The Ramsey Show - App - What's Your Long-Term Game Plan? (Hour 2)

Episode Date: November 8, 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. Thank you for joining us. Open phones at 888-825-5225 you jump in we'll talk about your life and your money john is with us in fort wayne indiana hey john welcome to the dave ramsey show hi hi what's up uh i would like to find out what i should do if the place i work for goes on strike. Do you have any money saved? Yes, I do.

How much? Currently, I'm on B-set four, five, and six. So I have six months of my expenses saved. How long have you worked there? Eight years. How many times have they been on strike? In my eight years, they haven't been, but in the past they have. Okay.

Well, then it's not a very often occurrence, is what my point is. What makes you think you're going to? Just all the rumblings? Exactly. Exactly. And the strike might not happen until next year so basically how long should i be saving prior to it possibly happening yeah well i mean you can see storm clouds coming if you want to build up your storm shelter reserves your emergency fund a little a little heavier just to kind of be ready.

That's not a problem. And then once everything calms down, you can just take that money and invest it, right? Correct. So if you want to build double that emergency fund or build it up during that time, you know, to eight months or nine months or whatever, that's fine. But if a strike goes on eight or nine months, you're probably looking for a new job. Okay. Right?

Correct. I mean, 30 days or a couple months or something you might go with, but I don't think you're going to sit there two years and wait on this thing to get over. No. And do nothing and your family starve, so you're probably leaving. That would be my guess. Okay. What do you do for a living?

Manufacturing. Okay. All right right and how old are you 34 34 correct okay all right but yeah you're definitely looking for a new career if this thing lingers because it's not something you want to engage in is your way of you know building wealth and so forth. Where, you know, every so often I lose a year of income. I don't think so, you know. But if it's just a short thing, then, you know, that's fine. Not a big deal. But I'd go ahead and build it up a little bit.

And that gives you a comfort. And you don't have a freak out and so forth. And, you know, I guess you work side jobs or whatever. A lot of people do that when there's a strikeout. But, again, you're going to gauge. You're not going to run through all that money. Let's say you had eight months' worth of reserves, okay, and you get down to three months' worth of reserves. You're probably out looking for something.

You're probably changing directions, agreed? Correct. Before you get all the way to the bottom of that. But I wouldn't mind building it up a little bit right now just for the comfort of it. Is that logical to you? Yes. Hey, man. Thanks for the call. I appreciate you joining us. Carlos is with us in Boone, North Carolina. Hi, Carlos. How are you? Hey, Dave. I'm good. How are you? Better than I deserve. What's up? Well, first off, let me tell you, I'm a huge fan. I'm a huge fan of you.

Thank you. And I'm a teacher. It's funny because you and Chris were just talking about teachers. I'm 25 years old. My birthday is actually next week, Saturday, so I'll be 26. All right. I have zero credit card debt. Love it.

That's the good news at first, okay? My question for you, well, actually well actually i got a couple notes to wrote down i want to tell you what debt i do have right now i have eight thousand dollars in student loans i have twenty eight thousand dollars on a car and i have sixty thousand dollars on my house okay and i have $13,000 in savings. And, of course, my retirement, which I've only been teaching for going on five years now, I've only got about $9,500 in retirement, and that's just the state retirement plan. I'm not in a Roth or anything like that right now.

My question for you is my mortgage is a 15-year adjustable rate. Okay, right now the rate's 4.25. I think I already know the answer to these questions, but I want your blessing before I go forward with it. Should I pay the house off first, or should I just proceed and do the debt snowball? What is your income? What's your household income? Between me and my wife, we make about $80,000 each.

Okay. All right. No, we would work the baby steps, which you're not doing currently. No, I kind of jumped around with that. Yeah, I would just walk right up the baby steps, and let's return to that. Stop all investing temporarily. Take all money that you have that's not retirement and throw it at your non-mortgage debts um and so that means you're going to pay off the eight thousand dollar loan

today um and then you're going to throw some other money at your is there just two debts the car debt and the eight thousand yeah yeah yeah and so you're you had thirteen thousand in the bank so we're going to pay off $8,000 car debt. We're going to take another $8,000 at the $8,000 debt, $4,000 at the car debt, and then you're going to attack that car and get it paid off as quickly as possible. I probably would consider you can pay that loan off really, really fast, that adjustable rate. Here's the quandary with it. Are you going to keep it long enough that you're going to wish you had refinanced it as interest rates come up?

Oh, no. I mean, we plan on living there for quite a while. No, I mean, are you going to keep the loan long enough? And so is it going to take you long enough to pay it off but time we pay that car off um you should be car and everything debt free in a year build your emergency fund um then you've got 60,000 owed and you make 80 i mean you could pay that loan off in probably three years working the baby steps yeah and so during that time it may go from four and a half to five and a half to six and a half to seven and a half, though. Yeah. But it's a small amount. Yeah. So and it's a small

amount owed every time it does that. So I'm probably not going to go to the expense to refinance it to us to a fixed rate just to stabilize it. If I thought you were going to be in debt 10 years, though, I would go to the expense to refinance it just to stabilize it. If I thought you were going to be in debt 10 years, though, I would go to the expense to refinance it just to stabilize it. Okay. Yeah, my goal is just to knock it out just as fast as I can. Yeah, I think you do that, but you do it at Baby Step 6, and let's get back on this or for the first time

get on the actual Baby Steps plan. Hold on. I'll send you a copy of the book, The Total Money Makeover, if you don't have one so you'll know exactly what to do. And we appreciate you being a fan. Now it's time to actually do the stuff. Kelly will pick up, and she'll find out if you've got a book. If you don't already have one, we'll send you one.

Open phones at 888-825-5225. Y'all jump in. We'll talk about your life and your money. Is it good to get mortgage disability insurance in Baby Step 2? No. Mortgage disability insurance is a gimmick. I would have long-term disability insurance, period, but I wouldn't buy it just on the mortgage or just on loans.

I would just have long-term disability insurance. It's fairly inexpensive, especially if you get it through work. That's definitely the way to do it. This is The Dave Ramsey Show. No matter what time of year it is, focusing on your family's financial plan is always a smart move. I get questions all the time about where to start and what to do first. One of the most crucial and affordable first steps to take is to protect your family and get term life insurance. I know it's not glamorous, but all the other steps mean a lot less if something happens to you and your family has no financial protection.

Getting term life insurance needs to be a top priority. I recommend 10 to 12 times your income and lock in rates for 15 to 20 years. This gives you plenty of time to get out of debt and build wealth, and I've been recommending Zander Insurance for over 20 years. They understand and live this strategy, and they will take the time to help you find the most affordable term life rates. Go to Zander.com or call 800-356-4282. It's not that expensive, it's not complicated,

and you need to do it right now. That's 800-356-4282. Matt's with us in New York City. Hey, Matt, welcome to the Dave Ramsey Show. Dave, how you doing? Thank you for taking my call. Sure. How can I help? Well, I know you always say you do what you deserve, and I think that it's time I realized I deserve better.

So I've been watching all your YouTube. Thank God I have all the data on my phone. So I have a quick question. I'm on baby step number two. I'm moving through it pretty fast, feel real confident about it, and now I'm at the point where most people are. I have student loans, and I have a personal loan. The student loans are about $13,000, and the personal loan is about $10,000.

I was just curious. So that would mean that the student loan is at the top of the list. I'm actually not paying money on the student loans because they're in deferment. I'm still in school. Would it be smart to attack the personal loan since it's accruing interest that I'm making those monthly payments, and then after that goes away, start with the student loans or just keep in the order of the snowball? Doesn't matter. Either way. You're going to get out of debt at about the same time. The personal loan was the $10,000 or the student loan?

Yes, the personal loan was the $10,000, and in a year it'll turn into. It would be next anyway. It's the smallest debt. Yes, but I'm not paying any money on the student loans. I know, but you're not paying any money on it. It's $13,000. So if you're going down the debt snowball, smallest debt to largest debt, next up is the personal loan anyway, isn't it?

Okay, yes, and then just get rid of that. Yeah, and when you get rid of that, then even if you don't have payments on the student loan, go ahead and get rid of it. If you're still in school by the time you get to your student loan okay yeah my only fear was that um paying the personal loan if when i if and when i do graduate i'm hoping to graduate within the next few months when those student loans do kick in i'm nervous that it'll be too much you know all together but i think you did answer my question as just stick with the snowball,

stick with what you say, and attack that one first. Yeah, you're going to get there. How much have you paid off already? I've paid off probably about $5,000 altogether. Good for you. Thank you. What's your degree in? It's going to be a BS in psychology.

I work with adults with autism. In a couple of months. Yeah, so I actually called the college and stopped all the other student loans that I accepted, and I'm going to be paying out of pocket for those after listening to you. Good. And what is your current income, and will your income change after graduation? So my income is a little strange, but I do make base $40,000, but there's a ton of room for overtime, so I can get up to about $60,000 or $70,000. Okay. And that's now or after graduation?

A little bit of both. If I work enough overtime, I can get to the $60,000 mark. Without the overtime, it would be after graduation. If I work like a madman with overtime, I can get there now, and then after graduation I can I work like a madman with overtime, I can get there now, and then after graduation, I can. So let's say that we're talking to a guy making $60,000 to $70,000, and he has $23,000 in debt. How fast can he pay that off? 18 months? Within a year, yeah, within a year and a half, two years. Exactly. Yeah, that's where you are. So you're in good

shape. You're going to get there. So you'll be able to not only make your minimums on the student loan when it kicks in, the other loan will probably be gone, and you'll not only be able to make your minimums on the student loan, but then on top of that, you'll be able to go ahead and knock it out really fast because you're going to be paying $1,000, $1,500 a month on that puppy when you get there. Todd is with us in Sioux Falls. Hey, Todd, welcome to the Dave Ramsey Show. Hi, Dave.

Thanks for taking my call. Sure. What's up? Hi. My wife and I have been using your principles for 10 years, ever since we've been married, and we are debt-free except for our house. I am a veterinarian, and we are from Washington State, but we moved to South Dakota to take my first job, and then a practice is coming for sale back home, so we are moving home,

and I'm buying that practice. So, we're moving in January. We listed our house here in Sioux Falls in the first of August for $210,000. That's what our real estate agent suggested. We lowered it $10,000 a month so now we're at $170,000 and we've had zero showings. $170,000? Yeah.

Over $210,000? And you got zero showings? Right. The town is about 1,500 people. Wow. So what would the property actually appraise at were you to have an appraiser come out? Probably between 150 and 160. Then why did you put it on the market at 210? Because that's supposedly closer to the comparables.

Well, comparables is how you do an appraisal. Comparables are how you do an appraisal. Okay. So where'd you get $150,000? We finished the basement of this house. No, when I asked you what an appraiser would appraise it for you said 150 but you said the comparables indicated 210 i don't understand where'd you get your 150 from the banker when we finished our basement bankers are idiots you don't need to have them use appraisals no your real estate agent should be able to pull comps in the area.

The problem you've got is not a value problem. The problem you've got is there's no buyers in a small town. Right. Your absorption rate, we call it. The number of $200,000 houses that sell around there might be three a year. Right, exactly. And that's your issue. Do you hold on them and try to sell it 1,200 miles away

or just keep dropping it and get rid of the thing? Well, I mean, what you're doing is, let's say that when it does sell, if it takes a year, it sells properly for $200,000. But instead, you lower it all the way to $150,000 to get rid of it. Okay? That costs you $50,000. A lot. And if it costs you $50,000 to lower that, how long would you have to eat those payments?

How long before the payments would eat up the $50,000? What do you owe on the property? $100,000. And how much are your monthly payments? $750,000. Okay. So what we're saying is before you drop it $50,000, you would give it five years to sell. Okay.

$50,000 times $750,000 is 60 months. Right. Yeah. Is that going to mess up my ability to... Yeah, you're going to be renting in the new place. You're going to be renting in the new place until you get rid of this boat anchor that's around your neck. But I'm not going to give up $50,000 to do that. So what you need to ask your agent is how many houses in this price range sell in a year?

Or how many houses sell in 90 days in this price range? I think we just found out none in the 90 days. So how many sell in 90 days in this price range i think we just found out none um in the 90 days yeah so how many sell in a year so what is the prognosis if we leave this thing at market value because it's not a price problem it's a problem you can't solve is that you don't have any buyers the marketplace is just super small and so you've just got to ask, you know, because I guess you could lower it all the way to $100, but at some point you've lost your tail end, right? Yeah. I'm going to plan to hold it and give it a year.

Well, and just rent and... On the other side, yeah. ...pay double payments for a whole year. Well, for $50,000? Yeah. That's $12,000 as payments for a whole year. Well, for $50,000? Yeah. That's $12,000 as payments for a year. I won't give it a year, and I'm going to wager $12,000 against $50,000, assuming that a house is sold in that area when you look back at the historical data.

If you look back and you find, okay, five houses houses selling a year in this price range in this town okay that's made that's probably what you're going to find is something like that if you find zero houses have sold in the last 24 months then you're just screwed you've lost your butt you're going to have to take the hit okay there is houses for sale no i, I said sold. For about two years. I said, I know. I don't care about that. I'm asking how many houses, $200,000 houses sold in a 20-mile radius in the last two years. That's the data I want.

If it's five, then I'm going to give it a year because I think that's what you're going to find. If it's zero, then you're in a completely disastrous marketplace, and you're going to have to take the hit. And you were somebody else's savior when you bought this thing. Wow. But I'm going to guess and say that's not zero. But, I mean, I know a guy just put a $10 million house on the market, and zero $10 million houses have sold in five years in his area.

Guess what? That house isn't going to sell. For any price. He can drop it to $5 million. It's still not going to sell. Because he's got zero buyer activity in that price range in that marketplace. Zero buyer activity. That can happen in the lobby of ramsey solutions ted and camille are with us. Hey, guys, how are you? We're great.

Welcome, welcome. Where do you guys live? Cedar Rapids, Iowa. Well, that's a bit of a haul. Yes, it is. Wow. Welcome to Nashville. And all the way here to do your debt-free scream.

Yeah. Very cool. How much have you paid off? That was $58,000 in two years. Good for you. And your range of income during that time? $90,000 to $150,000. Cool. Big jump in income in two years. Good for you. And your range of income during that time? 90 to 150. Cool.

Big jump in income in two years. What happened to your income? We went to work. Yeah, I picked up another job and had worked crazy overtime. Lots of overtime. Lots of OT. What do you all do for a living? I'm an occupational therapist at a skilled nursing facility.

Okay. So I have a sales and tech support position at GoDaddy. Okay. And lots and lots of overtime availability is what I'm trying to say. Yeah, absolutely. Okay, very cool. What kind of debt was the $58,000? Student loans.

Oh, student loans. Every bit of it was Ugly Sally. Yeah. Oh, Ugly Sally. Oh, ugly Sally. Oh, my gosh. Kick her out in the street. I love it. Good for you.

So how long have you been out of school? Oh, eight years. Uh-huh. Yeah. And so what happened all of a sudden? Because like two years ago, something happened. Well, I started looking at my kids and I was like, well, maybe we should start saving for them and stop paying for mine.

Oh, it was yours? It was all yours? Well, it was both of ours. Okay. All right. It really started about 148 years ago, and we were whittling it down, but we were just sick and tired of it. And we wanted to follow your plan. We followed it kind of halfway, more that Dave-ish plan leading up to that.

But at two years, we refinanced the house, 15-year, followed it step by step. And we got to work. What happened? What was the conversation or the thing that happened that moved you from ish to really doing it? I think I started to see the light at the end of the tunnel. I felt like it was doable versus just something that we could never accomplish. Okay. Which that will keep you intense.

I mean, you can run a half marathon or a marathon and then still sprint to the finish with that last 100 yards. You've still got a little gas in your tank. And so seeing the finish can cause you to get intense, right? Absolutely, yes. Okay. And that's kind of what happened then. So what is the secret to getting out of debt? What do you tell people when they say you paid off all your debt?

When you say you paid off your debts and they say, how did you do that? Well, I say we first started to start to budget together and really get both parties involved all in. I was a little bit more passive early on, and then I started to really look at the numbers, and then we got really focused. So we used every dollar, and we were just all in. Yeah. Yeah. When she went and got her second job, started working that.

And then I was like, well, I can't let her, you know, do that on her own. And so then I started working as much overtime as possible as well. Okay. All right. And she got involved in the budgeting, huh? Yep. So I'm the spender. And definitely if the nerd gets involved

heavily it it definitely uh goes a lot further yeah it affects if the saver gets involved yeah well and both of you work on it there's just accountability absolutely that was the other thing i was going to say is keeping each other accountable accountable yeah yeah um we also um made like a vision board um and so we had like chains. So we really got the kiddos involved. We would take links off our chains to have them involved. And they loved it. Okay. Cool.

Cool. So how did you guys get connected to us? My dad. My dad, absolutely. He's a big fan. Yeah. All right. So when you kicked it into gear two years ago, he was your cheerleader?

Absolutely. Yep. And my mom. And we got books. We were reading. We were on fire. Our church did financial peace. We went there.

Went through it twice. Oh, wow. Yep. So just keep involved. I think the other thing was we listened to you on podcasts, on YouTube, live, enough that our kids learned your phone number before they learned ours. Okay. Well, they can call anytime.

They might. That's fun. I love it. And then we had goals, too, I would say. One of Ted's dreams was to get a dog, and I am not a dog person, so at the very end we got a dog, and we just happened to name him Ramsey. Uh-oh. What kind of dog is ramsey

he's a border collie oh all right they're pretty smart yeah yeah they heard things around that's good yeah i could i could go with that that's good oh my gosh you guys went crazy you named a dog ramsey oh my gosh yes we're yelling your name around all the time oh man yeah you know you gotta we're yelling your name around all the time at our house. Oh, man. Yeah, you've got to be careful what you name a pet. We named one Heaven because the one before her went to Heaven, and so I'm out in the front yard yelling, Heaven!

The neighbors think I've lost my mind, right? Ramsey's out there praying at the top of his lungs. He's a Pentecostal or something. I mean, my guy is crazy, right? That's fun. Well, good for you guys. Well done. We got a copy of Chris Hogan's book for you, Retire Inspired.

And that's the next chapter in your story for you to be millionaires. You're on your way. You make great money. You got great occupations. You got lots of things you can do now. And you brought the kiddos with you all the way from Cedar Rapids. What are their names and ages? So we have Hayden. He's 11.

We have Eli. He's 11. We have Eli. He's 8. Will is 6. And Odin is 2. I saw Eli when I was walking in a while ago with his T-shirt. Pretend I'm a gazelle. There it is. All right.

Go for it. Fun stuff. Good. Have they been practicing their dead free screams? The whole drive. Yes. Oh, my gosh. That's a long drive.

That's a lot of dead free screams. Oh, my gosh. So they ought to be good at it then. I think so practiced up we're schooled up here all right here we go ted and camille hayden eli willa and odin 58 000 paid off in two years making 90 to 150 lots of ot and extra jobs to get her done count it down down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free!

I love it! I'm proud of you guys. Very well done. Very well done. Excellent. That's as good as it gets that's the sound of a family tree changing did you hear it four young people traveling with their parents kids all the way from cedar rapids to mark this moment that their family tree changed. You need to mark stuff. You need to have milestones that you mark things in your life, reset things. Yeah, that family tree just changed.

It had already changed, but they marked it today. Very well done. Edward is in New York City. Hi, Edward. How are you? Hi. How's it going? Better than I deserve.

What's up? So I just want to try to summarize it. I just had a big change in my life. I found out my girlfriend was pregnant, which was pretty exciting. And then a couple months after that, I found out that it's twins. Okay. So it went from pretty exciting to now I'm kind of scared. Terrified. Yes.

Okay. Yeah. I have a car loan that's got me worried. I have two years left on the financing plan. I just wanted to figure out if I should get rid of the car or if I could hunker down and budget a bit better. What do you owe on it total? I owe 17. And what is your household income?

I am currently with both my jobs making 63 to 65. Both jobs are hourly, and my girlfriend is around 25. Okay. All right. Cool. All all right when y'all getting married um once we get that down a bit more because she's got a ton in student loans so i was hoping you have twins i don't know you have twins i don't know why debt matters yeah uh i mean you're already doing everything married people do except being married and so yeah i would encourage you to do that because it's going to stabilize everything illegally and relationally and allow you guys to focus on this i think you can keep the car um you can work it through and get it paid down especially if it works for twins

um it's a good solid vehicle and if that's your only debt you can plow your way through this um i'm gonna encourage you get married immediately um you don't have to have a you know get out of debt thing you have babies it's like you know this is this is an important thing and so let's stabilize this household let's get things moving in the right direction and let's get these debts paid off as soon as possible. Is this car paid off? So good question, sir. Thank you for calling in.

This is the Dave Ramsey Show. We'll be right back. St. George, Utah. Jace is on the line. Welcome to the Dave Ramsey Show. Jace, how are you? I'm good, Dave. Thanks for taking my call. Sure, what's up? Quick question for you.

Am I making a mistake by staying on baby step 3B for four to five more years, not just for a down payment, but to actually buy a house cash before I start to invest in my 401k? How old are you? 37. Okay. Well, just run some numbers. You can jump on ChrisHogan360.com and use the RIQ calculator the retire inspired quotient calculator and look at your retirement IQ

and say okay if I don't start saving for retirement until 40 but I don't have a house payment and I invest a house payment plus I fund my 401k will I have enough? Okay. And the answer is going to be yes you will but you have to

follow through with that I mean you have to follow through with that. I mean, you have to continue to pay a house payment, even though you don't have one, only this time you pay it to yourself. Okay. And then even the house payment plus, like I said, my 15%. It won't be 15% anymore because you'll be a baby step seven. Okay, so go to baby step seven. Don't do 15% anymore.

Yeah, you just max out and put everything you can in the 401K. What's your household income? Depending on how much side work I pick up, 72 to 75 a year. Okay, all right. Well, I mean, if you're saving 20% of that plus or minus a house payment, you're going to have a lot of money when you put that in the calculator. From 40 to 65, that's 25 years of saving serious money. We're talking about saving, you know, 15, 20 grand a year.

Which I can do that. Yeah, you can. Okay. And then at my age, on my 401k, do I want the Roth 401k on my contributions? Yes, you want it to grow tax-free for sure. Okay. I wanted to ask you, I'm not sure it would be okay if I waited, like want to grow tax-free for sure. Okay. I wanted to ask you, I'm not sure it would be okay if I waited, like I said, four or five more years. Well, the only way you answer the question is, does it cause you to not be able to retire?

And so I don't want people to stay out of their 401ks and miss it for very long. But you've got a big goal here, and your big goal is to not ever have a house payment. Correct. But you've got a big goal here, and your big goal is to not ever have a house payment. And what that does is if you turn that money into investing rather than consumption, meaning you don't blow a house payment every month, you invest it instead, then the answer is no, you haven't waited too long, you're fine. But if you turn around and buy something with it every month and you consume it all, and you only want to put 15% aside, then you might be making a mistake there.

Tiffany's in Baltimore, Maryland. Tiffany, welcome to the Dave Ramsey Show. Hello. Hey, what's up? I'm calling because I'm trying to decide if I want to file bankruptcy or not. How much debt have you got? I am in $51,000. What kind of debt is it?

Loans and credit cards. I had a major medical, several major medical issues happen, and I had a disability in place, and the insurance company is fighting me. It's been a year and a half, and they still haven't given me my money, and I wouldn't be in that situation that I'm in if they had given me my money. So I just got a lawyer, and they're just writing letters basically right now because I can't afford to get a real lawyer if I'm just doing it through, like, prepaid legal. And so that's the situation I'm in.

And it's really hard because I've always had things in place and all. Are you currently disabled? Yes, I am. What's the nature of your disability? It's several things going on right now, several medical issues. So fibromyalgia and just found out I just had a test on August the 20th, and I found out I had a liver condition. So what kind of debt is the $51,000? You said credit cards.

How much of it is credit cards? Let me see. I didn't. of it is credit cards and then I have personal loans. So for instance, one credit card company is $13,000. They just sent me a letter and if I paid them $25,000, then they would, you know, I'm just going through them and calling them all and just telling them i'm having a hardship to see if they would lower how much i owe well done doing good for them to lower you don't have any money well my husband's income i was thinking but it's still not enough oh well that's part of the picture. And what does he make?

About $28,000 a year and that much because he lost his job when I first got hurt. When I first got hurt. Are you still not receiving disability? Nope. I'm applying. The insurance company had enough to tell me to apply for permanent disability through the state, but I've been in and out of work so much that now it's going to be really, really low. It's not even going to be what I could get because, you know,

it goes by the earned credit. So I've been in and out, in and out of work. So at this point, I went to a disability lawyer, and so I'm trying to find out. He said that he can't really tell me much until they go in and see if I could do a seven or if i could do a seven or 13 and then if i did a 13 he didn't know how much they were going to pay so i said i'm going to give you eighteen hundred dollars to figure that out and then i might have to wind up paying i mean you know still owing that money

i don't understand you gave him eighteen hundred dollars to file bankruptcy i didn't give him anything oh i didn't give him anything. Oh, good. I didn't give him anything. All right, so you're not paying on these credit cards or these loans today, right? No, not right now. I'm not. I'm just paying what...

So where are you going to be... Let's pretend you just didn't pay those loans for a year, and they just sit there. Okay? Worst case is they would sue you, right? Yes. And what are they going to get? You don't have anything. You don't have an income and you don't have any assets, do you?

Do you own something that's valuable? Well, I have, yes. I own two homes. I have two homes and I looked at the equity in the other home. I have about $50,000 in that house. I can't sell the house, though, because I tried to sell it before I bought this other house years ago. Why can't you sell it? Because they're selling houses in the area like for $60,000 and $70,000. Some of them, you know, the Aria, the houses in the Aria are going for like $1,000, like

$150,000. Mm-hmm. But... Why can't you sell your house? There's a lot of them in the Aria that are... Say that again? Why can't you sell your house? The one over...

The other house that I don't live in, that's the one I'm speaking of, it has about $50,000 in it. Yeah, why can't you sell it? The one over at the other house that I don't live in, that's the one I'm speaking of. It has about $50,000. Why can't you sell it? Because in the area, you have a lot of foreclosures, and people are selling them for $60,000. And you owe what? I owe $98,000. Okay. So sell it and get out what you can out of it and pay some of your bills.

And pay off my debts with that? Yeah, definitely, before you go bankrupt. When you get ready to file bankruptcy, they don't let you keep investment property with equity and then not pay your bills. That's not how bankruptcy law works. So the bankruptcy trustee will force the sale of that property, and it will be forced to be paid against your bills. And I think you can get enough out of that to go to each one of these,

and you can probably settle $50,000 in your situation for around $35,000 if you negotiate with them. But you'd need the money in your hand to do that, and you don't have any money. So this is a way to get this all cleared up. And then in the process, of course, we've got to figure out how to get your income back up and get your household income working again because that's the root cause of all of us. And so long-term, where are you going to be in two years? Where are you going to be in a year? Where are you going to be in three years?

What's your long-term game plan and what are you doing about getting there? That's got to be your next steps because you've got to get either disability income coming in, you know, if you're due workers' comp, if you were hurt, you said, on the job, or I couldn't tell from the way you're saying that which way it was but you know any money that is due you or any money you can create you use to create your future kiddo and that's what we want you to do we want you to have a future and so you start looking out there in the into the future and saying how am i going to take the next steps to get there but as far as filing bankruptcy i don't think that's going to be advantageous to you when you've got this much owed when you've got this much equity in a property, and I think you can clear up the

debt by selling it. Selling it, taking the equity, using that money, that $30,000, $35,000 that's there, $40,000, whatever you get out of it, and settle that $51,000 in debts by negotiating with them. Get that in writing before you send them any money. But I think you can work your way through this. You can file bankruptcy if you want, but I think they're going to make you sell the house either way. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, and Kelly Daniel, our associate producer and phone screener. This is known as common sense for your dollars and cents. It's called the Dave Ramsey Show.

Hey, it's Blake Thompson, Senior Executive Producer for the show. You know you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.