The Ramsey Show - App - What To Look for When Buying Your First Home (Hour 3)

Episode Date: January 6, 2021

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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. Christy Wright, Ramsey Personality, is my co-host today.

Open phones at 888-825-5225. That's 888-825-5225. Mary in McAllen, Texas, starts off this hour. Hi, Mary, how are you? Hi, Dave, how are you? Thank you for taking my call. Sure, what's up? Okay, so I hopefully, God willing, about next month, I should get baby step three done,

six months of expenses for emergency fund. My question is, because my six months of expenses is basically the same as what's left to pay off on the mortgage. Should I use that fund to pay off the mortgage early and then build up my six-month expenses all over again? Because with that mortgage bill gone, it'll be a lot easier to build up six-month expenses. Unless you had an emergency in the meantime. Right. So I have one-month emergency expenses in cash here in my home,

but the rest of it is the six months. So technically I'll have seven months. Okay. Well, I wouldn't have seven. I would have six as a max. You can have anywhere in the range of three to six, but I would not go below three. Paying off your home is exciting, but it is not an emergency.

Okay. And I don't want you to have a paid-for home and have an emergency and no money. Okay, I agree. So let's just take a little bit more time and get the house paid off. But if you want to dial it down to three months and you're comfortable with that from six or seven, then use that four towards the idea then yeah that could move you forward i'd be okay with that but i wouldn't go below three months emergency fund uh the baby steps are in that order for the reason

that being debt free other than your home having your emergency fund in place that those are foundational things to create stability in your life when crap happens like pandemics you know this is your fault you get people so excited they just want to pay it off so fast i have had this call every time i'm on the show with you can i use this money this savings whatever to pay off my home early they go to these extremes it's because you get them so motivated and you get them so worked up and then they're just ready to do all the steps all at one time this is your fault it is my fault so i get the opportunity to clarify what i really meant but yeah it's awesome that she's excited though you know like that's awesome and here's the thing the truth

is if the if i was sitting in that situation that's the exact question i'd be asking because i'd want to be done yeah Yeah. I want to go. I want to run. I can see the finish line. I want to run through that tape on the finish line. I want to finish. I want my time to be over. I want to be done.

I want to move on to the next thing. Check that box. Have accomplished that goal. And I am a, Rachel talks about in her new book, Know Yourself, Know Your Money, the scarcity people and the abundance people. Scarcity people do not ask this question. Yep. Abundance people ask this question. That's right.

Because abundance people assume there's not going to be an emergency. That's right. During the time that you don't have an emergency fund. That's right. You know, I saw Rachel, speaking of, I saw Rachel put something on Instagram. This was a couple weeks ago, and it was a picture of a gas tank where it's like half empty and it's like i need to fill up and then there's another gas tank that's on e and it's like i got plenty of room that is me i run on fumes my husband's filling up if he's got any amount of gas it's so true we just look at this same amount completely different isn't that funny

it is uh but that's a you know and again there's nothing wrong with being an abundance person there's nothing wrong being a scarcity person but you just always know who's asking that question. That's right. And you don't want to go too far on the extremes because that's where you find the toxicity on any of these tendencies that Rachel talks about. And that's one of them. That's a good spectrum right there to think about when you're looking at questions like this. Is it because I'm an abundance person? Because abundance people like me and you, we think we can out-earn our stupidity.

Oh, I told Matt the other day, I go, see, money's just so fluid. You just go get more. And he's like, what is this hand motion? What is this? What is this thing? I don't know. Go get more. It goes out.

It comes in. It goes out. It comes in. Go get more. Go get more. He's like, yeah, no. He's like, who are you? I don't even know who you are.

Right, exactly. This is great. But I love your answer there. I want to go back to that really quickly. I love your answer because it doesn't have to be all or nothing. She's got seven months of emergency funds. She can have three months of emergency funds, take four months worth, put it towards the mortgage. She's making a huge leap there.

Almost there. If six months does it, four months is coming pretty close. That's right. So knock her out. Get her done. William is with us in Jackson, Mississippi. Hi, William. Welcome to the Dave Ramsey Show.

Hey, Dave. How are you? Better than I deserve. What's up? So I'm planning on graduating from college this time next year, actually. Congratulations. I'll be debt- next year, actually. Congratulations. I'll be debt-free from student loans. Wow.

I won't have a home, and I have a full-time job that's lined up for this time next year, starting at about $75,000 a year with 401k options and benefits. Good. My question is, what should I do when looking for getting a new house or starting to look for my first home? Currently, I want to live outside the city limits because inner city Texas where I live is tremendously larger than it would be outside the city limits. So what do you suggest I should do for my first house?

Okay. Well, you've established one thing you want. You know what you want. You want to be outside the city limits so what do you suggest i should do for my first house okay well you've established one thing you want you know what you want you want to be outside the city um the first thing i'll tell you is you don't have to be in a hurry um i'm okay if you wait a year or two uh i don't want you to be a renter your whole life uh but you are not being like crazy man or you're not stupid or something by not buying a house immediately because the first couple years out of college is when is one of the most transitional times of most people's lives new jobs new relationships all kinds of things going on and a home is a very permanent type decision it It's something that's not easy to undo. You can buy a car and get rid of a car pretty easy by the end of the week, right? But a house, you buy it, you're going to, you know,

it takes a little while to get rid of that thing if you've got the wrong one or something. And so, you know, the first thing I would do is not buy for the first six months out of school, maybe the first year out of school, and maybe even more is okay, but at least six months, between six months and a year is fine, somewhere in there. The second thing, then, is when you get ready to buy a home, take your time in searching and really researching. It's a large purchase, and when we teach business people in leadership decision-making skills,

one of the things we teach them is he with the most options and the most information wins the negotiation and wins a good decision. If you look at two houses and you pick one out, that's like going on a date with a girl two times and getting married. Okay? And so, you know, you don't want to do that. We want to take our time, get to know this area, look at several properties. I'm looking at a second home situation right now, and I probably looked at 60 properties in that area.

Of course, I enjoy it. I'm a real estate guy, but I look at a lot of properties. I learned the square foot prices. I learned, you know where the uh the popular side of the tracks is and the popular side of those tracks is and down into the cul-de-sacs and what's the differences and i want to learn and learn and learn and learn and learn learn learn and learn and then you'll make a better decision What if I said you could totally reset your money in 90 days? Last year, you might have felt out of control of everything in your life, including your money.

But it's a new year, and it's time for a new way of thinking. You can take back control of your money. So if you're ready for a reset this year, then join me, Rachel Cruz, Chris Hogan, and Craig Groeschel at Reset Live, our free live stream on january 12th we're going to walk you through exactly what you can do in just 90 days to kick start a better year with money we'll help you dream about the life you really want and set solid goals for you to make it happen then we'll show you faster ways you can pay off debt and save money make the reset live day one rsVP for the free live stream by texting RESET to 33789. Text RESET to 33789. Christy Wright Ramsey personality is my co-host today. Open phones at 888-825-5225.

Thank you for joining us, America. We're glad you're here. Ezra is with us in Chicago. Hi, Ezra. How are you? I'm doing all right. I can't complain, considering how the year's been last year. So it's been pretty, I would say 2020 the year horse year of my life um made some pretty

poor financial decisions and having to pay for those now and just um looking for the best way to to get out of that cool i understand i've been there myself brother how can we help So about 80K in debt, making currently about $27,000 to $3,000 a month just recently was promoted to area manager. So I'll be starting that in April, and that pays very nicely. I'll get a startup bonus, a moving bonus as well. So I'll be making about 50, I think about 55, 60K plus the startup bonuses. But definitely looking to get out of debt. Because I've actually never been in debt before in my life, so this is a whole new experience for me.

What kind of debt is it? And, um, so it is some of it. I mean, it's kind of like all the work is with 2020. Um, I apply for a,

for, um, a number of things such as, um, from rent to, um, utilities. And, um, I apply for, a number of things such as from rent to utilities, and I applied for just different aid, and some of it was supposed to be granted,

but for whatever reason, it was denied. I bought a car, and I ended up returning that because that was just very, it was not a wise decision looking back. So what is the $80,000? Break it down for me. What do you owe $80,000 to? Okay. Okay.

So for the car, I owe about $20,000. And that's a repo fee? That's the deficit on the repo? Right. Okay. Right. I turned it in. Got it. that's a repo fee? That's the deficit on the repo? Right. Okay. Right, I turned it in. Got it. I gave it back to them.

Yeah, it's a voluntary repossession. So you owe $20,000 deficit. You lost $20,000 on the transaction. So what's the next thing? Okay, so the next thing, so I have about $10,000 in student loans. Mm-hmm. And then I have about $8,000 in housing. So I was actually supposed to be approved for that amount during 2020,

and so I wasn't worried about it. You mean unpaid rent, bad rent on a place you used to live? Right, at a place I used to live. Okay, so you have a a landlord you owe an old landlord you owe a grand to right which which they were surprised too because they're like we don't know it doesn't matter it doesn't matter that's part of your screw up you believe the crap out of the government okay so that's only 38 what's the rest of this okay so then um i have so unemployment they want to select um what they what they helped me with during um yeah what they helped me with during 2020 it was i feel like it was their mistake

and i've tried arguing it with them um they're just like to set up a payment plan because you have to pay so so you took you got more unemployment than you were due according to them yeah how much uh seven grand total okay what's the rest of this okay so then um about, let me see, all together, 13 in credit card debt. Mm-hmm. And actually, that's it. That's 58. That's not 80.

Okay, you're right. I sort of miscalculated that. Okay, good. That's good news. That's a good miscalculation, actually. We've already gotten rid of a bunch of debt. Well done. This call is going great. All right, so the old landlord and the unemployment and the car repo,

and for that matter, even the student loan, do not require payments today. You can put the student loan on hardship deferral. Tell the rest of them, you're already in default. These are things you didn't pay that you should have paid or shouldn't have ever taken out and so you're not paying payments on any of those things right now that leaves you only with credit card debt okay for right now first and so chop up all your credit cards we're going to get you on a budget we're going to tear into these credit cards as fast as we can and listen you get no life because last year you made a mess,

and this year you got no life because you're going to be doing nothing but working all the time. Six jobs. You're not going to go out to eat unless you're working in a restaurant. You are not going to go on vacation for dadgum sure. You are broke and deeply in debt. You need to get in attack mode. Do you agree?

I agree. 80 hours a week, six jobs, delivering pizzas, Uber Eats. I don't care what you're doing, cutting grass, blowing leaves. I don't care what you're doing, man. You're going to make some money, and you're going to take your regular job, too, and you're going to work all the time. No partying, none allowed. I don't even care if you have a social life at all i just want

you to work for one year and you can clean this whole freaking mess up in one year but at the end of the year you're going to be really tired and you're going to be free is that okay yeah that's okay with me you got to go bananas okay so then what we're going to do is we're going to go ahead and knock these credit cards out list them smallest largest, pay minimum payments on all of them except the smallest one, put every dollar you can squeeze out of your budget on that smallest one, then every dollar on the next one until it's gone, then every dollar on the next one until it's gone. When all the credit cards are gone, then we're going to take these other debts and list them smallest to largest and begin to work your way through them.

By the way, you're going to pay off that $ that 13 000 of credit cards in about two months okay because you're not going to do nothing else and you're going to be working a lot so the current income that you have is going to almost double yeah and you're going to throw it all all every dollar you're going to eat and keep your lights on and take a shower and go back to work and that's all you're going to do until you get this mess cleaned up and if you do that dude i can get you through this in 12 months but you're going to have to be with it man i mean you're playing for the super bowl there's no let up there's no it's game on you're going to leave it all on the field okay yeah absolutely so you knock those credit cards out you're going to leave it all on the field, okay? Yeah, absolutely. So you knock those credit cards out.

You're going to reach over and knock that landlord out pretty quick, then that unemployment, then we'll reach over and we can start the student loans up. And, by the way, I want you to save up about $5,000 when you get down in that stuff and offer that car a $5,000 settlement on that repo. You can settle those repos for about a quarter on the dollar. Okay. Wow. I didn't know that.

Yeah, so we just got rid of another $15,000 in debt when you get down there. But let them sit over there and cook a little while while you work on the rest of this. And don't call them until you've got the $5,000 saved. And don't tell them you have a dime more than that. I've got $5,000. That's all I've got. If you'll take that, I can make this go away today. If you won't take that, I can't do anything.

I'll just have to wait. Don't make payments on that repo. Okay. Settle it in a lump sum with a settlement and an argument. Okay. They're used to losing money on repos. That's why they don't like them. And then you've learned your lesson, right?

You're not going to do this kind of stuff anymore learn my lesson okay there's two lessons in your there's two lessons in your in your story from it from me if i'm reading your tea leaves lesson number one is we don't buy cars unless we pay cash period as a matter of fact we don't buy anything unless we pay cash for the rest of your life if this is the worst mistakes you ever make in your life, you're going to be a multimillionaire. Okay. If you learn from them. But if you go back and make the same stupid mistake again, then you're going to be what's called normal. People that say the same dadgum thing over and over again and can't figure out why they're broke.

So don't be that guy. Okay. The second lesson is you were hoping that someone was coming to help you. You thought the Lone Ranger was coming. You thought the Calvary was coming. And you thought unemployment was a gift. And you thought the landlord was going to get a free gift from the government. And you thought, and none of it worked.

When you wait on the government to fix your life, your life sucks, people. You cannot wait on Washington to fix your life or anyone in government. You have to take control of it. These are the two lessons from your story, Ezra. Hold on. I'm going to put you on hold and send you a copy of the Total Money Makeover to show you how to do this. We'll be right back. Welcome to the Dave Ramsey Show. Christy Wright, Ramsey Personality, is my co-host today. Sean is with us in Chicago. Sean, I see on my screen you're debt-free.

Congratulations. Yes, sir. Thank you, Dave. Well done. How much did you pay off? $32,124 in about 27 months. Very good. How long did this, you said 27 months, and what was your range of income during that time?

I float right around $90,000. I'm in sales, so I peak a little below that, a little above that sometimes. Gotcha. Well done. Well done. Thank you. What kind of debt was the $32,000? Oh, it was all the normal stuff.

Unfortunately, I had reached the stage of insanity and repeated this a few times, many more times than I care to admit. But this is the final time, and I put, you know, it was the straw that broke the camel's back. So it was a car. I had a couple of credit cards that went to settlements. I had a couple of family loans. I had some medical debt that came up for some minor surgery that I had. So, yeah, it was all over the board. Okay. Wow. Well, good for you, man. So what started all this 27 months ago? Because you're

a man on a mission. Yeah, I had a job where I had a company car. And because of some of the past history with my money, it was the only car that I had. So when I left that job, I needed a car. And unfortunately, I went out and financed one, which was the quote unquote normal thing to do. But thankfully, this time I went out and got a used one at least. And the bank charged me 17.24% interest on the car. And for me, that was an I've had it moment. And I started to think about my daughter and the amount of times that I've gone through this. And this was it for me. So August 4th, 2018, I wrote down my money makeover plan after reading your total money makeover book. And so I want to thank you for the process and the wisdom and the guidance that you've given me to help me change my life, really.

Well, thank you. You did it. I'm so proud of you. Very well done, sir. Very well done. How does it feel now that you're free for the last time? Well, it feels amazing. I feel kind of like the wave was crushing me before,

and maybe I'm on top of the wave now, but I guess I'm still not used to not having any debt. I mean, I just finished paying it off in November, so I'm ready for the wave to help me build that fully funded emergency fund. So I'm still a little anxious, but I'm glad it's done. And baby step two is behind me. You've been so intense it feels a little bit surreal when you get the other side of it. It feels weird.

I mean, unfortunately, Dave, I mean, I'm 48 my whole life. I've been terrible with money. And it was a lot of it was around cars you know just being done with cars and buying new cars and then rolling the you know that in the next cars and uh for whatever reason uh just throughout my life it hasn't been my strong point but it is now uh my daughter so in May, she's probably sick of hearing me talk about it, but I'm so thankful for all the free information that the podcast provides, and the EveryDollarPlus app is amazing. I've never budgeted before in my life until I started using every dollar.

And now I do it every month. Wow. That's awesome. Yeah, it's just part of my routine. It's a totally different way of thinking, and it's changed my life, honest to gosh. And now you get to keep your money, Sean. When you get paid, you get to keep your money. You're not sending it backwards to all these bills and all your hard work. You actually get to keep your money, Sean. When you get paid, you get to keep your money. You're not sending it backwards to all these bills and all your hard work.

You actually get to keep it. And like you said, work on this baby step three. But, man, what an awesome moment where you get to let that sink in, that your money is yours. You get to keep it. So what do you tell people the secret to getting out of debt is? Because you have been very successful. Yeah, for me, you know, this program has opened my mind, my heart to a lot of different things. I had to submit to a new way of doing

things and really a proven plan. You know, so for me, that was the biggest thing was just kind of letting go. I had a side hustle where I install wireless security cameras. And I'll just give you a quick example of how my mindset has changed. At first, I was Davis. So I still had a couple of credit cards. And I went out and bought some cameras that were on sale because they were 25% off. And I thought that'd be great for my inventory, but I bought them on a credit card. And they sat at my dining room table, and I just said to myself, I wouldn't have done that had I not had the credit cards, you know, because I didn't have the cash to purchase them.

So I took them back, and that day I shredded the credit cards. There you go. And closed the accounts. Ding, ding. It's amazing how you make decisions differently when you take debt off the table. When it's not an option, just like you said, Sean, just like you did. That's powerful, dude. And the most gratifying piece, Dave, is that I changed my family tree.

Amen. So what's your daughter's name? It's Ashlyn. Ashlyn. A-S-H-L-Y-N-N. Okay. So is she there to scream with you she is all right very good we've got a copy of chris hogan's book for you everyday millionaires and um you're definitely going to be one that's the next chapter in your story my brother i'm proud of you very

very well done all right sean and ashlyn thirty32,000 paid off in 27 months, making $90,000. Changed forever. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! Whoop, whoop, whoop, whoop, whoop, whoop, whoop.

Yeah, love it. That is awesome. Love it, love it, whoop, whoop, whoop. Yeah, love it. That is awesome. Love it, love it, love it. Congratulations. That's amazing. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mess up, you measure wrong, you pick the wrong color, it's ugly,

they will remake your blinds for free. You get free samples, free shipping, and with the new promos they run all the time, you save even more. Always use the promo code RAMSY. Today's question comes from Al in New York. My wife and I are debt-free and have $200,000 between stocks and 401K. She's a real estate agent, and I'm a utility worker in New York City. Over the last year, I took my online fitness coaching business off the ground, and its monthly income is sometimes higher than my regular job.

We have a paid-off house on the Greek Athens Riviera, and my wife and I are considering moving there. She is Greek and would work in real estate there. Should I quit my job and work on the business remotely? How do I get over the fear of losing security benefits and a guaranteed paycheck, as well as fear of failure that's a lot that's a lot going on there dave yeah there's a lot happening there well the problem is you are not uh changing one thing you're changing everything everything i mean she does not have a

real estate career there she'd have to start from scratch You do not have a fitness career there. You'd be starting from scratch, except what you can do remotely. And so you're not giving up one job. You're giving up three when you leave and starting fresh on things you know about. But what I would consider is I would want to have some money saved to get you through the first six months, not the emergency fund. In addition to that, I want to have a nest egg of some kind. I don't mind you giving up your secure job as long as you're moving to something where you have a proven track record of making money and you don't in Greece. Right. Right.

And what's interesting is I love this last question. How do I get over the fear of losing security benefits and a guaranteed paycheck as well as the fear of failure? You know, Dave, one of the questions I get all the time, and I know you've heard me talk about this, is how do I know is it fear or wisdom? If you've got some legitimate concerns in a basis form, that's wisdom. That's not fear you should just push into and do it scared. This is like, no, let's pay attention and do this smart. Yeah. If you had the income from real estate and the fitness career going that was equal to what it is in the States, it would be an irrational fear.

Right. But this is rational fear. Right. I'm afraid reading your story. I mean, I want you to have a lot more of these holes plugged before you do this move. This is the Dave Ramsey Show. our scripture of the day romans 5 3 and 4 more than that we rejoice in our sufferings knowing that suffering produces endurance, and endurance produces character, and character produces hope.

Winston Churchill said, There is no time for ease and comfort. It is time to dare and endure. This is no time for ease and comfort. It is time to dare and endure. Tia is with us in Roswell, Georgia. Hi, Tia. Welcome to the Dave Ramsey Show.

Hey, thank you for taking my call, and I respect both of your opinions so much. Thank you. Thanks. Thank you. Thanks. Thank you. I'm trying to decide if I'm crazy for thinking about expanding the business right now with everything that's going on with COVID. I'm a reflexologist

and right now I rent a room inside an office space to work out of and I'm paying $250 a month, but in April the lease will be up there. The lady that I'm renting from is not renewing another five-year lease. So I feel like it's an opportunity for me to grow and expand. And I'm looking at getting a whole office suite that has,

or the one I was looking at has seven offices because it's a better deal than the ones that only have like three or four offices. And then renting out the other rooms as I rent the room now. Because normally you can rent a room for about $400 or $500. But everything that's going on with COVID, I don't know if that's just crazy or if it is actually a good time to grow. Well, it's not really growing your business. You're getting in the subleasing business. Yeah.

Yes, but I do want to become a health coach eventually, and then I would have another office as well, because with seven offices, I could rent. If I rented five of them for $400 or $500, that would more than cover the rent. Yeah, but now you're in the real estate business. Why don't you just stay in your business and rent two offices? Yeah. Yeah.

There aren't two offices available. And the problem is if I just rent a room, then I'm going to be paying $500 per full time in the area that I'm working in. Yeah, but if any of those other rooms are empty out of those seven, you're going to be paying $900. Or they don't pay their rent. Well, it's just $1,800 for the rent for that office. I know, but if they're all empty or not paying

because their businesses didn't operate while yours did, you now have $1,800 worth of rent because you got in the real estate business. It's a risk. Yeah, and that's why I'm wondering if it's crazy or not. I don't know if it's crazy, but I just think you're confusing it with your actual business goals. Well, it's not what you want to do. If you want to grow your business, you can grow your business, and it has nothing to do with you renting out other offices to other businesses.

Well, I would like to grow in that way as well because I would like to have a wellness center at some point. And the lady that I rent from now, I was asking her about it and how it's worked for her, and she said in the 10 years that she's been in Roswell, she's never had to pay her rent because people that rent rooms from her more than cover it because she's a massage therapist. So that could be part of it. Here's what I would say in this whole renting out of the rooms idea, and I want Dave to jump in. He's definitely the real estate expert.

But let's just say that you do want to have this additional space. You find a space and something other than this one or seven option, something in between like Dave and I are talking about, and you find a place that has two to three rooms that you can afford all three rooms if all three rooms are not rented out. And then anybody you get to rent rooms two and three is bonus money for you. But you're not going to put yourself in a position to hope and pray and wish that these other rooms are rented out. Exactly.

Exactly. You're going to be sitting there more fretting about rentals than you are fretting about running your business. It's going to suck the joy out of your business yeah yeah you need to have a a total rent that if nobody is there but you that does not put you out of business 1800 puts you out of business and uh you're going from 250 now to 500 for one or two um or to 1800,800. I mean, if you want to go on up to 700 or 1,000 or something and have four rooms or something like that, that's fine. But I think that you're taking on too much here, and I think you're going to get distracted.

You need to focus on being a reflexologist, not a real estate broker. Yeah, and when you're spending all your time and your energy focusing on this real estate stuff that you don't know anything about by the way this is something you have to there's a learning curve to this it's taking away from you potentially growing and expanding to this health studio you're talking about wanting to add that's going to take time and energy too you're trying to do too many things if you had two or three rooms and you get that operating successfully and you make some money uh and then you go to a different model and you say okay now i want to build my wellness center or now you go to a different model and you say okay now

i want to build my wellness center or now i want to rent out something and create a wellness center now you've got a step you've taken some baby steps to get there rather than this leap uh i'm afraid this is going to set you back because i'm afraid it's harder than it sounds to you a matter of fact i know it's harder than it sounds to you to keep to keep these things full of people who pay their rent. Because, you know, it's a process to learn to put the right people in a building as a landlord and, you know, not just believe everybody that walks up and says, yeah, I can pay the rent. Tim is with us. Tim's in Lima, Ohio.

Hi, Tim. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call. I'm an officer in the United States Army through the Army National Guard in Indiana. And I just got offered a $20,000 retention bonus for three additional years of service. And currently, my two major debts are my student loan, which is like $14,700, and a car, which is like $28,000. And I was wondering that since we're in the COVID season and interest rates for my student loan are at zero

and I'm technically in forbearance even though I'm making payments on it, should I take this $20,000 bonus, which will roughly be about $14,000 after taxes, and put it towards the student loan, or should I put it towards the car, which I'm still accruing interest in? What do you000 a year. So in the end, I'll come home with about, with overtime, about $115,000. Yeah. This car is not completely in the crazy zone, but it's close. Yeah, I know. Well, I would pay off your student loan

with your bonus, and then I would either get in attack mode and get that car paid off in about 18 months, or I'd sell it and move down one of the two. Right. But the interest on it doesn't matter to me. What matters to me is that you lean into both of these things and knock them out one way or another as fast as you possibly can i mean

of all the things you told me about your whole life the thing that doesn't fit in the sentence is this car thank you for your service by the way yes i mean you're very critical thinking skills on everything but then you like lost your mind one day and bought a car. I mean, it's like, you know, the student loan's not out of hand. It's not a good thing. I'm glad you're getting rid of it. You know, the re-sign bonus is a good idea. You know, you're serving your country.

Thank you. You know, you've got a whole process, a thought process on everything until it came to this car. And it's just like this weird thing sitting there in the whole sentence. It doesn't fit. So I'm okay if you keep it because it's not more than half your annual income and you can pay it off in under two years but dude i'd get rid of the debt within a very short period of time i would lean into it knock it out as fast as you possibly can and if you're not willing to like jack up that car and get rid of it in terms of that then you need to look at moving down and out of it it's

not something you want to coast around on. If you're going to keep it, you need to get it paid for. It's like you always say, and I love this quote. I quote you all the time. You say, you can wander into debt. You cannot wander out. You have to get fired up and do something different or else that car payment will stay there forever.

I mean, it will be there forever. Sure will. That's exactly right. Well, good show today, Christy. This was fun. Thanks for hanging out. James Childs and Kelly Daniel in the booth, thank you. Great job.

Our producer, assistant producer. I am Dave Ramsey. Your host will 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. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.