The Ramsey Show - App - Understanding Your Home Insurance Policy (Hour 3)

Episode Date: August 14, 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. You jump in, we'll talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225. Thank you for joining us, America. We're glad you are here. Bradford's going to start us off this hour in Atlanta, Georgia.

Hey, Bradford, how are you? What's going on, Dave? How are you doing, sir? Better than I deserve. What's up in your world? Oh, man, I can say just the same. So today it is a debate between my wife and I on how to buy first-time homeowners. We're debt-free.

We're currently saving up for at least a minimum of a 20% down payment, maybe a little bit more depending on the purchase. She's thinking smaller. I'm thinking larger. What are your thoughts? Why are you thinking smaller and larger? Are you talking about price or size? Both.

Okay. Why the argument? I don't understand. She thinks that we should go for something that's, I'll say, inexpensive in lieu of saying cheap, and I think we should do something that is still within our budget but allows us to have a little bit more than the bare minimum. Okay. If she's going cheap, is there a reason?

I mean, meaning we're going to live like no one else, so later we can live like no one else. Is there another goal with the money, or is she just generally a cheap person the latter okay all right well that's good uh i married one of those they're really handy to have around actually um from the book i read uh we turn into millionaires because of yeah yeah i mean she's honestly i'm the spender that's why God makes me teach this every day. But Sharon, Sharon's naturally cheap. And I mean, every pair of clothes she puts on, she has to tell me how she got a bargain on it. It's like part of the routine.

So the same in my house. Yeah. So, I mean, it's a wonderful thing. You could have had the other kind of wife. Lord help you. You know, I mean, so. Yeah. But but here's the thing.

Mathematically, it's this. You need each other. Opposites attract. And you're there to help her have a little bit more enjoyment out of her life and to loosen up. And she's there to keep you conservative enough so you don't run the car into the river, you know? And so, you know, that's the you, the maximum home you would buy, would be on a 15-year fixed where the payment is no more than a fourth of your take-home pay. Now, I can assure her that you guys can qualify, and most of your friends are buying almost twice that much house.

That's 100% what serves you right there and uh a 30-year adjustable rate mortgage maxed out every bit you can buy is double the formula i just gave you and it's 25 of your take-home pay on that so by using my formula she is being conservative and so and you're not being you know crazy wild buying too much house nut man you know you're not you're not that guy if you use that formula uh you're being very conservative in your home purchase uh and if it's within that guideline you know i'm fine with it for a first time home buyer the thing i will remind both of you is this you're not gonna live live there forever. The number of times that people buy a home and stay in it their entire married life is almost zero. The average home sells every five and a half to six and a half years in America.

That's the average. And so it's just like taking a job. You're not going to be there forever. You're not selling yourself into slavery. You can just quit if you don't like the job, you know, and if you don't like the house, there's another house on every corner you drive past. You can sell that one and move into another one. So you've got the ability as your financial situation changes to move up, down, out, in, you know, whatever. It's not forever. It's your first

home. It's a great home home it's a great place to get started i'm really thankful i do not live in the first house we bought because it was a dump i mean i'm really thankful i don't live there anymore it was crappy and but it was a great place to get started and we got to be homeowners and we made a little money on it when we sold it and all that kind of stuff so you know you know, make a decision. But it takes some of the pressure off of the decision. If you remind yourself, it's probably for five years, you're probably going to move. And it's like, oh, it's not forever.

So if I don't do exactly the right thing, we can move again. Now, I don't want you moving every two years. That'll drive you crazy and make you broke. But the point is that it's not forever, and if you use our formula, you're going to be okay. Alex is with us in Dallas, Texas. Hi, Alex. How are you? Hello.

Hi. This is Alex. Hey. How can I help? I have a general question. I live in Texas, so we did an insurance claim because our roof got damaged after a hailstorm. And so I did an insurance claim, and my insurance company sent me a $1,000 check to replace my $8,000 roof. And I wasn't aware of the policy. I reached out to my broker, and my broker

and my insurance company told me that I had a cash value policy that I'd never heard of. So I actually reached out to the broker, and the broker says, like, you know, that's what you sign up for. You kind of wanted the cheapest policy. But I told the broker, how would you write a policy like that to somebody who lives in Texas, which there's hailstorms, and, you know, it's just. And so I don't know what recourse I could take uh towards the insurance company or the broker none none no you bought it you're a grown-up and um they you know it's what they sold they sold a uh substandard policy it's not called cash value it's probably called actual

value um and here's the thing too i don't know that the policy is the problem i'm not aware of a policy type that allows them to give you a one thousand dollar check on an eight thousand dollar claim i don't think there's an insurance policy that's that cheap um i think what's happened is is you've got a dispute about whether that roof is really completely destroyed or not and um i mean at the end of the day, I'm not an attorney, but an insurance policy is a contract. You signed a contract. You paid money.

They signed a contract. They received money for covering you for exactly what the contract says. If you don't like what the contract says, the suggestion is, as an adult, you shouldn't sign it, and you shouldn't give people money for it. And so, um, you don't get to just go, Hey, I bought a blue car. Wait a minute. Who sells blue cars? That's wrong to sell blue cars. You bought a blue car, dude, you know? And so that that's kind of the way contract law works in Texas. But, uh, again, I'm not an attorney. And if you think you've been shy stirred somehow or misled

or fraudulently treated, then you could see an attorney for advice to find out for sure what's happened. But with what you're describing to me, I don't think you're going to find out anything different. You might, though. So it's worth a phone call or two to sit down with somebody and understand what's going on. The lesson I learned in a situation like this, Alex, and I've had this kind of thing happen to me before, like just like it has to you, sometimes with more zeros, sometimes with less zeros. But every time I lose money because I don't check something out thoroughly, it teaches me to check stuff out thoroughly. And when I lose money because I do something stupid, I call it stupid tax. And I have paid a lot of stupid tax my friend uh the good news is most of the time

on stupid tax you only pay it once because you learn your lesson and you learn to read contracts this is the day ramsey show Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal. Folks are under a lot of pressure to offer more money to get into that house. Don't do that. Get certified instead. The Churchill Mortgage Certified Home Buyer Program is a game changer. You can quickly position yourself as a more reliable buyer, and you get an upper hand during the negotiations. You can close two to three weeks faster than your competition. So call Churchill Mortgage today and get certified. They've helped

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Hi, Craig. how are you? I'm doing pretty good today. How are you? Better than I deserve. What's up? I had a question about my current situation. I am currently receiving VA compensation and Social Security disability. I was just wondering, after I finish paying off my debt, would it be wise to invest it or would it be wise just to put it somewhere where I have access to? Obviously you are disabled. Yes sir. What is the nature of your disability? In 2005 I was 45 feet away from a car bomb when it blew up in Iraq and a fracture of vertebrae in my back so they had to do the surgery and I was never able to fully recover from them,

so they medically retired me from the Army. That gum, man. Wow. Thanks for your service. Unbelievable. Thank you for the support. How old are you? 35.

You married? Yes, sir. And what does she make? She makes roughly $12,000 a year. She's a paraeducator for a local school district. Okay. And are you working outside of your military disability? I work part-time driving a bus for our local school district here in town.

Wow. Okay. Well, what I would say is this i would take your disability income her income and your income and put them in one lump sum at the top of the page every month and um then you need to live out of that food shelter clothing transportation and utilities right. And, you know, what I would want to do is you want to always be giving. You always want to be investing and saving. You want to avoid debt, and you want to make your budget balanced. And so with all of your income, I hope you can do some investing, and you should be able to.

We should be able to after we pay off the debt that we have. We're currently on step two where we're starting to snowball yeah um so our highest credit card we have about four thousand on it and we're working to pay that off we should have paid off in about three months very cool good well i mean your income comes from several sources the story is unbelievably dramatic obviously and traumatic, both. But really, it doesn't change the steps. You still are going to use all of your income from all sources to walk the baby steps.

And that's what you're doing right now, baby step two, getting out of debt. Then three, you're going to build the emergency fund. And then four, you're going to start investing long term. Okay. And so you're going to continue to do that, and you need to do all of that regardless of the source of the income. In your case, though, the source is just unusual because it's a disability income from such a crazy situation. So, wow, amazing.

That is one check I don't mind writing as a taxpayer right there. That's one I'm happy to write. Very few things I say that about, about as a taxpayer, the check I'm thrilled to write. But that's one I'm thrilled to write. Man, wow. Shelly is with us in Chattanooga. Hi, Shelly, how are you? Hi, fine.

I had a question. Last summer I kind of got into trouble financially, and I had like four credit cards or so. So what I did is I consolidated them and just have one loan at the bank, and I have this IRA that I rolled over from my 401K. And they said that if I can take out $10,000 a year without getting penalized for it with no tax, and the loan is like for $11,000, and I wondered would it be smart to just take that out and pay that loan off.

How can you take out $10,000 without being penalized? Well, that's what they said. I don't know if it's my age or what. How old are you? 65. Well, you won't have any penalty on anything you take out. The only thing you would have would be taxes on it. And I guess what they're saying is it won't drive you into an upper tax bracket. What is your income?

Well, I make, as a nurse, about $60,000 a year, and then my husband, who's totally disabled, he gets a pension that's like about $1,800 a month. How much is in your IRA? About $120,000. Okay. a month how much is how much is in your ira about 120 000 okay i think you will have some taxes you won't have any penalties i think you will have some taxes if you take it out and pay this off um the thing is you probably make enough to just pay it off in a year if you buckle down on your budget couldn't you you mean like stay off of amazon and stuff yeah maybe maybe you don't push that little prime button anymore there's crap showing up at your front door huh yeah take that app off

your phone it's not been a blessing i can tell by talking to you hey listen you don't want to be broke no and that's not a good idea. I'd like to retire next year. Well, then you're going to have to stay away from Amazon. Yes, I know that. Okay. Wow. Because all I owe is that and then my car and then what's left on the house. How much do you owe on your car?

About $20,000. Okay. Here's what I would tell you. Larry Burkett used to say that debt is not the problem. It is the symptom of another problem. Okay? And so your debt is not the problem. And if we make the debt go away, guess what?

In your case, and in most of our cases, by the way, we didn't solve the real problem. So what's the real problem at your house? The real problem is you guys are real problem at your house the real problem is you guys are not on a detailed plan that gives you guardrails and keeps you from overspending thus amazon appears yeah my husband like i said he's totally disabled because he's not he can't do anything yeah but that doesn't mean that doesn't mean you can't control your spending no that's right okay i want to go to that financial peace university all right you can't control your spending. No, that's right. Okay. I want to go through that Financial Peace University thing. All right, you can go.

I'll send you. Oh, really? Yeah. Take him with you. Can he go with you? No, he can't even sit up in bed. I'm taking care of him and working at the hospital. Oh, my goodness.

Okay. Well, you go through the class, and what I want you to do instead of cashing the IRA out is I want you, I want Shelly to get control of Shelly. Okay. Because I think that's going to be a bigger blessing than just getting the debt paid off. And then the debt will be paid off because you guys make decent money. I mean, you're making, between all the income sources coming in,

you're probably making over $90 a year, aren't you? Yeah, maybe. Yeah, what's his disability? Huh? How much is his disability? A over 1800 a month so what is that a year 20 grand and you're making 65 so that's good that's bumping up to 90 right there so yeah you are i thought i was almost like i've done this before but yeah yeah go through financial peace university you hold on i'll have kelly pick you up but shelly here's the deal, honey. I love you, and I want you to get control of you.

Shelly, get control of Shelly. That's what changed my life when Dave got control of Dave. Changed my life. And it was the benefit of me going broke because I was out of control. I mean, I was heading over the bridge. The signs were out, bridge out, bridge out, bridge out, and all it is is press down on the accelerator. And you're doing the same thing, but you're doing it smaller.

But that Amazon, man, it'll eat you alive, kiddo. You don't get control of you. And credit cards get other people. Car payments get other people. And you need to get rid of this debt, and you're going to be able to do it. You make plenty of money to clean the debt up without cashing in your nest egg to do it. So I want you to get that car paid off and get this bank loan paid off, and then no more nervous laughs about a mistake I made last summer

because we're not going to do that anymore. You're going to get control of you, and you guys got a long life ahead of you, and you're going to need some money for it. So you can't let those people bear down on you and you be out of control. So hold on. I'll have Kelly pick up. We'll put you in Financial Peace University as my guest. And the only thing I ask is you take care of business now.

You take care of you. You do this stuff. I'll show you what to do, but you've got to go do it. It's a big deal. This is the Dave Ramsey Show. 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 800-356-4282. Zander.com. In the lobby of Ramsey Solutions, Stephen and Tricia are with us. Hey, guys, how are you? Hi, Dave. We're doing great. Welcome, welcome. Where are you guys from? Cincinnati, Ohio.

Oh, fun. Fun. About a good five-hour drive down to Nashville. Five hours with bathroom breaks and three kids, yeah. I love it. That's perfect, as it should be. Well, welcome, you guys. And all the way here to do a debt-free scream.

Yes. How much have you paid off? $246,000. Woo-hoo! Wow! And how long did this take? Right at seven years. Okay.

And your range of income during that time? $125,000, or sorry, $250,000 to start and then down to $125,000. Okay. And... Wow. during that time 125 or sorry 250 to start and then down to 125 okay and um wow okay i'm guessing with seven years and such a big amount that's your house that's correct you got it you paid off your house i'm looking at weird people i love it congratulations you guys very well done that is fun how does it feel to not have any payments in the world not even a house payment oh my gosh well we just paid it off yesterday so this is a new feeling okay all right hadn't even you hadn't had the mathematical hit the checkbook yet with no house payment yeah we'll see that during the next budget window here wow that is so cool you guys how old are you two

47 wow 48 all right and not even 50 in your houses paid for. You are so set. This is amazing. What's this house worth? About $290,000. Wow. Good for you guys. Very fun. Okay. So tell me the story. What happened all seven years ago that got you started on this process? Well, this is kind of unusual, but it started when our divorce papers were written in 2009. It was August, and there was really no hope for our marriage. We had three little, they were little then, but God had a different plan for us. He truly did. We had a lot of people praying for us, people we didn't even know were praying for us, friends of friends of friends, and he worked a miracle. He changed our hearts.

He changed our marriage. And he led us to our church, our new church, with our pastor, Matt Codora, right here. Wow. And friend. And when we were there, we met some people at our new church that highly recommended your class, Financial Peace University, and it was being offered at the church. I have to be honest, I hadn't heard much about you before. I knew your name, but that's about it. There's a lot of people haven't. It's okay.

Yeah. I'm sorry, but it changed quickly because we signed up for the class nearly five months after our divorce papers were written. We had already burned them that New Year's Eve. And we decided at that point that God had taken us this far on this journey, that it was time to trust him implicitly with everything, including our finances, which we thought we were really good at, by the way. And we decided whatever Dave says goes. And we went through the class, and seven years later, here we are. We've facilitated three classes so far, and we're doing our fourth one in January. Wow.

So the marriage trouble that you were in at the beginning of this story, did money problems have any part of that? Money was not really a driver, really just because God problems have any part of that money was not really a driver really just because was god wasn't a part of our marriage we just weren't in a good church we weren't you know following god's word on anything really so um when he crashed into my life good old-fashioned selfishness yeah absolutely yeah that's usually what happens in that situation is that what it was yeah absolutely that's happened around our house sometimes in 35 years of marriage that's happened a couple times yeah that can that can come up wow and so it was? Yeah, absolutely. That's happened around our house sometimes. In 35 years of marriage, that's happened a couple times.

Yeah, that can come up. Wow. And so it was kind of winding down. So I've got to go back because it's such a great story, and you've been so open about it, and I appreciate that. So what was the first thing that happened? Because it's not anything to do with this debt-free story. Debt-free is kind of the end of the financial part of this big miracle story overall.

But you had the divorce papers written. What happened? What was the stopping? What stopped it? Yeah, it was really God crashing into my life. I was Saul on the road to Damascus, and he just crashed into my life and said, I have other plans for you. So you just woke up in the middle of the night?

I mean, what are you saying? I was at work, actually, and I felt like I was going to lose it. And I just had to get in the car, and I drove to a parking lot, and I lost it. Okay. And when I came to my senses, I was in a parking lot of a church. So I just went in and prayed and turned my life around. Wow. Not this church? Not this church. I was actually out in my work. Just a church at that time. Okay. And actually I was talking to somebody who was trying to turn me around out in

Colorado, my sister-in-law Karen. I got on the phone with a pastor out there and told him what had happened and what do I do, you know? My heart was on fire. What do I do? And he actually connected me to a church that was less than two miles from our house, which is where we are now. Okay. And what's the name of Pastor Matt's church? Faith Presbyterian Church. Faith Presbyterian Church. Okay. Very cool. It's in Mount Washington. Yeah, right near us. So you drove out of work, losing it, end up in the parking lot, and you and God have a good conversation. Yeah, mostly him talking to me. Yeah, yeah. You were ready to listen by then. Yeah. And so you call Tricia and go, let's work on this.

Yeah. And like I said, I wasn't sure what to do. My heart was on fire. I needed to understand God and the relationship. And I needed to get myself right before I could be right for anybody else. So you're what, 40 years old roughly? Yeah. Or probably 39, I guess.

I was right around 40. Yeah. Wow. So Tricia, you get this call from this guy that you really didn't like right then. And he says he's been in the church parking lot talking to God. What did you do? Roll your eyes? I didn't believe it.

To be honest, I didn't believe it at first. I thought so. Okay. Good for you. But God worked on my heart, too. Yeah. He really did. So you softened up.

We both did. Yeah. And Pastor matt helped lead us through that process god is god is good yeah god is great wow so the marriage starts coming back together you guys start talking you start looking towards the future and the money piece is just a piece of it and it pops up five months later you go into financial peace and it's like hey whatever we're doing we're doing it all in now. And so, Dave, whoever, God, whoever, let's do it. Yeah.

And so now seven years later, here we sit with a paid-for house. You got it. And, you know, the paid-for house is really, really cool, but the rest of your story is better. We get some cool debt-free stories, and this is a cool debt-free story but this is a better life story absolutely this is very very cool there's a whole family restored here and kept intact with this marriage and a future and a legacy that has changed and um i mean when you have an intersection with jesus in the parking lot man i mean it changes everything changes the trajectory of your eternity way to go guys very cool stuff and what a great

story to connect up with a great church and great pastor and to the point he came with them for those of you listen for those of you looking deeply into your radio pastor matt came with them he's their cheering section here so that's pretty cool that's pretty cool i get moms and dads and brothers sisters and friends showing up to support on Debt Free Screams. Occasionally, I get a pastor, but this is special. Very well done. That's very neat. Very, very neat. Okay, so the normal question is, what do you tell people the keys to getting out of debt are?

Are they different because of everything you all went through here? There's the mechanical things, but was there something heart thing that happened that was different? Or is it just the normal stuff? You can tell me whatever you want. Tell me, I don't care. I would say, you know, it's the why.

You know, figure out your why. Yeah. How are you doing this? Your why had to be huge. Yeah. Yeah. Yeah, it was already there. So, you know, I just,

that was in my heart and I was just ready to run. So, yeah. The big picture makes the little decisions a lot easier. Yeah. Oh, yeah. Yeah, you can do the little sacrifices if you can see the end of the game. Right.

Yeah. Very cool. Very cool. What was the hardest part after you have this Damascus experience, this mountaintop experience, and this huge learning curve over that 18 months, that initial 18 months or so that involves you starting Financial Peace. After that, it starts to cool off a little bit.

Life comes back in. I mean, seven years you kept at this. So what was the hardest part to keep it going? Keeping the free spirit in line. You! You! Oh, okay. So what did the free spirit do when. You! You! Oh, okay. So what did the free spirit do when she was out of line?

Oh, I would just not follow the budget to the line. I learned, and I learned, and I was never perfect. All right. Connor and Brendan and Reed are with you. Stephen and Tricia from Cincinnati, Ohio. House and everything. $246,000 paid off in seven years. Count it down.

Let's hear a debt-free scream. Three, two, one. We're debt free! We're debt free! Well done, you guys. That is fabulous. This is the Dave is Hebrews 11. Now faith is the assurance of things hoped for, the conviction of things not seen.

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Today's question is from Justin in New York. I recently fell in love with the tesla model 3 i was wondering if at some point in the baby steps it is okay to splurge on a nice car i make 50 000 a year so it would take me a few years to save up and pay cash for it do i need to make more before i consider this sort of purchase? Well, I'm not familiar enough with Tesla to know what the Model 3 is, nor do I know what it costs. So I'm having trouble putting implications to your question.

How much? $35,000. Okay, a guy in the lobby says $35,000. And we can trust guys in our lobby, so there you go. So he wants to spend $35,000 on a car and he makes $50,000. Okay. Guy in the lobby says $35,000 and we can trust guys in our lobby. So there you go. So he wants to spend $35,000 on a car and he makes 50. No. There you go. That's an easy answer. Here's the thing. Okay. Cars, anything with motors in them, even if they're electric motors, goes down in value quickly. That includes Teslas, which is, you know, an interesting experiment. And a lot of people are loving these cars. I'm not dissing the cars, but the company's hanging on by a freaking shoestring. And if it goes belly up, you know what you got? A dishwasher on wheels, baby.

I mean, you got a problem. You got a dishwasher on wheels, baby. I mean, you got a problem. You got a real problem. And so, you know, ask anybody that owns a DeLorean what happens when something goes broke, okay? Ask anybody that owns something, you know, do I need to keep going? A Saturn, what happens when they close up a brand, okay? Very heavy drop in prices. You make $50,000 a year, you should not have more than half your annual income tied up in all of your vehicles combined. So if you're a single guy making $50,000 and you want to put $25,000 in something and you pay cash for it, okay, as long as it's brand new.

Extra heavy risk on something experimental like a Tesla. And I understand they're good cars. I've got no issue with the quality of the car. I've got no issue with the performance. I understand they're really fast. I've got a good friend who's a jet pilot that owns one. So I know they're probably pretty good because those guys are all anal about mechanical things. And so, you know, I'm sure it's a fine vehicle. I don't have any personal knowledge of it.

I don't own one. I need something that makes noise, and so it bothers me. But lots of noise. I'm a redneck. But nothing against Tesla, in other words, except that it is a very narrow market, an unusual vehicle, and the home office is hanging on by a thread. So, you know, this is something you buy when you have the money to throw away. In other words, or you get such a good deal on it that it doesn't damage your finances. You do not spend $35,000 on a vehicle of any kind when you make 50, even if you're

paying cash, because you're putting money and stuff that goes down in value. In the case of an unusual vehicle like we're talking about, it's going to go down in value even more. And so, no, no, I wouldn't do that. Now, if you're buying one for $20 and it's used and you want to pay cash, it's still a big risk. But as long as you're paying cash and it's under half your annual income, I'm going to be okay with that as long as it's used. Tony is with us in Baltimore. Hi, Tony. How are you?

I'm stressed, Dave. Uh-oh. How can I help? All right, so here's the deal. My mother-in-law is the co-signer on my wife's student loan and her car loan, and we're trying to follow baby step two. My wife and I did FPU, and we're trying to to follow baby step two my wife and i did fpu and we'll both work at two jobs i'm driving lyft even though i have a salary but anytime we don't pay on the

student loan my mother-in-law pays on it and we catch the backlash because she doesn't tell my father-in-law why wouldn't you pay on the student loan if you're banking on if you're out there working your butt off working baby step two well it's a little bit further down i've got a bunch of medical debt and a bunch of stuff from my first marriage if we're going by numerical value no i didn't tell people to not pay other bills in the debt snowball it's below the line right now after we pay rent after we you don't have the money to pay all your bills you're not in baby step two okay yeah that's where bills. You're not in Baby Step 2. Okay. Yeah, that's where I'm at.

You're in Baby Step 0.5. Yeah. You've got to get current on everybody first. So what's your household income? It fluctuates, I'd say, between $80,000 and $90,000. Okay. And how much is the student loan debt? $80,000. Good Lord. 80 and 90 okay and how much is the student loan debt 80 000 good lord and how much is owed on her car six i'm actually paid 200 a week on that to get it paid off faster good that's going to free

up some room uh wait a minute you're paying extra on it well i'm I'm paying $200 a week. Is that the normal payment? No. So you're paying extra on it? Yes. Meanwhile, not paying the student loan on time? Yes. Wrong. Wrong.

So first rule is let's get current with everyone before we pay extra on anything. Okay. And I don't blame you for wanting to get her out of your ear, and I'm trying to help you do that. Okay. Okay. So you have $6,000 and $80,000, and you've got medical bills. How many medical bills?

I lost count. I didn't have health insurance when I was younger. Oh, Lord. And is a bunch of that in default? Yeah. Have you got a bunch of it on payments, or are you just paying it as you can? I'm paying it as I can. Okay. How much total is that?

Obviously, my wife figured all of that out. I don't have it sitting in front of me. Well, give me a guess. 20 or 200? I'd say about $20,000. It's a lot of little stuff. Gotcha. A lot of little ankle biters. Okay.

What other debts? I owe $7,000 on a car that was repossessed when I was younger. Are you paying anything on that? Not right now. Good. Okay. Don't. Right now. Okay.

The medical bills that do not have any payments on them that you haven't worked out a deal with, don't pay anything on them. Set them to the side. Set the repo to the side for now. What other debts have you got? We owe about six grand on my car. Okay. So six grand each on two cars and you're making 80?

Good. Did you say your household income was 80? Give or take. My wife's a server okay and how much is uh and how much is your rent uh 11 50 okay you guys need to do a written budget and you need to personally get involved and see the numbers in the budget so you know what they are and can answer these questions when you and i talk again. Gotcha. Okay. You need to get more involved because she's carrying all the weight of this by herself, and she's having to cringe every time the phone rings and the ID says her mom's number.

So you guys make enough to pay minimum payments. If you don't pay anything on the medical bills except what you've already agreed to do and you don't pay anything on the repo right now and you pay the student loan minimum and you pay the car payment minimums you make enough to do that and eat and still have money left over to start working your debt snowball gotcha so get current stay current that's then let's save a thousand dollars maybe Save $1,000. Maybe step one. I got that. Okay. You got more? We capped it at $1,000, and we kind of resell it. I'm in the middle of a custody battle. Okay. All right.

Do you have any other money in any kind of investments? No. Okay. All right. Good. So let's pay minimum payments on everything, walk through a bunch of those ankle biters. Any of the medical bills that you promised to pay, payments on everything. Walk through a bunch of those ankle biters. Any of the medical bills that you promised to pay, knock them out.

The ones that you're not paying anything on, set them over on the side, like I said, okay? Then let's clean up the medical bills you're paying payments on, the two car payments first. Then you stay current on the student loans. Then we'll go and do settlements with those old medical bills and that old repo. You can settle that old repo for about $1,500 if you negotiate it. Be sure you get any settlements in writing, and be sure you do not allow them to have electronic access to your checking account. So, there you go. Get after it, dude.

Hold on, I'm going to send you a copy of the book, The Total Money Makeover. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive, and it could be you this year.

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