The Ramsey Show - App - We've Been Doing Dave-ish for 6 Years (Hour 3)

Episode Date: July 26, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios. It's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life, your money. This is all about you. The phone number is 888-825-5225. That's 888-825-5225.

Starting off this hour is Daniel in Cincinnati. Hey, Daniel, how are you? Hey, Dave, how are you doing? Better than I deserve. What's up? I just want to thank you for all that you do. Your show has already begun to change my life and my family as well, so I'm very thankful for you.

Thank you. How can I help today? So kind of maybe a unique situation. I've heard you speak on it in the past before, but I wanted some specific clarity, I guess. So I found your show in January of this year, and I had already kind of had Baby step one and baby step three completed, but I skipped baby step two until I got the wisdom that I'm supposed to not have then.

So I've been working on that, and I've been working on that with my wife. We've been married for a little over a year now. And a big question for you is more of some guidance and maybe just kind of how to do this the right way, I guess, but it's kind of a family thing. So my wife has some student loan debt totaling $33,000 at the beginning of the year, and this was before we were together, dating or married. But to my understanding, her and her father had an agreement, I guess,

that if she were to go to a Christian private college, that he would pay for the college in full. The problem we're having now is kind of after, once we started having talks at marriage and stuff, her parents sort of talked to us about this and kind of come to an understanding on it. But apparently her mom wasn't really in the loop on that conversation and on that idea. So now we're at the point where we're having conflicting ideals when it comes to her dad versus her know, my wife and what we should do about the student loan debt. Whose name is the student loan debt in? So it's definitely in her name, but I think it's also in her mom's name. I think it's co-signed.

I'm not certain. It's not a parent plus loan then. It is a straight-up student loan. Yeah. Okay. There's multiple. There was different loans. So's not a parent plus loan then. It is a straight up student loan. Yeah. There's multiple. There was different loans. So what is your household income? Household income was aiming to be $70,000 this year. I make $40,000. My wife was making $30,000. She just lost her job about 10 days ago. She's searching. I'm optimistic about that. She'll probably find something similar within a couple weeks.

Sure. Okay, good. And what other debt do you have? So my car loan, unfortunately I bought a brand new car a year ago before I found you, and that's the debt we're working on paying off right away right now. I'm at $11,000 right now. I bought it for $18,000. Do you have any other debt other than your car loan of $11,000 and $33,000 in student loan debt? No other debt. Okay, good. And how much is in your emergency fund where you skipped a step?

We have $11,000 in there right now. Okay. Pay off your car today. Okay. And then pay off your student loans. Mm-hmm. As fast as you can. So my wife is a little uneasy about doing... I tried to get her to knock down...

to get her to agree on knocking our savings down to $1,000. Like I've heard you say before, but she's a little uneasy, I guess, about that, especially with... Well, the problem is this. You've been talking about what instead of why. Okay? You guys can get...

You make $70,000 a year, you can get out of this debt. But you can't if you work your plan. Uh-huh. Because you've helped no one get out of debt, and we've helped millions. That's right. So, I mean, you have to decide what you're going to do here. Yeah. So it's up to you guys.

You can live your life. You're adults. You're allowed to do whatever you want to do here um yeah so it's up to you guys you can live your life you're adults you're allowed to do whatever you want to do but um the way we do things when someone calls on this show is um with as much love as i possibly can um i i i want good things for you and my 30 years of helping millions of people uh what what would i do if I woke up in your shoes one year married with $44,000 in debt and $11,000 in the bank, making $70,000 a year? Well, I would work the baby steps.

And the reason they're numbered is so that you do them in order. Yeah. I agree. This is fairly easy stuff here. So, you know, now, can you talk her into it? I don't know. I don't know. Maybe she wants to work her plan.

She can work her plan if she wants. But I think the two of you need to sit down and talk about, okay, what is our goal? If our goal is financial peace, some money in the bank, building wealth, and no debt, what is the shortest, fastest, most efficient way, least painful way to get to that goal? And most high probability of getting to that goal. It would be to take your savings down to $1,000 and pay off your car today, get on a really tight budget, and attack with a vengeance those student loans because her parents aren't going to pay them because her mother's in charge. And her mother, you know, is not concerned.

So enough for her husband to keep his word. Her daddy is a wimp. He's not going to keep his word. Had I given my daughter my word, we would be keeping my word at my house. But her daddy's a wimp he's not going to keep his word had i given my daughter my word we would be keeping my word at my house but her daddy's a wimp you're going to pay the student loans mommy's in charge so just get over it and move on you don't get to control their house and they're not going to pay the bill and the bill is in your wife's name so you're going to pay the bill that's what's going to happen and i really wouldn't argue with them anymore there's no point in arguing just step back and love them where they are. And it's just how they run their

house. And that's cool. And then you guys have to decide how you're going to run your house. What are we going to do here? Are we going to just, you know, wander along and stay in debt? Or are we going to attack this with a vengeance and a proven plan? And that's what you've got to do. So hold on. I'm going to send you a copy of the book, The Total Money Makeover. I might suggest you just sit down with your wife and say, hon, why don't you read this? This is why I'm so excited. And then let's talk about it before you just reach over and pay off the car.

I'm not suggesting you push your wife around emotionally. I'm saying you explain to her why this is important and why it works and why we're doing this. And, you know, The Total Money Makeover book will help you walk through that process. Hey, thanks for the call. Open phones out here at 888-825-5225. What a sad situation. Can you imagine how that makes that daughter feel?

So you parents that have teens that are getting ready to go off to college, don't make any deals around student loans. Don't take out any student loans. What? You can't go to school without a student loan? It's federal law. That's what people think, isn't it? Now, let me just tell you, you pick a school that is an in-state school, and you study a degree that is usable and you work while you're in school not flopping whoppers at minimum wage but you know dog sitting babysitting cleaning toilets mowing grass you can make 20 an hour

doing those things most of us worked when we were in school it's not child abuse so send the little princess to work. Put her in a school you can afford. And then you don't end up breaking your promises because you're a wimp. This is the news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again.

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Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Thanks for hanging out with us, America. Kristen is in Tampa, Florida. Hi, Kristen. How are you? Hi, good.

How are you? Better than I deserve. What's up? Well, me and my husband have been doing Dave-ish for probably about six years. We've made some progress, but I still feel like we're kind of not on the same page. I've done financial peace, the home study. We do every dollar, but we make very good money, and we're still $155K in the hole. I think we're going to go ahead and do Financial Peace, a live course, together. He agreed to do that, but I just don't.

I'm to the point where I've started to reinvest into my retirement because I'm scared that we won't have enough debt. Okay. How can I help? Is it okay for me to be putting into my retirement at this point? Well, you're an adult. It's certainly legal. Yeah. You know, if you're asking me, that what i teach you know what i teach right and you know that's not it how do

i get my husband's on board but he's very passive about it he's not active about it um i've tried doing the cash flow system where I take out money for groceries. But then, for example, like last week, he went to the grocery store. You need to sit down with him with candles lit and the kids in bed and the TV off and tell him he needs to man up. That you're tired of living with a dead fish. How's that sound? That sounds brutal, doesn't it? You just told me your husband was passive. That's like the worst possible thing you can say about a guy.

A passive man. Ew, gross. No, I mean. Yeah, I mean. All right, kiddo. You guys have got to sit down and decide. Here's the thing. He is passionate about some things.

He's passionate about you. That's how you got married, or at least at one time he was. How long have you been married? Ten years. Okay. What does he love to do more than anything? What's his favorite sport? He had a back injury, and that kind of also kind of put us in a hole.

What does he love to do? What's his passion? His kids. Okay. Our kids. Okay. So he's not a dispassionate person. No.

He just is not passionate about this subject. Yes. Okay. So he's not a dispassionate person. No. He just is not passionate about this subject. Yes. Okay. He kind of just says, okay, I agree with whatever. Yeah. And so what you've got to do is tell him, guys are thick. We don't do subtlety. You have to come right straight at us.

It's the only way we hear you. And so you need to take his two hands in your hands and say, it's not okay that you're not involved in this i need you to be my man i need you to walk with me and the two of us carry this together with some enthusiasm you standing on the sidelines like a wet dishrag and saying whatever you want to do honey be the only adult in the house is not okay with me anymore i'm done with this. It's time that we go to this class together.

It's time that we both get on this horse and we both kick this horse until it runs. And when you say that to a guy straight in his face, he will hear you because he loves you. He loves those kids. And he's not a dispassionate person. He just isn't real enthused about this particular subject. But when you tell him how important it is to you and it's important to the family that he carry his part of this family he will do it he just needs some instruction and some real direct requests from you my wife my wife passively saying i wish the garbage would carry itself out doesn't work

she looks at me and says if you carry out the garbage would carry itself out. It doesn't work. She looks at me and says, if you carry out the garbage, that would be really sexy. The garbage is on the curb. Well, I mean, he works two jobs, and he's doing that to put us ahead. That's not what you said, though. It's not about his work ethic. It's about whether or not he's committed to make this family's finances go ahead and get out of debt and build some wealth and get some stability. And he's just passive about that.

He wants you to do all the work. And you don't want to do all the work by yourself anymore. You're tired of that, and you need to say so. Okay. He's not a bad guy. I was picking on him earlier, just making fun of you, okay? Okay. He's not a bad guy.

He's a good guy. But guys are thick. You have to just tell us stuff. We don't do subtlety. You just have to say it like it is. This is what I need you to do. These three things. When you do these three things, you're sexy.

When you don't do these three things, you are not sexy. Guys get that. Guys get that. We're pretty simple machines. Okay. So you're going to go to this class. You're going to go this class you're going to smile and you're going to help me with this and you're going to stick to the budget that we work together as a matter of fact you could actually lead in this whole equation and wow i would be so impressed with you were you to actually lead in this equation instead of having

me be the only adult in the neighborhood i don't want to be that anymore. And it's not because he's not an adult. It's just because you've got to let him know he's not carrying his half of this, and you are now demanding that he does, not as a witch. I hope he's listening. Not as a witch, because you're not a witch, and not as a nag, because you're not a nag. You're just communicating clearly what your feelings are. And I think i'm reading your mail am i yes okay all right so you guys go to financial peace university live no more ish

yeah and there's no shortcuts you can't drive around the barn three times you got to go through the barn submit to the plan this is how you get out of debt why so that we can build wealth and send our kids to college why so we can have a good life and be generous why because this is how you get out of debt. Why? So that we can build wealth and send our kids to college. Why? So we can have a good life and be generous. Why? Because this is how it works. The other crap doesn't work.

It's frustrating. It's stressful. You worry. You think about retirement. You think about kids. You think about student loan debt 20 years from now that they're going to be paying. You think about all these things. Yeah, you think about money too much.

Yeah, when you don't have a plan, it's called worry. Yes. Then you need a plan and be executing towards the plan, and then the worry goes away. And you can get there. You can do it. You can do this. So, yeah, go to the Financial Peace University class. You got it already scheduled, it sounds like.

Do that. But have some real clear communication with him that you need him to carry his part of this equation as part of this marriage i want you to be passionate about this for the good of our family budgeting is sexy you know that that's the message that's what you say and you know it works, works, works. It's not manipulative. It's just clear communication. And both of you then have to stick to it. Because once you get him going, he's going to call you out when you start screwing around, too. I mean, when you start messing around on this, you start, I'm going to go out to eat.

He's going, no, no, we're on a plan now. You put me on a plan, we're on a plan, we're not going out to eat. He's going to be calling you out. So be careful what you wish for. But no more ish. Ish doesn't a plan. We're not going out to eat. He's going to be calling you out, so be careful what you wish for. But no more ish. Ish doesn't work. And it's not Dave-ish.

It's submit yourself to a proven system. And when you do that, you'll get the results. Good question. It was fun talking to you. Thanks for calling in. Open phones at 888-825-5225. Stephen's with us in Seattle. Hi, Stephen.

How are you? I'm doing pretty good, Dave. How are you? Better than I deserve. What's up? So my question is about how should I break up my income with regard to saving for a house and saving for retirement? And so over the past several years, when I left school, I wasn't really saving for my retirement.

I had a little bit of debt, but about a year or so after I started listening to you, I got rid of all my debt. Good. How old are you? And I've been hammering. I'm 28. Okay. And you got your emergency fund in place of three to six months of expenses? Yes. Okay. So you're at baby step three. Now then we move to four, which is 15% of your

income going into retirement, or sometimes people postpone that a little bit and save very aggressively for a house before they start saving for retirement, in your case, restarting retirement, and we call that baby step 3B, or sometimes they don't put a whole 15% in because they want to aggressively save for the house. So you're right at the position to do that. So just sit down and say, okay, we're going to completely focus this money or we're going to partially focus this money on building our down payment. And then that will show you exactly what to do. And you can run some quick math on that. I can save $2,000 a month a year, it's $000 income, or $24,000 down payment, rather. If I can save $3,000, I'm going to have $36,000 a year.

What are you going to have in a year? Two years. You don't want to go out five years, but if it takes you a year or two to save up your down payment, you're 28, and then you start your retirement, you'll be right back. In the lobby of Ramsey Solutions, Ethan and Annie are with us. Hey, guys, how are you? Better than we deserve. I love it. Welcome.

So I met you guys on the way in this morning. You were coming in early, checking us out as I was walking in the door. And so welcome. Where do you guys live? Near Cleveland, Ohio, Painesville. It's East Cleveland. Gotcha. Cool.

And all the way down to Nashville to do a debt-free screen. Heck, yeah. Love it. How much you paid off? All right. We paid off $48,836 in 18 months. We also cash flowed our wedding in that time. It was $10,600. And then we also had to buy two newer cars for us, but used cars, and that was $7,500.

Wow. Okay, cool. And how long did all this take? 18 months. All right. And your range of income during that time? We started out around $62,000, and then we finished up around $92,000. Cool.

All right, fun. And what kind of debt was the $49,000? All around 92. Cool. All right. Fun. And what kind of debt was the $49,000? All student loans. Yes. Oh, wow. Student loans. So when did you get married? Last year, September 9th.

Yeah. Okay. Coming up on your one-year anniversary. Yep. Yep. All right. Very cool. So you cash flowed that in the 18 months.

So six months of this, you worked individually, and then a year of it, you've worked together. Exactly. Very cool. Good. Very good. of this you worked individually and then a year of it you've worked together. Exactly. Very cool. Good. Very good. Good for you guys. And you paid cash for the wedding. Did you have a good wedding for $10,000? Yes, we did. And you can do it for that cheap. We really want to be a good example for that. We had 180 people, huge venue, two venues, one

for the wedding, one for the reception. Same place but it was affordable and everybody had a good time. Outdoors, just to make it easier and more fun. Very good. Good for you guys. That's fun. So what started you on this process?

When you got engaged, you looked up and said, we've got to clean the mess up, or how does this all work? Yeah, so when we got engaged, my brother, my oldest brother, Jake, he gave us a financial financial piece or not a financial piece book he gave us the the total money makeover and she read it on the way back from raleigh north carolina where he lives home and and i was already listening to your podcast and knew a little bit of your program and that really got her on board and then about six months before we got married we're like we let's go through financial peace.

I asked Jake, and he said, yeah, it's probably a good idea. He hasn't been through the program, but he said it's probably a good idea to do it. So we did it, and we've been gazelle intense ever since that point. And we knew we kept our budgets separate for that six months, but we were looking over each other's shoulders, making sure we kind of agreed so that when we got married, we could work together. And when you join accounts and you come in together as one, you really see where the money is going. And to me, I was like, I don't want to spend, I don't need that.

I don't want Ethan to think that I went out and bought a top. I don't need it. Let's pay this debt off. Let's get it done. Wow. We did the, it was fun because on the snowball I had it posted in our room. I'm ready to cross off the next thing. And it was fun to keep just crossing off and changing those numbers to keep it going.

So who had the most student loan debt? It's funny. We make almost the exact same salary and we had almost the exact same student loan debt coming in oh so it's all even straight up pretty easy yeah love it very cool but i mean you did 60,000 plus dollars almost 70,000 dollars worth of stuff here debt reduction and other wedding and other stuff here in 18 months yeah picked up a costs. You hardly made that amount during that period of time. Yeah. We live with two roommates.

Shout out to Vanessa and Shea for living with us. Our rent was super low because of that. I worked at Advanced Auto Parts for eight months. I worked construction on the side. I did everything I could. I cook. We don't go out to eat a whole lot. My boss at Cleveland Whis whiskey actually gave me a raise because i told him what i was doing he said yeah he said well i'm gonna

help you pay off your student loan debt he was actually my professor in college so he understood you know where kids are at so it was a really good um thing for him to do and that that helped us grow a little bit that's where some of the income increase came from. Yeah. Very good. Very cool. Yeah, you get a big jump in income during that time. So very well done. So how does it feel? Amazing. Oh yeah, it's pretty awesome. We teach FPU at our church. Oh, thank you. Hope Ridge United Methodist Church in Concord. It's been a really cool, we actually got involved because we went and took FBU at the church, then met really cool people, ended up getting married by the preacher there. Wow.

And the preacher's husband, John, he helped us in the class. We've got to give a shout out to Bob Rader for running the class there. And we've taught like three times with them in various locations. And the FBU program really brought us into the church, and now I'm drumming on the praise band, and we're really involved in the church. And it's been a really cool journey. Very cool. I love that story.

That's wonderful. Even the pastor that does the marriage, I mean, the minister that does the marriage for you, you run into them through Financial Peace. That's very cool. Yeah. Very cool. Hey, folks, if you didn't know, Financial Peace is an all-encompassing Peace. That's very cool. Very cool. Hey, folks, if you didn't know, Financial Peace is an all-encompassing program.

Yes, it is. Yes, it is. It's a whole life thing. Oh, that's great, you guys. What do you tell people when you're leading these classes? Now, you did it. You're poster children, right? You did the thing. You've $49,000.

You paid cash for your wedding. Nobody can gripe when they look at your story. They've got to do the deal, right? What do you tell them the key to getting out of debt is? It's very possible. You can do it. You guys are fighting fear constantly, and Ken Coleman alludes to that a lot in his shows. And it's really true.

If you just get people to see that the fear is pushing them away from the finance. And finance is easy. It's math. It's simple. But once you open yourself up to get into that finance and really become accountable to yourself and whoever else is involved, in my case, Annie, that really gives you a huge stride. Live below your means and stay gazelle intense.

Yeah. Yeah. Just complete focus. Hustle and grind. Yeah. Gazelle intense. Live below your means and stay gazelle intense. Yep. Yeah. Just complete focus. Hustle and grind. Yep. Gazelle intense. Live below your means. Real simple.

Yeah. That's good. Yeah. You got the real practical. He's got the philosophical, right? Yeah. You're fighting fear, and you are. That's a really good word.

I like that word. That's well done. Because it is. It's a belief thing, this hope thing. It is. It's almost like, in this case, fear is the opposite of hope. Yeah. And you start to believe it can happen.

That's when the fear is pushed back, and then you start to actually do the stuff. You live on less than you make. You get more intense. Yeah. It's like, yeah, I can do this. Wah! You know what I mean? It's like, that's how it works out.

Yeah. So, very cool, you guys. Very cool. It sounds like you had a great support team around you, like more cheerleaders than detractors, I guess. Yes, yes. My family is really into it. A lot of my family does the class now, and they do the program,

and we're all trying to get them out of debt. And it's been a good ride for me. And we haven't had too many detractors. I've had some people not quite believe me, like we're out of debt. Yeah, they look over their glasses like, are you serious? You're going to be out of debt?

But we just tell them our example and then they kind of say, well, okay, maybe it is possible. It helps them. Yeah, there's power in that story, isn't there?

Yeah. It really is. Well done. Well, we got a copy of Chris Hogan's book for you, Retire Inspired, signed by the man himself. We want you to be millionaires as your next step to live like no one else so later you can live and give like no one else.

That's on the way, isn't it? Yes, it is. How old are you two? How old are you two? 28 and 29. And you can do this. You can do anything. Yeah.

Hey, you guys out there, there's some powerful millennials. I'm looking at them right here. Well done, you guys. You got this thing going. I'm proud of you very very well done good job all right it's ethan and annie from cleveland ohio 49 000 plus a wedding and two cars all done in 18 months making 62 to 92 count it down let's hear a debt-free scream three two one free scream. Three, two, one. We're God free! I love it! Wow.

Well done, you guys. Very, very well done. You know, what Ethan said there is really, really, really important. You hear what he said? You can do it. You, you can do it.

Is it easy? Well, no winning is never easy. Darling winning was never supposed to be easy. Otherwise we wouldn't call it winning. Wealth building is not easy. It's unusual. Most people don't have what it takes, but you do.

You can do this. You can do this. I'm waiting on your call. When are you going to do your debt-free screen? I'm waiting on you. Yeah. This is the dave ramsey Our scripture today, Proverbs 16, 9. The heart of a man plans his ways, but the Lord directs his steps.

Robert Louis Stevenson said, Life is not a matter of holding good cards But of playing a poor hand well That's good Condi Rice said similarly She said it doesn't matter where you're coming from It matters where you're going to Robertson, Philadelphia Hey Robert, welcome to the Dave Ramsey Show

Hey Dave, how you doing? Better than I deserve. What's up? Nothing. I just wanted you to maybe evaluate what I'm thinking about doing and my overall situation. I'm 51. Four taxes make around $100,000. I have probably four or five months left on my mortgage. I've really been aggressive towards that in the last year.

Good for you. I took a lot of my savings. Good for you. I took a chunk out of my savings, and I want to get that mortgage done with. So right now, I have in my 403B account about $560,000 and another $60,000 in a separate IRA. And I have about a $25,000 emergency fund. Mm-hmm. I have one car payment, $500 a month, and I help my daughter with college.

She comes out to the apartments and cell phone and all this. In another year and a half, I'll be paying about $1,000 a month to help her. Mm-hmm. So my question is, what would you think about, what's my, my, uh, mortgages paid? I was, I like to have a goal. So I was kind of thinking I would just really max out the four through day. That would be $924 biweekly. I'd be allowed to put in my employer puts in about 50, $50 every time I do that. And, you know, really go towards that. But, you know, I remember 2007 when the stock market went ugly.

I lost a lot of money. And, you know, right now. You didn't lose any money because you didn't take it out. Well, right, right, exactly. But I was thinking, what's your opinion on refinancing my house? It's worth about $280, $300. And taking that money and buying an investment property. No, no, no.

I'd never borrow on my home to invest in anything. Now, let's get your house paid for. And then before you max out that $403 billion, you get that stupid car paid off. $500 car payment? Yeah, well, I'll pay it off. $500 car payment? Well, it was... Yeah, well, pay it off. I know, I know. I'm going to actually double those payments.

Quadruple them. Let's get this stupid thing done. And then max out your 403B. Now, once your 403B is maxed out and your home is paid for, and you've got the college thing budgeted, then if you want to start saving money to pay cash for a house a small rental in a few years there's no problem with that if you want to do an after-tax regular mutual fund um i did a lot of that at that stage you're you're at what we call baby step seven at that point the house is paid for there's zero debt no car debt or anything

you have your emergency fund you have have the kids' college fund funded. You've got the $60,000 going there. And you're funding your 403B. If you want to start saving then to pay cash for a house, I just use an S&P 500 no-load because I'm not going to be leaving it in there that long, two or three, five years, whatever it is that it takes to build up the money to pay cash for a piece of real estate. So that's my little real estate fund.

I just build that up on the side and pay cash. But no, I'm not ever going to tell you to borrow on your home to invest in anything ever. Alan's in Boise, Idaho. Hey, Alan, how are you? Dave, it's such an honor to talk to you. You've saved our lives. Well, I'm honored.

How can I help? Hey, we got ourselves into a situation. We were working on our three to six months of expenses. We paid off everything, including our house, when Murphy slapped us silly. And we ended up doing what we said we'd never do, and we went into our home equity line of credit to the tune of about $20,000. My question for you is, do we stay intense and pay off this line of credit, or do we treat it kind of like our house payment and start investing and then just pay extra toward the thing to get us out?

I'd stop everything and pay it off immediately. Okay. Yeah, get it done, and then kick everything back in Hardcore and then cancel the line of credit Don't leave it laying on there Absolutely So it never grows back Ever ever ever again But it's not going to take you long

It's only $20,000 and you know how to do this You've done it before and just lean into it Smack it silly this time And let's get rid of it And then build your emergency fund up. Having walked where you walk, you may want a bigger emergency fund. I don't know what happened that caused that to happen and whether the probability of that

situation is ever there again, but truthfully, with Sharon and I having been broke, we've never touched the emergency fund ever in our lives because we're so paranoid, especially Sharon, that the emergency fund has its own emergency fund. And so we never get to the real one. We just touch the outer ring if we ever got to an emergency. So we're big, big piles of cash people because we don't ever want to be back there again. We don't ever want to be back there again. We don't ever want to be back there again. David is with us in Jacksonville, Florida. Hi, David.

How are you? Good, Dave. Thanks for taking my call. Sure. I've got two quick questions. Okay. We are on baby step number two. We're about $40,000 in debt between a car and some credit card debt.

And I'm in sales. Now, I get a car allowance, $500 a month. And should we include the car in Baby Step 2, or because I get a car allowance, should we handle it differently? Yeah. No, your car allowance is part of your income, and your car is in your baby step, too. Because here's the thing.

If you get fired, you don't get a car allowance anymore, but you still have a car payment. You still have a car payment. Okay. They don't, like, say, oh, you don't have a car allowance anymore, so now you don't owe anything on your car. That's not how it works. Okay. Now, also, though, my expenses, I have to put out all my expenses, and then I'm reimbursed. Yeah.

And so it's making, you know, budgeting a little hard because I don't, I can't really budget it between gas and, you know, How much are your expenses a month? How much is your expense account a month? I don't, there's not a set. No, I mean, what do you usually spend that is reimbursable in a month? It's usually about $1,500. Okay, so set up a separate checking account, and let's put $1,500 in it with a debit card on that account. Never.

And then leave it completely separate? Never, yeah. Never use that account for anything that is not reimbursable. Okay. And you'll never have to touch it again. Because every time you take $500 out or $800 out, $800 or $500 is going to come back in because they pay their bill back to you, but it's just a delay, right? Right, right.

And we were trying to do it out of our you know out of our regular checking account driving nuts uh but it was messing up yeah it'll drive you nuts plus you forget what's when you're traveling you do buy some things that are not reimbursable exactly i mean yeah shampoo is not reimbursable you know i mean you know so i don't have that issue but but you know anyway whatever right i mean whatever that issue. But, you know, anyway, whatever, right? I mean, whatever it is you're buying, it's a personal item. It's not reimbursable. You know what that is.

And the problem is that it's all commingled. So if you're on the road and you buy something that's not reimbursable, you would use your personal account for that. Right. But you'd use your expense account that we set up on the side just now only for reimbursables, and that way you'll never have to fund it again. You fund it one time, and they give you the money back each time. They give you the money back each time. They give you the money back each time, so it'll always be there.

As long as you don't go over $1,500, you'll never be in the hole, right? Right, right. So, I mean, put $2,000 in there if you want, just to make sure. But it makes your life a lot easier to just keep it very, very segmented like that, very compartmentalized, departmentalized, so you break it out. So, good question. Hey, thank you for joining us. Open phones at 888-825-5225.

Michaela says, My husband is on Facebook, thinks that the American economy is so high and with too much debt that it will soon crash worse than 2008. What are your thoughts? So what if it does? What are you going to be doing? I don't think it's going to crash,

but that doesn't change my investment strategy. I'm investing in exactly the same things if it's going to crash, but that doesn't change my investment strategy. I'm investing in exactly the same things if it's going to crash or if it doesn't crash. Nothing changes. I'm going to get out of debt either way. Nothing changes. The strategies that we use cause you to prosper in up times and be protected in down times. So use those strategies. And whether he's right or whether I'm right won't matter. 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, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.