The Ramsey Show - App - When Is the Right Time to Build a House? (Hour 3)

Episode Date: December 17, 2019

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Music Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is done, 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.

Thanks for joining us. Open phones at 888-825-5225. Emily is with us in Arkansas. Emily, Merry Christmas. How can we help? Merry Christmas, Dave. So I was calling and wanted to ask you about a property my husband and I purchased this summer. We do intend to build a house there eventually, and that's what I'm asking you about.

We owe $20,000 on a car right now and intend to pay that off in less than a year, hopefully. And so we owe $50,000 on the land. Do you suggest paying the land off before we start to build? I assume you're borrowing money to build? Yes, sir. Okay. And what's the situation with your current property, current home? We owe $60,000 on it now, and we have about that much in equity as well. So you'll be selling it at the time to wrap it up.

And what are you going to spend to build on the property? Probably around $125,000. Okay. All right. And so $125,000 and $50,000 is $175,000, correct? Yes, sir. And if you rolled your land mortgage into your construction loan your construction loan would be 175 and your final mortgage would be 175 yes sir okay uh well

mine plus or minus you getting the home sold at the exact right time for your final mortgage to be less okay so what you can do is you can take out a construction loan uh get it pre-approved they want a construction lender is going to want the first mortgage position meaning they're not going to allow the fifty thousand dollar mortgage to stay in place so the first thing they'll do is pay it off and your construction loan will have a starting balance of fifty thousand okay and then they approve your plans and and obviously the property, the plans, and the land would have to appraise for considerably more than $175,000 for them to make this loan. Okay. Which you probably should. I mean, you paid the property. Right. And you're building the house.

So, I mean, let's say the house appraises, the house and land finished appraises for $225,000. You're going to be just fine on this deal. All right, so that's the game plan. Then what happens is you're going to have to have a builder that they approve, a general contractor that's licensed, a set of plans that they approve, and then as you build, you draw against the construction loan above the initial $50,000 to pay the builder until you're completed. When you're near completion, you put your house on the market and sell it, and then a permanent mortgage, a regular mortgage comes in and is put in place as the house is completed.

And so what the construction lender is going to look for is what's called a takeout letter which is where you're pre-approved for the mortgage at 175 the permanent mortgage that's going to take out the construction loan after construction that makes sense yes so all of that to say you do not have to wait to pay off the land to build the house. Okay. But we start paying, when you take out the construction loan, you pay interest. Exactly. The whole time. So we would start at just paying interest on that $50,000 and then we would just raise as, okay.

Exactly. And then as you draw down on the loan, your interest payment will increase because the loan balance is increasing. Right. As the house has reached different points of completion and the loan is paid out as the houses reach different points of completion and the loan is paid out to the builder. It's paid directly to the builder. But all of that has to work together. Sometimes you can get the construction loan and the permanent takeout mortgage from the same institution.

Okay. And Churchill Mortgage does that in some cities, and lots of banks will do it in your city. It's not unusual at all. And then they can be separate. It can be a bank construction loan, and a mortgage company does the takeout. That's okay, too. They don't have to be from the same place.

It can save you some fees if you wrap it all together because they're not going to double charge on title policies and closing costs and all this other crap because you've already done it once for the construction loan right okay gotcha that makes sense so if you wrap them together and your local bank does both or churchill does both if they do it in that market then that's what's there but they're they're not going to allow you to build it out of the back of your husband's pickup doing that. You're going to have to have a certified contractor, and they're going to approve the plan, and an official appraiser is going to appraise the property based on the blueprint as if it is completed, and that's how construction lending is done.

So, hey, thanks for calling in. Hope that helps you get started. Kristen is with us in Texas. Hi, Kristen. How are you? Hey, Dave. How's it going? Better than I deserve. What's up? Okay, so my husband and I are debt-free, and we paid cash for our house as we built it wow and so now we're concentrating on retirement good and we can afford to max out a 401k but i wanted to get your opinion on if we should just put in what the company will contribute or match it or do an ira on the side or kind of what okay think about that. Okay. We use a formula. It's kind of like rock, paper, scissors. It's called match beats Roth beats traditional. Okay?

Okay. So the most fun is the match. The second most fun is tax-free growth, which is Roth. Does the 401k offer a Rothoth 401k yes so awesome yes roth 401k for the company great okay so mathematically you get the match in there and you've got the tax-free growth the match is not in the roth the matches and after tax has to be by law. But the rest of it is Roth. Now, are the options, the mutual fund options that you can invest in inside that 401k, are they good and strong? I just started with a company, so I have a little time to research

for that. If they're strong, I would just load that puppy up. Okay. So if we can, if they are good, then go ahead and max it out. Yeah. Okay. Max it. You're in baby step seven. I'd put everything I could in there. And you can do two Roths, too, if you want to.

How old are you guys? 25 and 28. Wow, and you got it paid for. House, what's your house worth? We built it, and so we saved on labor. What's it worth? My parents have it at about $200, but we could probably sell it for like $250 at least. Way to go.

How does that feel to be in your 20s and have a paid-for house? You're rock stars. It's awesome. It's absolutely freaking incredible. Yeah, so you can do $6,000 each in a Roth IRA as well, and I would. And so get with one of our SmartVestor pros, and they can help you set that up in good mutual funds. And for that matter, while they're doing that, they can help you look at your company's 401k options, help you pick those. So I'd load that 401k.

I'd load those Roth IRAs. I'd keep the government's hand off of as much money as I possibly could. You're going to be so wealthy, it's going to be ridiculous. I just love it. This is the Dave Ramsey Show. Support a small business this holiday season that does business right. I'm talking about Grip6 belts. It's the only belt you can get online with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable.

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Go to Grip6.com and search for the Dave Ramsey page to get get 35 or more off grip six products grip six dot com Lauren is with us in Texas. Merry Christmas, Lauren. How can I help? Hi, Merry Christmas, Dave. My husband and I have a question. We are just getting started on Baby Step 2, and we're about to receive about a $10,000 settlement from an accident. And so originally we were planning to put that all towards Baby Step 2. Good.

But we are debating now because our AC unit, our heating and air unit, went out again today. We have to go to a place. And over the last two summers, it's gone out, and we've had to have work and repair done on it. I believe it's about 17 years old. I think it was when the house was built. So we're just wondering if we should go ahead and put all that towards debt and just hope nothing happens over the summer,

or should we set some aside and plan to have that unit replaced? Because every time someone comes out, of course, they're always telling us they don't know how much longer it's going to last us. Well, sure, they're trying to sell you a unit. Of course. I mean, the repair upgrade to replacement is a standard heating and air process. What went wrong this last time? What's the repair cost?

Today they came out, they replaced the motor, and it was $250. Okay. What's your household income? I think we take home, we bring home, so my income fluctuates. So in a whole month, we probably bring in like $4,500 a month. So your household income is like $70,000 a year, give or take. Okay. About.

All right. And how much debt do you have, not counting your home? About $75,000. Okay. On what? About 30 student loans, 40 credit cards, and the rest on a car. 30 in student loans, what? About 30 on student loans, 40, I guess, on credit cards. Oh, 40 on credit cards.

Okay, I didn't hear you all right ouch all right credit cards are the problem huh yes sir how long you've been working on this uh well we have how long have you been doing d Ramsey, Dead Snowball, Gazelle Intense? We're completely focused. We have not been Gazelle Intense. We want to be. Okay. That's kind of what I was sensing. And so there's two or three things that go into this, all right?

There's the practical aspect of the question that you asked. To replace your heating and air, you don't want to be without heating and air. In Texas, you don't want to be without air in the summer. That's a bad problem. You probably can fix that and patch it up for another $300 or $400 if it comes up again, and you can pull that together out of your budget. If you have that level of an emergency and keep on trucking it's not going to kill you uh the other aspect though is something happens when you sell out to the idea

when you sell out to the idea you're either forced to or you just choose to completely, completely lean into the idea where it's no longer safe. And I'm just going for it. And that's what putting the 10,000 on the debt and rolling up your sleeves and doing the budget super, super tight for the first time. And really growling and saying, we're not going out to eat and really growling and saying, we're not going on vacation and really growling and saying, I have enough purses and enough shoes and really growling and saying, honey, you can't buy any more tools. You've got enough.

And whatever it is, whatever it is that we've all been just kind of, ah, it's okay. We do a little of this, a little of that do a little of this, a little of that, a little of this, a little of that, and suddenly we end up $75,000 in debt making $70,000 a year. Right. And that's how $40,000 in credit card happens. It wasn't one stupid thing. It was death by a thousand cuts, wasn't it?

Yes, it was. And when you sell out emotionally, you're going the opposite direction from the death by a thousand cuts. Because there's a kind of a visceral sense of positive desperation. Does that make any sense? Yes. In other words, the way it makes you feel scared when you put the whole10,000 towards this debt with that limping heating and air system. That kind of thing down inside of you, it's kind of like edgy and raw and scared.

That's the thing that drives you on out of debt. That means you've sold out. Right. And a good sold out into the system, you know, and you're going to go do this. It's like ah you know and and there's there's something to that that's not all mathematics and practical that that that i've that i've watched people do for 30 years and and when they become unreasonable they get unreasonable results that's what i'm trying to say and so i would put the whole $10,000 towards it, and I would double down on my commitment and my visceral reaction to this situation,

and I would just start, you know, getting up early and working late, and I would sell everything in sight where the kids think they're next, and we would cancel vacations, and we're not doing this, and don't even talk to me about seeing the inside of a restaurant unless you're working there, and you're getting this mess cleaned up. That's what I would do. Yeah. I understand the logic of what you're laying out, but the logic of what I'm saying also works,

and it actually works better. You've got to lean into this to get the results that you hear people get with these debt-free screams here on the air. Really good question, though. Thank you for joining me. Let me talk that through with you. All right, Jason's in Michigan. Hey, Jason, how are you? Hi, Jason.

Three, two, one. All right. And I'm going to John in Tennessee. Hey, John, how are you? I'm good, Mr, one. All right. And I'm going to John in Tennessee. Hey, John, how are you? I'm good, Mr. Anderson. How are you? Better than I deserve, sir. What's up?

Well, we are very normal Americans. And I've got a kind of weird situation. My wife's sister lives with us. She lives with us since high school. I'm sorry, you're cutting away from your phone. Speak directly into it. Your wife's sister what? My wife's sister?

Yes. She lives with us. She's lived with us since high school, and she's starting college in January. Cool. She had my Buick. I bought my wife's grandma's old Buick for $1 in January. Cool. Um, she, she had my Buick. Um, I bought, I bought my, my wife's grandma's, uh, old Buick for 1600 bucks. Yeah. And, um, and she had that for about a week

and she blew it up and I spent about another $700 in the car. Um, but the, uh, the motor was shot, so I could not fix it. How did she blow the car up in a week yeah it it uh the thermostat stuck and it overheated on her and she didn't look at the gauges so she just ran it till it stopped well there you go blew the motor um so uh i had a little can shaved up i went and bought her a newer um fusion for about four grand and she, with the intention of her paying me back, obviously, and she was thinking about going to the bank and getting a loan in order to pay me back now. And I didn't know, you know, I've been listening to you for about two months. I'm trying to get my wife on board with actually doing her steps,

and we're hopefully going to start that in January. And I told her that, you know, this is, I mean, she's just starting out and this is, you know, the wrong way to go about it. So I didn't know what you would suggest in that case. Yeah. Well, John, you're, you're a kind guy to help her out. And obviously you've kind of been almost surrogate parents to her. And that's a cool thing that you did. Um, I wish you'd had the money to do it, but, I mean, you paid cash for the $4,000, right? I did. Good. Okay. That's a good start. Well, I don't teach people to borrow money, as you know, right?

Yes, sir. And I don't teach people to go into debt to their relatives, and I don't teach them to go into debt to banks. My suggestion in this situation would be that you just gave her a car. Merry Christmas. No loan. She doesn't owe you the money back. You just helped out your surrogate daughter,

and you bought her a $4,000 car. That's what I would do if I were in your shoes. And no, she doesn't need to go to the bank, and no, she doesn't need to pay you back. And now you guys get on with the business and straighten up your finances so that you can do this more because giving is really fun in a season of giving what better gift can you give someone in the coming year than a new job business leaders if you're looking to add to your team in 2020, get started now with LinkedIn Jobs. At Ramsey Solutions, we post on LinkedIn Jobs because we know the right person will have an impact on our company for years to come. And LinkedIn Jobs matches the right person with the right job. It's no wonder a hire is made every eight seconds on LinkedIn and over 600

million members visit LinkedIn to make connections, learn and grow as professionals and discover new job opportunities. So find the right person for your team and give the gift of a rewarding new career. Get started today and get the gift of a rewarding new career. Get started today and get $50 off your first job post. Visit linkedin.com slash Ramsey. That's linkedin.com slash Ramsey. Terms and conditions apply. Calling from Los Angeles with a debt-free scream.

John and Alice are on the phone. Hey, guys, Merry Christmas. Merry Christmas, Dave. Congratulations. How much debt have you guys paid off? $95,000. Cool. How long did that take? It took us 20 months. Good. And your range of income during that time? We started at about $130,000 20 months. Good. And your range of income during that time? We started at about $130,000, and then we ended up at about $127,000.

Okay, cool. What do you all do for a living? I am a registered nurse. I take care of our son. Awesome. Very cool. What kind of debt was the $95,000? It was a mix of student loans, a lot of student loans, all mine,

and my new car that I had bought before we got married. Ah. It was all mine. Okay. How much was the car? It was about $30,000. Okay. So $65,000 on the student loans, $30,000 on the car.

What kind of car? It was just a Mazda 3. Probably not the best version. Okay, good, cool. So what happened 20 months ago that lit you guys on fire, guys? Well, I was talking to John, and we were dating, and I just found out that he had a large amount of debt before, and I was scared. I was really scared, like, oh, what am I getting into?

And so I heard about DeRanzi and told John about it. Yeah, and then I got really into the podcast. We download every dollar. I'm kind of a nerd, so once she she introduced me to to your program um i really i really liked it and once we started once we got married then we really started uh you know working really really hard towards getting out of debt yeah because the inference was if you didn't get your crap together she wasn't gonna hang around pretty much i heard that i heard it right between the sentences there it was there yeah she was kind of sweet about it she's like it scared me but i heard i knew what exactly what

that meant so very cool i love it so how long you guys been married uh two years okay all right so right after you got married is when the 20 months started then. You really tore into it hard. Exactly. Exactly. Very cool. And this sounds like baby came along pretty quick. How old is baby? Baby just turned one yesterday.

What's your baby's name? His name is Corin. All right. Very cool. So you truly, sir, have scored the trifecta. You are debt-free. You married the woman of your dreams, and you've got a future, huh? Amen to that.

I love it. Very cool. And baby, your young son is here. This is amazing. Well done, guys. How old are you guys? Thank you so much. Thank you. We are about 30.

Okay. We're both 31. Okay. And everything is paid for. How does that feel? Awesome. Just about 30. Okay. We're both 31. Okay. And everything is paid for. How does that feel? Awesome. Just really awesome. Yeah, just super freeing.

What do you tell people the key to getting out of debt is now that you've done it? I think just to have, just to say no. Just say no Just to say no And just You know Just find ways To have fun That's cheap And affordable

Do lots of vacations What was the best Cheap What was the best Cheap affordable fun You found I'm not really sure Four games

Yeah Four games We had a lot of game nights With our friends Instead of going out. Okay. That's cool. That's fun. Well, very good, you guys.

We're very proud of you. We got a copy of Chris Hogan's book for you, Everyday Millionaires. That is the next chapter in your story. You're on your way. You make over $100,000 a year. You're 100% debt-free. You're 30 years old. Game is on, man.

You're doing it. I'm proud of you. Thank you so much. John and Alice in Los Angeles, California. $95,000 paid off in 20 months, making $121.27. Count it down. Let's hear a debt-free scream.

3, 2, 1. Thank you, Jesus. We're debt-free! Yeah! three two one thank you jesus that's how that's done wow how fun that is so fun way to go you guys well if you're thinking about moving the old neighborhood is going to be in the rearview mirror. You're looking for a new place to call home. Buying a house is one thing, but buying and selling at the same time, the stakes are high.

Details are double. The trouble's double. There's a doubly tight timeline. You've got a lot of stuff going on. You've got to be an expert to get all that stuff lined up make those dominoes fall just right and that's why it is so important to have the right agent on your team you don't want some jumpy amateur managing one of your biggest assets for that matter two of them here right right? You need a trustworthy, experienced agent to guide you.

And we've created a network of top real estate agents from across the country who follow the principles that we teach. We call them our endorsed local providers, our ELPs. And when you work with one of our ELPs, you don't have to wonder if the person you've hired is real or not. We have vetted them. They're one of the top real estate agents in your area. They sell a lot of houses, and they'll help you get her done. That's what it amounts to. How do you find one of these rare breed guys that we endorse?

Well, you go to DaveRamsey.com slash agent to find an agent who will take care of you DaveRamsey.com slash agent or if you're on there and you see ELP click real estate agent and you'll find a high octane high protein real estate person who can help you not only get the buying done but the selling done and if you need to do it simultaneously, these guys know how to pull it off. That's how it's done. Open phones at 888-825-5225. Sean is on Instagram. Dave, should I unplug my retirement investments to start investing in real estate.

Yes, I would stop adding to your real estate investments. If you mean unplug them by cash them in, no, I would not. Oh, I'm sorry, to start investing in real estate. No, no. I would just keep putting 15% away into your 401k, and then above that, get your home paid off. No, I would just keep putting 15% away into your 401k. And then above that, get your home paid off. When your home is paid off and you have zero debt and you're in baby step seven, I would save up and pay cash for my real estate investing.

That's what I actually did, by the way. And I got to tell you, the first house you buy or the first property you buy after you get your home paid off takes a while but then you've got all the rent from that coming in plus your other income and the second one comes a little faster and then you got all the rent from those two coming in because you got no debt and when you don't have any debt on rental property all the rent comes in it's a really really sweet position to be in it changes everything and so it takes longer to pay cash for your first few properties but it actually builds your wealth faster at the end of the story because you've got no risk and no cash flow drain and you do not accidentally get yourself in a pinch. So Sherry says, Dave, Merry Christmas is offensive to some people.

I know, Sherry, but it's not offensive to Dave Ramsey listeners because Dave Ramsey listeners are like mature people. They're not running around looking for something to be offended about. It's okay. It's okay, honey. Everything's going to be all right. Merry Christmas. It's okay.

It's okay. I understand. Listen, if you don't want to listen, it's okay, sweet girl. But this is called The Dave Ramsey Show. And you know what that means it means i get to do whatever the flip i want to do and you get to change the channel if you want to it's okay it's okay and people don't like some people don't you know everybody's looking for something to be mad about look we're not looking for something mad about here we're looking to help you change

your life and if you want to get sidetracked with that kiddo, you can get sidetracked with that. Just get your little feelings hurt. It's okay, sweet girl. This is the Dave Ramsey Show. How often can you get the best of both worlds? Not very often, right? Well, with the Rate Secured program at Churchill Mortgage, it's possible. You can secure a low rate now to nail down your budget, and if rates drop while you're shopping for a home, they'll give you the lower rate. That's right. They take on the risk of fluctuating interest rates, not you. Who does that? Well, you should fall in love with the numbers before you fall

in love with the house. This program lets you do just that. So if you're buying a home this year, Let's go. This is a paid advertisement. NMLS ID 1591. NMLS ConsumerAccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Our scripture of the day, 1 Peter 4a, Above all, keep loving one another earnestly, since love covers a multitude of sins. John Quincy Adams said, If your actions inspire others to dream more, learn more, do more, and become more, you are a leader. Mally is with us. Mally's in Georgia.

Hi, Mally. Welcome to the Dave Ramsey Show. Hi, Dave. Nice to talk to you. You too. Merry Christmas. How can I help? So I have a question.

Well, a couple of questions. I'm looking into buying a house, um, in the new, very near future. Um, hopefully within the next few months, um, I've been going through, um, this, uh, home buying counseling, um, it's called NACA. I don't know if you've heard of them. No. So I have basically around $15,000 in debt. I was looking to buy around $180,000 house, but I was planning to use part of my 401k to put down on that house to make the payment go down. My question to you is, should I just not stop that and pay off my debt first and start looking for a house?

Yes. Yeah. How old are you? 31. Okay. What do you make a year? About $41,000. Good.

Okay. Well, I want you to get a house. I want the house to be a blessing. I do a house. I want the house to be a blessing. I do, too. I want the house to be a blessing and not a curse. And when you move in a house and you still have debt, and on top of that, now you've taken out a 401K loan on top of that, this house is set up to be a curse. Murphy's going to move in your spare bedroom and bring his three cousins,

broke, desperate, and stupid, with him. So, no, you're better off to go ahead and get your debts paid off. What's the $15,000 in debt? I have $12,000 and change in my car loan and about $2,500 in one credit card. Okay. So what I would do, do you have any money saved at all? I have about $8,000 saved. Okay, cool.

I'll pay off your credit card today. Okay. Cut it up, close the account, and then I'll tear into that car with a vengeance and get it paid off as fast as I could. And as fast as it's done, then you would save up an emergency fund of three to six months of expenses and then save your down payment.

That means we're delaying your home purchase about 18 months. Now, that sounds really bad because you were all jacked up about buying a house this spring, and I just delayed you 18 months, okay? But let's kind of visit that, okay? You can buy a house this spring. You've got $15,000 in debt and a 401k loan and you're broke. Right. And you move into that house.

And the hot water heater goes out or the heat and air goes out. And you got a real stress point now. Make $40,000 a year, you don't have any margin. You're living paycheck to paycheck, hand to mouth, and stress is all around you. Or you delay it 18 months and when you move in this house, you have no payments except the house payment. No 401k loan, no car payment, no credit card payments. Oh, and you have $10,000 in the bank for an emergency.

That's a whole different way of buying a house. The house would be a blessing and a place of peace and a place of solace not something that when you drive up you go i really wanted to buy this house but some days i just wish i didn't because i feel stressed about it you know but you don't feel that way if you do it the way i'm talking about and uh it's just a little bit slower with a lot more wisdom and um people aren't going to, but it's not their money. People got opinions, but it's not their house. And I'm not going to recommend you buy a house and create stress and problems for you. And it will, if you do it the way you're talking about doing it.

It will. I've been doing financial coaching for 30 years. It will. You'll end up calling me going, Dave, I got a problem. How am I going to pay my car payment? This and that, and I got this and this. There's no room in my budget anymore. Yeah, you will not be having fun.

Rick is with us. Rick is in Minnesota. Hi, Rick. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up in your world?

Well, first off, Merry Christmas. Merry Christmas to you. I wish I would have found you 20 years ago. Let's start there. All right. Well, I learned about you a week and a half ago. Wow. I got the yes.

I got your book, Total Money Makeover, a week ago, and I've read it. Wow. Finished it last night. Cut up all my credit cards except one until I get my debit cards in the mail. Wow. And I bought my 401k. You're game on, man. I know.

My question is about a lease. Mm-hmm. I have 20 months remaining on a 2018 Dodge Durango. Mm-hmm. $470 a month. In 20 months, I'll have paid $9,395 and have nothing, as you very well pointed out. I can turn around and terminate that lease immediately by giving the bank $5,723.

I've attempted to put this lease on Marketplace to get out of it. No. No takers. No. I can try to buy it and sell it, but after tax, I owe $33,500, and they're selling it for about $27,500. Okay. But the bank will allow you to terminate the lease.

By terminate the lease, what happens? If you terminate the lease, you can sell the car? How are you getting out of that? Two ways. The first one is I pay them $5,723, send in the keys, and walk away. I've satisfied the lease. And there's no repossession there. Correct.

Okay. Or I would need to purchase it with tax for 33 561 dollars right and i don't want to do that because now i got to try to sell it and let people test drive it and all that mess right which is what you usually have to do to get out of a lease this termination clause that you've got is unusual, but it's wonderful. Yes, it's with a large bank, and I contact them just to be sure. And if I terminate the lease now, it's $5,723 instead of $9,395, which is my total of payments. So if I take and pay that $57,023, I found a 2001 Chevy S10 Blazer, no rust, very good running condition,

and between the two of them combined, I'm just under $8,400 instead of $9,395. Do it. Do it? Do it. I'm in. I like it. Do it? Do it. I'm in. I like it. That's what I needed.

I just wanted to make sure I was thinking right. You are. And the thing is, you're taking a step back so that you can take a step forward. You're driving like no one else, and later, when you're wealthy, you can drive like no one else. Okay. You're going to be in a position. This is not a permanent decision. Okay. Welcome to the tribe. Very well done. The car fleece is the most expensive way to operate a car. According to my calculator, Smart Money Magazine, Consumer Reports, and many other articles,

all you have to do is the math. And another indication that it's very profitable for them is it's the first thing that the car dealer pushes on you when you walk on the lot they make more money on the fleece than they do on the sale of the vehicle because what happens is when you lease a dodge durango the lease the paperwork the contract is then sold, and the dealer gets a premium on that contract that puts more in their pocket than if you had bought that car for cash, more than their net profit on the sale of that car. And so that's what you've got to be careful of. The car fleece, when you back it out the average one the cost of capital which is effectively your

interest rate is around 14.2 percent when you actually back out what you're paying on the money because you're renting the car but in a sense you're renting the money which is called borrowing money there's a way to calculate that out and what your effective interest rate is. Stay away from that crap. Pay cash for used cars until you're a millionaire, and then pay cash for whatever you want. That puts us out of the Dave Ramsey Show and the books. We'll be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. If you would like to do your Debt-Free Scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.