the school puts on a large career fair. Uh, it'll be this semester.

And then that's kind of what I plan to go and really look. And the company I interned for, they were, they were okay with that. They liked that. They said, Hey, just let us know,

you know, come time for graduation with what you want to do. Cool. Yeah. Yeah. I like that, too. I mean, that's good. But a key thing when you graduate, man, land you a good job and avoid debt.

Do not touch nothing. Yeah. I think you're on that path. Right. So what you've done so far, you're going to extend past graduation. Here's what you've done. You've been very, very intentional. Nothing has accidentally happened in your world.

You've set out with a game plan, with a goal, and you executed on it. And that's all you want to keep doing. It's pretty simple. What are you going to do with money? You're going to be very intentional. And, of course, you know we teach the baby steps. We're going to walk you right up the baby steps the shortest path to wealth and you're going to start out with no baby step two and so you may have an some furniture to purchase a car upgrade or something like that that you need

to save up and do as soon as you've gotten your emergency fund in place and then then you may want to start your retirement and those kinds of things you may want to start thinking about saving towards a house yeah but dude you have been very systematic very process driven which is not really surprising for a mechanical engineer maybe okay but but it but it is very unusual that you're you're wise beyond your years how you've set yourself up and not only was he intentional today but he was also he showed self-discipline throughout the whole process. And that's going to be something very key going into, you know, adult life on his own. Absolutely. Absolutely. So we're going to give you a graduation present. We want you to go through Ramsey plus a one-year membership,

and that's going to set you up for financial peace university. Going to set you up with every dollar sink, set you up with a baby step tracker tracker and it will show you exactly what to do with money yeah it's the class that everyone should have been made to take back in high school but we weren't and so we're going to show you exactly how this works and exactly step by step what to do and we're going to pay for it and give it to you as a graduation present. So hang on. Kelly will pick up. We'll get you signed up for a year on Ramsey Plus. Ann is with us. Ann is in San Jose, California. Hi, Ann. How are you? Hi, Mr. Ramsey. Thanks for taking my call.

Sure. What's up? So I'm currently in school pursuing a certificate in medical assisting. The thing is, it doesn't pay a whole lot of money over the course of a long time, and I'm wondering if I should go back to school to complete my bachelor's degree while I'm working full-time. What do you want to do? Something administrative, like maybe health services administration or HR. Why? It's just more of my field.

I do have some limitations with my condition. I just wanted something kind of that I know I can manage. What kind of a condition do you have? I have paranoid schizophrenia. Okay. And you're being treated? Yeah, the reason why I stopped going to school was because, well, I had a psychotic episode, so I just had to stop. Yeah. So it kind of made things difficult sure sure okay but are you are you seeing a therapist regularly yeah i also take medications regularly it just took a little bit of time to find one that worked with my uh yeah my body yeah it does it's uh uh that's why they

call it practicing medicine i think um yeah it's difficult. But the good news is you're kind of on an upswing right now, right? Yeah. Okay. Then I guess it goes back to, you know, you don't want to do something to put yourself in an environment where you have problems with this, but otherwise, that you don't have a ton of limitations as long as we're, you know, under control and on medication and things are heading in the right direction. So it's just a matter of how much energy you have and what environmental limitations you want to not have some kind of another episode, right? Yeah, because I want to work in the medical field. I just don't want to work directly with, like, you know, injecting people

and getting IVs and doing like the emergency room stuff that's why i was thinking more administrative okay i got you that makes sense all right um well i don't know that you need a bachelor's to do administrative work it depends on what you're wanting to do if you're wanting to do uh like a hospital administrator then yeah you probably do need a bachelor's may need a master's at some point to move all the way into a senior role like that. In the medical field, it's not unusual, but because you're working with doctors all day long. So, but I think what you need to do is get real clear, as Ken Coleman says, on exactly what you're targeting and over what period of time you're targeting it. And then that tells you what classes are going to be required,

what degrees are going to be required, and then as he says, get clear, then get qualified, right? Yeah. And so it's a little bit squishy in talking to you of exactly where you want to go, and then you can figure out exactly what's required, and then you can figure out how long it's going to take you to get those requirements met right yeah and i love how you get very practical dave and i want to give her something more so on the personal side um i want you to speak what you

seek and so you know that's what you want to do so stop saying hey i have conditions i have this well you understand that you're doing the proper things. You take your medicine and you're seeing your therapist on a regular basis, but stop speaking negative. Okay. You know where you are. So, you know what? I'm going to do this. I'm going to do that. I will get into the medical field as an assistant and go around those channels while you're still doing the things you have to do medically wise, because that's important for her. So she can get to the practical side. Like you gave her, You can do anything. You can. And she will. Speak what you seek until you see what you spoke.

Ooh. That's a preacher line right there, man. Hey, Dave. That's not my line, but I love it. This is the Dave Ramsey Show. Thank you. I'm Anthony O'Neill Ramsey Personality is my co-host today here on the Dave Ramsey Show. If you're a teen or the parent of a teen, I'm pumped to tell you about a self-study course that the team and Anthony launched called Foundations in College Prep. It's an online course that shows young adults that graduating with a debt-free degree is possible. It's perfect for 14 to 18-year-olds. And Anthony debunks the myth that to go to college, you have to have student loans. And he shows you a step-by-step process on how to start out right.

Right now, we've got the course at a very special price only $29.99 it's usually $89.99 this is a stay-at-home deal it is and it's a great deal um sold because i'm in it what's all about humility no no no no honestly i i spent a lot of time with the team here dave just really really fine-tuning it, and not just making it educational but entertaining as well. So this young person will actually enjoy it. They will laugh, but they will walk away informed and educated. AnthonyO'Neill.com slash store, and you can get the new Foundations in College prep course for 14- to 18-year-olds, only $29.99.

And, of course, our team has created a one-stop shop for everything homebuyers need to know. A lot of people buying houses right now. Yeah. And if you're going to do it correctly, you should go to DaveRamsey.com slash homebuying. Get the answers you need to make smart decisions. We have this, you know, research, this trending in home prices. We talk to reputable real estate people in your area. We're going to walk you through this whole thing.

Go to DaveRamsey.com slash homebuying, and we can help you walk through the whole process right now in a crazy, crazy real estate world. Ansley's with us in Athens, Georgia. Hi, Ansley. How are you? Hey, Dave. Hey, Anthony. Thank y'all for taking my call. Sure. What's up? Well, I just actually finished reading Total Money Makeover about an hour ago, and throughout the book, one thing that kept speaking to me was that we paid or we financed i'm sorry um more car than we should have um so i have a 2020 suburban that we got back in april and we owe 64 000 on it so throughout the book that was one thing that just kept popping and i said we got to get rid of this car.

So this past weekend, we went to a couple different dealerships. One said, I don't want your car, and the other one wanted me to take a $10,000 loss in order for them to take my car. So I'm at a loss as to what to do in order to take this big chunk out of our debt. What do you owe on it? $64,000 currently. Okay. And what's the market value if you looked it up on KBB?

They told me about $56,000 with it being in excellent condition since we've only had it for a few months. Is that trade-in or is that private sale? Yeah. That's trade-in. That was trade-in. Yeah. That means they're going to make the money on it right okay number if you sell this car to an individual you can probably get

out of it yeah okay but it's not gonna but but that's a hard that's an expensive car to sell to an individual yep very difficult car to sell $64,000 car loan. Yeah, we have four kids. I can't breathe. I can't breathe. I know, I know. We should have read Total Money Maker a few months ago, but I just discovered it, and now we're here, and we can't... What is your household income? We bring home about $9,500 a month. Yeah, you need to sell it. Yeah.

You don't have to panic, and you don't have to give it away, but you do need to sell it. Okay. It was an unreasonable purchase in your situation, and that's being kind. It is. I get that. And so, but I mean, it may take you a while. You're either going to take a ten thousand dollar loss by selling it to a dealer at wholesale or you're going to take a while to sell it and

you know get the use of it during that time and how much other debt have you guys got not counting your home um total it's 164 what's the other $100,000? We owe $32,000 on my husband's truck. We have just over $55,000 in student loans and then

a few small credit cards. So almost $100,000 in car payments. Yes. Wow. You owe more on your cars than you make yeah oh my god that's rough but here's here's the thing actually i'm ainsley you just joined the family so welcome to the family thank you i'm just crying with you yeah we both are i know here's what i would do if I was in your situation. I will put that car up.

And then what I would try and do, because every time you drive that car, the value is going to go down. If you are going to sell that car, which we are suggesting that you do, I would try and figure out how you all can keep the miles low on that. And then I would say, you know what, husband, we need to take a five thousand minimum loss. We may have to take the $10,000. And give yourself a time frame. So if the car's not sold by this date, we're just going to take the loss. One month. Yeah.

Give it a month. Put it up for sale. See if you can move it for a month. After that, you need to take the loss. You've got such a big mess. You've got to move on this. What's his truck worth? I think they said $30,000. About what he what he owes on it yeah i'd put it up for

sale too yeah okay yeah you guys have a car mess you need to buy two five thousand dollar cars and get back to reality okay and um and they make they make five thousand dollar cars it'll carry four kids it's just a big van okay just get you a big old cheap van and buckle them in and go. Yeah. You're going to feel like you've lost 300 pounds. I mean, you're just being – their car payments are $2,000 a month. It really is. Now, Dave, you know the listeners out there are saying,

Dave just told them to sell both their cars and go get $5,000 cars. Yeah. What's wrong with that? Nothing at all. Good. But I want to ask you this because I know people are thinking, well, Dave, at what point can I get a nice car? When you can pay cash and when the total of your vehicles equals less than half your annual income.

They have one car. Yeah. Both of their cars are almost, one's over half your annual income they have one car yeah that both of their cars are almost one's over half their annual income one's almost half their annual income right and so you know his truck is out of line yeah you know if you're gonna have two cars and you make 90 two cars equaling 45 that's a couple of $20,000 cars that you pay cash for neither one of these cars are that. And if he's going to drive a $30,000 truck, that means she's going to be driving a $5,000 car the rest of her life until they get their income up.

Because you don't need to spend more than half your annual income on things with motors and wheels because they all go down in value. You're not going to become wealthy doing that. And I'm not preaching at her. I'm just saying in general. Let me answer your question. Yeah. Because she's had the discovery, but now comes the pain.

Yeah. Because it's a dramatic shift from a $64,000 2020 Suburban to a hoopty. Yeah. I felt everyone listening right now, oh, my gosh. Well, but you know what? You should be, oh, my gosh, the other way. Yeah. How scared I am forty. Yeah. I felt everyone listening right now, oh, my gosh. Well, but you know what? You should be, oh, my gosh, the other way. Yeah. How scared I am for her.

Absolutely. And her family. I don't know how in the crud they qualified for the loan. Yeah. I mean, what was the car dealer smoking? I don't know. I don't know either. $64,000 at this interest rate right now, that's easy.

A $1,200, $1,300 car now payment. Oh, it's more than that. Okay. All right. Back to the norm dave back to the norm so here's the thing um i'm a car guy i like cars me too i like things with motors in them i like things with wheels i you know. I like things that go fast with motors in them. There you go. However, if you do math, they all

suck. I own several and they suck. Because they just simply go down in value. There is no... They're not an investment. They're an expense. The largest thing we buy that goes down in value.

And Americans, we're just car people. We love our cars. And they kill you financially. So you have to limit the damage. This is the Dave Ramsey show. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey show. This episode is over, but if you heard about an event, product or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section or head over to DaveRamsey.com and click Dave Recommends.

Thanks for listening.