The Ramsey Show - App - Understanding the Early Buy-Out Option for Car Leases (Hour 3)

Episode Date: September 28, 2018

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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 am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Mitch is with us in Kansas City. Welcome to the Dave Ramsey Show, Mitch.

Hi, Dave. How are you doing? Better than I deserve. What's up? Well, Dave, I got a question for you about a whole life insurance policy. My wife has a whole life insurance policy that her parents got for her, you know, 20 some years ago. And they're done paying it, and now they're transferring the ownership over to us. We were wondering if that would be a wise thing to maybe cash that out. Yes. Or, okay. We're in Baby Step 2, so I didn't know if it would be wise to cash it out or just let it grow. No.

It's not growing, but about 1% a year. 1.2% is the average cash value growth. Okay. So it sucks as an investment. It sucks as an investment. It sucks as an insurance product. So you should get 10 to 12 times your income on you, 10 to 12 times her income on her in term life insurance, 15 to 20-year level term, and then cash this stuff out and use the cash value towards your baby step two. Awesome. We already have the term life insurance in place for both of us oh good

times our income yeah they're just um and it would be it would take about their care of the rest of our debt which is about 13 000 and the cash value right now is about 17 great there'd be taxes with it nope probably not the basis in your whole life policy for tax purpose calculation is your basis. In other words, as if what you paid for it is the total that her parents paid in over all those years, which is probably a whole lot more than $17,000. Oh, okay. And so as long as that's the case, there's no gain.

Now, if they paid in $15,000, if the total of all the premiums they ever paid was $15,000 and you pull out $17,000, The gain would be $2,000. Gotcha. Okay. It would actually be ordinary income. It's not a gain because it's not actually an investment. All right. But, yeah, 98% of whole life policies, particularly these horrible childhood policies like this one, do not –

you don't even get back what you put in it. That's how bad the rate of return is. You see what I'm saying? If that had been put in a mutual fund, it would be $100,000 instead of $17,000. Gotcha. That's what I mean by bad. Well, that will help us get done with Dave's set, too. Perfect, man.

Get after it. Seth is in Indianapolis. Hi, Seth. Welcome to the Dave Ramsey Show. Thanks, Dave. Thanks for having me. Sure. What's up?

Hey, so I, unfortunately, I only met you about a year ago, and I took a lease out on a car two years ago for a three-year lease, about a $20,000 car. So I still have payments until next July or this coming July. And then I had about a thousand nine hundred dollar buyout on the car after that i was trying to see if there's like what the best option for me to do now is to get out of it early and get me a little bit cheaper car okay well the thing the way to look at it is the total of your lease payments between now and july and so you've got seven, eight, nine, ten payments of how much?

How much is your monthly payment? $2,710. Okay, so that's $2,000, right? Now, if you got the early buyout on the car today, do you have that number? If you paid the car off today, what would it be? Before I made my last payment, the buyout was right at $15,000. That's wrong that's not that that's the bot that's the 11 plus your remaining payments that's not your early buy right the early buyout if you're if you're at 11 in july would be about 13 or 14 right now

what is the um what's the value of the car today? Right now on Kelley Blue Book, it's about $13.50 to $14.00. Okay. So let's pretend that it was $14.00 that you sold it for, and your buyout was $14.00. It would cost you nothing to get out of it today. Keeping it from now until July is a $2,000 decision. You see see what i'm saying so it's not going to kill you either way but you'll probably save a couple grand if you sold it now assuming that you don't lose more on it than two thousand dollars which is what you're

going to lose on it if you keep it till july you see how i'm doing that yeah so you have to call them and get the early buyout the early buyout if i give you a check this month and pay the car off what is the balance then not what's showing on your statement what's showing on your statement is your residual buyout plus your remaining lease payments that's your total liability and it should be less than that it should be well let's see you're dealing with 15 000 bucks at 10 that'd be 1500 uh if you're complete yeah i'm about right it's probably about 13 and a half or 14 it's probably about the value so then the only question you got is in your overall situation is it worth two grand to you to get rid of it 10 months early because that's if

you don't get rid of it's going to cost you about two grand between now and then it's not the end of the world in other words if this was a ten thousand dollar swing i'd be going dump the stupid car but it's two thousand bucks it's not it's probably not changing your life depending on how that equates to your income gabby is with us in Cincinnati. Hi, Gabby. How are you? Hi, I'm good.

How are you? Better than I deserve. What's up? So I've been listening to you for, I don't know, a couple months now, and me and my husband are in a little bit of a situation, and he's not really on board with the whole idea. Like, I mean, he's gone over, you you know how much we're in debt and everything and we have it written out and he says he's for it but he's kind of an impulse buyer and i don't know he's just not really i know he's not with it

how old are you i'm you don't know how old I am. I'm 24. And how old is he? 28. And how long have you been married? Four years. Okay. The issue is I just quit my job because we had our son in January, and I quit in May, and that basically cut our income in half, which is an issue because the debt was before that,

but that's making it a little harder to be like, we're going to knock this out. I guess. Yeah. How much debt have you got? About $78,000. Good Lord. Yeah. What does he make?

He makes $65,000. Okay. Ouch. Yeah. So how much do you owe in your cars? $10,000 on one car. Okay. All right.

Well, I think what you've got to do is put the kids to bed and sit down with the candles lit and take his two hands and your two hands and say, Hello, this is important to me. We need to be grown-ups with our money. This is scaring me bad. And you need to get his attention. You have toddlers and babies hanging all over you.

The whole time you're trying to have conversations, you can't have conversations. When they're in bed, you need to get his two eyes locked on your two eyes and have it very, very serious. He needs to hear you. Subtlety does not work with men. You have to be very direct with us for us to hear you. And, you know, yeah, you, this is a real difficult situation you've gotten yourself into here. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM,

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Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thanks for joining us, America. Hunter is with us in Orlando. Hey, Hunter, how are you? I'm good. How are you, Dave? Better than I deserve. What's up? So my question was, how much do you think young people, say 18 to 23, should prioritize investing and starting early relative to kind of piling cash for a first home? I think you can do both.

There's no rush to buy the first home. Generally speaking, from 18 to 25, there's a lot of transition in your life. There's a lot of moving around your life there's a lot of moving around things that happen new jobs finishing or going to college possibly getting married a lot of stuff happens in that 18 to 25 range and so yeah and every one of those things may precipitate living in a different place and so like if you bought a house at 18, and let's just, you know, I don't know your situation, but let's just pretend you then are at 19, and then you finished college and got married,

there's a real high percentage chance that house ain't cutting it, you're moving somewhere else, so you probably should have just rented during that time and piled up cash. So it's not a rush until things kind of settle out in your life and you know what the groove is. Now, you can settle in the groove at 18. That's fine. You say, I graduated. I know what I'm doing.

This is what I'm doing. And there's not going to be any big changes going forward. Then that's usable in the marketplace and not getting a degree in left-handed puppetry or something like that. But yeah, that's the best return, because you make more money on that than you do on a mutual fund or on purchasing a house. And so, but it all depends on your situation. The more stable and predictable, the less transition that is in your future, the more you would lean towards maybe buying a house.

But I'm just not in a hurry there. I love real estate. I want you to own real estate. Real estate's a good place to have money. It's a good thing to own to have a part of your life going forward, but it's not necessary that you get in a hurry on it just to say, I own a house. Anthony is with us in Jacksonville, Florida.

Hi, Anthony. Welcome to the Dave Ramsey Show. Hello, Dave. How are you? Better than I deserve. What's up? Well, I'm 22, and I'm starting an air conditioning company, and I wanted to know if I should lease, vehicle lease,

or buy a van for, say, $3,500 or whatever I could afford and buy cash? Or what should I do? If you want to win in business, you don't borrow money. Got you. And that would include leasing. Okay. Leasing is just another way of financing something. If you lease a copier, you financed your copier.

If you lease a van, you financed your van. That's what you did. You bought a van you financed your van that's what you did you bought a van you couldn't afford that's what it amounts to and so have you got 3 500 bucks yes sir i do good then pay cash for your van and go make a bunch of money even if it doesn't look as good as the other say i had to spend 12 000 to get a nice one. I'm sorry, you're doing heating and air? Yes, sir. How many people do heating and air with someone based on the quality of their van? Good point. Zero.

Right. They do it based on the quality of whether you do the work well or not and have a good price. How old are you again? 22. Good for you. Good for you. You're a sharp young entrepreneur, man. So you're kicking this thing off on your own, you in the van and getting it done, huh?

Yes, sir. Way to go, man. Have you been working in the heating and air business for a while? Yes, sir. My dad owns his own business, so I've been working with him for quite a while. Okay. And so it's just going to be you in the van and start off, huh? Yes, sir.

Where are you going to get your customers? I'm hoping in the next couple of months. I've been going to school and took my contractor's license, so I'm just at the beginning stages. But, I mean, what kind of marketing are you going to do? Where are your customers going to come from? Well, the past few years I've been um kind of i guess advertising passing out cards and getting numbers and so i was gonna call them um just call different people and my dad has other business people um so i was gonna get some customers from him. Okay, so he doesn't need, he doesn't, he's got some overflow he can throw your way?

Yes, sir, and he's kind of trying to retire, so. Oh, okay. All right, so we'll transition out of that. Good. Now, I don't mind you moving up to a $10,000 van, but go make $20,000 or $30,000, and then we'll talk about it and pay cash for it. Got you. Okay.

Okay, but always be thinking this is a business transaction this is not a prestige purchase and so you know i've never walked into a guy's office and because he had a twelve thousand dollar desk in his office i did a deal with him gotcha ever not once as a matter of fact i might not do a deal with him because of that right but i've never walked in there and so people all the time buy things in business that they just personally want to own and they rationalize it and go well it helps me with my credibility horse crap it does not your credibility comes from your ability to get the job done and the way you present yourself and the way you present yourself here on the air was excellent

you're a sharp young dude hold on i'm going to send you a copy of the book entree leadership how we grew this business from a card table in my living room about where you're starting now and to where it is now hopefully we can help open phones at 888-825-5225. Brandon is in Savannah, Georgia. Hi, Brandon. How are you? Hey, Dave. I'm doing well. Good.

How can I help? So I'm 22 years old, and I'm about $30,000 in debt. After my monthly expenses, I've got about anywhere between $100 to $200 left over. That's for groceries and gas to get to work. And I've been trying to cut back, and here lately, it's just been rough. I'm just trying to figure out what to do. What do you do for a living? I paint.

How many hours a week uh 50 all right you're an artist or a house painter i uh paint apartment buildings okay you work how many hours 50 hours a week okay all right um you work for someone or you said you got your own business no i work for a, or you said you've got your own business? No, I work for a company. Okay. What if you picked up some side jobs on residential doing some painting on the weekends? I have done that in the past. Lately, it's been rough.

Most people going into this season, personal houses i at least in the savannah area i don't know about other surrounding areas but around here in the past i've always found that coming into this season a lot of people don't really want you inside of their house work well i mean there's a guy painting the outside of my house right now. So I don't live in Savannah, but I'm calling BS on that. People don't paint their houses in September in Savannah? Give me a break. Of course they do.

So you have an income issue, dude, and you're not organized with your spending. So I want you to jump on EveryDollar and get that budget app downloaded for your phone and on your computer. It's free. And get you a budget laid out because you don't know where your money is going. You're disorganized. And you're just working and playing on the weekends. And you have no idea where the money's coming. It's coming in and going out, and it just disappears, and things are tight.

So we've got to get organized and make the money that you have behave, and we need to add some money to it. And that's why I'm trying to create some extra income. The good news is painting, you can actually make some pretty good money. Matter of fact, you might grow yourself a business that would make you a whole lot more than you're being paid right now, once you learn how to do paint, which you do know how to do, apparently. So, that's what I'd look at doing. This is the Dave Ramsey Show. Identity theft has become an epidemic. Data breaches are being reported every day,

and hundreds of millions of people have had their identities stolen, sometimes multiple times. That's crazy. Now, I've seen firsthand when people are stressed and freaked out when they become an identity theft victim. And those who have credit or ID monitoring plans find out really quick how unprotected they are in so many ways. That's why adding Zander's ID theft plan to our benefit package was such a smart move.

Zander's plan covers all types of ID theft, takes over all the work, and even covers your bank account if it gets hacked. I know my team is getting the broadest protection available and can focus on their family and their other priorities instead of being freaked out. Whether you're a family or a company looking to help out your team, you need to check out Zander's plan. Get a quick, easy quote at Zander.com or call 800-356-4282. It really is the best value out there. Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Jason and Allison are with us. Hey, guys, how are you? Hey, Dave.

Hey, we're great. How are you? Welcome. Good to have you. Where do you guys live? We live in Houston, Texas. Welcome to Nashville. Thank you.

And all the way here to do a debt-free screen. All the way. That's right. And how much have you. Where do you guys live? We live in Houston, Texas. Welcome to Nashville. Thank you. And all the way here to do a debt-free screen. All the way. That's right. And how much have you paid off? $111,000. Cool. And how long did this take?

It took us about three years and one month. Okay, cool. And your range of income during that time? Started off at about $110,000, and we got a few raises and did some hard work and drug some stuff home from the cave and we ended up at $145,000 and then I was able to give some of that up and go pursue a dream job. Our income came back down. And that's where we're headed now.

Very cool. Good for you. What kind of debt was the $111,000? It was car debt, both of our student loan debt, and also credit card debt. Cool. So what started you on this 37 months ago now? Oh, and I was going to say, along with the types of debt that we had, we also cash flowed Jason finishing up his bachelor's degree and having a baby and also a job layoff during that time. And also wanted to give you credit, Dave, for having a baby and paying off the medical bills.

We actually both worked negotiation skills that we learned from you on the podcast and were able to negotiate down our medical bills. And so that was just really awesome and made us both really proud. Very cool. Good for you guys. It was really funny hearing Allison in the other room going, let me speak to your manager. And I'm like, oh, who's that? That's not my wife, but she was listening to you. And so that's where she got that for sure.

Well, why not? Right? Why not? I love it. It's your money. Good for you guys. So again, what started the whole process 37 months ago? So we got married about three and a half years ago.

And then that process, we had heard about you and the program. And we started to work through that. As we were doing that, we were like, hey, we need to get a little bit deeper into this. So we went and took the class at a church that we don't go to. And after taking the class, we were kind of bummed our church wasn't doing it. Well, Second Baptist in Houston, we totally launched it all over six campuses. And we actually were coordinators for that. Thank you.

So we got to do that twice, once with the coordinator coordinators. And then we did it again with the whole church. And it was really exciting, and it kind of gave us that extra oomph to keep going. Wow. Way to go, you guys. Very well done. That's a great church. We enjoyed being there. Yeah. So to hear our pastor say about you, hey, you're the real deal, that's what solidified it for me. I was like, hey, we're doing the right thing. Well, he's a good man. Good folks.

Good folks. Well done. All right. So now you did it. You paid off $111,000 plus all this cash flowing. And how did you do that? What do you tell people the key to getting out of debt is? I think for me it was finding your motivation and continuing to be fed that motivation all

along the way. And for me, it was the Dave Ramsey Show podcast. Personally, that was really motivating hearing other people's stories. And so find what it is for you that helps you stay focused. And then also, of course, the budget is always key. Absolutely. For sure. So for me, it was that I've had it moment.

I had to have it like two or three times. So the first one, we had it, and we were drawing a line in the sand because we were getting married, and we were going to raise our children and have a family the correct way. Well, then I had to have another one, and this one, I was driving for work from Virginia to New York City. Overnight, it was a crazy drive. It was just something that I had to do to sort of knock out something.

And as I was driving, I see this beautiful building on the side of a hill. And I started looking at it and thinking, wow, that's a cool building. And I start to look up what it is, and I found out it's Sally freaking May. And so I was so mad at that point. I was cranking you all the way. And you kept me up that night. And I had had it with Sally Mae and all of her antics. And we were getting out of debt. And so we did.

I love it. Well, congratulations, you guys. So who were your biggest cheerleaders? Our family and our friends were definitely supportive. Yeah, we were definitely supported by family. And the people who were in our class were like cheering us on because they were wanting to get into the same headspace that we were yeah yeah very cool well again thanks for leading the class there's nothing like leading it to help you be accountable right i mean it's like you got to do it now you can't open your wallet

and credit cards fall out if that's that would be a little hypocritical. Exactly. At that point. Especially when they're cutting up cards right in front of you and you're cheering them on. It was really surreal for us to be able to support two different times and really be leaders in our community. Right. And during this time, you had a little boy. We did. Salter. And his name is Salter.

Salter, yeah. And he's with you today. Salter. And his name is Salter. Salter. And he's with you today. He is. How old is he now? 20 months old. Cool. We got a copy of Chris Hogan's book for you, Retire Inspired. And, of course, that's the next chapter in your story to be millionaires now and outrageously generous as you go along.

All right. It's Jason and Allison and Salter from Houston, Texas. $111,000 paid off in 37 months, making $110,000 to $145,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo-hoo!

Well done, you guys! Well done! That is absolutely awesome. Well done. That is absolutely awesome. Fabulous. Good job, you guys. I love it. Open phones at 888-825-5225.

You jump in. We'll talk about your life and your money. You know, the next step is to move into that everyday millionaire status. Now, we've sold almost 20,000 of these everyday millionaire books already, and it doesn't even come out until January. They're on presale. Everyday Millionaires, How Ordinary People Build Extraordinary Wealth and How You Can Too by Chris Hogan. It is the place where we unpack what we learned at Ramsey Solutions with Chris Hogan

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And we'll unpack every bit of this for you. Just go to ChrisHogan360.com or DaveRamsey.com and pre-order the new book everyday millionaires our question today comes from blinds.com find out for yourself why blinds.com is the number one online retailer of custom window coverings site-wide savings happening right now plus you can take an additional five percent off at blinds.com slash Ramsey. Christian is in South Carolina. Since the market is at an all-time high,

would it be wise for my wife and I to fully fund a Roth IRA in one lump sum? Or should we wait and dip in the market? We currently have two mutual funds that are doing very well. We're thinking of investing this lump sum into these mutual funds, but we're concerned about the record high market. What if you'd asked that question four months ago? What if you'd asked that question four months ago? What if you'd asked that question six months ago or eight months ago or two years ago? What if I had said, oh, just, oh, yeah, because we're all worried that it's at an all-time

high. The only question you've got to ask yourself is, from here, even if it dips, where do you think it's going to be 20 years from now? Because it's a Roth IRA. It's a long-term investment. So 20 years from now, where do you think it's going to be? Even if it dips, it'll be up from the all-time high. Unless America ends, because the economy will continue to prosper and grow.

So I invest when I'm ready to invest. I don't sit and worry about whether I've figured out that the market has reached its pinnacle and will never get here again. I'm not that fatalistic. And the historical data indicates that I'm right. This is the Dave Ramsey Show. So just sit. Our scripture of the day, Psalm 56, 3 and 4. When I'm afraid, I put my trust in you, in God, whose word I praise. In God I trust, I am not afraid.

What can mere mortals do to me? Maya Angelou said, Courage is the most important of all virtues, because without courage, you can't practice any other virtue consistently. Michael's in Phoenix. Hey, Michael, welcome to the Dave Ramsey Show. Hey, Dave, how are you doing? Better than I deserve. How can I help?

My question is, we actually moved in with my in-laws, and my wife's going back to school. And we're working on paying our debt off and becoming debt-free. Good. And we're upside down in our vehicle, and we walked away with about $70,000 from our house. And I was wondering, should we take some of that money and pay the car off, or would it be better to sell the car and pay the difference?

How far are you upside down? It's worth maybe $20,000, and we owe $30,000 on it. Okay. Where'd you get the maybe $20,000? That's just doing a little bit of market research seeing we have a little more miles on ours than the other do so it could be a little less yeah so what i would do is jump on kelly bluebook.com and look at a private sale appraisal on there it takes you about 10 minutes and that'll give you a more accurate than a um than a wet finger in the air on what the car is actually worth.

What's your household income? Right now she makes $45,000 and I'm making $35,000, but she's actually going to be going part-time to start nursing school. Okay. So a $20,000 car, even if it were paid for, probably doesn't really fit in your all's life with your income right now, right? Correct. You wouldn't buy that much car with this situation.

You're just in this much car. And you have $70,000 cash in your hand. How much other debt do you have? We have about $3,000 in credit cards. Okay. So you've got enough to pay the car and get rid of the car and get you about a $5,000 or a $10,000 car that you pay cash for, right? Yes.

So that will use up about 15 of your money. So we're going to use up about 20 of your 70 to do all that. How are you paying for school? Right now we're paying it out of pocket. Good. What does right now mean? You're not planning to do that all the way through if we can we'd like to she already has we actually have uh she has 20 25 000 student loan debt already so we really don't want to add to it from this school or from the last one, it's from a previous degree she got.

Okay. How much other debt do you guys have? I have a student loan that's about $2,800, and that's all we have. Okay. I would go ahead and pay yours off, but she can delay hers while she's in school, and I'd pay off the car and pay off the credit card and be debt-free everything but her student loan while she's in school. And then I would raise my right hand,

and I would use this money for her to go to school if you have to. I would not borrow another dime. Okay. The only way to get out of debt is stop borrowing more. Does that make sense? Makes perfect sense. Yeah. So we're going to clear up everything but hers until she gets out,

and then we're going to use your income, her income, to feed the family, and hopefully we can cash flow and not mess with this house money anymore than we've already messed with it just now. Right. But I would rather use that than I would go in debt. Okay. Makes sense? Makes perfect sense.

Thank you, sir. Samantha's in Green Bay, Wisconsin. Hi, Samantha. How are you? Hi. Thanks for taking my call. I'm good. Good.

How can I help? I just found your program a couple of months ago and am trying to avoid making another bad financial decision. Okay. And I've started saving up for a house. Good. And I would really like to buy a tiny house. And I know you say those are depreciating assets because it's on wheels.

And so I just want to... The tiny house is on wheels? Yeah. I don't know if you've seen any of the programs, but they're like on a trailer. It's built like a real house, but you can move it. Oh, I know what a tiny house is, but I didn't realize you could move them. Okay. Yeah, you can hook them up to like a pickup truck.

Gotcha. Okay. That's not the problem. That's not the problem with those. What I'm referring to with wheels is the mobile home, a trailer. Okay. Yeah, you would live in it. And they go down in value for sure.

I don't know if tiny houses will go down in value or not. I just don't think they're going to go up in value like a traditional home, and I wouldn't tie my money up in it for that reason. Okay. And let me tell you how I want to base that on, okay? What makes something go up in value is the more people that chase that item, the more it shoots up in value. You know what I'm saying? If something is scarce and there's a lot of people chasing it, that drives the price up.

You know what I'm saying? Does that make sense to you? Yeah. That's basic econ 101. But if there's a flood of things, then it becomes cheap if there's too much of it. The problem with tiny houses is not that they're evil or something like that, but there's going to be a very small percentage of the population that buys houses that are going to be interested in a tiny house.

And so you don't have very many people chasing them. That's going to make them not go up as much as a traditional house. A lot more people will buy a regular house. Would you agree with that? Right. Which means that there's a lot more market for the regular house, which means it's going to appreciate more. And so I would not buy a tiny house if I were in your shoes.

I would rather see you rent a little while and save up for a down payment on a more traditional home purchase and get you a 15-year fixed mortgage or less or just save up and pay cash for it if you want to. But I think you're going to have a harder time selling the tiny house, and I'm positive of that, and a harder time than a traditional house because there's fewer buyers. And as a result, they're going to not appreciate as much if at all i don't know what they're going to do but there's no it's a simple econ lesson from the seventh grade that says you know it's

a supply demand curve is what it's called when there is a uh a lot of demand for a limited supply, it drives price up. When there is a limited demand for a supply, then it drives price down. And so it's very simple that way. So something that's rare versus the number of people looking for it drives the price up. And, you know, that's what's going to happen here. There's no way around it. Lane is with us in Casper, Wyoming. Hi, Lane.

How are you? Good, Dave. How are you doing? Better than I deserve. How can I help? Well, a series of bad decisions has led me right to you. I quit my job, and I'm trying to make the right decision with my 401k. Okay.

You quit your job. Do you have another job? Not currently. My wife is working. Oh, okay. What does she make um my wife made 50 000 how much 50 000 a year 50 000 okay can you live on that um no not in our current situation okay all right the. So we got to change your situation or you got to get a job? That's where we're sitting. The idea is to be able to chase a passion and to do that is to

eliminate the debt and then maybe be able to do that on her income. How much debt do you have? Well, it's hard to say. We lost our house, and that's still under foreclosure. Without that, I have $63,000 roughly. On what? Two vehicles and credit cards and some medical collection. How much of the 63 is the vehicles? Most of it. So sell them.

Get rid of them. Yeah, if you want to chase your dream, you've got to get rid of the debt, right? If you cash out the 401K, they're going to charge you a 10% penalty plus your tax rate. So you're going to be hit with about 30%. That's like borrowing money at 30% interest to pay off your debt. That's not chasing your dream. That's just dumb. No, I wouldn't do that. And it might be that you need to work a regular job while you start chasing your dream and get some income for your household. It sounds like you guys have been starving for a while around there. That puts us out 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, 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.