The Ramsey Show - App - When You Don't Have Debt Payments You Have Money! (Hour 2)

Episode Date: February 7, 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 dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. The phone number here is 888-825-5225. That's 888-825-5225. Amy starts off this hour in Baltimore, Maryland.

Welcome to the Dave Ramsey Show, Amy. Hi. Thanks, Dave, for taking my call today. Sure. What's up? I have a big question. We have a business, and we are struggling. A lot of things happen to cause that struggling, and we borrow money more than what we're able to pay back at this point. So my question is, you know, we've discussed with several about the possibility of bankruptcy, but, you know, like how do you make that decision and go down that road?

Because it's not really where we want to be. Sure. That's scary. So you said family business. Is it you and your husband or siblings or parents? Actually, it's just my husband is the sole owner, but there's more family members involved as far as being at the business. But your husband makes all, I mean, he's the owner,

and he's signed on all the debt. He owns the business. Yes. But he happens to employ some family. Yes. Okay. And so how much money have you guys borrowed i don't even know the numbers but i know the numbers are huge and i guess i'm just looking for how you figure out if you know that is the route that you need to go, or should we, you know, like where do you get help, and how do you figure all this out?

Right. Okay. Well, if you ask a bankruptcy attorney if you're bankrupt, they're going to tell you you are. Asking a bankruptcy attorney if you're bankrupt is like asking a dog if it's hungry. Okay. So that's not going to be, you know, that's not going to be your point of information. How many employees does your husband have? I think like 25.

What kind of a business is this? I can't disclose that at this point. Well, I don't think anybody's going to. It's a business sales yeah it's business sales sales right they they sell things oh yeah okay does he have inventory oh yeah okay all right um well i can't really give you much help unless I knew a little bit more than you know or that you're willing to disclose. So the – Where do you go for resources, though, if you're not going to check with a lawyer to see, like, where – who do you talk to?

I think that's what I'm struggling with as far as where do you go for, you know, advisement in making decisions. Well, there's not a lot of places, honestly. I mean, you can get a good business attorney might be able to give you some insights that isn't in bankruptcy. I'll put you on hold, and Kelly will pick up. We'll see if we have one of our coaches that we have trained that lives in your area. They specialize in helping people not file bankruptcy. A couple pieces of information I can give you are this, okay? Okay.

That'll help you, okay? Most small businesses, 25 employees size small businesses, do not survive a bankruptcy filing. So basically it means you're closing. Okay. If you're closing. Okay. If you do this. And the items that he has in inventory will be sold off. And if they have debt directly against them, they will be repossessed.

And the bank will own them. But if they have debt, if he just has debt in general, any assets that you own will do that. The other thing is then there's no separate bankruptcy for business in a situation like this because this is not business debt. He has signed this debt personally. Very likely you signed it too. You probably got your signature on some of the documents too. So that means that, like, does your home have equity?

Yeah. Okay. It's probably not going to survive a bankruptcy so all of that not to scare you but to say let's find a different way let's find something else to do i would rather fight with the creditors and try to scratch through and keep it open and just simply not pay them and let them come after me than i would just try to file because when you file everything you guys own goes under the heading of the trustee's ownership until he just determines based on bankruptcy exemptions to hand it back to you and um i don't know what maryland's homestead exemptions are, how much of your equity in your home you're allowed to keep.

Some states it's a lot, and some states it's almost nothing. In Tennessee it's $7,500. If you have equity over $7,500, then you're going to hand your home over to the trustee. They're going to sell it, and everything over $7,500 is going to go to your creditors that you didn't pay. Anything you own is sold off to go to pay your bills. So what I would try to do is sell stuff off and go to pay my bills or not pay some people and settle some debts.

But we don't know how much debt he's got or what kind of debt it is in this conversation. So it's a little tough for me to help you. But hold on. Kelly will pick up a little tough for me to help you. But hold on. Kelly will pick up, and we'll try to get you with one of our coaches and see if we can walk you through this. I'm sorry you guys are facing it. I know it's hard on him and you. Kelly is with us in Oklahoma City.

Hi, Kelly. Welcome to the Dave Ramsey Show. Hi. How are you? Better than I deserve. What's up? Right. So I have a question. I have a car that has about $8,500 left on the note.

Currently it's in my dad's name, and he's financed it to the bank. And we were wanting to put it in my name, but I understand now. I started watching you recently, and now I understand that your stance on credit is that it's not necessary. Right? So my question is whether or not I should pay the car off as quickly as I can or just put it in my name and then assume the responsibility. Well, you can't assume the responsibility. The bank will not move the note into your name. No, I mean, I would be buying it from him yeah you'd have to go get a loan and buy it for him from him and uh when you pay the loan offer that he has then they'll give you

the title and your bank the title but you're not going to assume this debt and you're not going to be able to transfer the title until that debt, the current debt is paid off because they're going to hold that title until then. So what do you make a year? About $25,000. Yeah. And what's this car worth? I would say $13,000 to $14,000. Sell it and buy a car for $5,000 for cash.

After I get it paid off? No, sell it for $13,000. $8,500 pays off. That puts $4,500 in your pocket. Right. And buy a car with that $4,500 for cash, no payments. Right. That's what I would do.

Hey, man, thanks for the call. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees, and if you're thinking our low cost means less coverage, think again. Our voice and data service covers 99% of Americans, and our 4G LTE network provides the fastest internet speeds like more expensive carriers. We operate on the largest GSM network in the U.S. to ensure you receive reliable coverage virtually anytime, anywhere.

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Better than I deserve. What's up? So, we have a question, my wife and I. We recently are now on baby step number four. We actually just started listening to you for the last two weeks, and we've paid off all of our credit card debts. We don't have any debt with our cars. And right now we're trying to pay down our 30-year mortgage debt we just got this past August. The question that we have right now is, my wife is a doctor.

I'm a student right now in seminary. And one of the things that has recently been offered to her is a partnership with her clinic. But the catch is it's $165,000 total of investment into the clinic that would be garnished from her paycheck over the next three years. And so we're trying to figure out, is it wise for us to hold off or to actually jump into this possible partnership? Because there are year-end benefits of bonus dividends and shareholder, you know, basically shareholder shares of the profits from the clinic each year. How long has she been a doc? She's been a doctor for almost, oh my gosh, ever since we've been married, for about nine, ten years. Okay. And so what is her income?

The income is about $200,000. We did recently just join up with the 401k program with her company and right now we're putting in 10 based on our financial advisors um advice for the 401k and and what do you make uh well i'm inseminated i do work for our church oh that's right you said you're still in school yeah you're in school okay yeah all right um i get like a 2400 um stipend but that's right. You said you're still in school. Yeah, you're in school. Okay. Yeah. All right. I get like a $2,400 stipend, but that's it. Okay, so you put $50,000 a year out of her income in for three years, roughly, $55,000 a year for three years. And then what does she get for that? She basically gets to participate in the extra bonuses that will come to the company, and also the year-end profits are divvied up between all the shareholders in the clinic. Wonderful. What does that mean in money?

In money, apparently it has a range from a low of $50,000 to $250,000. Her part? Yeah. Her part? Yeah. Per year? Per year, but there's no guarantee. Starting immediately or starting after she's paid it off? Starting immediately. So it likely would pay its own way?

It would, but there's that risk of, if they if they don't do enough with patients depending on how it could come yeah but it could come it's not coming out of her pay today because her income is likely to go up at least fifty thousand dollars and it's going to cost her about fifty five thousand right and if it doesn't go if it if let's say it pays zero this year. Instead of $200,000, you've got $150,000 of her income to work with, right? Basically, yeah. Yeah. $165,000 divided by three is $55,000, okay?

So, and yeah, I'm doing this deal for sure. You would? Yes, I would. Hmm. The only concern that we have right now is our mortgage payment right now is about $3,400, and that's not paying extra to try to pay it off faster. That's okay. You'll be able to pay it off faster because our income is going to double over time. For the rest of the year, we would have to at least try to live.

Well, for this year. But you're also going to get out of seminary and start an income, right? At some point. Potentially, yes. So five years from today is what I'm making this decision based on, not this year. If this year things are a little tight and you don't pay extra on your mortgage for one year,

but the return is an extra $150,000 a year from now on, yeah, I'll do that. It's not guaranteed, but nothing's guaranteed. You can show up at the church tomorrow and they decide they don't want you. There's not anything guaranteed. The $200,000 they're paying her is not guaranteed they could close the clinic you know so there there's there's not there's risk in everything but if they have a track record one thing that could give you a comfort is to say okay if she had been an owner in the last four years what would been her payout

instead of just guessing it what the future is going to be. But you can look at what the past has been. And, you know, are we doing better or are we doing worse than the last four years inside the clinic? And so, you know, I think you're going to hear that I think this is a deal. I think it's a good deal. And I do not recommend

people get into partnerships. The only ones I have seen survive is medical and lawyer attorneys and docs because it's a different type of partnership it's a different type of operation and they generally do make it long term and there's some economies of scale and some other stuff that does make sense there um some some crossing of practices and all kinds of things that make sense in these deals. So, you know, dental, medical, and attorneys are the only, you can't find typical small business partnerships that make it more than 10 years.

90% of them don't. So I tell you, stay away from partnerships generally. But in this case, it's medical, and I think the numbers work on it, from the ones you gave me anyway. Bill is in Los Angeles. Hi, Bill. Welcome to the Dave Ramsey Show. Hey, Dave.

Thank you so much for taking my call. Sure. What's up? My wife and I have a lot of student loan debt. And before I tell you how much, you have to promise me not to yell at me. Okay. The total debt is around $640 forty thousand dollars oh my goodness i'm so sorry okay um tell me tell me your doctors or lawyers or neurosurgeons or something both of

us are lawyers okay okay in los angeles and how long have you been out of law school we've been out about four and a half years. And what do you guys make? Right now we make $265,000 household income. Good. Okay. Okay. I have two job opportunities that will both dramatically increase my pay. My wife's job is stable and good, and she can work at home, and we have a five-month-old baby.

So her job is not going to change. If anybody's going to make a change, it's going to be me. So one of the jobs would increase our household income would be $450,000 if I took the job. It would take me away from my family a lot of the time, and it's not in a practice area that i'm crazy about um and it's probably not somewhere where i would want to be long term what is a lot of the time pardon what is a lot of the time when you say you're away from your family a lot of the time what's that mean um you're going to be overseas for six months and not see them or you work a lot of hours no i just work a lot of hours okay and i could probably do a lot

of the work at home yeah so what does your wife what is what is your wife's income she makes 150 000 from home um three days a week at home okay she needs to increase her hours okay because she's gone deeply into debt and she has to monetize this degree. And, yeah, I think you take the job. I mean, you have two opportunities. One's $400. What's the other one? The other one will bring us up to around $350,

and that one is in a practice area that I like, and I could see myself staying there for a long time. $50,000 a year in this equation doesn't change my decision, so I would go with the one I like and the one you can see yourself doing. Sorry to interrupt. It's $450 or $350, so it's about $100. Oh, about $100 spread. Okay.

Well, here's the thing. So you would be making $350? Yes. And she would be making? No, no. Our household income would be. Oh, So you would be making $350,000? Yes. And she would be making... Our household income would be... Oh, so you would go to $200,000? Yes. Or you could go to $300,000?

Yes, exactly. Okay, so $350,000 and $600,000. I can't breathe. So you're debt-free in about four years. And you're living on beans and rice. And by the way, her income's coming up to $200 also. Every year we both get raises. Yeah, she can stay home, but she's got to take on more hours.

She's got to get her income up. And then you go ahead and take your $200,000 that's less and staying in your practice. But then, dude, you guys have to lean into this and you have to treat this like your hair's on fire because your hair is on fire. This is the Dave Ramsey Show. What will your family do if you die? Did I get your attention? Good.

If you're a father, mother, husband, or wife, it's your responsibility to have life insurance. No matter where you are in the baby steps, you have to deal with this right now. How will your family pay for the mortgage, put food on the table, or pay for education? How will they deal with retirement and stay the course for getting out of debt and accomplishing something with their lives? This is what life insurance is all about. I knew when I started this show it was something my listeners had to have, so I went out and found a company I could trust to offer the plans I believe in. That's why I've been talking about Zander insurance for over 20 years. If you haven't

dealt with this, please go to zander.com or call 800-356-4282 and let them help. This is a priority. It's not expensive, it's not complicated, and you need to do it today. That's zander.com or call 800-356-4282. In the lobby of Ramsey Solutions, Samantha is with us. Hi, Samantha. How are you? Hi, Dave. Doing great. Happy to be here. Welcome. Welcome. So where do you live? I'm Samantha is with us. Hi, Samantha. How are you? Hi, Dave. Doing great. Happy to be here.

Welcome, welcome. So where do you live? I'm from St. Louis. Oh, cool. Good to have you in Nashville and all the way down here to do a debt-free screen. Yes, sir. Good for you. And how much have you paid off?

Just under $43,000. Good for you. And how long did this take? 16 months. Good for you. Good, good, good. And what was your household income during that time range? Started at $56,000 and ended at $58,000. Good. What for you. Good, good, good. And what was your household income during that time range? Started at 56 and ended at 58.

Good. What do you do? I'm a civil engineer. Good, good. So what kind of debt was the 43? So it was all from school. About half of it was student loans, and the remainder was money that I agreed to pay my parents back. For school?

Yes, all for school. Good, okay. So it was all student loans just basically yeah okay all right so we got mom and dad and sally may out of your life and how long have you been out of school um about a year and a half it'll be two years in may okay so immediately after school you get the job as the engineer great job great career field and you immediately tackle this one right after it yep that's what made you know to do that and believe you should well so i had heard about you when i was still in school and you know it all sounded like a great idea but i just wasn't mentally into it yet wasn't ready to

take it on and so right after i graduated i sat down and i saw the number that i needed to pay back and it scared me i had a little panic attack and so i knew that i needed to pay back, and it scared me. I had a little panic attack, and so I knew that I needed to get it together and get it taken care of as fast as possible. Well, you, I mean, making $58,000, you knocked this out fast. Yeah. You were on beans and rice. Kind of. You kept living like a college student, didn't you?

Kind of. So I was very lucky. I was able to stay at home right after school, and that kept my expenses low, and that helped me knock it out really fast. Oh cool so how long were you at home or are you still getting ready to move out oh good but getting there okay all right so mom and dad give you a place to live and you get them paid back yep thanks mom and dad hey that's good that's a good short-term plan and it was a short term 16 months that's done and uh now you're making money and you have no payments yeah it's a good feeling well engineers months. That's done. And now you're making money and you have no payments.

Yeah. It's a good feeling. Well, engineers are good at math. So you could see this pretty quickly when you laid it out in front of you, right? Yep. Okay. And who was your biggest cheerleader? That would be my boyfriend.

He was the one who got me started with you. And he was the one I talked to, you know, this number's getting smaller. It's going really fast or this is really discouraging i wish this would be done sooner but yeah he's the one who who helped me push through wow very good very good so he is on this too or just saw what you were doing and believed it uh he's doing it too okay he's on his way good very good congratulations so what do you tell people the key to getting out of debt is? We've got students graduating, and you hear all the – have you seen all the whining in the marketplace that millennials like you are stuck and you can't win,

and yet here's another rock star millennial standing in front of me. I mean, you're incredible. You can do it. Very well done. So what do you tell them that the secret to getting out of debt is? Most important thing is to make a budget and have a plan. Look at how much you have to pay off and figure out, you know, look at your income, see how much you can throw at it, and figure out how fast you can do it. Yeah.

You didn't spend money going out. You haven't been going out every weekend. I had a little fun, but it's all about budgeting. You know, you can give yourself whatever you want to do. You can still do fun things, but you have to plan for it. And you have to realize that you might have to wait a while to do those really big things. But when you're done, you can do things like come to Nashville and go on trips. There you go.

That's fun. It is possible. I love it. Well, congratulations. Thank you. Very, very well done. I'm proud of you. Thank you.

You've got a bright future ahead of you. I hope so. You do. I mean, your income is going to go up. You're definitely at entry level. It's going to go on up from here. And no payments ever again. Nope.

You've learned your lesson. You're done. Yeah, no more. Love it. Well, we've got a copy of Chris Hogan's Everyday Millionaires for you. Number one bestseller. How Ordinary People Built Extraordinary Wealth and How You Can Too. You're going to be an everyday millionaire. Yep.

You are. That's the goal. You are. And I'm going to say i knew you back when yeah starting early i love it good job samantha all right samantha how old are you 24 24 years old from st louis paid off 43 000 $43,000 in debt in 16 months. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free! Woo! Woo-hoo!

Yeah! This is how it's done. Wow. Congratulations. Now, some of you are out there, and you make twice what she makes, and you're still sucking your thumb and whining, and you're 48. Twice her age. She just rubbed your nose in it.

She just destroyed your whining. 24 years old, paid off $43,000 in 16 months. That's known as a rock star. I mean, that young lady is on fire. Wow. Now, maybe you're not just out of school. Maybe you're not a civil engineer. I don't know.

Maybe you've got big problems. Well, welcome to the human dead blame race. We've all got something to get over, don't we? So you're going to get over yours. This is your time. This is your time. This is your time. There is no excuse for you not to start being intentional with your income. Some of you have been slopping it up, half-butt doing stuff, ishing your way along, Dave-ish,

financial piece-ish, and there's just no excuse for it there's no excuse for it the verdict is in this stuff works when you work it but if you ish it you're going to get ish results and i gotta tell you i, our last two debt-free scrims, last hour or this hour, are both young people that are dialed in. They got a plan, and they found the plan, and they're going to stick to it. As a good friend of mine who's a multimillionaire told me, I finally got out of debt. I decided I was going to submit to your way of thinking. You have to submit to something.'re gonna you know what was the

whole song you're gonna serve somebody right you're gonna serve something you're gonna serve somebody you're gonna serve bank of america and general motors and sally may the rest of your dad blame life if you keep ishing along that's just stupid it's lazy and it's a lack of diligence and it's a lack of emotional strength and courage on your part you can do this i know you can probably a whole lot more than some of you know you can because the shortest distance between you and wealth is getting rid of your stupid payments. When you don't have any payments, you know what you've got? Money. The borrower is slave to the lender.

That's why they call it MasterCard. Take a minute. Think about your future. What if you never had another car payment? What if you never had another credit card bill? What if you got rid of that student loan that's been around so long you think it's a pet? What if you actually started to understand how mutual funds and Roth IRAs and 401ks work and you started using them to your advantage?

Oh, you got to be careful. You'll be thinking like one of those evil rich people then. Well, you can do all this stuff. Financial Peace University, our nine-week class will show you how. And when you go to the nine-week class, we give you a one-year membership to Financial Peace, the entire online experience, which has the entire nine-week class on it online,

and it has the Legacy Journey class afterward, and it has the Smart Money, Smart Kids class, and it has Every Dollar Plus, and it has all kinds of community for you to get involved and get encouraged. You learn how to spend wisely, how to get out of debt, how to save and pay cash for things so you don't go back in debt, get that emergency fund in place, walk your baby steps, and become an everyday millionaire. We're going to show you how.

Why do you want to do that? So you can retire with dignity. So you can change your family tree. You could be the last one in your branch of the family tree that says, I'm broke. The little man can't get ahead. Eeyore is my spirit animal. You can stop that crap.

Get into Financial Peace University right now. Go to DaveRamsey.com, get lined up, and you can have what Samantha's got. It's doable. This is the Dave Ramsey Show. Thank you. nina is in san francisco welcome to the dave ramsey show nina hi dave How are you? Better than I deserve. What's up? I've never been on air, so I'm excited and honored at the same time.

Well, we're glad to have you. How can we help? Yeah, so my question is, I've been with my husband for two years, been married since September. I'm an immigrant, so I just permanently moved to the United States last March of last year. So I'm waiting for my work permit to come out in about three months. So our plan was to go to school, for me to go to school for a nurse's, to pursue nursing,

or to get a job and help him pay off the debt that we have, which is $441. And then... $441,000. And then... $441,000 what? That's mortgage. We have the truck. We have a part of a property. We live on a 25-acre property, but then there's another property around the pond that is $25,000 that we have to pay for. Then, of course, credit cards and a few other things that just fall in there.

What does he make? That's the thing. He has irregular income. He literally just got his contractor's license last month. He just got his what? Contractor license. Contractor license. So what was he doing before that?

He was painting and carpentry, but multiple friends and friends of friends. So nothing really official. And now he's all official. Okay. So what kind of income has he been making doing this on the side of hustle? Usually maybe $1,000, $2,000. It's really irregular. We can't even really tell how much it's been so you're not even he's

not even gonna pay his bills then that's the thing we are we are i don't know you know where i had a lot of stuff so okay either his income is going to go up and or you're going to add income to it or you're going to sell a bunch of this stuff one of those things is going to happen okay we've uh given him the idea of selling stuff. One of those things is going to happen. Okay. I've given him the idea of selling stuff, so he's open to it. But when I get my work done, it's... I don't really care if he's open to it. If he can't make more than $1,000 or $1,500 a month and you're not working,

all this stuff is going to get repossessed and foreclosed on. True. That's a fact. You cannot support what you told me he has in debt with his income unless his income goes way up and unless you add income to it so it looks to me like you guys are going to probably start selling some stuff um and when you get your finances stabilized then you can talk about going to school but right now you're on the verge of foreclosure yeah i get it yeah we can't talk about i'd love for you to go be a nurse but you can't i think it's a great career and i'd like for you to save up and start paying cash and go to

nursing school but uh it sounds like he's got a mess he's made and probably you since you married into it the two of you are going to clean that up in some way by increasing household income and selling stuff um in order to get your life back. Now, once you get your lives back, you get yourself settled down and stable, and that may be a year or two. Then maybe you go to school. But, yeah, as soon as your work permit comes in, you're going to work, he's going to work, and you're selling stuff.

You've got a mess on your hands, kiddo. Isaac's with us in Denver. Hi, Isaac. How are you? Hi, Dave. How's it going? Better, kiddo. Isaac's with us in Denver. Hi, Isaac. How are you? Hi, Dave. How's it going? Better than I deserve. What's up?

Hi. So I started listening to you about two weeks ago. Your book, The Total Money Makeover, is in the mail. I got married in April of 2018, and my son was born nine months and three days later. So we're planning on going down to become a single-income family here once she gets off maternity leave. We're about to pay off all of our student loans probably next month and basically start from scratch there with zero dollars in the bank. My question is, do we continue the beans and rice lifestyle to achieve steps three, four, and five, such as, more specifically, we're in a $1,300 a month house, which is a really good deal here in Denver,

or do we move into a one-bedroom apartment and still continue to be real frugal and just live kind of in that nature? What do you make? Last week, I got a market analysis raise of $5, and so I'll be making $73,000 gross income. Okay, good. Very cool. How old are you two? We're both income. Okay, good. Very cool. How old are you two? We're both 26. Good, good.

Okay. Well, in order for her to stay home full-time, which is what you want the decision to be, and I agree with your decision, it means you're going to sacrifice some other places. Yeah. That means something has to give, right? Because the income is going to be dropping permanently while she stays at home. And that's fine. My wife did the same thing.

We made a decision that we were going to not have as much money. We were not going to have as good a lifestyle because we valued her being there more. And she desperately wanted to be at home with the babies. So that's fine. And I got no issue with that. But that means your new life is $75,000 a year. Yes. Okay.

Now, how do we move forward at $75,000 a year? Baby steps one through three, $1,000, being debt-free, and having your emergency fund are gazelle intensity because they're an emergency once you get those three things done you have a foundation laid for a long play but that's your short play okay and so until you get your emergency fund in place and you get some money between your family your new baby your new wife and you and murphy you got to get you a pad you got to a shield up, and that shield is that three to six months of expenses. Once you've got that and you don't have any payments, then you relax a little bit, and you start your 15% of your income going into retirement,

and you start saving and paying cash for things that you guys want to buy and do around the house. You want to travel. You want to upgrade a car. You want to buy a couch. You want to save for a house. You want to do those kinds of things. That's where you do all of that, and that's relaxing a little bit, but you still have to be living on $75,000 a year.

Okay. And you still have to be on a budget, but you don't have to be on scorched earth and absolutely have zero anything, which you do that. You do the scorched earth, the gazelle anything which you do that you do the scorched earth the gazelle intensity until you get through baby step three because it is an emergency until you have an emergency fund you know you just got to treat it that way so hey good question thank you for joining us open phones at 888-825-5225 jessica is in Dallas. Hi, Jessica.

Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? Hi. So I'm calling because right now we're on baby step two, trying to pay off some student loans and some car payments that we got ourselves into.

And we currently rent. We've been renting for about three years. And seeing as we are projecting the payoff, all of our debt, which is about $160,000 in five to six years. Good Lord, what is your debt? It's from student loans and just car loans. How much do you owe on these cars? The cars, it's $25,000 and $30,000. It was a stupid mistake. Yeah, sell them. Sell them.

Okay. Why would you drive a $30,000 car when you're broke? Well, see, the thing is we looked at selling, and my husband was concerned on getting less money back than what we owe. Yeah, you don't have to cover the difference. I'm sure you're upside down. But maybe you owe $5,000 and you're driving a beater instead of owing $30,000. What's your household income? Right now we just moved, so it's $90,000, and I'm looking for a job right now.

And what will you be projected to make? If I'm making what I made at my previous job, about $33,000 a year. Okay, so we're talking about $125,000 household income. You have $160,000 in debt, and you have $55,000 in car debt. Yes. Does that sound stupid when I say it out loud? We know it's stupid. Sell them.

And it was something that we regretted. Sell them. Basically after it was done. Sell them. Okay. And get on a written budget and cut your lifestyle to nothing. At $125,000 income, you can be out of debt a whole lot faster than five or six years. Shouldn't take you anywhere near that long,

especially if you get out of these stupid cars. They're absurd. Thanks for the call. This is The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.