The Ramsey Show - App - When Getting Knocked Down Is the First Step Up (Hour 3)

Episode Date: September 20, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. It's a free call. The phone number is 888-825-5225. And this is the show where we talk about common sense for your dollars and cents. Do you remember, I don't want to say celebrate, but do you remember dates when bad things happened? Like my wife remembers the date that her mother passed away. You remember the date that you signed the divorce papers.

You know, you remember the date. It's not like you celebrate it, you do remember it you know i'm to the point now i'm almost ready to celebrate it saturday will be september the 22nd that is 30 years to the day from when i filed bankruptcy it's been 30 years. And all the wonderful things that have happened because that happened makes me almost want to celebrate it. That's sick.

That's just wrong. But you know what? I mean, I owned a whole bunch of real estate, and if that had just been successful, I would just be a guy that owned a bunch of real estate. And there's nothing wrong with that. That would have been a good life. I would have had fun, and I like real estate, and I like dealing with the uniqueness of each property. There's nothing vanilla about the business.

It's a new adventure every day. I'm always going to be a real estate guy in my soul. But if I hadn't failed, that's what I'd be, I guess. But we all fail, don't we? You ever think about where you would be if you didn't get knocked down? I would have just been a guy that owned some real estate. Again, there's nothing wrong with that, but I mean, man, what a wonderful life I've had because I went bankrupt.

It's not the path you should take. I am not suggesting this, young people. There's a better way to get to your passion to get to god's calling on your life than i got and what's strange is 30 years i know i'm getting old because i remember the old stories more than i remember yesterday i can feel when i'm talking to one of you on the radio i can feel, when I'm talking to one of you on the radio, I can feel the emotional pain of a 27-year-old guy with a brand-new baby and a toddler that's scared out of his mind. I can feel that more real than I can feel the emotion I felt yesterday about something. And it was 30 years ago.

I guess it just left a mark didn't it it's a wound and that you know if you i cut my leg when i was a kid i still got the scar on my leg it was like a bazillion stitches i cut it really bad so that's place on my leg for the rest of my life will be sensitive you know i still don't want to touch it you know it still hurts you know it's a scar it's a wound and i guess that's what i've got on my heart and i guess you you guys too i mean you get knocked down you get knocked out of the saddle. You get thrown off the horse. You get things don't turn out like you think they're going to turn out. Well, duh, we all kind of know that in our intellect. But when we're sitting in the middle of it, we can't help but whine a little bit about it. It's not supposed to be this way.

You ever said that? I've said that. But I think you celebrate something like what doesn't kill you makes you stronger. I think you celebrate something like Romans 8, 28 in the Bible. All things work together for good

for those that love the Lord and are called according to his purpose. Even the painful, horrible things that happen to us or that we bring on ourselves with our own stupidity, because bankruptcy didn't happen to me. I caused it by borrowing too much money. I was just straight up stupid. I mean, I did stupid with zeros on the end, man. I can't claim victim status. I i mean there were some people in the

banking world that did some things that were illegal and they did some things that were morally wrong and certainly relationally and spiritually wrong they just straight up lie steal cheat they mean they're just nasty human beings but you know what i set myself up for that because i walked into the spider's light layer and then I asked the spider not to eat me. You know, come on. That's just dumb. So, I mean, I exposed myself to these people. Not all of them are crooks, but, I mean, there are some people that did some stuff that you just –

it would have been pretty easy to claim victim status, I guess, but victim status doesn't get you there if you don't go okay i get that but my part in this is i'm so dumb i was in the room you know my part in this was i mean bernie madoff is a crook but yeah you kind of just walked in there and gave him a bunch of your money too and didn't think about what you were doing so you know yeah you're a victim no question he was a crook i get all of that and i'm a victim of mean old greedy banks but and they are mean old greedy banks i'm going to use for him to this day but but it's my fault my fault fault.

My fault. There's something about doing that that changes the direction of your life. Because it gives you the dignity of making different choices. If you assume the position of a victim, then you assume you don't have any control over any of the variables in your life and you're stuck. People like me, bald-headed people, can't win. Well, I'm bald, so I'm just screwed. You know what I mean? What does that mean, you know?

My family's obesity runs in my family. No, nobody runs in your family. That's the problem. You know, you've you gotta think about this you could take the victim thing right and you can decide that it's people like me people from my neighborhood people of whatever millennials baby boomers, Xers. You know, old people. There's ageism now. It just isn't, I mean, it happens to everybody, y'all.

Bad things happen to everybody. And everybody gets a stupid card, and some of us play the whole deck. You know? So I'm going to celebrate today. This weekend is the 30th anniversary of the bankruptcy. The day that God loved me enough to change the direction of my life so that my life would have a whole lot more meaning than it was on track to have. I was just going to become a collector of stuff. Now I'm a collector of stories.

Your stories. You, when you changed your life. Yeah, you over there. I collect your stories. It's a better collection than a collection of stuff. This is the Dave Ramsey Show. Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs.

Christian Health Care Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. So if you're interested, tomorrow on our website, most of the blog posts on our blog are things that are informational or they're stories that are written by our team.

And there are things, you know, either one of the Ramsey personalities writes them or our team's writing something on, you know, life insurance or they're writing something on whatever. Something that's informational. But occasionally I write a blog and put it on there. No certain schedule or anything, but we're going to post one tomorrow in celebration of the 30-year anniversary of the bankruptcy. Noah is with us in Lafayette, Indiana. Hi, Noah. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. Sure. What's up? So I had a question about a decision that me and my wife made. We've been married since May. I'm 22. She's 20. We commute an hour to and from school each day to save on rent money. We're both students at Purdue. We bought a car off of her mom. We got, I guess, a good deal, and this is probably the part where you're going to yell at me. We got a good deal on the car. We're going to pay $6,500 for it. It's valued at about $12,000.

And her mom told us to just give her $200 a month. No, like, interest or anything like that. My question is, we're kind of in a bad apartment situation, and we were hoping to buy a house preferably before the start of next summer just because our living situation requires us to walk all of the animals boarded at a kennel every weekend and holiday and during the summer that can be you know 20 to 30 hours a weekend. All of the animals. Yeah, so usually during the summer animals get boarded while people are on vacation.

I know. How many animals do you have? You're 22. You just got married. Well, we don't have very many animals. We're taking care of other people's animals while they're on vacation. Oh. We live above a of other people's animals while they're on vacation. Oh. We live above a vet clinic that has boarding facilities.

Oh, I see. Okay. Yes. So we get discounted rent for that, but it's not necessarily worth it in the summer just because it can be anywhere between 50 and 100 dogs that we have to take care of four times a weekend. Yeah. All right. And how much to take care of four times a weekend. Yeah, all right.

And how much is your rent? $200 a month. Okay, and what can you rent something for right beside your college? Right beside our college? Yeah, so you don't have to commute anymore. The cheapest we could find would be $1,000. That's not true. Well, so in West Lafayette, they don't charge per bedroom or anything. They charge per person.

And the cheapest rent that I've seen is $500. They kind of gouge the college students because they know that they're going to get it. There are people that rent houses there that don't rent to college students. The entire town is not college students. Do you believe that statement? What was that? Do you believe that statement, the entire town is not college students? No, the entire town is not college students. Okay, so there are some people that rent there that aren't college students

and that don't pay that type of rent. Yes, they rent houses. Most of the apartments are all just college students. So go rent you a house for $600, $700 near there and move, and you do not buy a house until you're out of debt, and you need to get this car loan paid off and an emergency fund saved before you talk about buying a house until you're out of debt and you need to get this car loan paid off and an emergency fund saved before you talk about buying a house okay we do have our emergency fund good how much is in the emergency fund uh three thousand dollars okay give mama two thousand of it take it to a

thousand and let's get this car paid off as soon as possible. Okay. What is your household income? Well, when I graduate in December, our household income will be about $20,000 a year. You're getting a college degree to make $20,000? For now. What is your degree in animal science okay so what are you going to be doing take 20 000 take home i should say yeah but i mean you went to four years of school that's that's a horrible income for four years of school, dude. So we need to rethink what we're doing with the direction of that as well.

But you need to get the car paid off. You need to build an emergency fund of three to six months of expenses. You do not have that. And then you start saving for a house. And it sounds like probably both of y'all ought to be out of school before you start talking about a house. Because you're way too broke to buy a house right now. You got no money. You got no money at all. And I would move.

I mean, move over there close to the, you know. But don't make statements like all the houses are rented, dot, dot, dot. Because there's no such thing as all. There's just not. That's a fatalistic statement. It's not true. Someone somewhere does something different. You can't rent. That's a fatalistic statement. It's not true. Someone somewhere does something different. You can't rent an apartment without a credit score. Not true.

You can't rent some apartments without a credit score. True. You can't rent an apartment unless they charge per person, which you said. Not true. You can't rent some of the apartments that are in the immediate area of the college, but back off a few miles from the college, but not as many miles as you are now where you don't have a one-hour commute. But that's what I would do. I don't think buying a home is going to be a blessing to you right now. I think it's going to be a curse because you guys are so tight on money. It's going to put you in a real pinch.

Thanks for the call. Open phones at 888-825-5225. You jump up, and we'll talk about your life and your money. Chris, who's a member of our Ramsey Baby Steps community group on Facebook, wants to know, when buying a used car, is it worth getting a certified pre-owned car? Not usually. No. There's no national standards for this.

This is just a marketing thing. There are usually nicer used cars that are certified. There's nothing wrong with it. But it's a marked up sales tactic on a nicer used car is all it is. So really what you want to do is you want to look at what the actual value of a car is, study the car you're buying, and he with the most information always wins in a negotiation. So if you want to get the best deal on a car, check out our car negotiation checklist. Go to DaveRamsey.com and check out our car, DaveRamsey.com slash car checklist.

You get the car negotiation checklist because you want to know about the insurance on the car, too, because sometimes you can buy one car that's $10,000 and the insurance is double what another car for $10,000 that's a different car. It changes everything. So you want to do that, and our ELPs can help you with that. Our endorsed local providers can give you quotes on different cars' insurance, and then they'll know if you're getting ready to walk into a serious mess or not. So if you want the car negotiation checklist, DaveRamsey.com slash car checklist.

Victoria on Twitter says, Should I pay items listed on my credit report as closed? Yes, if you legitimately owe them. There's two or three things going on. There's a moral obligation. There's a legal obligation. Just because they close it on your credit bureau doesn't mean you no longer owe it, morally or legally. Now, in some areas, you have a statute of limitations that after the debt is a certain age, you technically legally do not owe it.

But I got to tell you, they will chase you to the ends of the earth for half your life, even after statute of limitations. And it's just better to go back and clean these things up. You're better off to keep the corners of your house swept out. Let's sweep them out. Let's keep things clean. And it's worth the trouble, Victoria. It is a pain in the butt, though. I admit that. It's a harsh process to go through. But I would still do it. Hey, thank you for following us on Twitter.

You can do that at Dave Ramsey. This is The Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed.

Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things

ahead. In the lobby of Ramsey Solutions, Kyle and Amber are with us. Hey, guys, how are you? Hey, Dave. Great. Welcome, welcome. Where do you two live? Ravenswood, West Virginia. Which is near?

An hour north of Charleston. Okay, almost to Pennsylvania then. Pretty close. Pretty close. Cool. Welcome you guys. Good to have you. Thank you. So all the way to Nashville to do a debt-free screen. That's right. Yes. Very fun. And how much debt have you paid off? We paid off $36,000 in seven months.

Good for you. And your range of income during that time? About $76,000. Very cool. What do you all do for a living? I drive trucks for my dad. And I work for a state farm agent. Okay.

Very good. What kind of debt was the $36,000? A big John Deere cab tractor we had to have for the farm. Oh my gosh, the whole thing was a tractor? The whole thing. Oh my gosh, and you're not even a full-time farmer? No. But you paid it off or did you sell it? I paid it off. Okay, so we still got it. Yeah, gotta have it. Okay. Had to have a cab tractor. Yeah, it's mandatory. It's a federal law. So how much acreage have you got? We got about 650 acres.

You do? Yeah. Wow. My dad. We farm it, but my dad owns it. You bought the tractor? Yeah. But your dad owns the ground?

Right. Exactly. Yep. So why did you buy a tractor for your dad's farm? Well, I mean, it's a family farm, you know. Okay. owns the ground right exactly yep so why did you buy a tractor for your dad's farm well i mean kind of like a family farm you know okay but uh family farm except not got your name on it right okay yeah okay all right oh my gosh so you guys work out there a lot then yeah we do okay are you are you doing 650 is a bunch how much of it's in timber uh i'm gonna say half and half maybe

probably you know yeah all right big farm big farm big piece of ground beautiful up there too yes pretty area of the country so well done you guys all right so we got the tractor paid off so how long you two been married um just celebrated seven years yep okay so after seven years seven months ago you look up you got this tractor debt something activated and you said, we got to get it paid off. What was that? Basically, we were tired of being normal. Pretty much our whole marriage, we would finance something, we would pay it off, and then we'd buy something else, finance it, pay it off.

And we bought the tractor, which was by far our biggest loan that we've had so far. And I looked at him, and I'm like, what were we thinking? Right. And I said, we need to go through FPU because we weren't getting it. And once we went through FPU, it was life-changing. Absolutely. So will you finance something again? No.

Absolutely not. Never. So if you finance something again? No. Absolutely not. Never. So if you need something for the farm, how are you going to get it? We're going to pay cash for it. Save up and pay. Yeah. Absolutely. We took financial peace and, you know, we learned what to teach and we're going to the

rest of our life. Okay. Good for you. Well done. All right. So you pay off $36,000 in seven months making $76,000. I mean, you rolled it back. I mean, you went on beans and rice.

We did. Pretty serious. So what do you tell people the key to getting out of debt is? I think just sticking to the budget. You really have to make sacrifices and just working together. Because before we went through FPU, pretty much I did all the finances. And then once we went through FPU, we really started working together and that made a big difference. Right. Yeah. The big key for us was going through financial peace and just,

you know, realizing the debt that we had. And, you know, we thought we had our finances right by paying off stuff and, you know, getting back in debt because, you know, we could afford the payment. But, you know, that's not the way to do things. We found out if we can't pay cash for it, we don't need it. Right. Yep. So Amber's been doing the budget for seven years, and you guys go through this class. Kyle, when you actually sat down with her and started looking at the numbers for the

first time and looking and feeling it with her, how did that feel? About knocked me off my chair. I mean, you know, it's a real, until you do a budget, you don't know exactly what you're spending. And when we did our budget, it was so amazing. The money that was spent for stuff that we didn't need, just little things that you spend every day. And it's amazing how much your income, you practically, it's extra money. Yeah, it feels like you got a raise. Exactly. It does.

So, Amber, you've been carrying the weight of this, and you were going along with it all, but you were also then trying to come back and juggle with the decisions and make things work now things change kyle sticks his nose in your budget you were in control before right uh how'd that feel it was hard at first um but it's less stress on me now that he knows what's going on exactly but i'm definitely the nerd so it was kind of hard to give that up and let him in on it.

Well, you're still going to be the one that implements things, but at least you're not making all the decisions by yourself. Right. You're not carrying that weight. The less stress is off your shoulders. Exactly. Very good.

Yeah, that's a big impact on your marriage. It is. It changes everything. And I think you probably had a good marriage before. We did. But this changes it because now you're carrying life together as reflected in the numbers. Right.

Right. Yeah. Well done, you two. Very well done. Who did you have cheerleaders? Yeah, our FPU class, you know, everybody in there. And then our parents are big cheerleaders for us. Okay.

So they were pretty cool with the idea of not having debt on this tractor. Right. Right. Yeah. I bet. Okay. Well, way to go, you guys. Very well done.

I'm proud of you. We got a copy of Chris Hogan's book, Retire Inspired, for you. That is the next chapter. You're on your way to being millionaires now. You can do this. I think Amber's going to do this. I think this is real. I think this is good stuff. Kyle, I think you're on your way to being millionaires now. You can do this. I think Amber's going to do this. I think this is real. I think this is good stuff.

Kyle, I think you're married up, buddy. Well done, you guys. Very, very well done. All right, Kyle and Amber, Charleston, West Virginia, $36,000 in seven months, making $76,000 a year. Count it down. Let's hear a debt-free scream.76,000 a year. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

I love it! I love it! Way to go, you guys! Awesome! Absolutely amazing. Very well done. Open phones this hour as we talk about your life and your money. William is in Charlotte, North Carolina.

Hey, William, how are you? Good. How are you doing, Mr. Ramsey? Better than I deserve. What's up? I've got a question. I bought a house. The bank still owns it, obviously.

I took out a 30-year mortgage. I owe $120,000 left on it. I'm at $3.75. I want to refinance, or I'm thinking about refinancing. Why? Because I want to pay it off as soon as possible. You can pay it off without refinancing it. Okay, so I can just add payments to it?

Yes. Because they're talking about this PMI thing, that it's like $50,000 in interest over the life of the loan. So I shouldn't have to worry about that. You currently have PMI? Yes. By refinancing, you can get rid of it? I can get rid of it.

They said 80% of it. Okay. And what's it costing you today per month or per year what the pmi the pf uh because you're going to go you're going to go up in interest rate i mean current rates are not 375 current rates are more like 4.5. Yeah, they told me 4.2. Okay. And they told me that if I took it now, like, it would be, I could pay it off in 12 years at $12.50 a month. Right now, with everything that I'm paying, I'm paying $8.01 a month. Okay. And, I mean, it's not going to hurt me financially to do it.

Here's the thing. Let's pretend for a second that the PMI was not there, okay, for just a second. It is there, but we're going to pretend it's not for a second. If you simply pay extra on your mortgage, you can pay it off in 12 years, okay? Now, the PMI is an extra expense, and what you need to figure out is, is that extra expense more than roughly a half a percent? Because from 375 to 425 is a half a percent. And so that's like 600 bucks a year is how much more the interest is going to cost you if you refinance.

But if PMI is 3,000 a year and you can only go up 600 a year and get rid of the PMI, then you would do that. You see what I'm saying? So you need to compare the interest rate increase of $600 a year against the PMI savings that you're going to have, and that will tell you whether you need to refinance. You do not need to refinance just to pay extra. You can do that on your own. This is the Dave Ramsey Show. Our Scripture of the Day, James 1, 2-4.

Consider it pure joy, my brothers and sisters, whenever you face trials of many kinds, because you know the testing of your faith produces perseverance. Let perseverance finish its work so that you may be mature and complete, lacking nothing. Billy Graham said mountaintops are for views and inspiration, but the fruit is grown in the valleys. Ooh, that's the truth. I'll tell you what. Good stuff.

Good stuff. Good stuff. Well, our brand new book, Everyday Millionaires, How Ordinary People Built Extraordinary Wealth and How You Can Too, by number one bestselling author and Ramsey personality, Chris Hogan, is based on the largest study ever conducted of millionaires. Over 10,000 millionaires surveyed. And the results will blow you away. William, with a million and a half net worth, said,

I'm living proof that you can come from a poor family with terrible money habits growing up, but with education, hard work, and an intentional plan, you can create wealth and change your family tree. You create your own destiny. Kathy, with $2.6 million net worth, said, I had $20 to my name at 23 years old in the early 80s. My husband-to-be didn't have much more. I never imagined we would be millionaires.

Fortunately, I had an employer who early provided comprehensive education about 401ks, and we started saving young. Chuck, $1.1 million net worth, said, I grew up in the projects. I went to public school and a state college with no student loans. I believe we, within reason, are the master of our own fates. We believe we are blessed because of our giving and hard work. Well, the Everyday Millionaire's book is on sale.

It actually comes out in January. We're doing a pre-sale on it. And you get $50 of free bonus items if you go ahead and buy it now. So we're bribing you to buy it early. The book will come in January. The Everyday Millionaire's audio book we're throwing in will come in January. And the Everyday Millionaire's e-book will come in January, The Everyday Millionaire's audio book we're throwing in will come in January. And the Everyday Millionaire's e-book will come in January, which is just around the corner.

Right now, you'll get a video lesson from Chris Hogan called How to Retire Inspired and a video lesson from me called It's Okay to Be Wealthy. So we'll send those out to you now and all the rest of the goodies, including the book, in January. All of that's only $20 at DaveRamsey.com. Or, of course, you can go to ChrisHogan360.com and get it as well. This book by Chris is going to be huge. The pre-sales on it are setting records already. It may be the biggest book we've ever done here. And it could be the most important one because it shows people that it can be done.

And when people believe it can be done, you know what? They get about the business of doing it emily is in fort myers florida hi emily how are you hi dave thank you so much certainly how can i help well i'm 33 years old and i'd like to buy a house i'm a physician so i can get a physician loan, which means I have to have 0% down and there's no mortgage insurance. There's a house that I like that's $280,000, so I need $7,000 for closing. But I still have quite a substantial amount of student debt. I would not buy a house. No. I would clear up your debt.

What is your income? $225,000. Wonderful. Yeah. Wonderful. how much debt do you have 385 000 in student loans my goodness gracious are you single private private medical school yeah i have a boyfriend but single okay all right what other overhead do you have um well right now i i made a poor choice and have an expensive rent that's due. So that's my main driving factor because right now if I rented a house, it would be the same. Do you have a car payment?

I do. I owe $18,000 on my car. Okay. All right. Well, here's what I would do. Listen, you don't have to do anything, but here's the shortest path to being unbelievably wealthy. You have a great income, and your income is going to do nothing but go up from here.

I mean, in a few years, you're going to be making $300. In a few more years, $400. That sounds good. Yeah. So, I mean, what if you said, I'm not a doctor, I work as a waitress and I make $30,000 a year and I'm going to live on that. Yeah. And you put $200,000 a year on your debt. Mm-hmm.

Like, I mean. I've been graduated from residency for three years, and about a year and a half ago I just moved literally like 25, 12-hour days a month. Good. And really just almost killed myself. Well, don't do that. But my point is this. My point is you make a huge income. You have a huge debt, and the only variable in here is how much you spend on you.

So if we can get you to spend almost nothing on you then let's say you throw 150,000 a year at this okay and you live on $75,000 a year that's not bad you know and you throw 150,000 hours a year at this debt are you not done in two years? No, you said $385,000. $385,000. Okay, so now you're done in two and a half years. Yeah. $150,000 a year, though. You see what I'm doing? I'm saying quit acting like you have any money and take this huge income and pay off this huge debt fast. Really fast.

Because what if you had absolutely no debt? I know. You would be so rich so quick. And that's what I want for you. Even with the doctor loan, I feel like the doctor loan is just a loss compared to rent. Okay, I've already answered your question. That's what I would do. You do what you want to do.

Thanks for the call. Katie is with us. Katie's in Lincoln, Nebraska. Hi, Katie. How are you? I'm well. How are you, Dave? Better than I deserve.

What's up? I have $40,000 in a savings account, and I'm wondering what to do with it. And I have a couple options, and I'm just stuck. Okay. Are you working the baby steps? Are you out of debt? Tell me about your debt. Out of debt except for a rental house and then the house that we live in.

How much do you own your home? $130. And how much do you own the rental? $80. And what's your household income? $50. And how much is in your emergency fund? That's the emergency fund.

I don't know if that's too high. Oh, okay. Well, you need three to six months of expenses. What's your household income, $80,000? $50,000. $50,000, okay. So three to six months of expenses, of household expenses. What's it take to operate your household if you had no income?

I would say we thought $2,000 to $3,000 a month. Okay, so say $3,000 times 6 is 18. That's six months. So the most you ought to have in there is 18. So I'd probably set 15 in there if I were you, and I'd take the other 25, and let's do something with the other 25. Okay. So I'd probably set 15 in there if I were you, and I'd take the other 25. And let's do something with the other 25. Okay.

And then let's look at your, you know, so now you've got your emergency fund, and now you're debt-free except your houses, right? Right. Okay, so that puts us on baby steps four, five, six. Okay, four is you need to be putting 15% of your income into retirement. You don't need this money to do that. Five is kids' college. Do you have kids in college? Are kids to go to college?

Yeah, I've got three kids, three and under. Okay. Then we've got $25,000 to start their college funds if you want to. That wouldn't be bad. And then you could throw some at the mortgage. Okay. So if you put, I don't know, not $10,000, but if you put, you can open a 529, put like $7,000 a piece towards the colleges and get them started really strong. Or just divide it by three and put it in there. I don't care.

It depends on whether you can weight it towards college or you can weight it towards that. I'm probably going to get a good oomph towards college with this money. Where did the money come from? We've saved it. Good for you. We've just continued to save it. Good for you. So with that practice of living on less than you make and you've proven that you can build wealth,

now we've got a real good start on college. We've got a real good start on retirement with what we're saying. You're completely debt free. Then I would just start throwing any extra money after this that I can find on the house. Let's get the house paid off. And then when it's paid off, then pay off the rental. And I just work it down

that way. So, really, really good question. You're doing a great job. Very well done. Very well done. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host. 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 guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live. Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern. Enjoy.